Research & Stock Picks

Company Reports

06 January 2025

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Consumer: Overweight with INDF & ICBP as Top-Picks

Strength

In 2025, we continue to like the defensive nature of the sector with the exception of UNVR; Driven by government stimulus (free meal program) and 6.5% higher minimum wages should help support purchasing power particularly for low-income earners

 

Weakness

Weakear-than-expected purchasing power as a result of  IDR depreciation on the back of higher for longer USD exchange rate may limit consumer companies' ability to pass on potentially higher raw materials costs such as CPO (2024: +33.7%)

 

Opportunity

Although price increases are unlikely to occur this year, lower raw materials prices such as wheat (2024: -14.8%) and sugar (2024: -5.6%) may still pave the way for margin improvements and price support towards market outperformance for some counters in 2025

 

Threat
Margin pressures to stem from: 1) trading down market effect by consumers may result in adverse sales mix and 2) fluctuating commodity prices due to La Nina and geopolitical tension; Sizeable 2024 market outperformance for some counters may cause profit taking

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