/MYOR Stock Analysis: Growth Potential Amid Margin Challenges
Stock MYORMarch 13, 2025

MYOR Stock Analysis: Growth Potential Amid Margin Challenges

Mayora Indah Tbk. (MYOR) remains one of the attractive consumer goods issuers in 2025. Despite facing margin pressures due to rising raw material prices, the company was still able to record solid sales growth. With a selling price adjustment (ASP) strategy and better margin expansion prospects in FY25, MYOR still has strong investment appeal. We maintain a BUY recommendation with a price target of IDR 2,800, offering a potential upside of 28.4% from the current price. What are the factors driving the prospects of MYOR stock going forward? Check out the full analysis below.

FY24 Performance: Net Profit Depressed, But Revenue Remains Strong

MYOR recorded a net profit of IDR 3 trillion in FY24, down 6.1% YoY, in line with still high margin pressures. Despite this, net profit in 4Q24 reached IDR 985 billion (+230.7% QoQ; -15.7% YoY), indicating a fairly good quarterly recovery. This recovery was driven by the exchange rate difference gain of IDR 233 billion due to rupiah appreciation.

In terms of revenue, MYOR managed to record +14.6% YoY growth with total revenue of IDR 36 trillion in FY24, slightly above consensus expectations. Domestic sales reached IDR 20.7 trillion (+16.6% YoY), supported by price adjustments and increased demand in the domestic market. Sales volume also grew 10.1% YoY, indicating strong demand although people’s purchasing power is still a concern.

Margins and Profitability: Challenges and Opportunities

MYO’s gross profit margin (GPM) increased slightly in 4Q24 to 20.9% (vs. 20.5% in 3Q24) thanks to the adjustment of selling prices. However, on an annual basis, FY24 GPM fell to 23.0% (-3.7ppt YoY) due to higher prices of raw materials such as coffee and cocoa.

We expect FY25 GPM to rise to 24%, in line with the possibility of further selling price adjustments and potential stabilization of raw material prices after the March-April harvest. FY24 operating profit decreased 5.2% YoY to IDR 3.9 trillion, with an operating margin of 10.9% (-2.8ppt YoY), influenced by rising labor costs and changes in pension fund assumptions.

FY25 Outlook: Positive Momentum from Government Stimulus and Eid

Several factors support MYOR’s growth prospects in 1Q25, including:

    • Government Stimulus – Social assistance programs and electricity subsidies increase the purchasing power of the lower middle class, encouraging the consumption of Mayora products.
    • Eid season – Sales tend to increase ahead of Eid al-Fitr, with a boost from higher public consumption during this period.
    • ASP adjustment – Some SKUs, especially cocoa-based products, saw price increases in January-February, which could help with margin expansion.
    • Raw Material Prices – Cocoa prices are starting to show signs of normalization, while coffee prices are still high but have the potential to fall after harvest.

Management is optimistic that January-February sales growth will reach ~15% YoY, with volume increase as the main driver. With these factors, we expect sales growth to remain double-digit in FY25.

Risks and Challenges: What to Look For?

While MYOR’s prospects are quite attractive, there are some risks to be aware of:

    • The price of raw materials is still high, especially coffee and cocoa, which can reduce margins if not offset by an increase in selling prices.
    • Changes in sugar tax policy, although currently there is no certainty regarding the implementation of the tax.
    • Macroeconomic conditions, including people’s purchasing power that is still vulnerable and rupiah exchange rate volatility.

Valuation and Recommendation: BUY with a Target Price of IDR 2,800

Despite the pressure on FY24 net profit, MYOR’s growth outlook in FY25 remains solid. We maintain a BUY recommendation with a price target of IDR 2,800, which reflects a FY25F P/E of 19x (-0.5 SD below the 5-year average). This price target offers a potential increase of 28.4% from the current price.

With its price adjustment strategy, strong sales growth, and potential margin recovery, MYOR remains an attractive choice for investors in the consumer goods sector. However, we will continue to monitor the development of raw material prices and government policies that may affect consumer purchasing power.

Conclusion: Is MYOR Still Worth Collecting?

In the midst of macro challenges and rising production costs, MYOR continues to demonstrate strong fundamentals with an effective adaptive strategy. The company’s FY24 performance reflects the company’s resilience in the face of margin pressures, while the FY25 outlook looks promising with government stimulus support, Eid momentum, and the potential for stabilization of raw material prices.

With a target price of IDR 2,800 and a potential upside of 28.4%, MYOR shares are worth collecting for long-term investors looking for exposure in the consumer goods sector with sustainable growth. However, investors still need to consider the risk of raw material prices and the condition of people’s purchasing power in their investment decisions.

References: (Majora Indah)))

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