4Q25 result recap

AMRT delivered strong earnings growth in 4Q25, driven by a significant rebound in gross profit margin (GPM), which expanded by +150bp y-y. This improvement was mainly attributable to the company’s initiative to reduce direct promotional discounts, which were heavily rolled out back in 2H24. As a result, the company was able to better capture additional seasonal margins at year-end from supplier rebates.

Improved opex-to-sales on a y-y basis also supported overall net margin expansion. Despite slower same-store sales growth (SSSG), we believe this reflects increased utilization of past investments, including distribution centers (DCs), additional chillers, and cash deposit boxes.

Shares of losses from associates rose to IDR134bn, likely driven by significant losses in its Philippines operations (35% ownership, with reported losses of IDR384bn). Nevertheless, overall earnings were in line with both our expectations and consensus estimates.

Off a lower base, while downtrading remains the key theme

We expect AMRT to post strong 1Q26F SSSG, supported by an earlier festive season compared to last year, as well as the recovery in rice supply, which should help drive higher store foot traffic and basket sizes. However, we anticipate some normalization in 2Q26F SSSG following the earlier festive season. We note that 2H25 provides a lower base for 2H26F, given the impact of rice scarcity and weaker cigarette sales during that period.

We believe the company’s focus this year will remain on navigating a challenging macroeconomic environment by balancing its product mix and offering higher-margin products, while also catering to downtrading behavior. This strategy should help maximize sales turnover and margins within its limited shelf space.

Maintain Buy with TP of IDR2,500

We maintain our Buy call on AMRT with a target price of IDR2,500, based on 27.5x 2026F P/E, equal to its five-year average. AMRT remains one of our top pick in the sector, as we believe its focus on daily essentials, combined with strong proximity and convenience advantages, should remain relevant even in a challenging macro environment.

Over the longer term, we see attractive upside potential from a possible increase in its payout ratio, supported by strong free cash flow generation (Fig. 1), as reflected in the first meaningful dividend payout increase in 2025 (Fig. 2).

While the direct impact of higher oil prices is likely to be limited, any ASP increases by FMCG players could provide a slight margin uplift for mini markets. The key downside risk, in our view, remains a sharper-than-expected deterioration in consumer purchasing power. Currently, the stock trades at a 2026F P/E of 15.4x.

 

Fig. 1: Free cash flow

 

Fig. 2: Dividend payout ratio

 

Fig. 3: 4Q25 financial results

 

Fig. 4: 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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Jody Wijaya (jody,wijaya@verdhana.id)

Sandy Ham (sandy.ham@verdhana.id)

Nayla Yasmin (nayla.yasmin@verdhana.id)

Samuel Christian  (samuel.christian@verdhana.id)