Brokers' take

Japfa Ltd | Buy (maintained) Dec 12 close: S$0.75 Target price: S$0.99 Maybank Kim Eng Research, Dec 12

Fuelled by the rebound in PT Japfa Tbk and animal protein other (APO) divisions, year-to-date FY18 has been far stronger than we expected. Upcoming Indonesian presidential elections, our forecast Indonesian rupiah appreciation and a softening in soybean meal should provide further tailwinds in coming quarters. Taking stock of various protein, dairy and commodity input prices, we raise FY18E/FY19E/FY20E core profit estimates by 23 per cent/9 per cent/9 per cent, and target price by 15 per cent to S$0.99.

Apart from usual average selling price swings, regulation change, raw material cost, disease and weather related risks inherent to agri businesses, the specific risks to our outlook lie in the consumer foods business posting higher than forecast losses, emerging Asia currency weakness versus USD and risk of illegal Chinese pork imports into Vietnam.