Charoen Pokphand Indonesia Tbk PT: Broiler Takes Wing
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- Upgrade to BUY, TP IDR5,900; higher broiler contribution in 9M25 helped beat our earnings forecast
- Largest broiler production in the nation at~40%, backed by partnership with PT. BISI to supply corn through plasma farmers
- Favourable broiler price from tighter supply, balanced mix of input cost, and free meal programme as demand cushion
- FY25/26F earnings raised by 32%/34% to IDR4.2tn/4.5tn on better broiler ASP and improved margin
As the largest poultry player in Indonesia, CPIN controls approximately 40% of domestic broiler production, allowing the company greater access to domestic GPS quotas and stronger control over broiler supply. The recent broiler price rally – from ~IDR15.4k to IDR22.8k at the farmgate level – has significantly boosted earnings, with CPIN already reaching our FY25 earnings target of IDR3.2tn within 9M25. The company outperformed both our and the market’s expectations, mainly driven by 1) favourable market conditions, supported by strong broiler and DOC prices; and 2) stable feed margins despite higher input costs. Previously, we maintained a HOLD call on CPIN due to its lower exposure to the broiler segment; however, this time the narrative has changed, as 3Q25 results reveal broiler contribution has surpassed feed.
We view CPIN’s feed segment as a stable cash-cow, providing sustainable margins from time to time. Compared to peers such as JPFA, CPIN feed holds the higher contribution <65% (EBIT). However, in the recent broiler price rally, CPIN managed its strategy to improve its broiler exposure while maintaining stable feed margin. We learned that this was doable for CPIN due to its 1) size advantage in both feed and broiler, enabling it to pass on raw material price increases to customers, partially protecting margins; and 2) its strategic partnership with plasma farmers, directly buying harvested corn, with PT BISI International Tbk helping CPIN secure ~367k tonnes of corn in FY24, helping stabilise corn supply and translating to leaner operations and a lower broiler production ratio at 0.94x of market selling price in FY25.
Maintain broiler outlook entering FY26. We expect broiler prices to sustain at least until FY26, supported by a lower GP import quota of 530k (-16% y/y) in 2024 that will fully materialise in FY25, becoming one of the key drivers behind the recent price hike. In addition, we may see a potential government culling programme in 2026 to manage supply, as the FY25 GPS quota is set to reach 550k (+4% y/y). We are also positive on the impact of the government’s free nutritious meal program, as we believe it will expand demand for poultry meat going forward. With two to three chicken servings in a five-day meal plan, our ground check estimates a potential +5.21-7.68% increase in demand for FY25-FY26 chicken consumption. As CPIN holds ~40% of domestic broiler production and ~49% market share in the downstream market (e.g., Fiesta Chicken Nugget & Primafresh stores), we view it as one of the key beneficiaries of the programme going forward.
A strong quarter performance from broiler triggered an earnings revision. We revised our earnings forecast by +32%/34% to IDR4.2tn/IDR4.5tn, mainly driven by stronger performance in the broiler segment. Our revised forecast is in line with the consensus, which remains bullish in the poultry sector, projecting IDR4tn/IDR4.42tn for FY25/FY26. CPIN booked IDR1.46tn in net profit in 3Q25 alone, +71% q/q, mainly supported by margin recovery across all segments – particularly the broiler segment and stable feed performance. With current broiler prices hovering around IDR20-22k, and assuming feed margins remain stable, we expect the broiler segment alone to contribute IDR2.4tn in FY25 (from IDR541bn in previous assumptions). We also assume lower feed and DOC ASP, which would widen broiler margins, resulting in feed segment EBIT of IDR3.7tn in FY25 and DOC EBIT of IDR139bn (from IDR3.5tn and IDR339bn in previous assumptions, respectively).
We forecast earnings to remain strong in 2026, supported by lower GP import quotas that boost broiler prices, potential government culling programmes, and sustained demand from the expanding free-meal initiative. We expect higher earnings in 2025, following CPIN’s stronger-than-expected performance driven by wider margins and a favourable broiler market environment. We believe CPIN’s performance will remain solid in 4Q25.
Free meal contribution to total demand (2025)
Total SPPG (Kitchen) - As of October 2025, | 11,577 |
SPPG Recipients Capacity | 3,000 |
Utilization Rate (%) | 90% |
Real Recipients/SPPG | 2,700 |
Total Potential Recipients | 31,257,900 |
Budget per Meal (IDR) | 10,000 |
Total Meal Budget per Day (IDR) | 312,579,000,000 |
Chicken Demand Proxy | |
Number of School Days | 22 |
No of Chicken in a Meal (3 Times/Week) | 0.6 |
Chicken Portion (Gram) | 60 |
Monthly Chicken Absorption/tonne | 24.76 |
2025 Projected Chicken Consumption (Tonne) | 3,870 |
FY25 Projected MBG Chicken Consumption (Tonne) | 297 |
MBG Contribution to total consumption (%) | 7.68% |
Source: Badan Gizi Nasional, DBSVI Estimates
We upgrade our call to BUY with a TP of IDR5,900, leveraging strong broiler momentum. We upgrade our call for CPIN to BUY, driven by its strong 3Q25 earnings, which are expected to sustain in 4Q25 and 2026, supported by a stronger broiler segment contribution of 22%. We revise up our earnings by 32%/34% for FY25/26F to IDR4.24tn/IDR4.52tn, based on a higher broiler price assumption of IDR20,000/kg (from IDR19,000/kg). With CPIN’s size advantage in securing corn supply, we view the company as capable of maintaining stable feed margins despite raising corn prices to IDR5,600/kg, while strategically lowered ASP to enhance broiler segment margins. We also forecast a lower feed segment contribution of 64.3% (from 68.7% in FY24) and a higher broiler contribution of 40.9% (from 35.1% in FY24).
CPIN DCF Valuation Table
DCF Valuation |
|
Sum of PV of FCF (IDR bn) | 25,398 |
Terminal Value (IDR bn) | 113,115 |
PV of Terminal Value (IDR bn) | 73,514 |
| |
Enterprise Value (IDR bn) | 98,912 |
Add: Net Cash (Debt) | (2,881) |
Equity Value (IDR bn) | 96,032 |
| |
Share Outstanding (mn shares) | 16.398 |
TP (IDR) | 5,900 |
Source: DBSVI Estimates
Valuation: Our TP assumption is IDR5,900, based on a five-year DCF valuation, implying a 5% terminal growth and 9% WACC. We upgrade our call to BUY with a TP of IDR5,900, implying a 21.4x FY26 P/E. We acknowledge that CPIN trades at a premium compared to peers such as JPFA, which trades at around 10-12x P/E. However, our historical data shows that CPIN has consistently maintained an average 145% P/E multiple premium over JPFA in the past 10 years. Our current TP, implying a 21.4x FY26 P/E, offers a compelling safety margin as it translates to an 82% premium to our JPFA FY26 target at 12.5x P/E. At this valuation, our TP of IDR5,900 is still below its five-year historical mean at 26.3x P/E.
Quarterly / Interim Income Statement (IDRbn)
FY Dec | 3Q2024 | 2Q2025 | 3Q2025 | % chg y/y | % chg q/q |
Revenue | 16,756 | 15,358 | 17,543 | 4.7 | 14.2 |
Cost of Goods Sold | (14,733) | (13,765) | (14,195) | (3.7) | 3.1 |
Gross Profit | 2,023 | 1,593 | 3,348 | 65.5 | 110.1 |
Other Oper. (Exp)/Inc | (1,089) | (1,135) | (1,218) | 11.9 | 7.3 |
Operating Profit | 934 | 458 | 2,130 | 127.9 | 365.4 |
Other Non Opg (Exp)/Inc | (198) | 112 | 199 | nm | 77.4 |
Associates & JV Inc | 0.0 | 0.0 | 0.0 | - | - |
Net Interest (Exp)/Inc | (174) | (103) | (123) | 29.4 | (19.4) |
Exceptional Gain/(Loss) | 0.0 | 0.0 | 0.0 | - | - |
Pre-tax Profit | 562 | 467 | 2,206 | 292.4 | 372.4 |
Tax | 55.7 | (100) | (742) | nm | 639.9 |
Minority Interest | 0.30 | 0.0 | 1.40 | 323.3 | nm |
Net Profit | 618 | 367 | 1,465 | 137.0 | 299.6 |
Net profit bef Except. | 618 | 367 | 1,465 | 137.0 | 299.6 |
EBITDA | 1,270 | 765 | 2,481 | 95.4 | 224.4 |
Margins (%) |
|
|
|
|
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Gross Margins | 12.1 | 10.4 | 19.1 |
|
|
Opg Profit Margins | 5.6 | 3.0 | 12.1 |
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Net Profit Margins | 3.7 | 2.4 | 8.4 |
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Source: Company, DBSVI
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