GGRM - Earnings spike on lower input costs; above

KBVS Update
Wednesday, 20 May 2026

GGRM – Earnings spike on lower input costs; above
(Maintain BUY; TP: IDR18,840)

* A sharp drop in cost of sales (-19.4% YoY) due to the absence of excise tax tariff hike and manageable S&GA strategy brought GGRM 1Q26 earnings skyrocketing from IDR108 bn to IDR1.54 tn, arriving far above our and consensus expectation.

* With revenue cooling and the industry stalling, we think the company is pivoting toward a survival strategy built on cost-restructuring and the hope of regulatory relief.

* Our conviction on the stock remains, driven by: a) unchanged excise tax tariff, b) continuing solid S&GA cost strategy, c) well- managed net financing.

* We revisited our model for GGRM to accommodate better-than-expected 1Q26 earnings and the latest closing price has surpassing our previous TP. Our revised-up 2026F earnings forecast is mainly underpinned by the assumption of mild excise costs and steady S&GA initiatives. We also adjusted MRP assumption, yet kept our TV growth for GGRM unchanged.

* Maintain a Buy with a DCF-based TP of IDR18,840 (12.3x ‘26F P/E), while currently trading at 11.0x ‘26F P/E, or slightly above its -1SD.

Regards,
Akhmad Nurcahyadi - KBVS Research team