Ultrajaya Milk Industry & Trading (ULTJ IJ) (Buy) - Surge in dairy sales

Food Beverages n Tobacco SH SC JW NY 1.5K

Surge in dairy sales

Maintain Buy with higher TP of IDR2,850

Robust demand for UHT full-cream milk

ULTJ recorded a significant increase in dairy sales of +18% y-y in 4Q25, boosted by demand from the free meal program, which in our view should help sustain the strong sales growth trend. Conservatively, we project +16% y-y sales growth for FY26F where 30% of its potential growth is likely to be driven by the free meal program; our industry survey indicates that ULTJ’s 2M26 sales growth still hovered above +20% y-y. For ULTJ, ultra-high temperature (UHT) full-cream milk has by far been the best-selling product category; we reckon that its sales grew by +50% y-y in FY25, and currently accounts for 55% of total dairy sales. We project demand from the free meal program will continue to show a gradual increase as we expect more and more kitchens to have milk on their menu, which will lead to increased contribution from UHT full-cream milk sales. Based on our channel checks, kitchens procure UHT milk products mostly via distributors and retail channels at normal free market prices, while only a few procure 125ml pack size milk directly from factories (currently account for only 2% of ULTJ sales) due to limited production capacity. Kitchens are now buying UHT full-cream milk products in all pack sizes given the availability issue. We believe ULTJ is in a strong position to capture demand from kitchens due to its strong brand equity, product quality, and largest production capacity with +50% additional capacity starting this year. As evidence, ULTJ as the market leader in UHT milk has continued to gain market share that improved to 37% in FY25 from 36% in FY24.

Margins should remain stable

We estimate ULTJ’s EBIT margins to remain relatively stable, supported by the company’s ASP hike and low A&P-to-sales ratio, largely offsetting the higher raw material costs. We also expect its ready-to-drink (RTD) beverage sales volumes to gradually recover; hence, an improved utilization rate should lower the fixed costs-to-sales ratio; we note that the additional demand created by the free meal program should to some extent also benefit ULTJ’s green bean RTD sales volumes. In addition, ULTJ may achieve improvement in cost control through improvement in its supply chain by leveraging technology at its new factories.

Raising earnings forecasts; increasing TP to IDR2,850, implying 87% upside

We revise up our earnings forecasts by +11%/+7.6% for FY26F/FY27F on the back of a potential acceleration in sales volumes driven by higher demand from the free meal program. We raise our TP to IDR2,850 (from IDR2,550), using an unchanged target P/E of 18.8x (+1.8 SD of 5-year-historical average) FY26F. Currently, the stock is trading at 10x FY26F P/E. Downside risks would be the stock’s relatively low liquidity.

Year-end 31 Dec	FY25		FY26F		FY27F		FY28F
Currency (IDR)	Actual	Old	New	Old	New	Old	New
Revenue (bn)	8,768	9,439	10,133	10,500	11,690	0	13,365
Reported net profit (bn)	1,353	1,412	1,568	1,639	1,763	0	2,042
Normalised net profit (bn)	1,353	1,412	1,568	1,639	1,763	0	2,042
FD normalised EPS	130.15	135.79	150.84	157.58	169.53		196.37
FD norm. EPS growth (%)	19.1	14.8	15.9	16.0	12.4		15.8
FD normalised P/E (x)	11.7	–	10.1	–	9.0	–	7.8
EV/EBITDA (x)	8.4	–	6.9	–	5.8	–	4.8
Price/book (x)	1.9	–	1.7	–	1.5	–	1.3
Dividend yield (%)	3.0	–	3.5	–	3.9	–	4.5
ROE (%)	17.4	16.5	18.0	17.2	17.9		18.4
Net debt/equity (%)	net cash	net cash	net cash	net cash	net cash		net cash

Source: Company data, Verdhana estimates

Key data on Ultrajaya Milk Industry & Trading

Income statement (IDRbn)
Year-end 31 Dec	FY24	FY25	FY26F	FY27F	FY28F
Revenue	8,874	8,768	10,133	11,690	13,365
Cost of goods sold	-5,852	-5,899	-6,770	-7,800	-8,880
Gross profit	3,022	2,869	3,364	3,890	4,485
SG&A	-1,623	-1,273	-1,510	-1,741	-1,990
Employee share expense	0	0	0	0	0
Operating profit	1,399	1,597	1,853	2,149	2,495
EBITDA	1,533	1,743	2,054	2,342	2,698
Depreciation	-134	-146	-201	-193	-203
Amortisation	0	0	0	0	0
EBIT	1,399	1,597	1,853	2,149	2,495
Net interest expense	37	39	47	53	61
Associates & JCEs	0	0	0	0	0
Other income	71	111	101	46	48
Earnings before tax	1,507	1,747	2,001	2,248	2,605
Income tax	-353	-370	-423	-476	-551
Net profit after tax	1,154	1,377	1,578	1,773	2,054
Minority interests	-17	-24	-9	-10	-12
Other items	0	0	0	0	0
Preferred dividends	0	0	0	0	0
Normalised NPAT	1,137	1,353	1,568	1,763	2,042
Extraordinary items	0	0	0	0	0
Reported NPAT	1,137	1,353	1,568	1,763	2,042
Dividends	0	-474	-549	-617	-715
Transfer to reserves	1,137	880	1,019	1,146	1,327
Valuations and ratios
Reported P/E (x)	14.0	11.7	10.1	9.0	7.8
Normalised P/E (x)	14.0	11.7	10.1	9.0	7.8
FD normalised P/E (x)	14.0	11.7	10.1	9.0	7.8
Dividend yield (%)	–	3.0	3.5	3.9	4.5
Price/cashflow (x)	12.6	8.9	10.6	9.3	7.9
Price/book (x)	2.2	1.9	1.7	1.5	1.3
EV/EBITDA (x)	10.0	8.4	6.9	5.8	4.8
EV/EBIT (x)	10.9	9.1	7.7	6.4	5.2
Gross margin (%)	34.1	32.7	33.2	33.3	33.6
EBITDA margin (%)	17.3	19.9	20.3	20.0	20.2
EBIT margin (%)	15.8	18.2	18.3	18.4	18.7
Net margin (%)	12.8	15.4	15.5	15.1	15.3
Effective tax rate (%)	23.4	21.2	21.2	21.2	21.2
Dividend payout (%)	0.0	35.0	35.0	35.0	35.0
ROE (%)	16.3	17.4	18.0	17.9	18.4
ROA (pretax %)	24.6	26.4	28.5	29.4	30.8
Growth (%)
Revenue	6.9	-1.2	15.6	15.4	14.3
EBITDA	-4.3	13.7	17.9	14.0	15.2
Normalised EPS	-2.8	19.1	15.9	12.4	15.8
Normalised FDEPS	-2.8	19.1	15.9	12.4	15.8
Source: Company data, Verdhana estimates

Cashflow statement (IDRbn)
Year-end 31 Dec	FY24	FY25	FY26F	FY27F	FY28F
EBITDA	1,533	1,743	2,054	2,342	2,698
Change in working capital	1,281	1,693	-268	-246	-247
Other operating cashflow	-1,551	-1,651	-284	-384	-452
Cashflow from operations	1,263	1,785	1,502	1,712	1,999
Capital expenditure	-248	-920	-530	-527	-542
Free cashflow	1,014	865	972	1,185	1,457
Reduction in investments	-54	-54	-54	-54	-54
Net acquisitions	0	0	0	0	0
Dec in other LT assets	0	0	0	0	0
Inc in other LT liabilities	0	0	0	0	0
Adjustments	-311	361	-30	-17	-22
CF after investing acts	650	1,172	888	1,115	1,382
Cash dividends	-416	0	-474	-549	-617
Equity issue	0	0	0	0	0
Debt issue	0	0	0	0	0
Convertible debt issue	0	0	0	0	0
Others	26	-443	-51	-5	0
CF from financial acts	-390	-443	-524	-554	-617
Net cashflow	260	729	363	561	765
Beginning cash	2,174	2,434	3,163	3,527	4,087
Ending cash	2,434	3,163	3,527	4,087	4,852
Ending net debt	-2,433	-3,162	-3,525	-4,086	-4,850
Balance sheet (IDRbn)
As at 31 Dec	FY24	FY25	FY26F	FY27F	FY28F
Cash & equivalents	2,434	3,163	3,527	4,087	4,852
Marketable securities	0	0	0	0	0
Accounts receivable	912	801	954	1,100	1,258
Inventories	1,390	1,107	1,354	1,560	1,776
Other current assets	134	124	141	163	187
Total current assets	4,870	5,195	5,975	6,910	8,072
LT investments	383	466	481	497	514
Fixed assets	2,461	3,235	3,565	3,899	4,238
Goodwill	0	0	0	0	0
Other intangible assets	9	15	15	15	15
Other LT assets	739	343	412	466	525
Total assets	8,461	9,253	10,448	11,788	13,364
Short-term debt	2	2	2	1	1
Accounts payable	555	484	564	650	740
Other current liabilities	346	302	371	414	474
Total current liabilities	903	788	937	1,065	1,215
Long-term debt	0	0	0	0	0
Convertible debt	0	0	0	0	0
Other LT liabilities	132	149	164	180	198
Total liabilities	1,034	937	1,100	1,245	1,414
Minority interest	88	96	111	129	150
Preferred stock	0	0	0	0	0
Common stock	566	566	566	566	566
Retained earnings	6,783	7,669	8,684	9,862	11,248
Proposed dividends	0	0	0	0	0
Other equity and reserves	-10	-14	-14	-14	-14
Total shareholders' equity	7,339	8,221	9,236	10,413	11,800
Total equity & liabilities	8,461	9,253	10,448	11,788	13,364
Liquidity (x)
Current ratio	5.39	6.59	6.38	6.49	6.64
Interest cover	–	–	–	–	–
Leverage
Net debt/EBITDA (x)	net cash	net cash	net cash	net cash	net cash
Net debt/equity (%)	net cash	net cash	net cash	net cash	net cash
Per share
Reported EPS (IDR)	109.31	130.15	150.84	169.53	196.37
Norm EPS (IDR)	109.31	130.15	150.84	169.53	196.37
FD norm EPS (IDR)	109.31	130.15	150.84	169.53	196.37
BVPS (IDR)	705.81	790.57	888.22	1,001.45	1,134.82
DPS (IDR)	0.00	45.55	52.79	59.34	68.73
Activity (days)
Days receivable	34.5	35.6	31.6	32.1	32.3
Days inventory	88.0	77.2	66.3	68.2	68.7
Days payable	31.8	32.2	28.3	28.4	28.6
Cash cycle	90.7	80.7	69.7	71.8	72.4
Source: Company data, Verdhana estimates

Company profileULTJ is Indonesia's leading dairy company, primarily engaged in manufacturing aseptic-packaged ultra-high-temperature (UHT) beverages. Its products include UHT milk (70% of sales), UHT tea (22% of sales) and others (8% of sales). Besides UHT beverages, the company also manufactures non-UHT products, such as sweetened condensed milk, tropical fruit juice concentrate and powdered milk. ULTJ markets its products under various brand names, such as Ultra Milk and Susu Sehat for its UHT fresh milk, Teh Kotak and Teh Bunga for its UHT tea, and Cap Sapi and Golden Choice for its sweetened condensed milk.

Valuation MethodologyWe derive our TP of IDR2,850 based on 18.8x FY26F P/E (+1.8SD of 5-year-historical average). We use JCI as our benchmark index.

Risks that may impede the achievement of the target priceDownside risks would bethe stock's relatively low liquidity.

ESGIn carrying out its business activities and operations, ULTJ is committed to ensure provision of benefits to its employees and communities, as well as to actively participate in protecting the environment. The company completes production facilities with necessary waste processing equipment, and employs personnel to monitor compliance with environmental standards when of disposing solid and liquid waste. ULTJ has also been using eco-friendly cardboard packaging since its inception.

Fig. 1: Consumer peers – valuation comparison

Source: Verdhana estimates

Fig. 2: ULTJ – Quarterly dairy sales trend

Free nutritious meal program has boosted demand for UHT full-cream milk since 3Q25. We expect more kitchens will provide milk gradually, hence, demand for UHT milk should expand further.

Source: Company data, Verdhana estimates

Fig. 3: ULTJ – Quarterly RTD tea sales trend

RTD tea sales were down significantly following a decline in demand from government events as well as the La Niña effect reducing consumption of RTD beverages; this trend has impacted the entire beverage industry in Indonesia. We expect a gradual recovery on the demand side following more aggressive government expenditure and a dryer season.

Source: Company data, Verdhana estimates

Fig. 4: Progress of the free nutritious meal program

Source: BGN, Verdhana research

Fig. 5: ULTJ – Annual total sales trend

We expect the government’s free meal program to support ULTJ sales growth from FY26F onwards.

Source: Company data, Verdhana estimates

Fig. 6: ULTJ – GPM trend

The company raised ASP by ~4% in Feb-26 to offset potentially higher raw material costs.

Source: Company data, Verdhana estimates

Fig. 7: ULTJ – A&P-to-sales ratio trend

Structurally a low A&P expense on the back of the company’s strong brand equity.

Source: Company data, Verdhana estimates

Fig. 8: ULTJ – NPAT trend

We forecast sales volume growth acceleration, supported by structural demand from the free meal program, as well as stable margins due to pricing power and more efficient production.

Source: Company data, Verdhana estimates

Fig. 9: ULTJ – ROE trend

Source: Company data, Verdhana estimates

Fig. 10: ULTJ – P/E band

Source: Verdhana estimates

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.

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by PT Verdhana Sekuritas Indonesia (“PTVSI”) a securities company registered in Indonesia, supervised by Indonesia Financial Services Authority (OJK) and a member of the Indonesia Stock Exchange (IDX).

This report is intended for client of PTVSI only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PTVSI.

The research set out in this report is based on information obtained from sources believed to be reliable, but PTVSI do not make any representation or warranty as to its accuracy, completeness or correctness. The information in this report is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. Any information, valuations, opinions, estimates, forecasts, ratings or targets herein constitutes a judgment as of the date of this report is published, and there is no assurance that future results or events will be consistent.

This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities or financial products. PTVSI and its associates, its directors, and/or its employees may from time to time have interests in the securities mentioned in this report or it may or will engage in any securities transaction or other capital market services for the company (companies) mentioned herein.

ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this report and certifies that the views about the companies including their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

RESTRICTIONS ON DISTRIBUTION

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Rating Table

Rating Remains	Buy
Target price Increased from IDR 2,550	IDR 2,850
Closing price 10 March 2026	IDR 1,525
Implied upside	+86.9%
Market Cap (USD mn)	1,045.3
ADT (USD mn)	0.5

Relative performance chart

Source: LSEG, Verdhana

M cap (USDmn)	1,045.3
Free float (%)	24.6
3-mth ADT (USDmn)	0.5

(%)	1M	3M	12M
Absolute (IDR)	0.0	1.7	2.3
Absolute (USD)	-0.4	0.6	-0.8
Rel to Jakarta Stock Exchange Composite Index	9.8	17.3	-8.9

Research Analysts

Sandy Ham (sandy.ham@verdhana.id)

Samuel Christian (samuel.christian@verdhana.id)

Jody WIjaya (jody.wijaya@verdhana.id)

Nayla Yasmin (nayla.yasmin@verdhana.id)

Tags: FOOD AND BEVERAGE, Ultrajaya Milk Industry And Trading, ULTJ, ULTJ JK, ULTJ IJ, Sandy Ham, Samuel Christian, Jody WIjaya, Nayla Yasmin

Ultrajaya Milk Industry & Trading (ULTJ IJ) (Buy) - Surge in dairy sales

Surge in dairy sales

Key data on Ultrajaya Milk Industry & Trading

Fig. 1: Consumer peers – valuation comparison

Fig. 2: ULTJ – Quarterly dairy sales trend

Fig. 3: ULTJ – Quarterly RTD tea sales trend

Fig. 4: Progress of the free nutritious meal program

Fig. 5: ULTJ – Annual total sales trend

Fig. 6: ULTJ – GPM trend

Fig. 7: ULTJ – A&P-to-sales ratio trend

Fig. 8: ULTJ – NPAT trend

Fig. 9: ULTJ – ROE trend

Fig. 10: ULTJ – P/E band

Rating Table

Relative performance chart

Research Analysts

yudi Administrator

Mayora Indah MYOR IJ Buy - Indonesia superior multinational company

Ultrajaya Milk Industry and Trading ULTJ IJ -Buy- July sales jump

Indonesia FMCG - Nutri-Grade labellings impact on consumers

Sariguna Primatirta CLEO IJ -Buy- Sales and margin can expand further

Indonesia FMCG - Lucrative risk or reward

Indofood CBP Sukses Makmur ICBP IJ -Buy- Solid growth engine

Ultrajaya Milk Industry & Trading (ULTJ IJ) (Buy) - Surge in dairy sales

Fig. 1: Consumer peers – valuation comparison

Fig. 2: ULTJ – Quarterly dairy sales trend

Fig. 3: ULTJ – Quarterly RTD tea sales trend

Fig. 4: P﻿rogress of the free nutritious meal program

Fig. 5: ULTJ – Annual total sales trend

Fig. 6: ULTJ – GPM trend

Fig. 7: ULTJ – A&P-to-sales ratio trend

Fig. 8: ULTJ – NPAT trend

Fig. 9: ULTJ – ROE trend

Fig. 10: ULTJ – P/E band

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Fig. 4: Progress of the free nutritious meal program