Japfa - Better Clarity On The Path Ahead
- Japfa (SGX:UD2)'s 1Q22 net profit of US$22.7m was in line with our FY22F estimate but below consensus due to persistent cost pressure despite in-line revenue. APO shaved net losses of US$20.8m in 4Q21 to US$11.2m in 1Q22. EBITDA turned positive to US$8.3m in 1Q22 from losses of US$9.9m in 1Q21.
- With better market dynamics, Japfa's management has expressed its intention to resume expansion plans across the businesses. Correspondingly, we could see capex increase closer to pre-COVID levels (FY19: US$319m) from an average of ~US$200m over the past two years.
- We reiterate our ADD call with an SOP-based target price of S$0.81 for Japfa, with S$0.48 per share in value locked behind AustAsia Investment Holdings (AIH) based on precedent sale-of-stake transactions in FY21 and remaining S$0.33 valued at 6x FY23F P/E of its remaining Animal Protein-Others (APO) business, slightly less than 0.5 standard deviation below its historical average due to ongoing cost pressures.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
TAY Wee Kuang CGS-CIMB Research | https://www.cgs-cimb.com 2022-04-29 2022-04-29
Previous report by CGS-CIMB:
2022-03-31 Japfa - Application To List China Dairy Business
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