Japfa Ltd *Official* (SGX: UD2)

Perisher

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moi unrealised profit of 20% evaporated :(

woah... that must have hurt. Tiagong got profit guidance...
My recent profits from various counters also evaporated. :(
 
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Jupiter2017

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http://www.businesstimes.com.sg/companies-markets/japfa-q3-net-profit-down-94
Japfa Q3 net profit down 94%
THU, OCT 26, 2017 - 7:56 PM CAI HAOXIANG haoxiang@sph.com.sg

JAPFA Ltd, a Singapore-listed Indonesian agri-food firm, reported a 94 per cent drop in net profit to US$3 million for its third quarter ended Sept 30, 2017, from US$48 million a year ago.
Revenue rose 3 per cent to US$814 million from US$788 million a year ago.
Japfa sells milk, poultry and beef in Indonesia, and runs poultry and swine farms in Vietnam.
Despite a pick-up in swine prices, Vietnam operations continued to make losses as continued China import restrictions bit.
The dairy business made losses due to a fair value loss from lower market price of raw milk, heifers and calves.
Meanwhile, the core Indonesia business suffered a sharp drop in net profit as poultry and beef margins shrank.
Japfa last traded at S$0.62, up S$0.035 or 6 per cent, before the results were released.
 

Jupiter2017

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http://www.businesstimes.com.sg/com...maining-interest-in-dairy-business-for-us263m
Japfa to acquire remaining interest in dairy business for US$263m
THU, DEC 21, 2017 - 10:46 PM STEPHANIE LUO stephluo@sph.com.sg

MAINBOARD-LISTED Japfa Ltd is intending to acquire the remaining interest in its dairy business through the purchase of the outstanding shares in AustAsia from Black River Funds, which is managed by Proterra Investment Partners LP.
AustAsia consists of the company's two principal subsidiaries - AustAsia Investment Holdings Pte Ltd (AIH) and AIH2 Pte Ltd - that own the group's dairy business comprising dairy farms in China and Indonesia, as well as its Greenfields milk downstream business.
In a Singapore Exchange filing on Thursday, Japfa said that it currently holds a 61.9 per cent and 64.4 per cent stake in AIH and AIH2 respectively, while Black River Funds owns the remaining interest.
Under the proposed acquisition, the company will acquire Black River Funds' 38.1 per cent stake in AIH and 35.6 per cent stake in AIH2 for an aggregate consideration of US$263.1 million, comprising call option shares of US$19.6 million (based on the cost of investment of Black River Funds) and sale shares of US$243.5 million, which took into account AustAsia's earnings and dairy industry earnings multiples.
The acquisition will be funded by bank borrowings.
Japfa said that the acquisition will bolster the group's overall profile.
"Gaining full control over its dairy business, which has been a strong engine of growth, will enable the group to align AustAsia's objectives with its long-term strategic goal of becoming a fully integrated milk and food player in emerging markets.
"With its upstream milk business substantially in place, the group will now focus on strengthening its downstream capabilities," it said.
For the proposed deal, the company will seek shareholders' approval at an extraordinary general meeting to be held on or around Apr 12, 2018, following the conclusion of the company's annual general meeting.
Japfa closed one Singapore cent higher at S$0.485 on Thursday.

Price link: http://www.shareinvestor.com/fundamental/factsheet.html?counter=UD2.SI
 

tulipcrane

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Wondering what the sudden sell off today... Its was doing quite well last few days.

Silver lining and can feel that its business going up AND USD too.. Its has good supply chain., aint it?
 

Paul Lee

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Rights issue for JAPFA at $0.50 per rights share, any advice ?

The decision on whether to take up a right issue is the same as to why you buy the share in the first place?

Are those decisions still valid? Are the fundamentals still strong? Would you buy the shares at the current price?

Lastly, why are they raising funds and what they are doing with the money raised? Is it to expand the business or is it to par down debts?

Answer those questions and the decision should be self-evident.

Of cos, if you buy the shares based on heresy rumours and unsubstantiated claims, then you are on your own. :s13:

(Not vested)
 

Shion

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Japfa to sell 25% stake in China dairy farming business to Meiji for $360 mil in strategic partnersh

Japfa to sell 25% stake in China dairy farming business to Meiji for $360 mil in strategic partnership

https://www.theedgesingapore.com/ne...-business-meiji-360-mil-strategic-partnership

SINGAPORE (Apr 15): Agri-food company Japfa has agreed to sell a 25% stake in wholly-owned subsidiary AustAsia Investment Holdings to Japanese dairy giant Meiji for US$254.4 million ($359.9 million).

Following the completion of the transaction, Japfa will own a 75% stake in AustAsia, which operates the group’s dairy farming business in China.

The group says the move is expected to strengthen its position as a raw milk producer in the growing Chinese dairy industry.

It will also open doors for Meiji’s expansion plans in the Middle Kingdom.

“We have been supplying raw milk to Meiji for many years and we are pleased that they have approached us to support their growth plans in China and reinforce our strategic relationship,” says Japfa CEO Tan Yong Nang.

“This strategic and synergistic partnership will secure the supply of quality raw milk for Meiji’s downstream operations and provide a stable revenue stream for Japfa, enabling us to build AustAsia to become the largest independent raw milk producer in China,” he adds.

Japfa intends to use the proceeds from the sale of the stake for the repayment of its US$253 million term loan.

Amid the uncertainty of the Covid-19 outbreak, this is seen as a move to improve the group’s consolidated leverage ratio and strengthen its balance sheet to weather the storm ahead.

So far, however, Japfa says its day-to-day operations have not been materially impacted by the outbreak.

Credit Suisse (Singapore) is the exclusive financial advisor to Japfa for this transaction.

Japfa had requested for a trading halt before market open on Wednesday. Shares in the counter last closed at 51 cents.
 

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Analysts bullish about Japfa-Meiji partnership in China

Analysts bullish about Japfa-Meiji partnership in China

https://www.theedgesingapore.com/ca...s-bullish-about-japfa-meiji-partnership-china

SINGAPORE (Apr 16): Analysts are bullish about Japfa’s impending strategic partnership with Meiji Co in its China dairy business. The move will likely stabilise the agri-food company’s revenue stream and help the firm refinance loans it took out to consolidate its China operations in 2017.

JAPFA announced that it will sell 25% of its share capital in AustAsia Investment Holdings -- which operates Japfa’s dairy farming business in China -- to Meiji, a leading Japanese dairy company, for a total cash consideration of US$254.4 million ($363.4 million).

Meiji is a well-recognised global brand in milk, yogurt and cheese categories. The sale of Meiji’s branded products in China is outpacing domestic dairy market expansion, as these products meet Chinese consumers’ expectations for food safety and security.

Japfa intends to use the entire profits of this transaction to finance a US$253 million term loan it took out in 2017 to strengthen its holdings in AustAsia. The partnership will enable it to strengthen its balance sheet amid cash flow pressure from the Covid-19 pandemic. UOB Kay Hian Research believes that JAPFA will be able to reduce its net gearing ratio from 111% to 84% for 2020.

Singapore-based Japfa will also sign an annually-renewable contract to supply Meiji with raw milk on a 5-year rolling basis. Meiji currently accounts for 5-10% of its present raw milk sales and Japfa eventually hopes to increase this to around 15-20%.

“This strategic and synergistic partnership will secure the supply of quality raw milk for Meiji’s downstream operations and provide a stable revenue stream forJapfa, enabling us to build AustAsia to become the largest independent raw milk producer in China,” said Japfa CEO Tan Yong Nang.

“We see this transaction as a favourable move for Japfa Ltd, with the entry of a credible strategic investor coupled with [a] supply contract. This would provide more certainty on the demand for its raw milk and future expansion, and at the same time enable the Group to leverage on Meiji’s growth in China,” agreed DBS Group Research analyst Andy Sim.

Japfa’s reduced stake in AustAsia has seen some analysts predict lower core earnings and earnings per share (EPS). DBS anticipates an approximately 5% loss in EPS while Kay Hian also reduced its net profit forecast for Japfa by 9% due to Japfa’s 25% divestment. The analyst also forecasts a further 4% reduction on the back of a fall in poultry prices in Indonesia in the wake of Covid-19.

CGS-CIMB Research’s Cezzane See, however, is more optimistic about the firm’s prospects, noting that Vietnam swine prices remained high in 1Q20 at around VND70-80/kg and that JAPFA’s dairy business has faced minimal disruption in the previous months.

DBS' Sim moreover believes that poultry price shocks in Indonesia are temporary and that the staple profile of Japfa’s products will ensure that its earnings will remain resilient despite the ongoing pandemic.

Analysts identified better operating metrics and prices for Indonesia poultry, China dairy and Vietnamese swine in addition to rupiah strengthening as potential upside trends for this counter. Prominent downside risks include scarcity of animal feed, potential animal disease outbreak and a demand-supply demand for key proteins.

Nonetheless, all three research houses consulted have issued “buy” or “add” calls on Japfa.

DBS has a target price of 84 cents on the counter, while UOB and CGS-CIMB have target prices at 90 cents and 95 cents, respectively.

As of 3pm, shares in Japfa are trading 4.5 cents higher, or up 8.8%, at 55.5 cents.
 

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Japfa scales up to feed emerging Asia

Japfa scales up to feed emerging Asia

https://www.straitstimes.com/business/companies-markets/japfa-scales-up-to-feed-emerging-asia

What drives Japfa chief executive Tan Yong Nang out of bed every morning is the awareness that he is contributing - one way or another - to the fight against hunger and malnutrition in Asia.

A report by United Nations agencies last year found that more than 20 per cent of the region's population - estimated at 3.5 billion - is grappling with moderate or severe lack of access to food.

"Japfa has a mission to feed emerging Asia," Mr Tan said. "With China, India, Myanmar, Indonesia and Vietnam accounting for more than 40 per cent of the global population, I'm glad to be able to contribute to the well-being of consumers, and play a small part in the efforts to end regional hunger."

As a leading, pan-Asian industrialised agri-food company, Japfa provides consumers with safe and affordable animal proteins, ranging from poultry and beef to pork, aquaculture and dairy products.

Headquartered in Singapore, it employs more than 40,000 people across a network of modern farming, processing and distribution facilities in Indonesia, Vietnam, Myanmar, India and China.

Prior to its listing on the Singapore Exchange in August 2014, Japfa was a poultry-focused, Indonesia-centric business.

"Our ambition then was to further expand and strengthen a business that already spanned multiple markets and pillars, offering a range of animal proteins," said Mr Tan.

Since its listing, Japfa has leveraged its diversification strategy by replicating its vertically integrated business model, which spans animal feed production and breeding farms in the upstream industry, milking and fattening farms in the mid-stream segment, as well as processing and distribution operations, which constitute the downstream sector.

The group's first pillar is poultry in Indonesia, where it maintains a leadership position through its listed subsidiary, Japfa Comfeed Indonesia, one of the two largest producers of poultry in the country with a robust market share and economies of scale.

The second core pillar is its dairy operations in China, where Japfa is one of the leading producers of premium raw milk.

This April, Meiji agreed to buy 25 per cent of Japfa subsidiary AustAsia Investment for US$254.4 million (S$353.4 million) in cash, further cementing Japfa's position as an independent raw milk producer in China.

The group's third pillar is its swine business in Vietnam.

Japfa has poultry operations in Vietnam, India and Myanmar, as well as aquaculture and beef operations in Indonesia. It leverages on its quality raw materials to produce premium, mass-market dairy products under its Greenfields brand sold in markets across Asia, including Singapore, as well as packaged foods under its So Good brand, available in Indonesia.

However, the agri-food business will inevitably be subject to cycles, which in turn will affect sales and profits. These cycles are determined by factors such as seasonality, government policies and macroeconomic drivers, which affect consumer spending.

"Our diversification across five proteins and five countries cushions us against cyclicality in any one market or protein group," Mr Tan said.

And given the growing affluence of Japfa's target middle-and lower-income consumer groups, it expects animal protein consumption to continue climbing. The region's poultry output surged 56 per cent over the last decade to 9.2 million tonnes in 2018, and is forecast to reach 12.3 million tonnes by 2028. Likewise, pork production grew 23 per cent between 2009 and 2018, and is projected to rise another 21 per cent by 2028.

China's per capita milk consumption doubled to 36kg in 2018 from 18kg in 2007, but it still stands at less than one-third the global average. The country's per capita dairy intake will continue to rise, particularly in third-and fourth-tier cities, USDA-Economic Research Service data showed.

Looking back on his 13 years within the group, with the last six as CEO, Mr Tan gets a sense of satisfaction from witnessing Japfa's steady growth and the group's ability to navigate choppy waters.

"Since our IPO (initial public offering), revenues have expanded by nearly a third to US$3.9 billion, while our Ebitda has nearly doubled to almost US$500 million," he pointed out, referring to earnings before interest, tax, depreciation and amortisation.

Nevertheless, one challenge the 59-year-old is keeping a close eye on is none other than Covid-19.

"As Japfa provides an essential service by supplying staple proteins, largely to the domestic markets in which they are produced, our day-to-day operations have not, thus far, been materially impacted by the lockdowns," Mr Tan noted.

In particular, Japfa has seen a recovery in demand for raw milk in China. "With the general shortage of raw milk in the country, and as an independent raw milk producer, we're poised to benefit," he added.

In Vietnam, pork demand remains relatively stable. However, the situation in Indonesia remains fluid - the country's partial lockdowns have reduced consumer spending and impacted poultry demand, leading to a continued decline in broiler prices.

"As this pandemic is an unprecedented event, the ultimate impact cannot be estimated with any certainty. Against this backdrop, we're focused on reducing costs and remaining efficient, as well as adjusting our investments and deploying our resources appropriately," Mr Tan added.
 

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Japfa completes China dairy unit stake sale to Meiji for US$254.4m

Japfa completes China dairy unit stake sale to Meiji for US$254.4m

https://www.businesstimes.com.sg/co...na-dairy-unit-stake-sale-to-meiji-for-us2544m

AGRI-FOOD company Japfa on Friday closed the sale of a 25 per cent stake in AustAsia Investment Holdings, which operates the group's dairy farming business in China, to Japan's Meiji.

As part of the agreement, Japfa will continue to manage the farming operations in China, which will supply raw milk to Meiji under a five-year rolling contract, renewable annually.

Japfa has received US$254.4 million in total cash consideration, and used that to pay down its US$253 million syndicated loan. The repayment of the term loan will thus improve the group's consolidated leverage ratio and strengthen its balance sheet, it said.

The completion of the deal follows approval granted by shareholders and the satisfaction of conditions precedent, the mainboard-listed company announced in a bourse filing last Friday.

Japfa continues to own a 75 per cent stake in AustAsia, one of the leading independent producers of premium raw milk.

Japfa already supplies raw milk to Meiji for its downstream operations in China, where Meiji is active in the milk and yogurt business as well as the ice cream and confectionery business.

Tan Yong Nang, Japfa chief executive, said the Japanese group's strategic partnership with the Singapore firm combines Japfa's expertise in dairy farming and raw milk production with Meiji's processing operations and well-recognised brand in dairy products.

"This strategic partnership also enables us to build AustAsia to become the largest independent raw milk producer in China and creates value for shareholders," he added.

Japfa shares fell one Singapore cent or 1.5 per cent to close at 66.5 cents on Friday, before the announcement.
 

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Higher swine and milk prices to help Japfa mitigate weak poultry business

Higher swine and milk prices to help Japfa mitigate weak poultry business

https://www.theedgesingapore.com/ca...ces-help-japfa-mitigate-weak-poultry-business

CGS-CIMB Research is keeping its “add” recommendation on Japfa with a target price of 96 cents.

In Vietnam, swine prices rose to an average of VND80,000 ($4.68) per kilogram in July-August, up more than 100% y-o-y. This, according to analyst Cezzane See, implies a still-strong 3Q2020, with the Animal Protein Other (APO) segment EBIT having already posted an earnings turnaround in 2Q2020, from a loss in 2Q2019.

Meanwhile, raw milk prices in China for 3Q2020 stood at RMB3.7 (75 Singapore cents) per kilogram as at Sept 23, up about 3.9% q-o-q and 2.3% y-o-y, lending a positive bias to Japfa’s dairy segment, whose EBIT had already increased by some 21% y-o-y to US$19.6 million in 2QFY2020, compared to US$16.2 million in 2QFY2019.

However, Japfa says that its average 3QFY2020 day-old chick (DOC) prices fell by about 20% to approximately IDR3,300 (30 Singapore cents), while average 3QFY2020 broiler prices were down to IDR14,600, 13% lower y-o-y.

“Our Indonesia team believes weak disposable income in Indonesia due to the ongoing impact of Covid-19 could cap the demand recovery for Indo poultry in 2H20F; moreover the oversupply issue within the broiler industry still exists. We foresee 3QFY2020 and 2HFY2020 prospects remaining weak for this segment,” says See.

On the back of these, the analyst expects Japfa to report a 3QFY2020 EBIT of about US$62 million ($84.1 million), representing a 28% y-oy- increase, led by strong earnings from its APO and dairy segments. Core net profit is also expected to grow by 123.0% y-o-y to US$26.3 million, with the benefits of the higher EBIT being further upheld by lower effective taxes and MI (Indo poultry carries the most leakage).

As at 4.15pm, shares in Japfa are trading 2.3% higher at 66 cents or 0.9 times FY20 book with a dividend yield of 5.7%.
 

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Japfa to sell 80% of Greenfields Dairy Singapore for $315m to TPG, Northstar

Japfa to sell 80% of Greenfields Dairy Singapore for $315m to TPG, Northstar

https://www.straitstimes.com/busine...lds-dairy-singapore-for-315m-to-tpg-northstar

SINGAPORE (THE BUSINESS TIMES) - Agri-food company Japfa will sell 80 per cent of its South-east Asia-branded dairy business to affiliates of investment firms TPG and Northstar Group for US$236 million (S$315 million) in a strategic partnership, it said in an exchange filing on Monday (Dec 7).

Japfa will retain 20 per cent of the shareholding in Greenfields Dairy Singapore (GDS), which is the holding company of Japfa's Greenfields dairy business. Japfa will continue to support TPG and Northstar in the management of the business.

Based on the consideration, the implied equity valuation of the GDS group is US$295 million, which is around four times the net asset value of US$81.3 million as at Sept 30, 2020.

Japfa expects to receive approximately US$244 million in cash following the proposed transaction, comprising cash proceeds of US$236 million from the transaction, and US$8 million from the repayment of a shareholder loan by GDS.

Japfa intends to utilise approximately US$150 million from the proceeds to declare and pay an interim special dividend of 10 cents per share to its shareholders following completion. It said further details on the dividend, if declared, will be announced only after completion.

The balance will be used for the payment of transaction expenses, the repayment of existing bank loans, and general working capital and corporate purposes.

The Greenfields dairy business is a vertically integrated business from dairy farming to branded dairy products in South-east Asia. GDS has subsidiaries in Indonesia, Malaysia and Hong Kong.

With a herd size of over 16,000 Holstein and Jersey cattle, Japfa's dairy farm operations are the largest in Indonesia by volume of premium fresh milk produced. It sells a range of dairy products including fresh milk, yogurts, UHT milk and premium cheeses under the Greenfields brand.

"The group's dairy business has grown considerably in recent years both in China and South-east Asia and there is potential for further growth," said Tan Yong Nang, chief executive officer of Japfa.

"We are pleased to form this strategic partnership with TPG and Northstar to accelerate the next phase of development in South-east Asia through their strong track record of developing consumer and retail businesses," he added.

With the proposed transaction, Japfa's senior management will be able to focus on its "fast expanding" China dairy business, as well as its other two core business pillars, namely poultry in Indonesia and swine in Vietnam, Japfa said.

TPG is a global investment firm with around US$85 billion of assets under management. Northstar is a private equity firm in South-east Asia, headquartered in Singapore, that manages more than US$2.2 billion in committed equity capital.

"This is the third recent investment for TPG in the dairy sector and we are delighted to do another investment in Indonesia," said David Tan, managing director of TPG Capital Asia. "We strongly believe that the Greenfields brand and product quality will allow it to continue to grow in consumer appeal."

Sunata Tjiterosampurno, co-chief investment officer of the Northstar Group, said: "We believe the trend of increasing consumption of dairy products will continue in South-east Asia as people become ever more focused on health and wellness."

The proposed transaction is conditional upon shareholder approval, and consent of existing bank lenders. Completion is expected to take place in February next year.

Credit Suisse (Singapore) is the exclusive financial adviser to Japfa Ltd for the transaction.

Shares of Japfa were trading at 80.5 cents as at 9.13am on Monday, up 3.5 cents or 4.6 per cent.
 

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Japfa net profits up 36.9% amidst pandemic, swine flu​


https://sbr.com.sg/agribusiness/news/japfa-net-profits-369-amidst-pandemic-swine-flu
Japfa's net profits were up 36.9% to US$35.5m.

Regional agri-food company Japfa recorded a 36.9% increase in its first quarter net profit, at US$35.5m with strong results from all segments.

This is despite the ongoing COVID-19 pandemic, and African Swine Fever affecting some of its markets.

PT Japfa Tbk, its Indonesia-based poultry arm, has also been affected by movement restrictions due to COVID-19. Still, revenue increased by 15.2%, as the government's culling intiatives balanced poultry demand and supply.

Its swine operations in Vietnam continued to deliver strong results, with a 24.7% increase in revenue, due to higher swine fattening sales volumes. The company, through strict biosecurity protocols, was eble to contain the adverse effects of African Swine Fever and replenish its stock faster than most of its competitors.

Its feeds segment in Mayanmar saw an operating loss due to recent political disruptions in the nation, while its feeds segment in India broke even despite the surging pandemic.

Dairy saw a 6.9% increase in revenue due to higher sales volumes in both the dairy and beef business.

During the quarter, PT Japfa Tbk placed a US$350m senior fixed rate sustainability linked bond (SLB) with a 5.375% coupon maturing in 2026. This was over 3 times oversubscribed.

"In 1Q2021, we have also achieved an important milestone with the successful issue of the first-ever sustainability-linked bond in the agri-food industry in the world. We are pleased with the positive response that our SLB received from the markets. The SLB is an additional catalyst to achieve our sustainability targets and an opportunity for our investors to partner with us towards a sustainable future," said Japfa CEO Tan Yong Nang in a Singapore Exchange disclosure.
 

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Japfa sees 54.3% rise in 1H2021 earnings; expects stronger growth this year​


https://www.theedgesingapore.com/ca...-1h2021-earnings-expects-stronger-growth-year
Earnings of agri-food company Japfa was up 54.3% to US$118.5 million ($160.5 million) in 1HFY21 ended June, from US$76.8 million the year before thanks to stronger revenue growth.

This translates to earnings per share (EPS) of 5.82 US cents on a fully diluted basis, up 52% from the 3.82 US cents logged in 1HFY2020.

Revenue for the first six months of the year was up 23.5$ y-o-y to US$2,262.4 million following higher income across all its segments.

Revenue from the group’s animal protein segment – which is captured under its subsidiary PT Japfa Tbk – was up by 25.6% y-o-y to US$1,539.6 million due to higher sales volumes of feed, day-old-chick and broiler.

Operating profits from this segment correspondingly increased by 249.7% to US$183.8 million following more stable poultry prices in Indonesia after the government’s initiatives to balance demand and supply.

Similarly, the other animal protein segment was up by 26.0% y-o-y to US$459.6 million while its dairy division was up by 6.6% to US$260.7 million.

The growth in the animal protein segment was driven by higher sales volumes of swine fattening and swine feed in Vietnam.

However, the segment’s operating profit was down to US$35.4 million from US$47.4 million as a consequence of lower swine fattening prices in Vietnam compared to last year.

This comes as swine fattening prices were exceptionally high in 2020 due to the supply shortages caused by the African swine Fever. Higher pork supplies in Vietnam have helped to depress the prices.

Meanwhile the growth in the dairy division was in response to higher sales volumes and prices of raw milk and beef in China.

Operating profit this segment was up 14.1% to US$53.1 million as raw milk prices remained strong due to the supply shortages in China.

Touching on Japfa’s results, CEO Tan Yong Nang says the company has “In 1H2021, we delivered a strong set of results across all segments and the Rolling Core PATMI without Forex for the past 12 months ending 30 June 2021 reached again a new all-time high since IPO at US$223.2 million”.

“This performance reflects our ability to execute, as well as our diversification strategy, which has proved to be effective even in the current unpredictable Covid-19 environment,” he adds in the company’s results filing on July 29.

As at 30 June, Japfa’s cash and cash equivalents stood at US$231.0 million, down from US$289.7 million in the previous year.

No interim dividend has been recommended for the current financial period as the group is looking to conserve cash for its operations. The group notes that it’s practice is to recommend an annual dividend payout with its full-year results.

Going forward, Tan hopes to deliver stronger growth with the company’s recent acquisition of two dairy farms in Shandong, China.

With this, the company’s quality raw milk capacity will grow while reducing the expansion lead time that will be needed if they had built new farms from scratch.

Through this, Japfa intends to have a stronger presence in the Chinese dairy market, where the demand for quality and healthy dairy products is expected to increase. It is also keen to take advantage of the favourable raw milk price environment there amid to the current supply shortage in the market.

Aside from these, the expansion of the group’s swine farming capacity in Vietnam is also slated to bring more returns.

Shares in Japfa closed down a cent or 1.29% at 76.5 cents on July 29, before its results announcement.
 

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Japfa reports earnings of US$113.9 million down 12.4% y-o-y on higher costs​


https://www.theedgesingapore.com/ca...gs-us1139-million-down-124-y-o-y-higher-costs
Japfa, a leading regional food producer, has reported a 22.2% y-o-y jump in revenue to US$3.4 billion for the nine months ended Sept 30.

However, due to higher raw material cost for feed and lower selling prices due to the pandemic, the company’s earnings for the period was down 12.4% y-o-y to US$113.9 million.

Besides its base in Indonesia, Japfa rears chickens, pigs and cows for milk in markets such as China, Vietnam and Myanmar.

“The diversification of our revenue and profit streams, coupled with the relentless focus of our local teams, continues to be a strength for our Group,” says CEO Tan Yong Nang.

“Meanwhile, we have continued our plan to grow our dairy segment, AustAsia, into the largest independent raw milk producer in China, by forging new strategic partnerships with growing food and beverage Chinese companies as shareholders of AustAsia,” says Tan, referring to a string of deals involving its milk producing subsidiary in China.

Japfa warns that with the “unpredictability” surrounding the pandemic, demand could dampen “in any market at any time”.

“We believe that we are well placed to manage the situation, on the strength of our large scale, industrialised business model and our diversification strategy across proteins and markets,” the company adds.

Japfa shares closed Oct 28 at 70 cents, down 2.11% for the day and 24.46% year to date.
 

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DBS remains neutral on Japfa as it expects its near-term outlook to remain subdued​


https://www.theedgesingapore.com/ca...-expects-its-near-term-outlook-remain-subdued
DBS Group Research analyst Cheria Christi Widjaja has kept “hold” on Japfa as she sees the group’s near-term outlook to remain subdued due to the limited room for margin improvements in FY2022.

“We foresee cost pressure lingering in 2022, as raw material and logistics costs stay elevated,” says Widjaja. This is in light of the recent Russia-Ukraine crisis, which has impacted a variety of commodity prices such that materials including soybean meal and corn skyrocketed recently. The analyst notes how this stands to limit margin improvements from demand recovery amid gradual reopening.

Moreover, in light of the resurgence of the African Swine Flu (ASF) outbreak, the analyst believes that there is a weak near-term outlook for Japfa’s Vietnam swine operation. This is compounded by existing Covid-19 movement restrictions that influenced softer swine prices.

However, Widjaja remains positive on certain aspects of Japfa’s business, such as strong broiler prices in Indonesia with the upcoming Ramadhan season and favourable raw milk prices in China.

Some risks include a surge in Covid-19 infections, higher-than-expected raw material costs, weaker-than-expected consumer demand, and greater or continued outbreak of diseases that would lead to price volatility.

In her report dated March 24, Widjaja has kept her target price unchanged at 67 cents, as she has kept her EBITDA forecasts for the FY2022/FY2023 the same following Japfa’s FY2021 results.

“We used a sum-of-the-parts valuation and pegged our valuation of Animal Protein Indonesia to our target price for Japfa Comfeed Indonesia (JPFA) at 2,060 rupiah (19.46 cents), while valuations of its Animal Protein Others and Dairy segments are based on FY2022 EV/EBITDA,” she writes.

“Our target price implies a 7.9x FY2022 P/E. Japfa currently trades at an FY2022 EV/EBITDA of 5x and an FY2022 P/E of 7x, which is lower compared to the average of its regional peers in the animal protein and dairy sector, which is at an FY2022 EV/EBITDA of 10x and an FY2022 P/E of 14x,” she continues.

As at 11.19am, shares in Japfa are trading at 1.5 cents up or 2.36% higher at 65 cents at an FY2022 P/B of 0.6x and dividend yield of 1.6%.
 
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