SINGAPORE (Oct 25): DBS Group Research is reinstating coverage on animal protein play Japfa with a “buy” on projections of an earnings turnaround in 1H18 which would stretch into 2H18 and FY19.

DBS is forecasting FY18F profit to hit US$86.7 million, up from US$1.3 million in FY17 as the research house expects prices of DOC (day old chicks) and broilers in Indonesia to stay strong in 2H18.

This is due to the lack of DOC supply in the market, stability in swine price recovery at above cost levels in 2H18 aiding Japfa’s Vietnam swine operations and its China dairy division benefitting from improving milk yields, says lead analyst David Arie Hartono in a Wednesday report.

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