Japfa’s strong bottom line in 1H FY20 has led analysts to keep their optimism on the agricultural producer.

This was despite a revenue decline on the back of lower poultry feed and day-old-chicks sales volumes in Indonesia.

“We think strong Vietnam swine and China raw milk prices would mitigate any near-term weakness in the Indonesia poultry segment,” CGS-CIMB Research analyst Cezzane See writes in a note dated July 30.

“We continue to see the benefits of its diversification efforts filter through, having seen several quarters of positive trend. We expect this to continue,” DBS Group Research analysts Andy Sim and Alfie Yeo write in a July 30 report.

Japfa reported earnings surged six-fold to US$76.8 million ($105.7 million) in the half-year period, from US$12.8 million a year ago.

Revenue, however, fell 3% y-o-y to US$1.83 billion from US$1.89 billion.

DBS says the company’s 1H FY20 operating profit of US$146.6 million was in line with its expectations, forming 53% of its FY20 forecast.

CGS-CIMB says that better poultry, and Vietnam swine and dairy operating metrics are potential catalysts for the company.

DBS has maintained its “buy” rating for the stock with an unchanged target price of 82 cents.

CGS-CIMB has also kept its “add” recommendation for the stock with an unchanged target price of 96 cents.

As at 10.44 am, Japfa was flat at 66 cents with 970,000 shares changed hands.