Ultrajaya Milk Industry & Trading (ULTJ IJ) (Buy) - The rise of plain milk

The rise of plain milk

Maintain Buy with higher TP of IDR2,200

Free nutritious meal program beneficiary

Our on-the-ground surveys reveal that the free nutritious meal program (MBG) has created additional demand for small size (100-200ml) plain milk products; a significant jump of demand started in 3Q25, along with the acceleration in MBG budget disbursement (IDR15tn in 3Q25 vs. IDR5tn in 1H25). In our view, ULTJ is in the best position to capture MBG demand, backed by its ample production capacity for small size packaged plain milk and strong brand recognition. We note that its peers mostly sell >200ml flavored milk; hence, they need to invest for new machines to produce smaller packages, which may take a year to be ready. Our conversations with MBG kitchen operators indicate that they mostly prefer ULTJ products due to its trusted product quality, given its pioneer and market-leader position. The contribution from small-size plain milk is still small (<3% of sales), but the run-rate, i.e. 125ml packaged milk, surged by +200% y-y, supporting ULTJ’s dairy sales growth of +6% y-y in 3Q25. In a bull-case scenario, assuming each MBG kitchen provides UHT plain milk every school day, we estimate the potential size of market for plain milk may reach IDR50tn a year (vs estimated ULTJ sales at IDR8.56tn in FY25F).

Manageable margin level

A decline in 3Q25 GPM level was attributable to lower economies of scale, as ready-to-drink (RTD) tea sales dropped by 30% y-y. However, management normalized its A&P-to-sales ratio significantly by 320bp/610bp in q-q/y-y, supporting EBIT margin. Meanwhile, selling to MBG kitchens also still produces healthy margin; although GPM is lower, it does not require A&P spending, andhence operating margin is still favorable.

Recommend Buy with higher TP of IDR2,200

Over the next few years, we expect dairy sales will grow rapidly along with MBG progress. We also track that RTD tea sales started to recover in Oct-25; hence, we revise up our NPAT estimates by 10%/8%/8% in FY25F/26F/27F. We reiterate our Buy recommendation with a higher TP of IDR2,200 (from IDR2,000), using a target P/E of 18.8x FY25F (unchanged). Currently, the stock is trading at a FY25F P/E of 11.5x. Given potential upside of 61.8% and dividend yield of 3%, ULTJ’s implied TSR is 64.8%. A downside risk would be tougher-than-expected competition.

Year-end 31 Dec	FY24		FY25F		FY26F		FY27F
Currency (IDR)	Actual	Old	New	Old	New	Old	New
Revenue (bn)	8,874	8,564	8,564	9,439	9,439	10,500	10,500
Reported net profit (bn)	1,137	1,119	1,230	1,307	1,412	1,513	1,639
Normalised net profit (bn)	1,137	1,119	1,230	1,307	1,412	1,513	1,639
FD normalised EPS	109.31	107.63	118.28	125.71	135.79	145.48	157.58
FD norm. EPS growth (%)	-2.8	-1.5	8.2	16.8	14.8	15.7	16.0
FD normalised P/E (x)	12.4	–	11.5	–	10.0	–	8.6
EV/EBITDA (x)	8.7	–	7.7	–	6.7	–	5.8
Price/book (x)	1.9	–	1.7	–	1.6	–	1.4
Dividend yield (%)	2.8	–	3.0	–	3.5	–	4.1
ROE (%)	16.3	14.6	15.9	15.5	16.5	16.3	17.2
Net debt/equity (%)	net cash	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	FY23	FY24	FY25F	FY26F	FY27F
Revenue	8,303	8,874	8,564	9,439	10,500
Cost of goods sold	-5,611	-5,852	-5,770	-6,359	-7,061
Gross profit	2,692	3,022	2,795	3,080	3,439
SG&A	-1,235	-1,623	-1,319	-1,424	-1,572
Employee share expense	0	0	0	0	0
Operating profit	1,456	1,399	1,475	1,656	1,867
EBITDA	1,602	1,533	1,667	1,863	2,086
Depreciation	-146	-134	-192	-206	-219
Amortisation	0	0	0	0	0
EBIT	1,456	1,399	1,475	1,656	1,867
Net interest expense	23	37	73	91	98
Associates & JCEs	0	0	0	0	0
Other income	28	71	67	108	186
Earnings before tax	1,507	1,507	1,615	1,855	2,151
Income tax	-321	-353	-378	-435	-504
Net profit after tax	1,186	1,154	1,237	1,420	1,647
Minority interests	-17	-17	-7	-8	-9
Other items	0	0	0	0	0
Preferred dividends	0	0	0	0	0
Normalised NPAT	1,169	1,137	1,230	1,412	1,639
Extraordinary items	0	0	0	0	0
Reported NPAT	1,169	1,137	1,230	1,412	1,639
Dividends	-416	-398	-430	-494	-574
Transfer to reserves	753	739	799	918	1,065
Valuations and ratios
Reported P/E (x)	12.1	12.4	11.5	10.0	8.6
Normalised P/E (x)	12.1	12.4	11.5	10.0	8.6
FD normalised P/E (x)	12.1	12.4	11.5	10.0	8.6
Dividend yield (%)	2.9	2.8	3.0	3.5	4.1
Price/cashflow (x)	6.1	11.2	9.5	9.9	8.3
Price/book (x)	2.1	1.9	1.7	1.6	1.4
EV/EBITDA (x)	8.5	8.7	7.7	6.7	5.8
EV/EBIT (x)	9.4	9.6	8.7	7.6	6.5
Gross margin (%)	32.4	34.1	32.6	32.6	32.8
EBITDA margin (%)	19.3	17.3	19.5	19.7	19.9
EBIT margin (%)	17.5	15.8	17.2	17.5	17.8
Net margin (%)	14.1	12.8	14.4	15.0	15.6
Effective tax rate (%)	21.3	23.4	23.4	23.4	23.4
Dividend payout (%)	35.6	35.0	35.0	35.0	35.0
ROE (%)	19.0	16.3	15.9	16.5	17.2
ROA (pretax %)	25.4	24.6	24.1	25.2	25.6
Growth (%)
Revenue	8.4	6.9	-3.5	10.2	11.2
EBITDA	12.4	-4.3	8.8	11.7	12.0
Normalised EPS	21.7	-2.8	8.2	14.8	16.0
Normalised FDEPS	21.7	-2.8	8.2	14.8	16.0
Source: Company data, Verdhana estimates

Cashflow statement (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
EBITDA	1,602	1,533	1,667	1,863	2,086
Change in working capital	-330	1,281	1,483	-199	-157
Other operating cashflow	1,028	-1,551	-1,654	-241	-226
Cashflow from operations	2,300	1,263	1,495	1,422	1,702
Capital expenditure	-232	-248	-559	-532	-548
Free cashflow	2,067	1,014	936	890	1,154
Reduction in investments	-48	-54	-10	-13	-14
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	-220	-311	94	-156	-85
CF after investing acts	1,799	650	1,020	721	1,055
Cash dividends	-312	-416	-398	-430	-494
Equity issue	-63	0	0	0	0
Debt issue	-598	0	0	0	0
Convertible debt issue	0	0	0	0	0
Others	100	26	-22	-48	-100
CF from financial acts	-873	-390	-420	-479	-594
Net cashflow	926	260	600	242	461
Beginning cash	1,249	2,174	2,434	3,035	3,277
Ending cash	2,174	2,434	3,035	3,277	3,738
Ending net debt	-2,173	-2,433	-3,033	-3,275	-3,736
Balance sheet (IDRbn)
As at 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Cash & equivalents	2,174	2,434	3,035	3,277	3,738
Marketable securities	0	0	0	0	0
Accounts receivable	767	912	866	943	1,040
Inventories	1,431	1,390	1,358	1,478	1,624
Other current assets	39	134	133	146	163
Total current assets	4,411	4,870	5,391	5,843	6,565
LT investments	329	383	393	406	420
Fixed assets	2,346	2,461	2,828	3,154	3,483
Goodwill	0	0	0	0	0
Other intangible assets	8	9	9	9	9
Other LT assets	429	739	645	801	886
Total assets	7,524	8,461	9,266	10,213	11,363
Short-term debt	2	2	2	2	2
Accounts payable	465	555	525	530	588
Other current liabilities	247	346	376	381	426
Total current liabilities	713	903	902	912	1,016
Long-term debt	0	0	0	0	0
Convertible debt	0	0	0	0	0
Other LT liabilities	124	132	152	177	208
Total liabilities	837	1,034	1,054	1,090	1,225
Minority interest	86	88	92	104	117
Preferred stock	0	0	0	0	0
Common stock	566	566	566	566	566
Retained earnings	6,062	6,783	7,564	8,463	9,465
Proposed dividends	0	0	0	0	0
Other equity and reserves	-28	-10	-10	-10	-10
Total shareholders' equity	6,601	7,339	8,120	9,019	10,021
Total equity & liabilities	7,524	8,461	9,266	10,213	11,363
Liquidity (x)
Current ratio	6.18	5.39	5.97	6.40	6.46
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)	112.44	109.31	118.28	135.79	157.58
Norm EPS (IDR)	112.44	109.31	118.28	135.79	157.58
FD norm EPS (IDR)	112.44	109.31	118.28	135.79	157.58
BVPS (IDR)	634.80	705.81	780.91	867.37	963.73
DPS (IDR)	40.00	38.26	41.40	47.53	55.15
Activity (days)
Days receivable	32.0	34.6	37.9	35.0	34.5
Days inventory	100.1	88.2	86.9	81.4	80.2
Days payable	35.6	31.9	34.2	30.3	28.9
Cash cycle	96.6	90.9	90.6	86.1	85.7
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 IDR2,200 based on 18.8x 2025F P/E (+1.9SD of 5-year-historical average). We use JCI as our benchmark index.

Risks that may impede the achievement of the target priceDownside risk would be tougher-than-expected competition.

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.

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

By accepting this report, the recipient hereof represents and warrants that you are entitled to receive such report in accordance with the restrictions and agrees to be bound by the limitations contained herein. Neither this report nor any copy hereof may be distributed except in compliance with applicable Indonesian capital market laws and regulations.

Rating Table

Rating Remains	Buy
Target price Increased from IDR 2,000	IDR 2,200
Closing price 27 October 2025	IDR 1,360
Implied upside	+61.8%
Market Cap (USD mn)	946.0
ADT (USD mn)	0.3

Relative performance chart

Source: LSEG, Verdhana

M cap (USDmn)	946.0
Free float (%)	24.6
3-mth ADT (USDmn)	0.3

(%)	1M	3M	12M
Absolute (IDR)	4.6	3.8	-26.9
Absolute (USD)	5.3	1.9	-31.2
Rel to Jakarta Stock Exchange Composite Index	4.4	-3.8	-32.4

Research Analysts

Sandy Ham (sandy.ham@verdhana.id)

Samuel Christian (samuel.christian@verdhana.id)

Jody Wijaya (jody.wijaya@verdhana.id)

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

ULTJ IJ				QoQ	YoY			YoY	9M25/
Profit and loss statement (IDRbn)	3Q24	2Q25	3Q25	(%)	(%)	9M24	9M25	(%)	Nomura
Revenue	2,138	1,798	2,156	19.9	0.8	6,583	6,238	(5.2)	72.8
COGS	1,411	1,220	1,469	20.4	4.1	4,358	4,181	(4.1)
Gross profit	727	577	687	19.0	(5.5)	2,224	2,057	(7.5)
EBIT	336	287	422	46.8	25.7	1,178	1,104	(6.2)	74.8
Other income/(expenses)
Net interest income/(expense)	6.0	8.8	8.8	(0.6)	45.7	28.7	28.7	(0.1)
Net forex gain/(losses)	(159.2)	(2.5)	23.2	n.a.	n.a.	(59.2)	71.4	n.a.
Others	(7.1)	21.4	4.3	(79.9)	n.a.	1.3	33.8	2,584
Pre-tax profit	175	315	458.1	45.4	161.1	1,148	1,238.0	7.8
Net profit	126	239	357.1	49.3	183.3	881	960.9	9.0	78.1

Gross margin (%)	34.0	32.1	31.9			33.8	33.0
EBIT margin (%)	15.7	16.0	19.6			17.9	17.7
Pre-tax margin (%)	8.2	17.5	21.2			17.4	19.8
Net margin (%)	5.9	13.3	16.6			13.4	15.4

Balance sheet (IDRbn)	Sep-24	Jun-25	Sep-25
Cash and equivalents	2,444	2,085	2,546
Total assets	7,892	8,158	8,575
Total liabilities	746	576	641
Interest bearing liabilities	2	2	2
Equity	7,146	7,582	7,934

ROA (%)	6.4	11.7	16.7
ROE (%)	7.1	12.6	18.0
Gearing (%)	0.0	0.0	0.0
Net gearing (%)	n.c.	n.c.	n.c.

Ultrajaya Milk Industry & Trading (ULTJ IJ) (Buy) - The rise of plain milk

The rise of plain milk

Key data on Ultrajaya Milk Industry & Trading

Fig. 1: ULTJ - 3Q25 results table

Fig. 2: ULTJ – Quarterly dairy sales trend

Fig. 3: Free nutritious meal program budget realization

Fig. 4: ULTJ – Quarterly A&P-to-sales ratio trend

Fig. 5: ULTJ – Forward 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) - The rise of plain milk

Fig. 1: ULTJ - 3Q25 results table

Fig. 2: ULTJ – Quarterly dairy sales trend

Fig. 3: Free nutritious meal program budget realization

Fig. 4: ULTJ – Quarterly A&P-to-sales ratio trend

Fig. 5: ULTJ – Forward P/E band

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