Consumer health’s brand transformation comes to fruition

We have tracked the progress of KLBF consumer health’s brand transformation over one year (read: Transforming the brand; Brand transformation; Brand transformation in progress; Repositioning, revamping, and reallocating; and Proven brand transformation), and the result was outstanding, with cumulative 4Q24-3Q25 y-y sales growth of +11% y-y (vs a 3% FY17-FY23 sales CAGR). Strong consumer health sales were driven by market share gains through new marketing initiatives led by Rudolf Tjandra (the director in charge of the consumer health and nutritional divisions since 3Q24). We suspect that energy drinks (second-largest revenue contributor), under the brand of Extra Joss, was a major growth contributor via new premium ready-to-drink Extra Joss Ultimate (launched in 1Q25), taking market share from Red Bull (market leader, unlisted) and ready-to-drink coffee products. Our channel checks confirmed that Extra Joss now has stronger brand equity among middle-income-class youngsters as a lifestyle branded products to boost stamina and as a replacement of coffee. Previously Extra Joss had been perceived as a low-end beverage with cheap price points. Herbal medicines, such as Bejo and Mixagrip Greges, have also expanded market share substantially, thanks to more affordable prices and new marketing campaigns. For example, KLBF has been successfully transforming Bejo into a more modern brand with selling price points ~30% lower compared to Sidomuncul’s (SIDO IJ, Buy) Tolak Angin brand (market leader with 70% market share), making it more appealing to consumers. Furthermore, we expect to KLBF gradually improve demand for its anti-acid Promag (the largest revenue contributor) to the next level, for instance management actively endorses Promag herbal as a herbal anti-acid for coffee drinkers, which may increase frequency to consume. We think management plans to change consumers’ mindsets on Promag from a one-time medicine into a day-to-day herbal supplement. All in all, we believe that marketing innovations will help the consumer health division gain market share without lowering selling prices; hence, we project a new double-digit sales growth era with a thick margin contribution ahead, with consumer health as KLBF’s main growth driver in the medium term.

Nutritional division gradually improves

We have noticed that KLBF’s nutritional sales have improved, recording flattish growth y-y in 3Q25 (vs -3.3% in 1H25) and a +9% q-q. Despite this flattish growth, KLBF’s nutritional division has still outperformed the powder milk industry, which is currently experiencing a decline in sales. KLBF started new marketing campaign activities for nutritional brands in 2Q25, but the benefit to sales performance will lag, in our view, given high inventory days levels at distributors. Our industry survey confirmed that a new campaign for the nutritional division so far has gradually reduced the inventory days level in 3Q25; hence, we will likely start to see stronger positive y-y sales growth in 4Q25F, in our view.

We maintain our Buy call

Overall 3Q25 results were in line with our forecast and Bloomberg consensus estimates; we expect consumer health and nutritional division sales contributions will be bigger in 4Q25F, while the A&P-to-sales ratio may decline q-q due to invoice timing. In our estimate, in the medium term, the pharma business will continue to have steady low-teens sales growth, given strong unbranded products demand from the national health insurance program. The distribution division also has an advantage, in our view, with a large point-of-sales networks in the healthcare space, attracting more third-party partners to join. Consumer health sales have continued to grow at double-digit pace on the back of market share gains, not to mention its thick margin contribution. With a healthier inventory-days level, the nutritional division should gradually grow at a positive growth trajectory going forward, in our view. With a complete set of growth foundations, KLBF may start to book a sustainable new double-digit earnings growth level going forward (vs mid-single digit CAGR over 2017-2024). We reiterate our Buy recommendation on the stock with a TP of IDR2,200, using a target P/E of 28x FY25F. Currently, the stock is trading at a FY25F P/E of 16.5x. However, we advise caution on entry points, as we assess a high probability of KLBF being excluded from the MSCI index, which may trigger passive fund outflow.

Fig. 1: KLBF sales growth y-y by division in 3Q25

 

Fig. 2: Consumer health y-y sales growth trajectory

 

Fig. 3: KLBF’s net profit y-y growth trend

 

Fig. 4: KLBF 3Q25 results table

KLBF IJ				QoQ	YoY			YoY	9M25/	9M25/
Profit and loss statement (IDRbn)	3Q24	2Q25	3Q25	(%)	(%)	9M24	9M25	(%)	Nomura	Cons.
Revenue	7,911	8,234	8,909	8.2	12.6	24,239	25,988	7.2	73.5	74.6
COGS	4,858	4,885	5,377	10.1	10.7	14,722	15,431	4.8
Gross profit	3,052	3,349	3,532	5.4	15.7	9,517	10,557	10.9
EBIT	709	1,065	861	(19.2)	21.4	3,002	3,307	10.1	70.4	73.1
Others	16	119	4	(96.8)	(75.8)	90	170	89.9
Pre-tax profit	725	1,184	864	(27.0)	19.3	3,092	3,477	12.5
Net profit	573	898	656	(26.9)	14.5	2,378	2,631	10.6	72.9	74.2
Gross margin (%)	38.6	40.7	39.6			39.3	40.6
EBIT margin (%)	9.0	12.9	9.7			12.4	12.7
Net margin (%)	7.2	10.9	7.4			9.8	10.1
Balance sheet (IDRbn)	Sep-24	Jun-25	Sep-25
Cash and equivalents	4,174	3,803	4,048
Total assets	28,752	29,509	30,102
Total liabilities	1,326	5,319	5,319
Interest bearing liabilities	592	602	332
Equity	23,912	24,191	24,802
ROA (%)	8.0	12.2	8.7
ROE (%)	9.6	14.9	10.6
Gearing (%)	2.5	2.5	1.3
Net gearing (%)	n.c.	n.c.	n.c.

 

Fig. 5: KLBF's forward 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)

Samuel Christian (samuel.christian@verdhana.id)

Jody Wijaya (jody.wijaya@verdhana.id)