4Q25 results review

ERAA delivered strong earnings growth in 4Q25, primarily driven by iP17 sales. This was partly supported by a low base last year, following the delayed iP16 launch from 4Q24 to early 2Q25 in Indonesia. As a result, the company recorded a quarterly revenue high.

Gross profit margin (GPM) came in lower both q-q and y-y. The company attributed this to weaker performance in several mid- to low-end handset SKUs, as well as the ramp-up of new business initiatives such as XPeng and Chagee.

However, the opex-to-sales ratio declined significantly, supported by stronger revenue. Combined with a forex gain of IDR47bn, this led to an overall margin uplift for ERAA. Excluding the forex gain, earnings were still broadly in line with our and Bloomberg consensus estimates.

iP17 to remain key driver in 1Q26F

We expect the low-base effect from the delayed iP16 launch to persist into 1Q26F, potentially supporting y-y growth in both revenue and earnings.

ERAA may also capitalize on recent ASP adjustments in newly launched mid- to low-priced smartphones to clear older inventory, which has underperformed over the past few years. As a result, margin expansion may remain limited in the near term.

Execution key in a softer demand environment

For the remainder of the year, we believe improving operational efficiency will be critical, particularly within Erajaya Digital, where sales productivity has been declining over the past three years (Fig. 3).

If the company is able to address this issue, we believe margins could remain relatively resilient despite a potentially softer sales environment.

Maintain Buy with TP of IDR680

Our TP of IDR680 is based on 2026F P/E target of 7.7x, equal to its 5-year average. While iP17 sales should provide near-term support in 1Q26F, we believe longer-term revenue and margin growth will depend on ERAA’s ability to improve store productivity in its digital segment and successfully expand its non-digital business lines.

Key downside risks include prolonged weak consumer spending environment and slower recovery in handset retail productivity. Currently, the stock is trading at 4.3x 2026F P/E.

 

 

Fig. 1: 4Q25 results summary

ERAA IJ				QoQ	YoY			YoY	12M25/
Profit and loss statement (IDRbn)	4Q24	3Q25	4Q25	(%)	(%)	12M24	12M25	(%)	Consensus
Revenue	16,672	17,318	24,243	40.0	45.4	65,280	76,607	17.4	108.1
COGS	(14,832)	(15,436)	(21,737)	40.8	46.6	(58,004)	(68,256)	17.7
Gross profit	1,840	1,883	2,505	33.1	36.2	7,276	8,351	14.8
EBIT	417	240	595	147.6	42.6	1,706	1,732	1.5	96.0
Other income/(expenses)
Net financing income/(expense)	(132)	(180)	(159)	(11.9)	20.6	(611)	(596)	(2.5)
Net forex gain/(losses)	(8)	82	47	n.a.	n.a.	20	203	938.4
Others	102	175	189	8.0	86.4	405	515	27.1
Pre-tax profit	379	318	673	111.8	77.4	1,519	1,854	22.0
Net profit	241	217	410	88.9	70.0	1,033	1,196	15.8	105.7
Gross margin (%)	11.0	10.9	10.3			11.1	10.9
EBIT margin (%)	2.5	1.4	2.5			2.6	2.3
Pre-tax margin (%)	2.3	1.8	2.8			2.3	2.4
Net margin (%)	1.4	1.3	1.7			1.6	1.6
Balance sheet (IDRbn)	Dec-24	Sep-25	Dec-25
Cash and equivalents	1,766	1,811	2,131
Inventories	7,131	12,244	11,645
Total assets	21,774	28,567	28,857
Total liabilities	12,717	18,927	18,679
Interest bearing liabilities	5,414	7,124	7,545
Equity	9,057	9,640	10,177
Inventory Days	55.6	70.6	0.0
ROA (%)	4.4	3.0	5.7
ROE (%)	10.7	9.0	16.1
Gearing (%)	59.8	73.9	74.1
Net gearing (%)	40.3	55.1	53.2

Fig. 2: ERAL revenue and net profit after tax (NPAT) as % of ERAA’s – continuous expansion led to higher revenue contribution but margin pressured in shorter-term

Fig. 3: ERAA annualized sales/store for digital business segment – has been trending down following the aggressive stores expansion in 2022-2023

Fig. 4: ERAA digital business segment stores expansion – consolidation period starting 3Q23

Fig. 5: MR.DIY (MDIY IJ, Buy) and Erafone stores penetration in cities by tiers as of 9M25 – With both owned ~1,1k, Erafone stores penetration is lower than MR.DIY, which may indicate that Erafone’s store density per city is higher than MR.DIY despite striking difference in avg. ticket size

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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Jody Wijaya (jody.wijaya@verdhana.id)

Sandy Ham (sandy.ham@verdhana.id)

Nayla Yasmin (nayla.yasmin@verdhana.id)

Samuel Christian (samuel.christian@verdhana.id)