Overview of Mayora Indah (MYOR IJ)

PT Mayora Indah Tbk, a leading Indonesian consumer staples company, specializes in manufacturing candies, cookies, and other food products. Through its subsidiaries, the company also produces coffee powder, instant coffee, and cocoa beans. Despite its strong presence in the consumer staples market, the company faces challenges in the form of fluctuating commodity prices, particularly cocoa and coffee, which are key ingredients for its products.

Stock Performance and Valuation

The stock is currently priced at Rp2,500 with a target price of Rp2,300, reflecting an 8.0% downside. This revised target price is based on a -2SD PE multiple of 14.47x applied to the 2025F PE, considering potential margin pressures in the first half of 2025. The company’s 52-week high and low are Rp2,850 and Rp2,230, respectively.

Major shareholders include Unita Branindo (32.9%), PT Mayora Dhana Utama (26.1%), and Atmadjaya Jogi Hendra (25.2%). With a market capitalization of Rp55,896.7 billion (approximately US\$3.44 billion), the stock is categorized under the Consumer Staples sector.

Key Challenges: Rising Commodity Prices

Mayora Indah’s margins have been under pressure due to a steep rise in the prices of cocoa and coffee, which are critical raw materials. Cocoa prices surged by 175% from US\$4,275 per tonne on January 1, 2024, to US\$11,745 per tonne. Similarly, sugar prices increased by 93%, reaching US\$808.10 per tonne. This has resulted in a 24.2% gross margin assumption for 2025, down from the previous 25.7%, leading to a 12% downward revision in the company’s net profit after tax (NPAT) forecast for the same year.

2025 Guidance and Strategic Initiatives

To counteract rising costs, Mayora Indah plans to implement a 10-15% price increase for cocoa-related products in the first quarter of 2025. However, prices for other products will remain unchanged. Despite these adjustments, the company anticipates continued margin compression in the first half of 2025.

The company also plans to introduce 5-10 new products in 2025, including biscuits and breakfast cereals, targeting both local and export markets. Notable product launches in 2024 included Coffee Cookies Premium in China, Tom Yum Cracker in Thailand, Roma Double Choco in India, and a Black Coffee Variant Instant Soluble.

Export Market Performance

Mayora Indah’s performance in export markets has been mixed. The China market is showing signs of slowing down, while the Vietnam market may face similar challenges. In contrast, the India market is experiencing rapid growth. In the Philippines, non-coffee products are performing well, while coffee products have grown at a single-digit rate. The Middle East market shows strong growth but lags behind the performance in India. The Thailand market continues to struggle.

Financial Forecasts and Key Metrics

Revenue and Profit Projections

Mayora Indah’s net turnover is projected to grow steadily, reaching Rp40,842 billion in 2025 and Rp44,916 billion in 2026. The company’s 2025 NPAT is expected to increase by 11.1% year-on-year to Rp3,497 billion, following a 7.7% decline in 2024.

Key Financial Metrics

• EBITDA Margin: Expected to stabilize at 14.5% in 2025, up from 14.4% in 2024.
• Net Margin: Projected to improve slightly to 8.6% in 2025 and 8.8% in 2026.
• Debt-to-Equity Ratio: Expected to decrease from 24.2% in 2024 to 20.5% in 2026, indicating a stronger financial position.

Despite these positive trends, the company remains cautious due to uncertainties in commodity prices and market conditions.

Sensitivity Analysis

The company’s net income is highly sensitive to changes in sales, costs, and raw material prices. A 5% change in average selling price (ASP) could result in a 46.8% impact on NPAT, while a similar change in volume would have an 11.3% impact. On the cost side, fluctuations in sugar, wheat, coffee, cocoa, and plastic prices could have a significant negative impact on NPAT, ranging from -3.5% to -7.5%.

Valuation and Recommendation

UOB Kay Hian maintains a “HOLD” recommendation for Mayora Indah with a target price of Rp2,300. The revised target price reflects potential margin pressures in the first half of 2025 and the use of a lower PE multiple. While the company’s long-term growth prospects remain favorable, the near-term outlook is clouded by commodity price volatility and mixed export market performance.