3Q25 Result – XPENG’s First Full Quarter Contribution
ERAL delivered a strong 3Q25 performance, reaffirming its execution strength in the lifestyle segment – despite a soft macro backdrop and seasonal normalization. SSSG stood at 11.9% (vs. a 2Q25 figure of 25.9%), bringing 9M25 to a solid 13.8%. Revenue climbed to IDR 1.7tn (+35.2% QoQ; +27.6% YoY), driving 9M25 revenue to IDR 4.3tn (+25.1% YoY) and thus reflecting 71.3% of our number. Sector data continued to highlight resilient discretionary demand, with cultural and recreational goods up 10.6% YoY and clothing rising 4.1% YoY (Exhibit 1). Growth was spearheaded by the fashion apparel segment at IDR 333bn (+22.8% QoQ; +639.5% YoY), followed by accessories and IoT at IDR 964bn (+23.7% QoQ; –16.2% YoY), and XPENG’s debut contribution of IDR 225bn (5.2% of total sales). Strong apparel traction lifted 9M25 GPM to 17.8% (vs. 13.6% in 9M24), although OPM and NPM moderated to 4.1% and 2.9%, as opex-to-sales rose to 13.9% (vs. 9.1% in 9M24) amid relentless store rollout, JD consolidation and the opening of XPENG dealerships. With an accelerated expansion plan in 4Q25 heading into FY26F, we expect opex intensity to remain elevated over the near term, followed by gradual normalization, as new stores ramp up and sales productivity gets peppy.

XPENG Momentum Builds
XPENG’s early traction has been well received among middle-to-upper–income segment consumers, with around 1,100 units SPK booked as of Oct-25, reaching 73% of FY25F target. The Co. projected roughly half of this volume to be delivered in FY25F; we estimate XPENG to book around IDR 494bn (~550 units). Profitability remains diluted, linked to CBU shipments, reflected in a 9.6% margin in 3Q25. We see margins meaningfully upbeat as CKD production becomes fully operational in early FY26F, with ongoing upside in FY26F: the Co. plans to introduce another SUV model. With volumes ramping upward and CKD normalization, we estimate FY26F revenue from XPENG could reach IDR 1.1tn (~1.200 units), representing 14.4% of FY26F revenue, with margins expected to trend toward a 15–18% range in FY26F.

Sustainable Growth through Lifestyle Portfolio Expansion
This year marks a strategic turning point for ERAL, reshaping its portfolio toward higher-growth lifestyle categories, while streamlining non-core segments. A reallocation of handset-related accessories back to ERAA, expected to be completed by year-end, has temporarily weighed on the accessories and IoT segment, with revenue booked at IDR 2.7tn (–8.9% YoY) as of 9M25. Looking ahead, ERAL’s focus inevitably shifts toward its lifestyle lineup, supported by strong performances from Garmin, Shokz and DJI. The fashion apparel segment continues to gain momentum through JD Sports and ASICS, further propelled by additional store openings, while new rollouts such as Wilson (three stores by 4Q25) and the ANTA Super Store (opened Sep-25) have shown encouraging early traction. Carefully considering a strengthening product mix and expanding store base, we now forecast FY25F/FY26F revenue to reach IDR 6.0tn (+24.2% YoY) and IDR 7.7tn (+27.8% YoY), respectively, driven by continued ramp-up in the fashion apparel segment, and rising contribution from XPENG. As ERAL maintains an aggressive expansion plan into FY26F, targeting 50–60 gross store openings, we expect OPM/NPM to remain at 4.5%/3.3% in FY26F. Nevertheless, the GPM outlook remains constructive, supported by a margin improvement in the apparel segment, bumping up to 44.1% in 3Q25; we expect GPM to hit 18.4% in FY26F, as the lifestyle mix deepens and scale efficiencies tighten up

Maintain BUY with TP of IDR410/sh
We maintain our BUY recommendation on ERAL, with a new TP of IDR 410/sh (prev. IDR 400/sh), indexed to 9.0x 2026F P/E. Our target reflects improving earnings visibility, driven by an expanding ERAL lifestyle retail portfolio and XPENG’s early traction in Indonesia’s EV market. While near-term margins may remain capped by elevated store expansion costs and promotional intensity, we point to a medium-term upside, supported by improving brand productivity, a richer category mix, and scale efficiencies, as the network matures. Key risks: prolonged margin pressure from higher opex, slower-than-expected uptake of XPENG models, and underperforming new brand rollouts.

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