• The Group recorded higher profitability, driven by strong performance from PT Japfa Tbk
• Animal Protein Other narrowed losses, and generated positive EBITDA in 1Q2018
The significant improvement in profitability was driven by PT Japfa Tbk’s margin and volume expansion. At the same time, Animal Protein Other (“APO”) narrowed its losses and generated positive EBITDA in 1Q2018, after navigating a challenging year throughout 2017.
The Group has also started recognising 100% contribution from its Dairy business, with effect from 1 January 2018.
The company has 4 different streams of businesses revenue to derive from :
Japfa Tbk delivered solid growth in 1Q2018. Revenue rose 16.2% to US$576.3 million, driven by marked improvement in sales volumes across the poultry division. In particular, sales volume for poultry feed grew 14.5%. Operating profit nearly tripled from US$19.5 million a year ago to US$56.4 million in 1Q2018, as operating margin expanded from 3.9% to 9.8%. This was driven by strong growth in poultry feed margin on lower raw material costs, as well as higher ASPs for day-old-chicks and broilers. Another major highlight of PT Japfa Tbk’s performance was the turnaround recorded by its broiler business, from an operating loss of US$5.3 million to an operating profit of US$18.1 million. Poultry feed remains a key driver of profitability across the Group’s animal protein business.
Animal Protein Other
In Vietnam, operating losses in 1Q2018 narrowed year-on-year to US$2.0 million from US$7.7 million in 1Q2017. The improvement in Vietnam’s profitability was due to (i) lower swine fattening costs as a result of the Group’s cost containment initiatives; (ii) lower costs for feed raw materials; and (iii) higher poultry ASPs. On a quarter-on-quarter basis, Vietnam’s swine prices picked up 11% in 1Q2018 but remained at levels below cost. Swine prices rose during the Tet festival in February 2018, and held steady even after the Tet holiday. In the near term, the curtailed demand following China’s import restrictions since 4Q2016 will continue to affect Vietnam’s swine market. Recovery in swine prices is expected when supply ultimately readjusts down to the new level of demand. The losses in Vietnam’s swine business were compensated by profitability generated by Vietnam’s poultry business, as well as continued profits from the feed businesses in Vietnam, Myanmar and India. As a result, APO reduced its overall Profit After Tax from negative US$6.5 million in 1Q2017 to negative US$1.6 million in 1Q2018. APO recorded a positive EBITDA of US$2.6 million in 1Q2018.
Despite pressure on raw milk prices, Dairy generated consistent profits, with higher milk yields and volumes. Revenue grew 20.2% to US$99.5 million, on growth in raw milk and ESL3 sales volumes in China and South-east Asia respectively. While overall operating profit increased 5.1% to US$19.3 million, operating margin dipped due to lower raw milk prices in China, as well as higher A&P costs in Indonesia as the Group launched a new range of Yogurt and UHT Small Packs – which are targeted to be one of the growth drivers for the Dairy business in Indonesia. Meanwhile, milk yields in China improved from 38.6Kg/head/day to 38.9Kg/head/day. Milkable cows in China increased 8.7% to a population of 42,010 heads as Farm 7 started fully milking in March 2018. Looking forward, the Group will continue to focus on improving milk yields and volumes in China to mitigate price fluctuations. In Indonesia, efforts will be channeled into brand building and widening its range of Greenfields dairy products to capture a larger target segment.
Food The operating landscape for Consumer Food remains challenging amidst heightened competition, particularly in the ambient food sector. In 1Q2018, due to lower sales volume and ASPs for ambient food (eg sausages) year-on-year, Consumer Food recorded an operating loss of US$1.4 million against a 3.1% decline in revenue. However, the Group has rolled out a few initiatives to address the competition. They include raising ASPs for frozen food, brand rejuvenation with a clearer packaging and brand positioning, and improving the taste and quality of “So Good” products. This strategy is beginning to bear fruits, evident from the breakeven EBITDA achieved in 1Q2018, as compared to a loss in 4Q2017. Sales volume of ambient temperature sausages also expanded on a quarter-on-quarter basis.
quote : http://infopub.sgx.com/FileOpen/Japfa%20Ltd%201Q2018%20Press%20Release.ashx?App=Announcement&FileID=502591
From TA point of view, it has a nice breakout of 56 cents on Friday + high volume and close well at 57 cents, this is super bullish!
Short term wise, it may likely move up to 60 cents then 63 cents with extension to 70 cents.
Not a call to buy or sell.
Please do your own due diligence.
Trade/invest base on your own decision.
Japfa Ltd is a leading agri-food producer focused on feeding emerging Asian markets. The Group produces protein staples such as chicken, beef and milk, as well as protein-based consumer food products. From its headquarters in Singapore, Japfa operates its businesses in the fast growing economies of Indonesia, China, India and Indo-China. Backed by two generations of farming experience, it operates industrial-scale farms which are vertically integrated with its downstream food processing operations
No comments:
Post a Comment