HMSP - Lean cost structure sustain earnings momentum; inline

KBVS Update
Wednesday, 20 May 2026

HMSP – Lean cost structure sustain earnings momentum; inline
(Maintain BUY; TP: IDR960)

* HMSP delivered positive earnings growth, came in line with our expectation (29%), yet below consensus (23%). The unchanged excise tax tariff coupled with well managed S&GA cost and net financing has overall underpinned the healthy earnings growth (7.2% YoY) from IDR1.92 tn to IDR2.06 tn in 1Q26.

* Amid the continuing sector growth pressure, total industry cigarette sales volume grew by only +3.5% YoY to 63.8bn sticks. Despite the mild growth, we like seeing HMSP continue domination with market share of 29.1%, or in line with our ‘26F market share for the company of 29.9%.

* Our conviction on the stock remains driven by: a) continuing mild cost input, b) well-managed S&GA cost and c) manageable ASP adjustment. Additionally, controllable S&GA expenses and net financing strategy will remain play significant role to support ‘26F earnings.

* Maintain BUY with DCF-based TP of IDR 960 (15.9x ‘26F P/E), currently at 12.1x ‘26F P/E, slightly above its -1SD.

Regards,
Akhmad Nurcahyadi - KBVS Research team