National Nutrition Agency (BGN) Permanently Suspended 883 Free Meal Program Kitchens

MACROECONOMY 
Govt. Accepted Perry Warjiyo’s Resignation, Destry Damayanti to Serve as Acting BI Governor 
The govt. officially accepted Perry Warjiyo’s resignation as Bank Indonesia (BI) Governor and will process a Presidential Decree for his honorable dismissal. In accordance with the Bank Indonesia Law, Senior Deputy Governor Destry Damayanti will automatically assume the role of Acting BI Governor until a new governor is appointed. The govt. stated that coordination with BI will continue to support the implementation of monetary and fiscal policies during the leadership transition. (State Secretariat) 

Govt. Included Danantara in KSSK Policy Coordination 
President Prabowo Subianto instructed the Financial System Stability Committee (KSSK) to include Danantara in policy coordination and decision-making related to the financial sector. Under the new arrangement, Danantara will participate in KSSK meetings to strengthen coordination across fiscal, monetary, and investment policies in supporting the broader economy. KSSK members also reaffirmed their commitment to enhancing inter-agency coordination and aligning policy implementation with the government's economic agenda. (Bloomberg Technoz) 

National Nutrition Agency (BGN) Permanently Suspended 883 Free Meal Program Kitchens 
BGN permanently suspended 883 kitchens under the Free Nutritious Meals (MBG) program after identifying violations related to hygiene, food safety, sanitation, wastewater treatment, and food quality. The suspended kitchens will no longer receive govt. payments, while meal distribution will be redirected to nearby facilities to ensure beneficiaries continue receiving services without disruption. BGN stated the move is intended to strengthen governance and improve food safety standards across the program. (Kontan)

INDUSTRY

Index Evaluation on IDX30, LQ45, IDX80, KOMPAS100 
(Effective period 03 Aug-26 – 30 Oct-26) 
LQ45 INDEX 
Inclusion: INDY, NCKL 
Exclusion: SMGR, TOWR 

IDX30 INDEX 
Inclusion: DEWA 
Exclusion: PTBA 

IDX80 INDEX 
Inclusion: BFIN, LSIP, NCKL 
Exclusion: INTP, PANI, SIDO 

KOMPAS100 INDEX 
Inclusion: BFIN, BIPI, BNBR, COIN, EMAS, GGRM, RMKE 
Exclusion: BREN, BTPS, DSSA, FILM, HMSP, INTP, MTEL, SIDO, TCPI (IDX)

COMPANY 
BCAS: AUTO IJ - 2Q26 net profit +36% yoy; inline with ours, slighly above cons' estimate
- 2Q26 net profit rose 36% yoy/+6% qoq to IDR 592 bn; cumulative 1H26 net profit was IDR 1.15 tn accounted for 50% of ours and 51.7% of consensus estimate. 
- 2Q26 Revenue was increasing +19% yoy/6.4% qoq supported by both manufacturing (+21% yoy) and trading (+17% yoy) segment. 1H26 revenue was IDR 10.85tn accounted for 52% of ours and cons' 2026F 
- 2Q26 Income from affiliates remained strong (+12.7% qoq, +54.2% yoy), 1H26 performance posted 32.3% yoy growth. 
- Our view: another quarter with solid performance. Despite a slight declining in gross margin due to a higher material cost, the company was able to maintain the double digit net profit margin at 10.6%. We maintain our Buy recommendation for AUTO with TP IDR 3,150

BCAS: MIDI IJ – 2Q26 Above , Margin Expansion Broadens, Fresh Food Rebounds
■ MIDI reported 2Q26 revenue of IDR 5.4tn (-8.7% QoQ, +10.8% YoY), bringing 6M26 to IDR 11.2tn (+8.5% YoY), tracking in-line at 49.4%/45.8% of BCAS/cons. QoQ weakness reflects post-Lebaran normalization compounded by softening macro: CCI fell to 117.8 in Jun'26 (9-month low, from 123.0 in Apr'26) and PMI collapsed to 46.9 in Jun'26 (lowest since Jun'25, sharpest new-orders drop in a year). Against this backdrop, +10.8% YoY revenue growth demonstrates staples resilience, with fresh food staging a dramatic rebound (+41.1% YoY vs -9.7% in 1Q26). Non-food remained solid (+9.9% YoY) while food decelerated (+4.6% YoY). 
■ EBIT came in at IDR 225bn (-22.8% QoQ, +8.5% YoY), bringing 6M26 to IDR 516bn (+27.6% YoY), tracking well above at 67.5%/46.6% of BCAS/cons. GPM expanded to 26.8% in 2Q26 (vs 24.4% in 2Q25, ~240bps YoY), a multi-year high, confirming structural margin gains post-Lawson divestment plus tailwind from food inflation. However, opex jumped +24.0% YoY in 2Q26 (sharp reversal from 6.4% in 1Q26), warranting monitoring, though 6M26 opex is still contained at +6.9% YoY. 
■ Net profit reached IDR 220bn (-17.0% QoQ, +10.1% YoY), bringing 6M26 to IDR 486bn (+24.4% YoY), tracking above at 55.3%/48.4% of BCAS/cons. NPM expanded ~50bps YoY to 4.3% in 6M26, reinforcing clean earnings structure post-Lawson exit. 
■ Fresh food inflection, MBG tailwind emerging: 2Q26 revenue surged +41.1% YoY to IDR 862bn with GP jumping +52.9% YoY. Beyond SKU rationalization playing out, we see the MBG program (IDR 335tn 2026 budget, ~Rp19tn/month spending, 142k+ pemasok, 4.5mn beneficiaries as of Jun'26) driving structural fresh food demand via (a) heightened household nutritional awareness and (b) food price inflation supporting pricing power. The "Ja-Di" initiative appears to be capitalizing on this shift, removing 1Q's biggest overhang. 
■ Ex-Java strategy aligns with MBG's next phase: Ex-Java remains the growth engine (2Q26 revenue +13.1% YoY, GP +40.6% YoY; 6M26 GP +34.5% YoY), particularly meaningful given BGN's recent moratorium on new urban MBG kitchens and pivot toward 3T (frontier/outermost/underdeveloped) regions, creating economic multiplier in exactly the geographies MIDI is expanding into. Conversely, Jabodetabek GP contracted -20.7% YoY in 2Q26 (6M26: -8.7% YoY) and Jawa ex-Jabodetabek GP softened (-9.4% YoY), reflecting weaker urban consumer confidence and likely competitive intensity from AMRT/IDMR. At RUPST (4 Jun'26) MIDI stated rural retail restrictions don't affect them given urban focus, and announced IDR 1.5tn 2026 capex. 
■ Our take: 2Q26 is in-line at topline but tracks above on earnings, with margin structure clearly upgraded post-Lawson and a strengthening structural narrative from MBG-driven food demand multiplier plus ex-Java economic activity. Fresh food rebound removes 1Q's biggest overhang; ex-Java momentum sustains the differentiation thesis. Opex normalization and urban weakness warrant monitoring but don't derail FY26F trajectory. Maintain BUY, TP IDR 440, upside intact on continued margin expansion, mix improvement, and MBG-linked tailwinds. Key risks: sustained urban consumer weakness, opex normalization, MBG execution/moratorium risk, and slower fresh food monetization.

BCAS: ERAL IJ – 2Q26 Above Fashion Emerges as Margin Engine, Opex Normalizes as Predicted
■ ERAL reported 2Q26 revenue of IDR 2.0tn (+16.4% QoQ, +59.4% YoY), bringing 6M26 to IDR 3.7tn (+41.0% YoY), tracking above at 56.7%/47.0% of BCAS/cons. Impressive against a softening retail backdrop (BI Real Sales Index -3.9% YoY in May'26, forecast -4.4% in Jun'26; CCI at 9-month low of 117.8 in Jun'26), reinforcing ERAL's premium-tier positioning as an outlier. Mix is structurally rotating: Automotive +80.1% QoQ to IDR 624bn (31% of revenue), Fashion Apparel +52.9% YoY to IDR 415bn (highest-margin segment), while legacy Cellular contracted -13.1% YoY on industry-wide memory-supply price hikes. 
■ EBIT reached IDR 76bn (+23.0% QoQ, +72.8% YoY), bringing 6M26 to IDR 137bn (+42.4% YoY), tracking at 42.2%/37.5% of BCAS/cons. Critically, opex-to-sales normalized to 13.8% (from 15.1% in 1Q26), with opex +6.5% QoQ vs revenue +16.4% QoQ, directly delivering the operating leverage recovery flagged as the key re-rating trigger in our 1Q26 note. GPM eased to 17.6% (vs 18.7% in 1Q26, 19.2% in 2Q25) on Auto mix dilution (10.0% GPM), though 6M26 GPM at 18.1% still expanded ~40bps YoY. 
■ Net profit reached IDR 65bn (+48.4% QoQ, +69.6% YoY), bringing 6M26 to IDR 108bn (+35.5% YoY), tracking above at 63.8%/47.2% of BCAS/cons. NPM improved to 3.3% in 2Q26 from 2.6% in 1Q26. The potential ~IDR 77bn one-off gain from 13 May EIDO divestment (at 1.5x book) does not appear booked yet, presenting upside risk to FY26F. 
■ Key finding: 2Q26 delivered on both 1Q re-rating triggers (opex normalization, Auto scaling) and added Fashion Apparel as a genuine second growth engine. Risks: blended GPM dilution from Auto mix (offset by Fashion's 39.9%), 6M EBIT at 42.2% BCAS needing 2H catch-up, and unbooked EIDO disposal gain as pending optionality. 
■ Our take: Clean beat with structural rotation intact. Auto is the volume story (XPENG global tailwinds plus Indonesia BEV surge defying weak retail), Fashion is the margin story (premium resilience amid mass-market weakness), opex normalization removes 1Q's biggest overhang. Post-EIDO, ERAL is genuinely asset-light with disposal gain as pending upside. Maintain BUY, TP IDR 410, (8.6x FY26E P/E). Risks: sustained cellular/accessories weakness, XPENG capacity, IDR volatility, and EV competition.

BCAS: SMGR IJ – Jun-26 Domestic Sales Volume 
- SMGR’s Jun-26 domestic sales volume reached 2.5mn tonnes (-1.3% MoM, +9.8% YoY), bringing 6M26 domestic sales volume to 14.2mn tonnes (+9.7% YoY), broadly in line with industry domestic demand growth of +10.2% YoY, with YTD bag portion at 73.2%. 
- SMGR’s domestic market share slipped to 45.9% in Jun-26 (vs. 48.3% in May-26), while 6M26 market share held at 47.4% (vs. 47.6% in 6M25).