Charoen Pokphand Indonesia (CPIN IJ): Initiate at BUY - The Right Cycle to be OVERWEIGHT
(Henry Wibowo - RHB Sekuritas)
click on link for full report
https://research.rhbtradesmart.com/attachments/22/rhb-report-ind_charoen-pokphand-indonesia_initiating-coverage_20180723_rhb-a-695207011179201645b552d033ca45.pdf
Initiate coverage with BUY and IDR5,000 TP, offering 28% upside (with c.2% yield). Our bullish stance is premised on:
♦CPIN being a market leader (feed, DOC, live bird, processed chicken) with 30-50% industry market share;
♦Large beneficiary of recent “undersupply” chicken market situation, translating to resilient selling prices and superior margin;
♦Highest ROE profile (21%) among peers, thanks to high-margin processed food business.
2018F EPS is 9% above consensus (upgrade should be likely in near- term). Valuation is undemanding at 15x FY19F P/E, with 45% EPS growth.
CPIN is up 33% YTD, outperforming JAKCONS -16%, JCI -8% We believe outperformance will continue in 2H18.
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