MARK - Steady as She Goes: Margins Anchor the Outlook

KBVS Update
Wednesday, 9 July 2025

MARK - Steady as She Goes: Margins Anchor the Outlook 
(Reinitiate with a BUY; TP: IDR900/Share)

■ Misses Estimates, But Margins Rebound on Supply Chain Gains. MARK posted lower-than-expected revenue of IDR203bn (-4.2% qoq/yoy), missing our and consensus estimates due to a sharp drop in Agricultural Equipment sales, impacted by weaker US exports. However, gross margin recovered strongly to 52.2% (vs. 39.8% in 4Q24), thanks to supply chain improvements and reduced inventory holding from six to four months, easing raw material cost pressure (~47% of COGS). Net profit rose +13.6% qoq to IDR70bn, though still slightly below estimates.

■ Delivering Stability with Strong Margins and 12% Yield Outlook. We maintain a constructive outlook as the company operates with steady capacity (19.2 mn pcs) and utilization is set to gradually rise to 75% in 2025F. Despite softer topline due to lower ASP, earnings are expected to stabilize, with GPM consistently >50% and NPM >30%. Combined with easing alumina costs (-22.9% qoq), strong cash flow, and minimal capex, the company is well positioned to maintain >85% payout ratio, translating to yields of over 12% by 2027F.

■ Reiterate BUY with Revised TP of IDR 900/Share, Supported by Resilient Margins and Attractive Valuation. We revise our TP to IDR900/share (from IDR1,250) to reflect more grounded assumptions on volume and input costs. At this level, the stock trades at 11.7x FY25F P/E, near its 5-year average -1 SD of 14.8x. With normalized earnings, high dividend visibility, and low leverage (DER <0.1x), we believe current levels offer an attractive re-entry point.

Regards, 
Laurencia Hiemas - KBVS Research