2Q25 Results – robust earnings on bullion demand

1H25 Highlights. HRTA delivered robust results in 2Q25, with net profit of IDR199bn (+32.7% QoQ; +93.1% YoY), bringing 1H25 earnings to IDR349bn (+69.5% YoY). This exceeded expectations, already achieving 56.3% of our and 61.8% of consensus FY25 forecasts. Revenue rose to IDR8.3tn in 2Q25 (+21.7% QoQ; +95.6% YoY), driving 1H25 revenue to IDR15.1tn (+82.6% YoY). Growth was underpinned by increase in pure gold sales volume reaching 8.9 tons (+19.4% YoY) and sharply higher ASPs, at IDR1.69mn/gram (+59.1% YoY).

Bullion remains HRTA’s core earnings engine, contributing 92% of revenue in 1H25. The Company anticipates bullion contribution could peak at 94–95% in FY25. Wholesale segment dominated 1H25, accounting for 80.3% of sales (vs. 66% in 1H24), driven by Bullion Bank transactions of 4.8 tons, representing 51.5% of total volume with Pegadaian continues to be the largest contributor, while Bank Syariah Indonesia (BSI) is expected to provide incremental demand, starting in 3Q25. HRTA retail revenue rose to 18.9% of total sales (vs 16.9% in 1H24), while exports fell sharply, to just 0.4% (vs. 16.5% in 1H24) as the Company reset its focus on higher-margin domestic markets.

Margins remain under pressure from the bullion-heavy mix as post-Covid demand has shifted toward gold bars. For FY25, the Company guided margins to stay in the 2.2–2.4% range, with more meaningful recovery expected post-LBMA certification (audit complete, approval expected late-25/early-26), should help close pricing gap with competitor by 1%, translating to 0.5% margin improvements.

2H25 Outlook – Sustained Growth Ahead
We expect HRTA to sustain its spectacular growth trajectory in 2H25, underpinned by:
1. Resilient bullion demand & firm ASPs: Domestic appetite for gold bars remains healthy. ASPs are expected to stay elevated amid Fed rate-cut expectations, central bank accumulation, and geopolitical tensions sustaining the gold rally.
2. Capacity-driven market share gains: HRTA is set to expand its refinery capacity from 18t to 30t by 4Q25, bringing total production capacity to 60t (CAPEX: IDR100bn), will enable HRTA to capture a larger slice of Indonesia’s bullion market.
3. Secured raw material sourcing: HRTA currently depends on material from local miners (25%), imports (25%), and scrap gold (50%), with additional supply from UNTR’s subsidiary Agincourt Resources expected to commence in 4Q25.
4. Retail expansion & margin uplift: The roll-out of retail outlets (targeting 100 stores by year-end, currently 93 outlets) should gradually raise the retail mix, providing structural support to margins.

Maintain BUY with Higher TP of IDR1,210
We reiterate our BUY rating on HRTA with TP of IDR1,210 (was IDR860) implying 36% upside potential. Valuation remains attractive at 6.5x FY26F P/E. We like HRTA for its resilience in the current environment, secured raw material sourcing, medium-term catalysts from LBMA certification, and capacity expansion. Backed by strong 1H25 earnings and better efficiency, we lift our FY25F/26F/27F earnings forecasts by 12.5%/12.7%/4.9%. We expect to see a continued growth trajectory into 2H25, though profitability will remain capped by the bullion-heavy mix.
Key risks include: a) Weak purchasing power; b) Delay in LBMA certification; c) Gold price volatility; d) Shifts in official regulations and policies.

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