CPIN - Solid 1Q25 results, was above expectations

CPIN - Solid 1Q25 results, was above expectations Charoen Pokphand Indonesia’ (CPIN) earnings grew 116.2% yoy/15.9% qoq to IDR1.5 tn in 1Q25 due to higher chickens’ sales volume, lower SBM prices and stable LC prices, despite lower chicken (LB, DOC) ASP, yoy/qoq. As a result, CPIN' 1Q25 earnings came above ours (36.2%) and consensus' expectation (37.7%). CPIN' revenue grew 11.3% yoy but was flat quarterly (-0.3%) qoq to IDR17.7 tn in 1Q25 due to higher demand of chickens during Ramadan festivities, despite with lower chickens’ (DOC, LB) ASP. Note that, LB’ ASP declined 4.6% yoy/4.7% qoq to IDR19,220 per kg in 1Q25. While, DOC’ ASP declined 10% qoq but was up 7.9% yoy to IDR5,518 per chick in 1Q25. Thus, CPIN’ 1Q25 revenue came in-line with ours’ (23.8%) and cons’ (24.9%) expectation. CPIN' gross profit reached IDR3.13 tn (+47.2% yoy/-9.1% qoq) in 1Q25. CPIN' EBIT reached IDR2.04 tn (+95.1% yoy/-2.5% qoq) in 1Q25. Moreover, CPIN' income tax rate has returned to normal level at 22.9% in 1Q25 (vs 39.8% in 4Q24). All in all, CPIN' gross, EBIT and net margin expanded to 17.7% (+s430bps yoy), 11.5% (+490bps yoy) and 8.7% (+420bps yoy), respectively in 1Q25. (Source : Company, KBVS) Comments : Maintained our CPIN ‘25F revenue growth at 10.1% yoy due to higher sales volume on government free nutritious food program with improvements in LB’ and DOC’ ASP, despite our anticipation on softer chickens’ demand in 2Q25F and 3Q25F due to less festivities. We also maintained CPIN ‘25F gross profit and EBIT growth at 10.5% yoy and 12% yoy, respectively, despite the latest government’ reference price for LC. All in all, we still expect CPIN ‘25F earnings growth at 14.4% yoy with around 20bps yoy net margin expansion. Maintain BUY on CPIN with the same TP of IDR 6,075/share, which implies 23.5x ‘25F PE or slightly above -1stdev of its 5 years mean PE. Currently, CPIN is trading at 18.3x ‘25F P/E or slightly above its -2stdev of its 5 years’ mean P/E.