Overview of Indonesia’s Consumer Sector in 2025

The consumer sector in Indonesia remains a mixed bag as we enter 2025. According to a detailed analysis by PT Maybank Sekuritas Indonesia, the sector holds promise for companies actively expanding their businesses and reducing competitive risks. However, challenges such as wage stagnation, inflation, and high informal employment continue to loom large. The report maintains a NEUTRAL outlook, with a preference for staples over discretionary products. Below is a deep dive into the key players in the sector, their outlook, and recommendations.

Top Companies Covered in the Report

The report evaluates major companies in the consumer sector, categorized into staples, retailers, and cigarette makers. Each company is assessed for its growth potential, market position, and valuation metrics.

Mayora Indah (MYOR)

Recommendation: BUY

Target Price: IDR3,500 (31% upside from current price of IDR2,670)

Mayora Indah is one of the top picks for 2025. With a forecasted EPS growth of 5.3% for FY24 and 20.5% for FY25, MYOR is set to benefit from its strong business initiatives and competitive positioning. Its PER valuation for FY25E at 14.7x is attractive, trading 1SD below its 3-year mean. The company is expected to deliver dividends of 2.7% in FY25, adding to its appeal.

MYOR’s key strengths lie in its ability to counter competitors and focus on high-income discretionary products. The depreciation of the IDR has been factored into the analysis, further solidifying its position as a top pick.

Indofood CBP (ICBP)

Recommendation: BUY

Target Price: IDR14,000 (24% upside from current price of IDR11,250)

ICBP shows consistent growth with an EPS forecast of 8.2% in FY24 and 10.6% in FY25. With a PER of 11.4x for FY25E and a dividend yield of 4.2%, it remains undervalued compared to its historical averages. Its ROAE for FY25 is projected at 20.8%, reflecting strong profitability.

The company’s focus on expanding its staples business and countering new competitors positions it well for sustained growth in 2025.

Mitra Adiperkasa (MAPI)

Recommendation: BUY

Target Price: IDR2,000 (50% upside from current price of IDR1,330)

MAPI is expected to deliver a robust recovery in FY25 with an EPS growth of 9.8%. Despite a slight decline in FY24 (-5.0%), the company’s focus on high-income discretionary products and market leadership makes it a compelling choice. Its FY25E PER of 11.2x is attractive, and its dividend yield is projected at 1.9%.

MAPI’s strategy to navigate weak consumer spending and maintain profitability through efficiency measures adds to its investment appeal.

Gudang Garam (GGRM)

Recommendation: SELL

Target Price: IDR8,000 (-38% downside from current price of IDR12,900)

GGRM is facing significant challenges with a projected EPS decline of 77.7% in FY24. Although a recovery of 18.7% is expected in FY25, its market dynamics remain unfavorable. The company’s PER for FY25E is 17.7x, and its dividend yield is 3.9%. However, persistent downtrading by consumers to cheaper alternatives is expected to erode its market share further.

GGRM’s future growth is constrained by competition from tier-2 cigarette manufacturers and regulatory pressures, making it a top sell recommendation.

Matahari Department Store (LPPF)

Recommendation: SELL

Target Price: IDR1,150 (-17% downside from current price of IDR1,385)

LPPF is grappling with operational inefficiencies and weak consumer demand. Although its EPS is expected to grow by 23.4% in FY24, the growth slows to 6.8% in FY25. Its PER of 3.5x for FY25E appears low, but its ROAE of 66.0% signifies over-leverage relative to earnings quality. The company’s dividend yield is projected at 4.0%, but this is not enough to offset its structural challenges.

LPPF is expected to struggle with wage cost pressures and declining same-store sales growth, making it a risky investment.

Unilever Indonesia (UNVR)

Recommendation: SELL

Target Price: IDR1,400 (-21% downside from current price of IDR1,770)

UNVR faces a tough road ahead with EPS declines of 25.2% in FY24 and only a marginal recovery of 1.7% in FY25. Its PER for FY25E stands at a high 18.5x, while its PBV of 20.0x suggests overvaluation. The company’s dividend yield is stable at 5.4%, but this is insufficient to offset the lack of growth.

UNVR’s challenges stem from weak consumer spending and rising competition in the staples segment, leading to its inclusion as a top sell.

Conclusion

The report by PT Maybank Sekuritas Indonesia provides valuable insights into Indonesia’s consumer sector for 2025. With a NEUTRAL outlook, it emphasizes the importance of business expansion and competitive strategies. Top picks like MYOR, ICBP, and MAPI stand out for their growth potential, while companies like GGRM, LPPF, and UNVR face significant hurdles. Investors are advised to focus on staples over discretionary products, keeping in mind the sector’s evolving dynamics.