A surge in number of kitchen opening

We expect a jump in terms of the number of kitchens (SPPG) opening in Aug-25 (see Fig. 1). To mid-August, the number of kitchens operating reached 5.3k (vs 1.9k YTD as of July), serving around 15mn students (assuming one kitchen can serve 3,000 dishes). This is in line with the government’s target to reach 7.0k kitchens by the end of Aug-25. Our conversation with UHT milk suppliers for free nutritious meal program confirmed that there has been a spike in demand for <200ml UHT milk products from free nutritious meal kitchens this month. In terms of budget realization, the free nutritious meal program has already spent around IDR8tn YTD (vs IDR5tn in Jun-25 and a total budget of IDR171tn). We believe the acceleration of kitchen openings is driven by additional supply of nutritionists and accountants, many of them graduating in Aug-25. Meanwhile, based on government data, many restaurant and cafe entrepreneurs and communities have already registered to set up foundations to operate free nutritious meal kitchens, given a lucrative revenue sharing and upfront payment system. Hence, with additional staff, established infrastructure by foundations, and a sufficient budget, we might see a surge in the number of kitchens opening from August onwards. The multiplier impact from free nutritious meal budget disbursement may drive higher overall consumption in 2H25F.

Key beneficiaries will be FMCG firms

We believe most of the money will flow to the middle-to-low-income segment, catering to students, kitchen staff, and food suppliers (i.e., farmers and distributors). In terms of consumption, the middle-to-low segment comes from a low base, and hence we think most of the extra money will go to FMCG rather than discretionary. We believe free nutritious meal budget disbursement should be in stages, with the highest spending in 4Q25F; the impact on grassroots consumption will be more apparent in FY26F. We expect higher government expenditures can revive out-of-home product sales next year. For 2H25F, our top picks would be MYOR > CMRY > KEJU > KLBF > AMRT > INDF. We still prefer FMCG firms with growing in-home and out-of-home products portfolio, which we think will have more stable sales (read 2Q25 results review), such as Cimory (CMRY IJ, Buy), Mulia Boga Raya (KEJU IJ, Buy), and Mayora Indah (MYOR IJ, Buy). We also like companies with the ability to take market share, such as Kalbe Farma (KLBF IJ, Buy). Alfamart (AMRT IJ, Buy) will also benefit, in our view, from its extensive store networks in lower tier cities, capturing middle-to-low-income class spending. And, Indofood (INDF IJ, Buy) could be a shelter stock, given its favorable agribusiness performance.

Fig. 1: Number of free nutritious meal kitchen opening (realization vs. target)

Fig. 2: Free nutritious meal program budget realization

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Sandy Ham (sandy.ham@verdhana.id)

Samuel Christian (samuel.christian@verdhana.id)

Jody Wijaya (jody.wijaya@verdhana.id)