Japfa Comfeed Indonesia: Ruling the Roost: Chicken Demand On the Rise
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- Japfa Comfeed Indonesia: Broiler price spike fuels a chicken run17 Oct 2025
- Elevated IDR335tn budget for Free Nutritious Programme in FY26 to be a demand multiplier for poultry consumption
- Free-meal demand supported by BPI Danantara’s IDR20tn feed factory funding, strengthening supply and programme assurance
- Poultry to remain a favourable protein option, supported through free-meal programme in FY26
- Maintain BUY with a higher TP of IDR3,600, materialising on a higher chicken consumption
Broiler prices sustained by government-led demand uplift. Broiler prices rebounded and remained firm above IDR20k/kg at the farm level since the post-Lebaran trough earlier this year. November 2025 marked the third consecutive month of elevated prices above this level, driving a 3Q25 earnings surprise to IDR1.1tn (+111.3% q/q, +91% y/y). We flag the broiler price upcycle and the accelerated rollout of the Free Nutritious Program as key upside surprises. Despite tighter GP import quotas materialising in 2H25 alongside higher feed input costs, we observe that the broiler price increase remains closely aligned with the expansion of the free-meal programme, reflected in the rise in SPPG units and total beneficiaries from September to December 2025.
Budget absorption reached IDR53tn, equivalent to 74.5% of the FY25 free-meal programme as of December, marking a sharp acceleration from the August low of IDR10.5tn. We expect the government’s push to expedite programme activation to carry into FY26. Under the new IDR335tn budget, our estimates suggest the addition of >10k SPPG kitchens, assuming a similar cost per kitchen as the prior allocation. Moreover, the programme is targeted to reach 82.9mn beneficiaries by Feb ‘26, nearly doubling from ~41mn in FY25, which we believe will act as a key stabilising factor for broiler prices going forward.
A brighter outlook for the poultry industry. We see the continued rollout of the free-meal programme, a controlled increase in GP import quotas, and government support for the poultry sector via Danantara positioning the industry as a key policy focus in FY26. On input costs, National Food Agency (NFA) forecasts FY26 corn production at 18mn tonnes (+11.7% y/y), driven by expanded planting areas and yield stabilising at 6.2%, which should help ease corn prices following their 4Q25 peak. Meanwhile, imported feed components – such as soybean meal and wheat – are expected to remain stable, supporting feed margin normalisation going forward.
On the flip side, Danantara, in collaboration with State-Owned Enterprises (PTPN and Berdikari), has announced its participation to support the Free-Meal Programme by safeguarding egg and poultry meat supply. The initiative includes investment in feed mill facilities across 13 regions, largely outside Java. While this could introduce incremental competition for integrated poultry players and marginally dilute feed market share, we expect near-term impact to be limited.
Despite a targeted investment start in January 2026, the lengthy process of land acquisition, feed mill construction, and certification may suggest that meaningful production is unlikely to materialise before 2028–2029.
Meanwhile, the National Food Agency (NFA) estimates that the free-meal programme will require ~1.1mn tonnes of additional broiler demand, equivalent to 28% of annual chicken consumption and 3.6x higher than our prior assumption of 297k tonnes. This incremental demand should benefit JPFA via higher feed and DOC sales, rather than dilute its market position. We also view Danantara’s investment in poultry as demand assurance for the free-meal programme, reinforcing poultry as the preferred protein choice.
Given that chicken production remains highly concentrated in Java, government initiatives are likely aimed at reducing DOC and broiler price volatility outside Java. Our channel checks with SPPG (kitchen) operators further confirm that poultry meat and eggs remain the dominant protein options, given their low cost (IDR2-3k per portion), compatible with the IDR10k meal price and with a lower allergen risk compared to seafood such as fish and shrimp.
EARNINGS ESTIMATE
Capturing low-hanging fruit. We revise our earnings forecasts upward by 8%/14% to IDR3.49tn/IDR3.99tn for FY25F/FY26F, driven by firm broiler prices and resilient domestic demand, supported by the free-meal programme. With 3Q25 net profit at IDR1.1tn, we expect 4Q25 to remain strong, underpinned by broiler prices consistently above IDR20k/kg, lifting FY25 earnings to IDR3.5tn (IDR3.2tn previously).
Entering FY26, we expect broiler prices to be less volatile, supported by higher consumption absorption from the free-meal programme. On the cost side, corn prices are expected to normalise post-harvest, helping sustain feed margins at ~7.4% in FY26. We factor in volume growth of +3% for feed and +1% for broilers in FY26, driven by a gradual increase in GP import quotas and improving demand, which should translate into earnings support for JPFA in FY26.
We maintain BUY with a higher TP of IDR3,600, following a shift in our valuation approach from P/E multiple to DCF to better capture JPFA’s more stable free cash flow profile and future earnings potential. Our five-year DCF assumes a 4.5% terminal growth rate and 11.6% WACC. The new TP implies a 10.5x FY26F P/E, which remains below +1SD of its five-year historical average P/E of 12.9x. This translates into a 26% upside from the current price of IDR2,850, supported by earnings visibility and sustained demand from the free-meal programme.
Quarterly / Interim Income Statement (IDR bn)
FY Dec | 3Q2024 | 2Q2025 | 3Q2025 | % chg y/y | % chg q/q |
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Revenue | 13,604 | 13,150 | 15,623 | 14.8 | 18.8 |
Cost of Goods Sold | (11,044) | (10,566) | (12,186) | 10.3 | 15.3 |
Gross Profit | 2,560 | 2,584 | 3,437 | 34.3 | 33.0 |
Other Oper. (Exp)/Inc | (1,452) | (1,602) | (1,655) | 14.0 | 3.3 |
Operating Profit | 1,108 | 982 | 1,782 | 60.8 | 81.5 |
Other Non Opg (Exp)/Inc | (63.4) | 15.7 | 11.1 | nm | (29.1) |
Associates & JV Inc | 0.0 | 0.0 | 0.0 | nm | nm |
Net Interest (Exp)/Inc | (196) | (194) | (193) | 1.4 | 0.4 |
Exceptional Gain/(Loss) | 0.0 | 0.0 | 0.0 | nm | nm |
Pre-tax Profit | 849 | 804 | 1,600 | 88.5 | 99.1 |
Tax | (194) | (196) | (329) | 69.3 | 67.9 |
Minority Interest | (39.0) | (52.0) | (96.3) | (146.6) | 85.1 |
Net Profit | 616 | 556 | 1,175 | 90.9 | 111.3 |
Net profit bef Except. | 616 | 556 | 1,175 | 90.9 | 111.3 |
EBITDA | 1,380 | 1,245 | 2,094 | 51.8 | 68.2 |
Margins (%) |
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Gross Margins | 18.8 | 19.6 | 22.0 |
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Opg Profit Margins | 8.1 | 7.5 | 11.4 |
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Net Profit Margins | 4.5 | 4.2 | 7.5 |
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Source: Company, DBSVI
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