Sector Update / Consumer Staples / Click here for full PDF version
Author(s): Andrianto Saputra ;Nicholas Bryan
- We estimate 2Q26F revenue to be in-line with consensus, driven by the low base effect in 2Q25.
- 2Q26F result is expected to come in above consensus, driven by robust GPM improvement from benign soft commodity prices.
- Maintain Overweight, with and as our top picks.
2Q26F revenue is estimated to be in-line with consensus estimate
Based on our conversation with staples companies, shared that its 2Q26F sales are expected to grow by low-teens yoy, driven by more working days due to the truck ban affecting deliveries (3rd-4thweek of Mar26 vs. 4thweek of Mar25 and 1stweek of Apr25). In addition, indicated that its 2Q26F sales are expected to grow 15-20% yoy, driven by a recovery in the dairy segment and stellar consumer food sales. Moreover, also shared that 2Q26F sales growth is expected to be similar to 1Q26's at 10.1% yoy, supported by strong pharmaceutical and distribution segments. We note that 2Q26F staples sales benefit from a favourable base effect, as aggregate 2Q25 sales grew only 2.1% yoy. Overall, staples sales within our coverage are estimated to be in-line with consensus estimates (Fig. 2).
Mixed GPM performance with showing a GPM improvement
We estimate 's 2Q26F GPM to improve to 25.4% (+504bps yoy) amid benign raw material prices (sugar/cocoa/coffee: -17.9/-58.8/-25.5% yoy). Meanwhile, we forecast 's 2Q26F GPM to drop to 34.1% (-68bps qoq) as Bogasari increased wheat prices by 2% in May26. On the other hand, we estimate /UNVR/CMRY GPM to decline to 36.5/46.2/42.9% (-460/-165/-244bps yoy) on the back of USDIDR appreciation of +6.2% yoy and higher Brent oil prices (+44.9% yoy). Moreover, we expect 's 2Q26F GPM to decrease to 57.7% (-277bps yoy) amid product mix changes.
2Q26F earnings preview: /MYOR above, /CMRY/UNVR in-line, while below
In terms of profit, we estimate 's/MYOR's 2Q26F earnings will come in above consensus estimates (Fig. 4), while /CMRY/UNVR should be in-line and below. We note that 's above-consensus result is mainly due to a 9.6% YTD earnings downgrade despite an in-line EBIT (Fig. 5).
Brent oil price reversal start to impact staples' earnings in 4Q26F
With benign Brent oil prices, we expect staples earnings to recover in 4Q26F, given the average inventory days of 81 days. In addition, /UNVR stand to benefit the most from the reversal in Brent oil prices, as combined Brent-oil-linked raw materials account for 65%/27% of raw material costs (vs. /ICBP/CMRY/SIDO at 6%/3%/20%/10%).
Maintain OW
In terms of valuation, aggregate staples valuation has de-rated to 10.2x FY26F PE (-2.1sd from its 3yr mean), resulting in an earnings yield of 9.8% (vs. 10yr Indonesia Government Bonds Yield of 7.2%), suggesting the sector provides an attractive risk and reward. Overall, we maintain OW rating for the sector as we expect GPM improvement from the oil price reversal to materialize in 4Q26F. Our pecking order is as follows: >MYOR>>ICBP>>SIDO. Risks to our call: rising Brent oil prices and weaker-than-expected purchasing power.
Sumber : IPS