Sector Update / Consumer Staples / Click here for full PDF version
Author(s): Andrianto Saputra ; Nicholas Bryan
- 1Q26 aggregate domestic sales growth of +4.4% yoy (vs. 5yr avg of +4.5% yoy) was partly dragged down by timing difference of Lebaran.
- Despite 2Q26F provides a favorable base effect, we remain cautious on prolonged higher brent oil prices.
- Maintain Overweight, with top pick being and .
1Q26 domestic sales was impacted by the shift in Lebaran
1Q26 aggregate domestic sales grew by +4.4% yoy (vs. 5yr avg of +4.5% yoy) as the performance was partly dragged down by timing difference of Lebaran stock-up in Dec25 (vs. Jan25 for FY25 Lebaran). Our discussion with companies indicated that purchasing power showed signs of recovery in 1Q26, driven by the ramp-up in government spending (MBG program), which aided consumption. In terms of profitability, 1Q26 net profit was above consensus estimate, while /KLBF/CMRY/UNVR's were in-line and 's below (Fig. 5).
recorded yoy GPM improvement, while others declined
Within our coverage, only recorded 1Q26 GPM improvement of +461bps yoy on the back of lower input costs (coffee/sugar/cocoa: -28.8/-24.6/-59.7% yoy). Meanwhile, /KLBF's 1Q26 GPM declined by -132/-288bps yoy amid higher skim milk prices (+8.6% yoy) and USD/IDR appreciation of +3.1% yoy. Moreover, /UNVR's 1Q26 GPM dropped to 34.8/48.2% (-137/-19bps yoy) due to higher CPO price (+12% yoy). 's 1Q26 GPM fell to 50.5% (-178bps yoy) driven by change in product mix.
Remains cautious on near-term outlook
We note that 1Q26 was affected by fewer working days due to truck delivery ban from 13th to 29th Mar26 (vs. 24th Mar to 8th Apr25), suggesting that 2Q26F will have more working days at 58 days (vs. 53 days in 2Q25). Moreover, 2Q26F domestic sales will benefit from a favourable low base (2Q25's +0.9% yoy). Despite this, we remain cautious, particularly if government raises subsidized fuel (Pertalite) prices, which previously weighed on staples domestic sales in FY22-23 (Fig. 6).
/UNVR are the most impacted from higher CPO/brent oil prices
2Q26F Coffee/cocoa/sugar prices dropped by -9.6/-14.5/-2.9% qoq, which should positively impact (raw material contribution at 15/11/12.5% each). However, commodities affected by US-Iran war are wheat/CPO/brent oil which have risen by +8.8/8.8/32.2% since 1Q26. We note that Bogasari has yet to raise wheat prices as we estimate it still has a buffer of c.5% from the current price. Our sensitivity analysis showed that every 5% increase in CPO/brent oil price, it may decrease /KLBF/CMRY/ICBP/UNVR/SIDO's FY26F earnings by -5.3/-4.7/-1.9/-4.2/-6.4/-0.4%.
Maintain OW
In terms of fund positioning, most local funds are already well-positioned in the staples sector; hence, incremental buyers are likely to come from foreign funds. Interestingly, aggregate staples' earnings yield has reached 9% (vs. 10yr Indonesia Government bonds return of 6.8%). Overall, we maintain our OW rating with pecking order of: >CMRY>>KLBF>>SIDO. Risk to our call: prolonged ME tension and soft purchasing power.
Sumber : IPS