A Surprising 2Q Turnaround
- 2Q25 net profit reached IDR368bn (+57.8% QoQ; +68.6% YoY), bringing 1H25 earnings to IDR600bn (-1.3% YoY), in line with ours/cons. The sharp improvement in profitability during 2Q was supported by a strong rebound in Herbal sales, which carry the highest margins. Despite soft topline performance overall, margins improved due to a notable reduction in A&P spending and lower input costs.

- 2Q25 revenue came in at IDR1tn (+31.7% QoQ; +3.6% YoY), bringing 1H25 revenue to IDR1.8tn (-3.8% YoY). The quarter saw atypically strong growth in Herbal and Pharmacy segments, likely due to the prolonged rainy season into 2Q. Export sales also grew 17% YoY, now contributing ~10% of total revenue. Herbal sales in 2Q25 more than doubled QoQ, driven by volume growth and increased contribution from essential oils—an unusual trend given historical seasonality patterns.

Guidance Trimmed, but 2H25 Tailwinds Gaining Strength

After a soft 1Q25 and a sharper-than-expected rebound in 2Q25, the Co. revised down its FY25 guidance to >5% topline and bottom-line growth, implying c.10% growth needed in 2H25. We see catalysts in place: (1) prolonged rainfall through Oct-25, sustaining Herbal demand, (2) higher A&P with proven high ROI, and (3) new SKUs for both local and export markets. Export growth should also accelerate as the company steps up expansion.

Upcoming launches in 2H25—such as on-the-go Herbal solutions and functional beverages—fit well with the affordable wellness trend. We expect stronger A&P allocation to support these initiatives, with benefits extending beyond 2025. Leveraging strong brand equity, SIDO should be able to scale new categories efficiently.

While we keep topline forecasts unchanged, we raise FY25F/26F earnings by 2.6%/0.6% to IDR1.2tn/1.3tn, reflecting Herbal margin tailwinds. With Tolak Angin still anchoring 2H performance amid favorable weather and seasonality, SIDO may see mid-single-digit growth alongside margin expansion across segments.

Reiterate BUY with higher TP of IDR650/sh

We reiterate our BUY recommendation on SIDO, raising our TP to IDR650/sh (15.9x PE25F), based on -0.5 SD below its 5-year mean, from previously IDR615/sh. The Co. continues to maintain a robust balance sheet, with zero debt and ample cash reserves, providing both financial flexibility and downside protection. The dividend yield remains attractive, supported by a consistently high payout ratio averaging ~92%. Additionally, the ongoing share buyback program (up to IDR300bn, capped at IDR760/sh) through Sep-25 offers further support to shareholder returns and valuation.

Key risks: soft consumer demand, export challenges, and rising raw material costs that may pressure margins.

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