2Q26F SSSG to soften, but remains on track with estimates

We expect 2Q26F same-store sales growth (SSSG) to soften sequentially from 1Q26 across most retailers, primarily due to the normalization in April following the shift in the Eid holiday timing vs. last year, as well as seasonally weaker post-Eid consumer spending. Nevertheless, we expect 1H26F SSSG to remain broadly in line with management guidance in the range of positive low-single digit to mid-single digit y-y (Fig. 2), which should help companies maintain their profitability margins y-y, in our view.

For Alfamart (AMRT IJ, Buy) and Alfamidi (MIDI IJ, Buy), we believe both the companies remain on track to achieve their full-year SSSG target of 4–5%. In addition, manageable food inflation should provide further support to sales growth, particularly in 2H26F (refer to our report, Revisiting the Walmart playbook ).

MAP Active (MAPA IJ, Buy) should also continue to deliver solid performance, as our channel checks indicate that sports activewear retailers have been relatively more resilient than other retail segments.

Meanwhile, we believe Mitra Adiperkasa (MAPI IJ, Buy) and Erajaya (ERAA IJ, Buy) are likely to see some moderation in SSSG due to a higher base resulting from the delayed iPhone 16 launch in April 2025. That said, we note that their non-Apple businesses should continue to perform relatively well, as evidenced by Erajaya Active (ERAL IJ, Not Rated), whose SSSG turned positive in May (Fig. 3).

We expect MR. DIY (MDIY IJ, Buy) to remain focused on maximizing revenue and net profit amid the challenging consumer environment by reinforcing its core value proposition of Hemat, Lengkap, dan Dekat (Affordable, Complete, and Nearby).

Lastly, while Azko (ACES IJ, Buy) has acknowledged softer footfall, management intends to drive growth through continued store expansion into outer islands and lower-tier cities, while also scaling up its new Neka store concept.

Ex-Java continues to drive growth despite seasonal headwinds

Historically, 3Q has been the softest sales quarter for retailers due to the lack of major spending catalysts, as consumer spending in Indonesia typically peaks during the Eid and year-end holiday periods (Fig. 4). While we expect the consumer spending trend to remain challenging, we continue to observe strong sales momentum in ex-Java regions (Fig. 5). This is consistent with the trend we have observed, where higher disposable income in ex-Java, coupled with relatively limited retail spending options, has supported robust demand. This dynamic has underpinned the successful expansion of MR.DIY, Alfamart, and Alfamidi, and has encouraged retailers to further accelerate store expansion in these regions, in our view.

Prefer staples-focused and higher ex-Java exposure retailers

Our current stock pecking order is AMRT > MIDI > MDIY > MAPA > ERAA > MAPI > ACES.

While the macroeconomic backdrop is likely to remain challenging for the rest of the year, we believe minimarkets are well positioned to deliver more resilient SSSG relative to other retail formats. In addition, minimarkets are largely insulated from the raw material and foreign exchange cost pressures faced by FMCG manufacturers. They also tend to benefit from a moderate inflationary environment, as retailers are generally able to pass through price increases while maintaining stable demand (Fig. 6)

While this may be one of the more challenging periods for discretionary retailers, it also presents an opportunity to streamline operations and improve efficiency, in our view. This could position them to deliver stronger profitability once consumer spending recovers.

Fig. 1: Indonesia retailers

Fig. 2: 1Q25-2Q26F quarterly SSSG y-y trend – Adjustment for 2Q26F, but 1H26F SSSG should remain at positive low-single digit to mid-single digit y-y growth

Fig. 3: ERAA and ERAL monthly SSSG (%, y-y) – Outperformance of ERAL over ERAA signalled solid non-handsets performance

Fig. 4: Retailers quarterly revenue contribution as a % of FY – 3Q has always been the weaker quarter for the year given the limited major spending catalyst

Fig. 5: Retailers 2023-2025 Java and ex-Java revenue sales CAGR – Higher growth observed in ex-Java, with exception of MAPA as they expanded more aggressively overseas

Fig. 6: Alfamart’s quarterly y-y SSSG and Indonesia food inflation y-y – Strong historic correlation at 0.7x

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)