Underperformance of modern trade drags sales; maintain Buy but cut TP to IDR2,500
First underperformance of minimarket in the past 12 years
Indonesia’s mini-market y-y sales growth came in slower than the traditional general trade (GT) channel for the first time since data was made available in 2014 (Fig. 2), signaling that the downtrading trend observed since 2H24 persists. Our survey among both listed and unlisted modern trade (MT) players indicates that declining sales of product categories such as cigarettes (LINK) and rice (LINK)—while contributing less to gross margin—play a crucial role in driving overall store traffic down (Fig. 3). Consumers purchasing FMCG products in the GT channel enjoy several advantages, such as: 1) availability of smaller sachet products, 2) access to cheaper cigarette offerings, and 3) the prevalent “pay-later” practice common in GT. Moreover, recent fiscal stimulus targeted at rural and lower-tier cities, coupled with favorable crop prices, likely benefits thelocal GT channel more than mini-markets. This helps explain the stronger performance of FMCG companies relative to Alfamart, particularly in 3Q25, in our view.
Weaker MT performance and less favorable product mix drive earnings lower
Alfamart booked only +1% y-y SSSG in 3Q25, bringing 9M25 SSSG to +2.3% y-y — a notably softer trend vs. historical levels (Fig. 4). The bigger surprise came from the gross margin decline, driven by a less favorable product mix. High-margin categories like ready-to-drink tea fell ~25% y-y in 9M25, while lower-margin staples such as cooking oil and sugar performed better amid rising in-home consumption. In contrast, Alfamidi (MIDI IJ, Buy)’s higher-margin frozen segment mix recorded 20–30% y-y growth, supporting margin expansion. Meanwhile, underutilized new distribution centers added opex pressure.
Margin recovery ahead
We expect 4Q25F margins to improve, driven by lower promotional spending—from last year’s heavy 4Q24 outlay that pressured GPM. While a SSSG recovery will likely take time, ongoing efforts to boost sales and employee productivity should help defend margins as the spending sentiment gradually shifts back toward modern trade.
Maintain Buy with a lower target price of IDR2,500, implying 31% upside
We lower our 2025F-2027F earnings by 6-14.6% (Fig. 1), resulting in a lower target price of IDR2,500 (from IDR2,900), pegged on an unchanged 2026F P/E of 27.5x (equal to its five-year average). The stock currently trades at 21x 2026F P/E. Key downside risks include prolonged consumer downtrading and a higher-than-expected 2026 minimum wage hike that could pressure margins.
AMRT 3Q25 earnings call key takeaways – 9 November 2025
Performance update
The company highlightedweak buying power and downtrading to general trade drive the soft SSSG.
The company has started to see SSSG improvement in Oct-25.
3Q25 SSSG at +1% y-y, while 9M25 SSSG stood at +2.3% y-y.
9M25 online sales contribution reached ~8% of sales, up +32% y-y.
FY25E SSSG is expected to come in at low single-digit growth, with topline growth in the high single-digit range.
2026E outlook
Targeting the opening of 800 Alfamart stores and 200 Alfamidi stores.
Online sales contribution to rise by around 2% to 10% of sales.
Expecting high single-digit topline growth and mid single-digit SSSG.
1 DC renovation planned.
Potentially higher dividend payout ratio compared to 2025 (45%).
On 3Q25 GPM decline
Reason
Less favorable product mix, with stronger performance in low-margin products (e.g., cooking oil, sugar) and weaker performance in high-margin products (e.g., beverages).
4Q25F and onwards expectation for GPM
Margin recovery expected from lower promotional activities vs. last year, as the company plans to spend only about half of last year’s promotional budget.
Exploring more SKUs that can drive both traffic and margin improvement.
On opex-to-sales pressure
Lower sales base.
Opex pressure from DCs, as the four newly-opened DCs last year are still operating at around 55–57% utilization. Overall cost pressure expected to ease further toward 2026F.
Patriot bonds
AMRT subscribed to IDR800bn of Danantara’s Patriot Bonds.
No balance sheet or working capital issues, as the company’s FCF after dividends remains sufficient to cover the payment (2026F FCF: IDR3tn; dividend: IDR1.5tn).
Company profileEstablished in 1989, AMRT business activities are managing a minimarket distribution network that sells basic daily needs for customers, at affordable prices, convenient shopping places, and easy to reach locations because most of AMRT's stores are located in residential areas and commercial. As of 9M22, AMRT has 20,015 stores spread across Indonesia.
Valuation MethodologyOur target price of IDR2,500 implies 2026F P/E multiple of 27.5x (equal to its five-year-average). The benchmark index of the stock is JCI Index.
Risks that may impede the achievement of the target priceKey downside risks include prolonged consumer downtrading and a higher-than-expected 2026 minimum wage hike that could pressure margins.
ESGAMRT carries out activities related to enviromental aspects to support sustainable business growth. As of 2021, since the implementation of plastic-reducing policy, AMRT has been able to reduce the use of shopping plastic bags by 18.8%. Other initiative done by AMRT is the reusing of wastewater. AMRT has twenty eight branches which reuse wastewater with a total volume of 5.81 Megaliters. Other waste treatment by AMRT is done by reducing the use of cashier paper receipts by 8.8%.
Fig. 1: AMRT— Earnings changes
Source: Company data, Verdhana estimates
Fig. 2: AMRT— FMCG sales by sales channel y-y growth excluding Covid period– First-time underperformance of Minimarket in 12 years
Source: Company data, Verdhana research
Fig. 3: Consumer purchase behaviour across channel in Indonesia – Minimarket saw the largest traffic drop
Source: Kantar Worldpanel, Verdhana research
Fig. 4: AMRT quarterly y-y SSSG trend
One of the weakest quarterly y-y SSSG trendSource: Company data, Verdhana research
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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