Consumer: FY25 Outlook: Growth Drivers from Supported Purchasing Power and Strategic Pricing (OVERWEIGHT)

Stock Code	Last Price	Change	Change %
PTRO	27,600	1,100	4.15%
CUAN	10,300	850	8.99%
MLPT	18,000	525	3.00%
BREN	9,200	375	4.25%
LIFE	7,200	325	4.73%
PANI	15,975	275	1.75%
AMMN	9,200	250	2.79%
GGRM	13,125	225	1.74%

Consumer

FY25 Outlook: Growth Drivers from Supported Purchasing Power and Strategic Pricing

We expect higher minimum wages in FY25 and a positive impact from purchasing power and govt’s meal program to create more jobs.
We estimate stronger volume growth in FY25, supported by ASP adjustments, to drive FY25F core profit growth of 9.3% yoy.
We prefer market leaders with opportunities to gain market share and implement ASP adjustment. Maintain Overweight with top pick on ICBP.

Higher minimum wage and supportive government policies to create employment and improve welfare

We expect several catalysts to boost purchasing power in FY25: (1) 6.5% increase in minimum wage (compared to the avg. of 4.5% in FY20-24) and (2) Govt’s free nutritious meal program, which will directly benefit MSMEs (along with continued extension of the 0.5% final tax income), thereby enhancing spending power among the grassroots segments. As part of the government’s quick-win program, with a total budget of Rp121tr for 2025, we expect these initiatives to increase GDP growth by 0.2%, supporting the potential of achieving the 5.2% GDP growth target for FY25. According to BRI, these programs are projected to create 2mn jobs. The planned 3mn housing may further drive employment growth.

Stronger volume with price adjustment opportunities to support FY25F core profit growth of 9.3% yoy

We forecast the sector will achieve FY25 top-line growth of 6.8% yoy, driven by a 4.5% increase in volume (compared to 3.8% yoy in FY24F) and a 1.7% higher ASP adjustment (up from 0.5% yoy in FY24F), due to the projected increases in input costs for key commodities such as CPO, Cocoa, and Coffee. We believe FMCG companies with dominant market shares will have the ability to pass on higher input costs while maintaining solid volume growth and margins. Additionally, we expect that exposure to the export market will provide further growth support. We estimate the sector will sustain its margins and achieve FY25F core profit growth of 9.3% yoy.

Maintain Overweight with ICBP as top pick

We believe all companies within our coverage will report positive volume growth and have the room to pass on higher input costs in FY25, given their dominant market positions (except for UNVR). Below are our pecking orders:

ICBP (Buy, TP Rp14,000): With no ASP increase in FY24 and higher CPO prices starting in Feb24, we see an opportunity for an ASP adjustment in FY25. This will help sustain margins and drive projected FY25F core profit growth of 10.8% yoy.
MYOR (Buy, TP Rp3,050): We believe MYOR’s solid sales volume will offset margin fluctuations caused by higher input costs (e.g., Cocoa and Coffee). Additionally, we believe the major contribution from export markets will help mitigate potential currency volatility.

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