Poultry Stocks Defy Budget Cuts: Why Analysts Are Still Betting Big on Indonesia’s Protein Giants

JAKARTA, Investortrust.id — Indonesia’s multi-billion dollar poultry sector is shrugging off concerns regarding the government’s flagship free school meal program. Despite reports of a potential contraction in the "Makan Bergizi Gratis" (MBG) budget, top-tier analysts are doubling down on the sector’s long-term upside, dismissing fears of a material hit to industry bottom lines.

The resilience of these Indonesian conglomerates—Charoen Pokphand Indonesia (CPIN), Japfa Comfeed (JPFA), and Malindo Feedmill (MAIN)—highlights the domestic market's ironclad demand for basic protein. By maintaining an Overweight outlook, analysts are signaling that the structural growth of Indonesia’s food security initiatives outweighs short-term fiscal policy adjustments.

The Budget Reality Check

Market sentiment took a hit following speculation that the 2026 MBG budget could be slashed from an initial allocation of Rp 335 trillion ($21.07 billion) to roughly Rp 268 trillion ($16.85 billion). BRI Danareksa Sekuritas (BRIDS), a leading local brokerage, analyzed the impact of a static recipient base for the program.

Under this scenario, the expected consumption of chicken meat by the program is projected to drop from 328,000 metric tons to approximately 300,000 metric tons. While the decline seems significant, it represents a mere 1.1% dip in total projected 2026 broiler production. Consequently, the industry’s estimated undersupply is expected to slide from 12% to 11%, a negligible shift that fails to derail the broader bullish thesis.

Sector Valuations Shine

The sector’s current trading profile is perhaps its most compelling feature. Poultry stocks are currently changing hands at an EV/EBITDA of 4.0 times. This places them at 1.5 standard deviations below their five-year historical average, a valuation level that historically precedes significant rallies.

"The influence on the poultry sector's outlook is relatively limited," BRIDS stated in its latest research note. While live bird prices dipped recently to between Rp 16,500 ($1.04) and Rp 18,500 ($1.16) per kilogram due to a combination of school holiday demand lulls and ongoing reforms by the National Nutrition Agency (BGN), analysts view this as a temporary anomaly rather than a structural weakness.

Targeting the Winners

BRIDS remains aggressive on its price targets for the sector’s leading players. The brokerage has placed a target price of Rp 5,900 ($0.37) on Charoen Pokphand Indonesia (CPIN), the country’s largest poultry feed and processed chicken manufacturer.

Similarly, analysts have set a target of Rp 3,300 ($0.21) for Japfa Comfeed (JPFA), an industry powerhouse with massive regional reach, and Rp 1,700 ($0.11) for Malindo Feedmill (MAIN). While second-quarter margins are expected to face pressure from the recent price volatility, the long-term momentum is buoyed by an anticipated rebound in live bird prices as seasonal factors normalize in the third quarter.