Hike of 2% in COGS Posted by Feed Division
The feed division experienced COGS pressure from 83% in 3Q16 picking up into 85% in 3Q17. The hike in COGS was caused by the hike of 12% in the local corn price. However, we oversee that the local corn price dived 9% in December 2017 compared to its price in November 2017. We gauge that in 2018 there will be no margin pressure because the local corn price will be stable at IDR3,700/kg.

Hike of 4% in COGS Posted by Processed Chicken Division
The processed chicken division endured the hike in COGS from 97% in 3Q16 into 101% in 3Q17. Nevertheless, its COGS quarterly declined from 103% in 2Q17 into 101% in 3Q17. The improvement in COGS was quarterly backed by the government initiation to overcome the excessive offer of processed chicken in the market.


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