Positive QoQ topline across all segments. In 3Q25, KLBF recorded revenue of IDR 8.9tn (+12.6% YoY; +8.2% QoQ), bringing 9M25 topline to IDR 26.0tn (+7.2% YoY), in line with both our and consensus estimates (SSI: 75.5%; Cons: 74.6%). Positive QoQ performances were observed across all segments: Pharmaceuticals reached IDR 2.5tn (+14.0% YoY; +10.3% QoQ), Distribution IDR 3.0tn (+18.7% YoY; +6.7% QoQ), Consumer Health IDR 1.2tn (+19.4% YoY; +6.0% QoQ), and Nutritionals IDR 2.0tn (+8.8% YoY; +0.2% QoQ), worth mentioning dairy industry recorded -9.0% in 1H25. The strong topline performance was supported by festive season timing differences in 2025 versus 2024, increased AnP spending particularly on ATL initiatives to strengthen Consumer Health and Nutritional segments, as well as the addition of new principals in the distribution business.

 

Elevated A&P run-rate to boost top-line performance. GPM stood at 39.6% (2Q25: 40.7%; 3Q24: 38.6%), supported by favorable product mix and lower raw materials costs, particularly in oil-related products (-13.7% YoY), packaging (PP: -7.6% YoY), and skim milk powder (-6.0% YoY). However, the EBIT margin declined to 9.7% (2Q25: 12.9%; 3Q24: 9.0%), which we attribute to higher A&P run rate of 10.9% (2Q25: 8.6%; 3Q24: 8.3%) as the company intensified marketing efforts to revitalize its legacy brands and strengthen engagement with younger consumers. Looking ahead, the company aims to further enhance marketing effectiveness and brand visibility (ex: digital videos, television billboards, music concerts, etc) to appeal to the youth segment and driving further top-line growth. At the bottom line, net profit came in at IDR 656bn (+14.5% YoY; -26.9% QoQ), in line with both our and consensus forecasts (SSI: 75.2%; Cons: 74.2).

 

Expecting more upbeat momentum in FY26F. For 2026F, the company targets high single-to-double-digit topline growth while maintaining margins similar to FY24 levels. KLBF remains focused on sustaining strong revenue momentum, with overall AnP run-rate expected to stay elevated to support growth. While there is still limited room for ASP adjustments, challenging macro conditions continue to pose risks as consumers become increasingly price-sensitive, prompting the company to rely more on optimizing its price-pack architecture. Consequently, margin expansion will take a backseat to topline growth, as the company focuses on sustaining market growth amid increasing competition and evolving market dynamics, driven by continued product innovation with R&D spending maintained at 1.2% of sales (2Q25: 1.7%; 3Q24: 1.3%).

 

Maintain BUY on potential new strategy as positive longer-term catalyst. While KLBF is currently not the cheapest in the sector in terms of valuation, we currently retain our BUY rating given its strategy to reshape business mix contributions, which could be accretive to profitability over the longer term. In addition, we like the defensive nature of its products on the back of the current difficult and challenging market operating conditions. Key risks to our call: 1) swing in raw materials prices, 2) elevated DXY, and 3) weaker-than-expected purchasing power.