3Q25 review

Overall sales showed a better growth trajectory (see Fig. 2); we believe a stronger sales trend can be seen from 4Q onwards on the back of government expenditure acceleration (including new stimulus and free meal program).

We observe six consumer trends having materialized in 3Q25: 1) cooking-at-home activities along with in-home-related products (i.e. frozen food, seasonings, and cheese) grew strongly (see Fig. 3), reflecting in strong double-digit sales growth for Cimory (CMRY IJ, Buy) and Mulia Boga Raya (KEJU IJ, Buy); 2) out-of-home-related products sales also slightly improved (see Fig. 3), where dairy showed a sales recovery; we note that CMRY, Indofood CBP (ICBP IJ, Buy), and Ultrajaya’s (ULTJ IJ, Buy) dairy segments grew y-y by +14%, +10%, and +6%, respectively in 3Q25; 3) general trade (GT) sales were more resilient than modern trade (MT) (see Fig. 4); we view that the rising incomes of farmers (backed by more stimulus and better crops prices) supports sales in GT where mom-and-pop stores and wet markets have more presence and proximity in lower-tier cities and rural areas. On top of that, we realize that more FMCG players put more efforts to expand GT market rather than MT due to expensive cost in MT. This may explain the sluggish SSSG in Alfamart (AMRT IJ, Buy); 4) the free meal program creates new demand for packaged plain milk category (read: The rise of plain milk), and a surge in plain milk sales has triggered more FMCG players to enter this category; 5) beauty-related products sustained their strong sales trends this quarter; social media influence has made cosmetics as affordable luxury necessities for all income classes in order to remain relevant with current lifestyles; hence, consumers continued their usage even during low-buying-power situations (see Fig. 5), and; 6) young consumers switch brands quite often following the brands’ relevance; therefore, most FMCG firms outperform peers in a couple of years led by market share gains, driven by right pricing points and relevant branding; a good example is the brand transformation of Kalbe Farma (KLBF IJ, Buy) consumer health products, which has been expanding market share. 

All in all, we believe these six trends will continue in the coming quarters. We believe some companies are in the best position to capture the trend, such as CMRY, KEJU, ULTJ, and KLBF.

Top picks

We maintain our bullish stance on the FMCG sector on the back of an improvement in government expenditure (including free meal program and social assistance packet) and reduced regulatory risks.

For big-cap firms, our pecking order would be KLBF > ICBP > Indofood (INDF IJ, Buy) > AMRT > Unilever Indonesia (UNVR IJ, Neutral); we note that most of these names will likely face a passive fund outflow risk in the upcoming MSCI rebalancing. Fundamentally, our first choice is KLBF due to its ability to gain market share and outperform peers. We continue to like ICBP, given its cheap valuation; however, the risks would be on tougher competition in Pinehill regions and CPO price hikes. Our next pick is INDF, driven by stronger agribusiness performance. For AMRT, we expect better earnings in following quarters and most of the bad news has been announced; the new potential risk will likely come from the magnitude of minimum wage increase next year. UNVR’s valuation is expensive; we caution investors that 3Q25F and 4Q25F will show strong y-y growth due to the low base, while we forecast its normalized growth rate over the medium term should be lower than peers’.

For small caps, our pecking order is CMRY > KEJU > ULTJ > Mayora Indah (MYOR IJ, Buy) > Alfamidi (MIDI IJ, Buy) > Sidomuncul (SIDO IJ, Buy) > Sariguna Primatirta (CLEO IJ, Buy) > Multi Bintang (MLBI IJ, Buy) > Sariroti (ROTI IJ, Buy). Our top pick is CMRY due to its ability to create new market through innovations. We are positive on the company’s consistent strong double-digit growth in the past five years, outperforming all listed FMCG peers; hence, it deserves a premium valuation. KEJU is our next pick; we like its product category positioning, where cheese is still a low-penetrated product in Indonesia, leaving room to grow, not to mention the support from SNS (unlisted; a sister company - a major GT distributor) to help its expansion. ULTJ’s sales performance should be the bottom this year; we have already seen an improvement in 3Q, and we expect the free meal program acceleration to push dairy sales and RTD tea recovery (as the government is more aggressive in spending) in the following quarters. On top of that ULTJ’s valuation remains undemanding. MYOR booked a gradual margin recovery, while we expect stronger domestic sales growth, driven by new products, going forward. Hence, strong double-digit earnings growth seems feasible next year. MIDI has a strong footprint outside the Java market; we expect an increasing trend of commodity prices and this should likely benefit wealthier farmers. SIDO booked high y-y sales growth in 3Q due to the low base; however, we foresee continued erosion of its herbal products market shares. CLEO spent more direct promotion budget this year to defend market share against a new competitor and a lower buying power situation; we expect better government spending to improve sales. MLBI suffered continuous market share erosion from local players; however, the company provides a good dividend yield of 9-10%. For ROTI, we expect market share erosion to continue; at the same time, the return rate will remain high, bringing pressure on earnings.

Fig. 1: 3Q25 results review

Ticker	Rating	Mkt Cap (IDRtn)	y-y Sales growth 3Q25 (%)	y-y EBIT growth 3Q25 (%)	y-y Sales growth 9M25 (%)	y-y EBIT growth 9M25 (%)	Sales contribution to cons est (%)	EBIT contribution to cons est (%)	Nomura expectations	Implied FY25F P/E (x)	P/E stdev to 5-year mean	TSR FY25F
MYOR	Buy	47.6	-0.6%	16.9%	5.9%	-12.7%	68.2%	60.4%	Below	15.4	-0.8 SD	77%
ICBP	Buy	101.5	0.8%	7.3%	1.4%	-3.7%	73.5%	71.7%	Below	10.5	-2.4 SD	93%
CMRY	Buy	38.1	22.7%	34.3%	18.6%	31.9%	75.9%	86.8%	Above	21.4	-0.6 SD	53%
INDF	Buy	65.0	5.0%	12.4%	4.6%	4.7%	74.8%	74.1%	In-line	5.7	-1.2 SD	84%
KLBF	Buy	59.8	12.6%	21.4%	7.2%	10.1%	74.6%	73.1%	In-line	16.7	-1.3 SD	75%
CLEO	Buy	13.0	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	27.3	-0.1 SD	66%
ULTJ	Buy	17.3	0.8%	25.7%	-5.2%	-6.2%	72.8%	78.1%	Above	12.7	-1.0 SD	49%
MLBI	Buy	12.4	-4.3%	-12.5%	1.8%	-5.8%	65.0%	59.0%	Below	10.1	-0.7 SD	101%
ROTI	Buy	4.9	-7.6%	-44.0%	-7.8%	-54.4%	70.3%	36.9%	Below	16.3	-1.0 SD	50%
SIDO	Buy	16.8	23.3%	24.3%	3.9%	2.7%	68.6%	67.1%	In-line	14.2	-1.7 SD	29%
KEJU	Buy	4.1	22.8%	9.5%	15.9%	24.8%	77.1%	76.6%	Above	21.7	+1.4 SD	22%
AMRT	Buy	83.5	5.7%	-32.1%	7.1%	-6.8%	72.6%	60.8%	Below	22.9	-0.6 SD	46%
MIDI	Buy	13.8	0.0%	42.7%	4.0%	28.7%	72.0%	76.4%	In-line	18.4	-0.6 SD	55%
UNVR	Neutral	98.4	12.4%	113.4%	0.7%	13.7%	79.2%	82.3%	Above	23.9	-0.9 SD	-34%

 

Fig. 2: Indonesia FMCG (excluding cigarettes) sales growth y-y trend

 

Fig. 3: In-home vs. out-of-home food consumption growth trend y-y of FMCG companies under our coverage

 

Fig. 4: Purchase behavior across channels

 

Fig. 5: Cosmetics companies' average sales growth y-y

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)

Samuel Christian (samuel.christian@verdhana.id)

Jody Wijaya (jody.wijaya@verdhana.id)