2Q26: a manufactured miss

Net profit of IDR186bn (-49.3% YoY, +26.6% QoQ) took SIDO 1H26 to IDR334bn (-44.4% YoY), just 25.7%/28.4% of our/cons. FY26F sat versus a 5-year 1H run-rate of ~45%. Revenue fell -20.5% YoY, to IDR826bn. It was herbal that did the serious damage, -48.3% YoY, while F&B grew +47.2% and pharmacy slipped just -4.2%. GPM compressed to 50.5% (-994bps YoY) on mix, rather than price, as F&B rose to 51.8% of 1H26 sales, at a 43.3% margin against a 60.5% for herbal. Opex-to-sales marked 24.2% (+696bps), reflecting the effect of three campaign launches and modern-trade listing fees, dragging EBIT margin to 26.3%. The shortfall was in fact deliberate. Sell-out rose ~8% YoY, while sell-in fell ~32%, a ~40ppt gap, as the Company held back shipments below consumption levels, to purge four months of distributor inventory. Tolak Angin held a 71% Nielsen value share while the Masuk Angin category stayed flat.

Cutting 26F/27F/28F by 31.5%/29.1%/29.7

We lower net profit to IDR890bn/953bn/1,017bn on revenue of IDR3,621bn/3,818bn/4,028bn, implying FY26F -11.2%, deliberately a notch below the Company's revised -10% guidance. Here are three reasons we are not simply marking to guidance:

1) The 4Q25 base is poisoned. Sell-in ran ~16% above sell-out in 4Q25. Even with a channel-clean and consumption growing ~8%, herbal would have had to lap an inflated comparison, so 2H26 herbal sell-in can converge with sell-out and still print a negative YoY. We assume herbal will mark -23.0% in FY26F.

2) The consumer segment is flat and not recovering. While the BI confidence index grew 1.0%/2.9%/0.0% YoY in Apr/May/Jun-26, real retail sales only managed +2.4% YoY in March, despite Lebaran. Peers are holding prices steady and reporting a shift to smaller pack sizes. Management's own analysis of a resilient-but-selective consumer is corroborated, which caps the pace at which cleaner shelves convert into volume.

3) Weather cuts the wrong way this year. BMKG forecasts below-normal, rainfall peaking in August. A longer dry season supports RTD and energy drinks but defers herbal as a seasonal catalyst; therefore, management is explicitly not betting on an early rainy season. We therefore push the herbal normalization benefit into 4Q26-FY27, rather than expecting it in 3Q26.

We normalize GPM at 50.6%/51.0%/51.3%, figures permanently below the pre-reset ~58% band, since the F&B mix shift is structural. Opex should be moderate, as the wedding-campaign assets will not repeat, with A&P guided at 10-12% of sales.

Valuation: reinitiate at HOLD, TP IDR390

We reinitiate coverage on SIDO with a HOLD and TP of IDR390/sh, from IDR625, on 12.2x FY27F EPS of ~IDR31. The multiple is an adjusted mean, derived from the current risk-free rate — SBN 10Y spot of 7.3%, plus a conservative 1.0% adjustment, rather than the 5-year historical average (which embeds a pandemic-era premium, no longer relevant). We apply the mean, not a discount to it: marking down the multiple on already-reset earnings double-counts the same event. At IDR352 the stock trades on 11.9x FY26F and 11.1x FY27F, roughly 1.6sd below its 5-year mean. FCF of IDR1,198bn/911bn/969bn on capex of only IDR92bn/104bn/110bn covers dividends comfortably, keeping the balance sheet debt-free and supporting a 7.7-8.3% forward yield. Including the yield, anticipated total return is ~19%.

What is missing is proof, not price. With a multiple already close to our adjusted mean, the re-rating case now depends on delivery rather than on further de-rating reversing, and we would rather underwrite that after the numbers arrive than ahead of them.

3Q26 is the print that settles it, being the first full quarter on a normalized base. July sell-in already rose at a high single-digit MoM rate, with sell-out flat YoY; the convergence, not the level, is the signal. We would revisit the call on evidence that herbal sell-in is tracking sell-out and that A&P intensity is normalizing. Risks to our view: soft purchasing power, a delayed rainy season, and further consensus cuts ahead of the inflection; upside risks: an earlier rainy season and faster F&B scaling than we assume.

SIDO - A Bitter Dose – by Design

SIDO - A Bitter Dose – by Design

Laurencia Hiemas

PT Sido Muncul Tbk

18 August 2026 - 07.41am

SIDO - A Bitter Dose – by Design

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