We upgrade our NPAT forecasts by +4.3%/4.6% for FY25F/FY26F on the back of a stronger-than-expected dairy sales recovery. Based on our on-the-ground survey of FMCG distributors and retailers, we reckon that CMRY's dairy segment sales could have reached reach low-to-mid-teens growth in 3Q25F (vs our estimate of an industry average of 3%), which would be a strong rebound versus -4% y-y in 1H25. The strong recovery was partly driven by better government expenditure and CMRY's product penetration into general trade (GT). We note that the company keeps innovating by introducing cheaper price point products to capture mass-market demand in GT and new product formats such as Eat Milk, providing excitement to consumers. We suspect CMRY regained some market share. We also predict that the Kanzler brand (consumer foods) still grew by a strong double-digit percentage. In addition, we believe the government is likely to push expenditure in 4Q, considering a low budget realization; hence, we forecast CMRY sales to achieve +19% y-y growth in FY25F (vs an average of +5% y-y for FMCG peers under our coverage). With a strong set of sales results and a stable margin, we project CMRY earnings may beat the Bloomberg consensus estimate by 5%.
Product innovation and penetration to push medium-term double-digit growth
CMRY has continuously introduced new product innovations to sustain its double-digit growth, usually launched in 4Q each year. Thus, we incorporate higher sales and an increasing A&P-to-sales ratio in 4Q25F. For next year, we expect Kanzler to continue to record stronger sales growth than dairy on the back of product penetration and market share gains. Dairy will book double-digit growth as well, in our view, as we expect acceleration in government expenditure to revive out-of-home consumption. All in all, we project CMRY sales growth to reach 15%/16% in FY26F/FY27F (vs 9.5%/9.9% on average for its peers).
Maintain Buy with higher TP
CMRY has consistently recorded double-digit NPAT growth (see Fig. 2), outperforming peers, even amid weakening buying power conditions. Therefore, we think that the shares deserve to trade at a premium valuation vs its peers’. We maintain our Buy call with a higher TP of IDR7,200 (from IDR6,700), using a FY25F target P/E of 30x (unchanged). Currently, the stock is trading at a FY25F P/E of 19.6x. Given upside of 53.2% and dividend yield of 3.6%, we expect a total stock return (TSR) of 56.8%. A downside risk would be tougher-than-expected competition.
Company profilePT Cisarua Mountain Dairy (Cimory), established in 1993, produces premium dairy and premium consumer foods. The company has positioned its novel products in the premium market by focusing on product quality and unique offerings. Cimory Squeeze (pouch yogurt), Kanzler Singles (ready-to-eat sausage), and UHT milk with unique flavors are just three examples. The company went IPO in 2021. Cimory currently has 6 factories, 1 distribution center, distribution branches, and 80 distributors which distribute the company’s product to 33,000 MT channels, 50,000 GT channels, and 2,700 MCMs. The current controlling shareholder is the Sutantio family.
Valuation MethodologyWe derive our TP of IDR7,200 using FY25F P/E target of 30x (+1.6std of its five-year mean). The benchmark index for this stock is JCI.
Risks that may impede the achievement of the target priceDownside risk would be weaker-than-expected buying power and intensifying competition.
ESGCimory is strongly committed to its ESG efforts to better the lives of Indonesian citizens, and at the same time achieve long-term sustainability and success. In terms of environment and energy, Cimory has put an effort in order to reduce the maximize the usage of energy, water, and waste. Cimory also provide an opportunity for local dairy farmers and housewives. They provide training to their local dairy farmers in order to further enhance the productivity and quality of milk, thus giving Cimory the best quality of milk. Cimory also provides economic benefit opportunities for housewives through their Miss Cimory program.
INVESTMENT RATINGS A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general.
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