Publicly listed poultry company PT Japfa Comfeed Indonesia is gearing its business strategy toward overcoming the impacts of the COVID-19 pandemic on the economy.
In addition to working to improve the efficiency of its production and internal operations, it will also continue to focus on its core business, as it sees the low-level of animal protein consumption in Indonesia as an opportunity to improve its business performance, the company wrote in its 2019 annual report.
The company’s general shareholders meeting on Thursday also approved rights issue and share buyback plans.
“[The approval] gives the company the flexibility to move if the internal and equity market situations are favorable,” a statement from the company read.
In addition, Japfa is pursuing a hedging strategy in relation to its dollar-denominated bonds and, for the next two to three months, hedging foreign currency payment obligations in relation to raw material purchases for its animal feed production. Hedging is essentially a risk management strategy.
Japfa’s total liabilities soared more than 17 percent yoy in the first three months to Rp 16.09 trillion (US$1.13 billion). Its net assets value stood at Rp 27.64 trillion, increasing almost 10 percent annually.
The company said it would continue to educate its farmer partners on production quality enhancement and competitiveness skills as part of its business strategy. Throughout last year, Japfa also expanded its operational networks to increase proximity with its partners.
“To meet the market’s demands, both domestic and foreign, Japfa will continue to increase its productivity, including by developing our human resources so they progress and develop as the company grows,” Japfa vice president director Bambang Budi Hendarto said in a statement on Thursday.
Japfa is currently the country’s second biggest producer of animal feed and day-old-chicks (DOC). It booked Rp 9.08 trillion in net revenue during this year’s first quarter, an increase of 6 percent year-on-year (yoy). Its net profit, however, jumped more than 10 percent annually to Rp 343.88 billion.
The shareholders meeting also decided to disburse around Rp 234.53 billion in dividends to its shareholders, the company’s spokesperson told The Jakarta Post after the meeting concluded.
The dividends are equal to 13.29 percent of the company’s 2019 net profit of Rp 1.77 trillion. Its net profit last year was 22.82 percent less than the Rp 2.17 trillion it booked it 2018.
The company booked an 8 percent increase in net sales to Rp 36.74 trillion in 2019 from Rp 34.01 trillion a year earlier, driven by a rise in sales volume across the board despite a depressed sell prices of live birds.
“The biggest contribution came from the animal feed business segment,” Bambang said.
Throughout the past month, Japfa’s shares, traded on the Indonesia Stock Exchange (IDX) under the code JPFA, have rallied 41.11 percent. The stocks rose 0.79 percent to Rp 1,280 apiece as of 1:40 p.m. Jakarta time on Friday, as the main gauge, the Jakarta Composite Index (JCI), climbed 0.5 percent.
“To anticipate any worsening in the economy given the prolonged COVID-19 outbreak in Indonesia, the management froze non-essential new capex,” Mirae Asset Sekuritas Indonesia analyst Emma A Fauni wrote in a research report published on May 20. She also lauded the company’s plans to conduct rights issue and share buybacks.
“Japfa is one of our preferred picks in the [basic industry] sector considering its good earnings quality and the 69 percent discount price to earnings (P/E) to [rival] Charoen Pokphand,” she wrote.