Affordable while luxury: all-time high market share in biscuits and wafers

We believe the middle-income class continues to prefer value-for-money FMCG products, given the lack of government incentives; the lower-end group will likely consume more affordable but branded FMCG products on the back of higher disposable income amid higher soft commodity selling prices as well as an increased number of social aid programs (read Follow the money). Hence, we believe MYOR’s product portfolio is in a sweet spot to enjoy higher demand, backed by its competitive pricing (20-30% GPM), strong brand value (market share domination), and quality products with global standards (45% of sales is contributed by exports). In fact, the company improved its market share in 2024 in biscuits and wafers categories by ~100bp. MYOR’s biscuits market share reached 43% in FY24 (vs 42% in FY23 and 28% in FY14); we expect growth in market share to continue, gaining from local and foreign brands (see Fig. 2). MYOR’s wafers division recorded a 24% market share in FY24 (vs 23% in FY23 and 6% in FY14); the company’s wafers have been successfully gaining market share from major incumbents such as Orang Tua Group (unlisted). Higher market share also translated to record-high processed food sales in 4Q24, up by +18% y-y.

Blessing in disguise: coffee market share surges in the Philippines

Expensive coffee bean prices put pressure on margins, but, this situation allowed MYOR to expand market share significantly in the instant coffee segment due to a better pricing strategy. We note that MYOR’s market share rose from 45% in FY23 to 49% in FY24 in the Philippines, as the company gained market share significantly after Universal Robina Corp (URC PM, Not rated) and Nestle (NESN SW, Not rated) raised their prices aggressively from 1Q24. This new market base should sustain or even may expand further, in our view; historically, MYOR has maintained its market leadership position in the Philippines over the past eight years (see Fig. 4). A surge in instant coffee market share in the Philippines was also reflected in all-time high sales for MYOR’s beverages segment in 4Q24.

Input cost pressure is a temporary phase

We believe coffee and cocoa prices are the company’s main concerns related to earnings growth in 2025. The company may not pass on the price increases on time, which may affect profitability in the short term. However, it is a temporary issue, in our view; historically, ASP adjustment has covered increasing raw material costs, given the company’s pricing power (see Fig. 8). On top of that, we believe the company can maintain its low A&P-to-sales ratio, backed by its strong brand equity.

Maintain Buy call; double-digit domestic and export sales growth in 2M25

MYOR recorded all-time high sales in 4Q24, thanks to both domestic and export sales. GPM in 4Q24 was better q-q basis due to ASP adjustment. Overall 4Q24 results were in line with market expectations. We think strong sales performance should resume this year. Our industry survey shows that MYOR could record double-digit sales growth in the domestic market even after the high base last year during the presidential election in Feb-24. Moreover, exports sales also recorded double-digit sales growth due to ASEAN’s contribution. We maintain our Buy call with a TP of IDR4,300, using a target P/E of 26.5x FY25F (+0.2SD to its five-year mean). Downside risks would be higher-than-expected coffee and cocoa costs.

Fig. 2: MYOR – biscuits and wafers market share trend in Indonesia

Fig. 3: MYOR processed food sales growth y-y trend

Fig. 4: MYOR – Instant coffee market share in the Philippines

Fig. 5: MYOR beverage sales growth y-y trend

Fig. 6: MYOR domestic vs export sales growth y-y trend

Fig. 7: MYOR all-time high domestic and export sales in 4Q24 (in IDRbn)

Fig. 8: MYOR – GPM trend, 2010-2024

Fig. 9: Coffee robusta and cocoa price index (2023 = 100)

Fig. 10: MYOR – P/E band

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

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Sandy Ham (sandy.ham@verdhana.id)

Jody Wijaya (jody.wijaya@verdhana.id)

Samuel Christian (samuel.christian@verdhana.id)