Japfa profits jumped six-fold to $67m in 3Q

Next year's earnings seen to grow by 16%.

Japfa's reported 3Q16 earnings came in at US$48.0m ($67)m, which is six times higher YoY and represents 8% rise QoQ.

 Excluding the impact of changes in fair value of biological assets and translation FX gains (losses), 3Q16 core earnings came in at US$42.0m (+51% y-o-y; -13% q-o-q) on annualised basis – given strong contribution from subsidiary Japfa Comfeed Indonesia (JPFA), notes DBS Group Research.

Taking this into account, the research house raised its ASP assumptions for Indonesian Feed, day-old-chick (DOC), and live broilers, and adjusted margins in cattle feedlot and consumer food higher.

"Our forecast on Dairy, which delivered 44% y-o-y growth in EBIT (-25% q-o-q due to seasonality) was unchanged," it said.

Based on its revised, forecasts, JAP’s EBITDA is projected to expand by 16% to US$464.8m next year (from US$399.8m this year) – driven by continued growth in all segments, said DBS Group Research.

"Over the next twelve months we expect resilient demand in Indonesian live broiler and DOCs, further improvements in Consumer Food products through new product launches, better productivity/raw milk price in Dairy segment, as well as lower borrowing costs – as we impute refinancing through new bond," it explained.