Highlights

• 1H26 top-line was solid at 11.3% yoy, but core profit was flat at 0.7% (50% in line with our 2026 estimate) due to high freight costs and the weak rupiah.
   
• Despite 1H26 revenue exceeding guidance, management maintained its conservative outlook while reiterating that cost pressure remains manageable. Capacity and Pinehill distribution expansion remain on track. Maintain BUY with a target price of Rp10,150.
   

Analysis

• 1H26 results ‒ Core profit in line. Indofood CBP Sukses Makmur’s (ICBP) 1H26 revenue grew 11.3% yoy to Rp41.86t, with around 92% of its sales
  increase contributed by its core noodles (+11.4% yoy) and dairy (+15.3% yoy) segments. EBIT margin softened to 21.9% (1H25: 22.5%) as noodles margin compressed to 22.9% (1H25: 24.6%) due to higher freight costs and the weaker rupiah, although management viewed the pressure as manageable. Consequently, EBIT increased 8.0% yoy to Rp9.15t, while core profit was broadly flat (+1% yoy) at Rp5.4t (50% of our full-year estimate). Meanwhile, reported net profit declined 33% yoy due to a 216% yoy increase in forexrelated finance expenses to Rp4.09t, as rupiah depreciation affected its predominantly US dollar-denominated debt (>90% of total) . 
   
• Overseas remained the key growth driver, with 1H26 sales growing 21.9% yoy to Rp13.4t (domestic: +7.0% yoy), supported by volume growth, capacity expansion, and continued distribution expansion through Pinehill. Note that since the 2020 Pinehill acquisition, production capacity has increased from 9b to 15b packs/year across several countries. Management also noted no apparent disruption to Middle East operations despite ongoing geopolitical tensions.
   

• Domestic demand remained resilient despite softer macro indicators. Although domestic sales declined 16.2% qoq in 2Q26 due to seasonality, yoy growth remained healthy at 8.7%, bringing 1H26 domestic growth to 7.0% yoy. Management attributed the resilience partly to the "lipstick effect," as consumers continued to spend on affordable staples and retail goods. We think this is supported by M1 money supply growth accelerating to 9.8% yoy in Jun 26 (vs 6.3% yoy in Jun 25), and broadly strong double-digit revenue growth across the consumer sector. Note that across the 37 consumer-related stocks we compiled, 1H26 aggregate revenue grew 13% yoy. 
   
• Growth remained largely volume-driven, with no broad ASP hikes. Aside from selective SKU-level price adjustments in dairy, management did not implement broad price increases in 1H26. Although Bogasari raised flour prices (raw material for noodles) by 2% in May and another 1-2% in Julyfollowing rupiah depreciation, the noodles division has refrained from passing on higher costs as the pressure is forex-driven rather than stemming from underlying wheat costs. Management prefers to wait for a more sustainable medium-term demand outlook before considering broader ASP hikes.
   
• 2026 guidance maintained. Despite 1H26 revenue growing 11.3% yoy, well above its 2026 guidance of 5-7% (vs 2025: +3%), management maintained its conservative outlook, citing macro uncertainty and higher freight costs. The company also reiterated its 2026 EBIT margin guidance of 20-22%, viewing the slight margin pressure in 1H26 (21.9% vs 22.5% in 1H25) as primarily driven by freight costs and rupiah weakness, while soft commodity costs remained manageable. Meanwhile, 2026 capex is budgeted at Rp5.5t (+50% yoy), mainly for capacity expansion, including an additional 1.5b packs of noodle capacity, further capacity additions in 2H26, and new dairy capacity expected in 4Q26.