GGRM - Softer excise and selling costs drive FY25 earnings beat

KBVS Update
Thursday, 9 April 2026

GGRM - Softer excise and selling costs drive FY25 earnings beat
(Maintain BUY; TP: IDR16,410)

* FY25 top line came in line with ours and consensus at 99.2%/97.4%. *A sharp drop in the cost of revenue brought GGRM’s earnings to 4.17%, beating our forecast, yet still below consensus. The softer cost input turned 4Q25 to a net profit from a net loss in 4Q24. Margin expansion was noted from top to bottom.

* On a segmentation basis, cigarettes' margin saw significant improvement to 3.9% vs. 2.5% in FY24. We might witness another mild ‘26F top line. Nonetheless, we anticipate another steady margin improvement in the absence of higher excise tax expenses.

* We also expect another round of softer operating expenses as an additional EBIT growth catalyst. Solid brand equity and strategic ASP will act as a crucial cushion for ‘26F earnings pressure due to fading low-income purchasing power and weakening overall industry demand.

* Maintain a Buy with a DCF-based TP of IDR16,410 per share (16.5x ‘26F P/E), currently at 14.7x ‘26F P/E, or slightly above -1SD of 11.1x ‘26F P/E.

Regards,
Akhmad Nurcahyadi - KBVS Research team