Midi Utama Indonesia (MIDI IJ)

Sustaining Revenue Growth, with Margins on the Mend 

• MIDI’s 1H26 revenue continued to outpace industry growth, while margins remained resilient on product mix and margin gains.
• 1H26 SSSG of 4.4% remained within guidance, with momentum expected to improve on a lower base.
• We tweaked FY26/27F net profit est by -1.9/-0.8% and reiterate Buy rating with lower TP of Rp480.

Strong topline momentum with improving margins

MIDI reported 1H26 revenue growth of +8.5% yoy, continuing to outpace Indonesia’s FMCG (+5.1%) and modern trade (+8.3%) growth. In 2Q26, revenue rose +10.8% yoy (-8.7% qoq), partly supported by 2-10% price increase on products with imported raw material exposure and oil price volatility. Mgmt noted that prices for predominantly locally sourced products remain unchanged amid soft consumer demand, although promotions have been reduced. Gross margin recovered back to 26.8% in 2Q26, driven by a more favorable product mix (higher contribution from fresh food and non-food categories) and margin gains from older inventory sold at higher prices. Meanwhile, net margin remained resilient at 4.1%, despite a slight qoq decline due to a higher opex-to-rev ratio.

Encouraging sales trend in Jul26; lower base to support 2H26 SSSG

2Q26 SSSG moderated to 3.4%, reflecting normal post-Eid seasonality, while 1H26 SSSG of 4.4% remained within mgmt’s mid-single digit guidance. Note that MIDI reclassified revenue from mobile airtime and data top-ups to fee-based income starting FY26. Mgmt highlighted that sales remained encouraging through the 3rd week of Jul26, with SSSG of ~3% (incl the impact of the mobile-data reclassification). From Aug26 onward, MIDI is also set to benefit from a lower base, as SSSG turned negative from Aug25.  Therefore, we now project FY26F SSSG to be at 4.5%, improving further to 5.2% in FY27F. 

Reiterate Buy rating, with slightly lower TP of Rp480

We reiterate MIDI as our top pick in the retail space, backed by its defensive staple retail business model and strong exposure to ex-Java markets (55% of stores). We believe its strategy to increase the contribution of fresh food and non-food categories, particularly personal care, should support margin expansion, while we see limited competitive risk from the establishment of Kopdes. We fine-tune our FY26/27F earnings forecasts by -1.9/-0.8%, while leaving our revenue assumptions unchanged. Accordingly, we lower our TP slightly to Rp480, based on an unchanged 3yr historical mean valuation of 18.5x from 19.6x. MIDI currently trades at 10.6x PE FY26F.  Key risks: weaker-than-expected consumer demand that may impact topline, Kopdes' expansion into Alfamidi’s urban retail territory.

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