P.T. Charoen Pokphand Indonesia is a poultry feed, day old chicks and processed chickens production group based in Indonesia. Co. is focused on agro-business activities that encompass the entire spectrum of the poultry business, from the production of feed products, breeding of poultry stock and production of processed poultry products. Co. maintains a network of production facilities in Balaraja (West Java), Semarang (Central Java), Sepanjang and Krian (East Java), Bandar Lampung (Lampung), Medan (North Sumatra) and Makassar (South Sulawesi). Co. is also engaged in the production and supply of poultry breeding stock for layer and boiler chicken in Indonesia.
Broiler prices recovered in Jul 19 to Rp18,750/kg and weakened again in mid-August to around Rp16,000/kg. We view the drop in broiler prices in mid-August as temporary. The feed segment is expected to book an extraordinary performance in 2019. Imported chicken might have limited impact on Indonesian poultry players and the impact still remains to be seen. Poultry companies are trading near their historical means. Maintain MARKET WEIGHT. Top pick: MAIN.
CHINA Sector Automobile: Retail sales growth turns positive in June on destocking of National V cars. Update Alibaba Group (BABA US/BUY/US$174.67/Target: US$206.00): New retail pioneer Hema making stronger contribution. INDONESIA Update Charoen Pokphand Indonesia (CPIN IJ/HOLD/Rp5,050/Target: Rp5,030): Declining raw material cost could help feed segment but DOC and broilers at risk. MALAYSIA Sector Telecommunications: We explore upside to our fair value assuming a successful due diligence exercise for Axiata and Telenor Asia. Our top pick is Axiata. Update Syarikat Takaful (STMB MK/HOLD/RM7...
We remain confident of Wisdom’s solid growth on the back of stable enrolment growth and tuition fee increments. Management is targeting 25% yoy growth in revenue and net profit in FY20. Unless regulations tighten further, we believe downside is limited. Maintain BUY with a lower target price of HK$4.50 as we ascribe a lower terminal EBITDA valuation of 8x (from 10x) for our DCF valuation.
1H19 results came in as expected with reported net profit up 35% yoy, in line with the company’s guidance. The earnings growth was driven by 33% yoy store count growth and a hoh rebound in new car sales margin given the earlier completion of the emissions standard transition of the luxury brands it sells, additional rebates from OEMs and better supply discipline. Raise 2019-21 EPS by 7%/10%/17%. Maintain HOLD. Raise target price to HK$6.00. Re-entry price: HK$5.00.
BYD’s 2Q19 net profit came in as expected at Rmb705m (up 87% yoy, down 6% qoq), in line with guidance; but core net profit disappointed at only Rmb328m (down 20% qoq), given the subsidy cut from 26 Mar 19. Looking ahead, BYD guided on a 3Q19 net profit of Rmb100m-300m, down 72-91% yoy, due to further subsidy cuts from 26 Jun 19. Cut 2019-21 EPS by 5%/8%/12% on lower EV sales. Cut target price from HK$23.00 to HK$21.00. Maintain SELL.
Poultry: Worst-case broiler price stress-test scenario indicates HOLD recommendations for CPIN and MAIN; JPFA is the most sensitive to changes in broiler prices. TRADERS’ CORNER PP Persero (PTPP IJ): Technical BUY Telekomunikasi Indonesia (TLKM IJ): Technical BUY
Poultry prices were disappointing in May 19. Broiler prices declined 16.3% yoy and 6.2% mom, while DOC prices fell 15.1% mom. Although DOC prices are still in line with our Rp6,000/chick assumption (5M19: Rp6,200), our concern lies with broiler prices which are still below the lower-limit benchmark price of Rp18,000/kg (5M18: Rp17,500). A broiler price stress-test indicates a HOLD recommendation at worst for CPIN and MAIN, and BUY on JPFA. Maintain MARKET WEIGHT.
CHINA Update Sunny Optical (2382 HK/BUY/HK$72.20/Target: HK$85.10): Maintains healthy growth despite Huawei turmoil; upgrade to BUY. INDONESIA Sector Poultry: Worst-case broiler price stress-test scenario indicates HOLD recommendations for CPIN and MAIN; JPFA is the most sensitive to changes in broiler prices. MALAYSIA Results Berjaya Sports Toto (BST MK/HOLD/RM2.60/Target: RM2.40): 4QFY19: Earnings in line and confirms resumption of industry growth; prefer Magnum for sector exposure. Top Glove (TOPG MK/HOLD/RM4.87/Target: RM4.60): 3QFY19: Below expectations. Margins take a steeper hit from ...
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