Recovery Underpinned by Government Intervention

In May-25, broiler prices rose to IDR 16,000/kg (+4.7% MoM, -23.6% YoY), while DOC prices surged to IDR 4,300/bird (+73.8% MoM, -41.4% YoY). The rebound was driven by the government's intervention through a culling directive issued by the Ministry of Agriculture in April—the first since 2023. Further support came from follow-up measures outlined in the Jun- 25 coordination meeting.
Key directives from the government focus on stabilizing supply and prices in the broiler
industry, specifically through:
1. Livebird and DOC Pricing Controls (Jun-25 Coordination Meeting):
a. Breeding companies are required to maintain livebird (LB) prices at IDR 17,500/kg for 1.8kg birds in Central Java, Yogyakarta, and East Java, and at a minimum of IDR 18,000/kg in West Java and Banten.
b. Broiler DOC (day-old chicks) must be sold to independent farmers at IDR 5,500/chick
(ex-factory, excluding vaccine).
2. DOC Production Control (Apr-25 Directive):
To address projected DOC oversupply—estimated at 41.05 mn chicks in May and 50.69 mn in Jun–Jul—breeders are instructed to:
a. Cull 49.79 mn fertile hatching eggs (aged 19 days) from April 26 to May 31 across
Java, Sumatra, and Sulawesi.
b. Cull 3.02 mn parent stock (aged 54 weeks) from 26 Apr to 31 Jul.
We expect DOC prices to remain volatile in the near term, especially as HE culling takes effect. For 2025, the government has set the national GPS allocation at 578,000 units (+9% YoY), including 18,000 units for Berdikari (Persero). We believe this increase reflects the government's intent to support a broader national food security program, in anticipation of stronger demand ahead.

Maintain O/W on Poultry Sector

We view 2025 as a normalization year for the broiler sector following a strong performance in FY24. Nonetheless, growth potential remains intact, underpinned by expected increases in consumption and continued government support—ranging from market balancing group (MBG) interventions to price stabilization efforts. These measures align with the government's ongoing push for food self-sufficiency and farmer welfare.
We maintain our BUY ratings on CPIN (TP: IDR 6,100/share) and JPFA (TP: IDR 2,270/share),
supported by favorable policy tailwinds and resilient demand outlook.
Key risks: regulatory shifts, feed cost inflation, and weak demand recovery

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