Indonesia Poultry - Potential rise in DOC GPS import quota a m-term earnings risk

Potential rise in DOC GPS import quota a m-term earnings risk

While the government’s proposed increase in day-old-chick (DOC) grandparent stock (GPS) import quotas is intended to support incremental demand from the free nutritious meal (MBG) programme, we see rising medium-term supply and margin risks for the poultry sector. Combined with higher feed input costs, this creates increasingly asymmetric downside to earnings for integrated poultry players from 2H27F onwards.

Possibly higher DOC GPS import quota for 2026F

Although the government has yet to officially publish the 2026 DOC GPS import quota, our channel checks suggest the quota could be set at around ~805k, implying a 39-44% increase from the 2025 quota of 560-580k (Fig. 1). In addition, there may be a further buffer of up to 200k, which would represent additional ~35% upside versus last year’s quota.

These estimates exclude any potential incremental allocations to state-owned entities (SOE) such as Berdikari (unlisted) and/or Danantara (unlisted), following indications of their intention to enter the poultry farming business (LINK). The proposed increase in import quotas is reportedly aimed at supporting a potential rise in poultry demand driven by the government’s free nutritious meal programme (MBG). As of Dec-25, the MBG programme had catered to 52mn daily recipients, and it targets 83mn recipients at full rollout (Fig. 2).

Rising risk of broiler oversupply

We estimate that a full rollout of the MBG program to 83mn recipients could generate additional poultry meat demand of 34% (Fig. 3), broadly supporting the proposed base import quota of ~805k. However, the inclusion of an additional supply buffer raises concerns that, if fully materialised, overall supply growth could outpace demand, resulting in broiler oversupply.

Such an outcome would likely pressure livebird prices and weigh on margins across the commercial farming segment, including Charoen (CPIN IJ, Buy) and Japfa (JPFA IJ, Buy). That said, the impact is unlikely to be immediate. Any meaningful increase in supply would only materialise from early 2H27F, given the typical 1.5-2 years conversion period from DOC GPS to final stock (FS) (Fig. 4). As a result, we view this as a medium-term earnings risk rather than a near-term concern

Higher input costs add exert pressure on poultry feed margins

Corn (55%) and soybean meal (25%) are the key raw materials in poultry feed production, and prices of both have trended higher in the past two years (Fig. 5 and Fig. 6). Corn prices have remained elevated following the government’s decision via the Ministry of Agriculture to raise the minimum purchase price for corn farmers in early 2025, compounded by the long-standing ban on feed-grade corn imports since 2016.

Meanwhile, although global soybean meal prices have been relatively stable, the weakening rupiah against the US dollar has increased import costs. Taken together, we believe these factors will exert margin pressure on poultry feed producers starting this year.

Downside risks are becoming more apparent

Should the proposed increase in DOC GPS import quotas materialise alongside sustained input cost inflation, we see increasingly asymmetric downside risks to CPIN’s and JPFA’s future earnings. As of 9M25, only 15% of both companies’ commercial farming revenue was channelled into the more stable downstream consumer products segment, leaving the remaining 85% exposed to volatility in wet market broiler prices.

While market mechanisms such as voluntary culling might eventually help stabilise pricing, we believe that without tighter controls over DOC GPS import quotas, the risk of structural oversupply is unlikely to be fully resolved.

We continue to have a Buy call on CPIN and JPFA . Currently, CPIN and JPFA trade at 6x and 9x 2026F EV/EBITDA, respectively.

Fig. 3: Estimated addition of annual broiler demand from free nutritious meal program (MBG) full implementation

	Bear	Base	Bull	Remarks
Total productive days	20 days x 12 months: 240 days			104 weekends, 25 national holiday and annual leave
Target mn recipients/day	24.9	41.5	82.9	Bull: Govt target of 82.9 recipient. Base: 50% of target, Bear: 30% of target
# of cut for a single broiler	10 pieces, twice a week			2 breast, 2 thighs, 2 drumsticks, 2 wings, 2 tenderloins, twice a week
Total broiler needed (mn unit)	239	398	796	twice a week x productive days × recipients × # of cut
Avg broiler mass (kg)	1.62			Avg of a 30 days-old broiler
Additional broiler from MBG (mn tons)	387	645	1,289	Broiler needed × avg broiler mass
2024 annual supply (mn tons)	3,840			Latest print
Addition from MBG to existing supply	10.1%	16.8%	33.6%

Source: Badan Gizi Nasional, Verdhana estimates

INVESTMENT RATINGS
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Research Analysts

Jody Wijaya (jody.wijaya@verdhana.id),

Sandy Ham (sandy.ham@verdhana.id),

Nayla Yasmin (nayla.yasmin@verdhana.id), and

Samuel Christian (samuel.christian@verdhana.id)

Tags: CONSUMER RELATED, Indonesia Poultry, Jody Wijaya, Sandy Ham, Nayla Yasmin, Samuel Christian

Indonesia Poultry - Potential rise in DOC GPS import quota a m-term earnings risk

Potential rise in DOC GPS import quota a m-term earnings risk

Fig. 1: DOC GPS import and growth y-y – If our findings are right, we may look at potentially the highest DOC GPS import quota increase in a while

Fig. 2: MBG daily recipients realization – the government reached 63% of its 83mn recipients target by the end of Dec-25

Fig. 3: Estimated addition of annual broiler demand from free nutritious meal program (MBG) full implementation

Fig. 4: Process of poultry breeding

Fig. 5: Domestic corn producer price (IDR/kg) – on a uptrend following the 10% minimum purchase price increase in early 2025

Fig. 6: Soybean meal price - -27% compared to Jan-22 price level, but USD/IDR strengthened by 20% at the same period

Fig. 7: Indonesia Poultry EV/EBITDA band (x)

Fig. 8: JPFA EV/EBITDA discount to CPIN

Fig. 9: CPIN EV/EBITDA band (x)

Fig. 10: JPFA EV/EBITDA band (x)

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Indonesia Poultry - Potential rise in DOC GPS import quota a m-term earnings risk

Fig. 1: DOC GPS import and growth y-y – If our findings are right, we may look at potentially the highest DOC GPS import quota increase in a while

Fig. 2: MBG daily recipients realization – the government reached 63% of its 83mn recipients target by the end of Dec-25

Fig. 3: Estimated addition of annual broiler demand from free nutritious meal program (MBG) full implementation

Fig. 4: Process of poultry breeding

Fig. 5: Domestic corn producer price (IDR/kg) – on a uptrend following the 10% minimum purchase price increase in early 2025

Fig. 6: Soybean meal price - -27% compared to Jan-22 price level, but USD/IDR strengthened by 20% at the same period

Fig. 7: Indonesia Poultry EV/EBITDA band (x)

Fig. 8: JPFA EV/EBITDA discount to CPIN

Fig. 9: CPIN EV/EBITDA band (x)

Fig. 10: JPFA EV/EBITDA band (x)

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