Periodic/Sector reports
Consumer: Better-than-feared Results, And A More Attractive Risk-Reward
MARKET WEIGHT (Maintained)
Analyst
Analyst
Highlights
- We see a more tactical risk-reward as share prices have been overly punished, while 1H26 results were better than feared, coupled with improving sentiment as oil prices and the rupiah stabilise.
- Despite the weak macro backdrop, liquidity is improving as M2 supply is growing faster than last year, coupled with signs of the “lipstick effect”, allowing selective consumer names to outperform.
- Maintain MARKET WEIGHT. Prefer selective names with solid fundamentals amid macro uncertainty. Top Picks: CMRY, ICBP, JPFA, AMRT.
Analysis
- Maintain MARKET WEIGHT, but tactically more interesting especially as a safe haven. We see a more favourable risk-reward as consumer results
have held up better than feared, while share prices have been overly punished amid weak market sentiment. Valuations have severely de-rated
on structurally weak consumption, with the non-cyclical sector now trading at 8.3x 2026F PE (near -2SD of its five-year average), with the condition
recently exacerbated by high oil prices, a weak rupiah and an upward trend in household debt. On the bright side, the negative sentiment appears to be
easing as: a) oil prices and the rupiah have been more stable, b) a forward looking view on consumption stimulus, (including the recently announced
Rp26.34t 2H26 stimulus package), amid slight fiscal relief from lower oil prices, and c) stronger-than-expected 1H26 financial results were reported
across the consumer sector. Top picks: CMRY, ICBP, JPFA and AMRT.
- 1H26 consumer results were broadly in line. Consumer and retailer related stocks under our coverage reported resilient growth, with aggregate
revenue up 12.1% yoy and net profit up 10.6% yoy, (~52% of full=year forecasts on average). Most companies' gross margins softened, as
expected, due to a weaker rupiah, higher prices for some soft commodities, and freight costs. Thus, most companies prioritised protecting volumes
rather than raising ASPs, ie Cisarua Mountain Dairy (CMRY), Indofood CBP (ICBP), and Mayora Indah (MYOR). Only two names expanded gross
margins in 1H26 vs 1H25: a) MYOR (+450bp) on lower cocoa and coffee prices, although 2Q already shows the peak passing, and b) Sumber Alfaria
Trijaya (AMRT) (+38bp), driven by product mix and some ASP increases. Interestingly, across a broader universe of 25 consumer-related names we
compiled, aggregate revenue grew a resilient 9.9%, with strength across dairy, poultry, bottled water and personal care-related companies, with the
highest profit growth coming from cigarette names (see table below).
- What’s the message behind the resilience? We acknowledge the macro backdrop has not been exciting, with CCI continuing to decline and RSI
staying negative for three consecutive months (April–June). However, liquidity is improving, with M2 growth holding at 8.7% yoy in June vs 6.4%
yoy a year earlier. We are also seeing an early “lipstick effect”, where consumers cut back on larger discretionary purchases but continue spending
on more affordable indulgences. Note the accommodation & food services component of GDP grew strongly at 10.6% yoy in 2Q26, alongside stronger
inbound tourism (+5.7% yoy) and weaker outbound travel (-2.4% yoy) amid rupiah depreciation, which may redirect some discretionary spending toward
domestic F&B, retail, personal care and leisure.
- We identify three common themes among the outperformers:
a) upper segment resilience and the "lipstick effect", particularly across sport & lifestyle and personal care names like Mitra Adiperkasa (MAPI), MAP Aktif Adiperkasa (MAPA, NR), and Akasha Wira International (ADES, NR);
b) strong brand power, integration, pricing ability and innovation agility, allowing names to either grab market share or pass through price hikes. We see this in names like: a) ICBP, which continues to deliver strong overseas growth supported by a distribution network that has enabled it to gain share amid
Middle East disruptions; b) AMRT, which has been able to pass on supplier costs; c) CMRY, which continues to innovate and drive market expansion,
and bottled water and cigarette names, which continue to raise ASPs; and d) Free Meal Program beneficiaries, particularly dairy and poultry-related
players such as Ultrajaya Milk Industry (ULTJ, NR), CMRY, Charoen Pokphand Indonesia (CPIN, NR) and Japfa Comfeed Indonesia (JPFA).
Highlights
- We see a more tactical risk-reward as share prices have been overly punished, while 1H26 results were better than feared, coupled with improving sentiment as oil prices and the rupiah stabilise.
- Despite the weak macro backdrop, liquidity is improving as M2 supply is growing faster than last year, coupled with signs of the “lipstick effect”, allowing selective consumer names to outperform.
- Maintain MARKET WEIGHT. Prefer selective names with solid fundamentals amid macro uncertainty. Top Picks: CMRY, ICBP, JPFA, AMRT.
Analysis
- Maintain MARKET WEIGHT, but tactically more interesting especially as a safe haven. We see a more favourable risk-reward as consumer results
have held up better than feared, while share prices have been overly punished amid weak market sentiment. Valuations have severely de-rated
on structurally weak consumption, with the non-cyclical sector now trading at 8.3x 2026F PE (near -2SD of its five-year average), with the condition
recently exacerbated by high oil prices, a weak rupiah and an upward trend in household debt. On the bright side, the negative sentiment appears to be
easing as: a) oil prices and the rupiah have been more stable, b) a forward looking view on consumption stimulus, (including the recently announced
Rp26.34t 2H26 stimulus package), amid slight fiscal relief from lower oil prices, and c) stronger-than-expected 1H26 financial results were reported
across the consumer sector. Top picks: CMRY, ICBP, JPFA and AMRT.
- 1H26 consumer results were broadly in line. Consumer and retailer related stocks under our coverage reported resilient growth, with aggregate
revenue up 12.1% yoy and net profit up 10.6% yoy, (~52% of full=year forecasts on average). Most companies' gross margins softened, as
expected, due to a weaker rupiah, higher prices for some soft commodities, and freight costs. Thus, most companies prioritised protecting volumes
rather than raising ASPs, ie Cisarua Mountain Dairy (CMRY), Indofood CBP (ICBP), and Mayora Indah (MYOR). Only two names expanded gross
margins in 1H26 vs 1H25: a) MYOR (+450bp) on lower cocoa and coffee prices, although 2Q already shows the peak passing, and b) Sumber Alfaria
Trijaya (AMRT) (+38bp), driven by product mix and some ASP increases. Interestingly, across a broader universe of 25 consumer-related names we
compiled, aggregate revenue grew a resilient 9.9%, with strength across dairy, poultry, bottled water and personal care-related companies, with the
highest profit growth coming from cigarette names (see table below).
- What’s the message behind the resilience? We acknowledge the macro backdrop has not been exciting, with CCI continuing to decline and RSI
staying negative for three consecutive months (April–June). However, liquidity is improving, with M2 growth holding at 8.7% yoy in June vs 6.4%
yoy a year earlier. We are also seeing an early “lipstick effect”, where consumers cut back on larger discretionary purchases but continue spending
on more affordable indulgences. Note the accommodation & food services component of GDP grew strongly at 10.6% yoy in 2Q26, alongside stronger
inbound tourism (+5.7% yoy) and weaker outbound travel (-2.4% yoy) amid rupiah depreciation, which may redirect some discretionary spending toward
domestic F&B, retail, personal care and leisure.
- We identify three common themes among the outperformers:
a) upper segment resilience and the "lipstick effect", particularly across sport & lifestyle and personal care names like Mitra Adiperkasa (MAPI), MAP Aktif Adiperkasa (MAPA, NR), and Akasha Wira International (ADES, NR);
b) strong brand power, integration, pricing ability and innovation agility, allowing names to either grab market share or pass through price hikes. We see this in names like: a) ICBP, which continues to deliver strong overseas growth supported by a distribution network that has enabled it to gain share amid
Middle East disruptions; b) AMRT, which has been able to pass on supplier costs; c) CMRY, which continues to innovate and drive market expansion,
and bottled water and cigarette names, which continue to raise ASPs; and d) Free Meal Program beneficiaries, particularly dairy and poultry-related
players such as Ultrajaya Milk Industry (ULTJ, NR), CMRY, Charoen Pokphand Indonesia (CPIN, NR) and Japfa Comfeed Indonesia (JPFA).
MARKET WEIGHT (Maintained)
Analyst
Analyst
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
