■ *Unfavorable macro backdrop may pressure auto sales; focus on medium-term catalysts.* Indonesia’s 2025F 2W and 4W sales are projected to contract ~2% YoY and 7–9% YoY amid weak purchasing power and elevated interest rates, pressuring DRMA’s near-term profitability. That said, medium-term catalysts remain intact, including new Chinese OEM clients (BYD in 2H26), EV-related diversification (auxiliary batteries), and expansion into non-automotive segments.

■ *2Q25 topline weighed down by high base effect.* DRMA booked 2Q25 revenue of IDR 1.31tn (-10.1% QoQ, +7.6% YoY), with growth capped by a strong pre-festive 1Q25 base. 2W sales stood at IDR 807bn (-12.9% QoQ, +12.3% YoY), supported by strong new spare parts launches. Meanwhile, 4W sales fell to IDR 305bn (-3.6% QoQ, -5.6% YoY), reflecting softer demand. Net profit came in at IDR 97bn (-31.7% QoQ, -6.0% YoY), missing estimates, as higher raw material and manufacturing costs squeezed margins (NPM 7.4%). Despite its rather underwhelming 2Q25, DRMA’s 6M25 revenue rose 8.6% YoY to IDR 2.8tn, with net profit of IDR 240bn (+1.3% YoY).

■ *Introducing the Future: Dharmaconnect.* At GIIAS 2025, DRMA launched auxiliary batteries (priced ~IDR 300K, lifespan: 5 years) and EV conversion parts (BLDC motors, batteries, controllers; conversion cost ~IDR 16mn). Currently, DRMA's auxiliary battery production remains relatively limited and primarily export-focused (mainly to South Korea), but mass production of 200k units is targeted for early 2026.

■ *Maintain HOLD (TP: IDR 950) on solid medium-term outlook.* We reiterate HOLD on DRMA with TP of IDR 950 (2026F P/E 8.1x, in line with peers). Weak demand in 2025F may cap near-term growth, but recovery is expected in 2027F as Chinese OEM penetration scales. Key drivers include BYD-related volumes, entry into new parts markets, and robust ROE of 18.6% (vs. industry 17.7%).