Poultry Stocks Stay Overweight as CPIN Emerges Top Pick on Solid Earnings Outlook

JAKARTA, Investortrust.id — PT Charoen Pokphand Indonesia Tbk or CPIN remains the preferred investment in Indonesia's poultry sector after BRI Danareksa Sekuritas reaffirmed its overweight recommendation, arguing that attractive valuations and improving chicken prices should outweigh margin pressure from higher feed costs.

Indonesia's poultry industry is closely tied to domestic food inflation and consumer spending. For investors, improving broiler prices combined with historically low sector valuations could provide a favorable entry point even as producers navigate higher raw material costs.

BRI Danareksa expects rising domestic corn prices to lift feed production costs during the second half of 2026. However, analysts said the impact should be partially mitigated by greater use of feed wheat as a substitute for corn and relatively favorable soybean meal import costs.

The brokerage estimates feed wheat will account for about 3.9% of total feed formulations this year. Indonesia's feed wheat imports reached about 320,000 metric tons, or roughly 353,000 U.S. tons, during the first five months of 2026, more than tripling from a year earlier, and are projected to rise to around 800,000 metric tons, equivalent to approximately 882,000 U.S. tons, for the full year.

Soybean meal imports also remained supportive. Import volumes increased about 17% year-on-year to 2.9 million metric tons during the January-May period, while average import prices held near US$378 per metric ton, supported by lower CIF costs and stronger supplies from Argentina.

Feed Margins Face Pressure

Despite lower import costs, BRI Danareksa expects feed margins to remain under pressure because importers' trading margins may squeeze profitability for feed manufacturers.

Among listed producers, PT Malindo Feedmill Tbk or MAIN is expected to be the most vulnerable because feed raw materials account for roughly 67% of its gross revenue, compared with about 40%-41% for both CPIN and PT Japfa Comfeed Indonesia Tbk or JPFA.

Even so, the brokerage forecasts aggregate net profit for the poultry companies under its coverage to reach around Rp 1.6 trillion ($101 million) in the second quarter of 2026. While that would represent a 65% decline from the previous quarter, it would still mark a 77% increase from a year earlier.

Analysts also expect live bird prices to recover gradually after falling to around Rp 13,300 per kilogram, or about US$0.38 per pound, in recent weeks as demand normalizes.

CPIN Remains the Preferred Bet

BRI Danareksa said the sector currently trades at an enterprise value-to-EBITDA multiple of around 3.8 times, roughly 1.5 standard deviations below its five-year average, suggesting much of the weakness in broiler prices and higher feed costs has already been priced into stocks.

The brokerage maintained Buy recommendations on CPIN, JPFA and MAIN, with target prices of Rp 5,900, Rp 3,300 and Rp 1,700 per share, respectively. CPIN remains its top pick, supported by its stronger market positioning and more attractive risk-reward profile relative to peers.