Unilever Indonesia (UNVR IJ)

The Inflection Point is Here

• UNVR delivered a strong 3Q25 turnaround, driven by higher vol in all segments, resulting in +12.4% yoy sales and +117.2% yoy net profit jump. 
• We expect the momentum to sustain into 4Q25, with management targeting better margins through cost discipline, efficiency and portfolio optimization.
• Thus, we are turning more positive on the stock and upgrade rating to Buy with a higher TP of Rp3,200, as we raise our FY25/26F EPS est. by 5.9%/4.7%.

3Q25 marked a key turning point driven by stronger volume

UNVR delivered a strong turnaround in 3Q25, delivering its first positive yoy growth since the downturn in 4Q23. Revenue rose 12.4% yoy and 7.7% qoq in 3Q25, primarily supported by higher volume across all business segments, signaling the improvement in consumer sentiment and domestic demand. Home & Personal Care (HPC) posted robust domestic sales growth of +14.7% yoy in 3Q25, driven by an +11.4% volume growth (vs. -6.9% in 2Q25). Meanwhile, Foods & Refreshment (F&R) recorded +9.4% yoy domestic sales growth, with volume up +8.5% (vs. +0.5% in 2Q25). Backed by strong sales and operational efficiency, earnings rebounded sharply by +117.2% yoy and +28.5% qoq in 3Q25. We attribute this solid turnaround to stronger execution, enhanced productivity, and disciplined cost control.

Strategic shift towards high-growth segments

To enhance its competitiveness and align with market trends, UNVR is focusing its portfolio on high-growth segments particularly in home care, personal care, and beauty & wellbeing (exhibit 9). The combined sales contribution from these segments has steadily increased from 7.7% in Sep24 to 9.5% in Sep25. As part of its Distributive Trade (DT) digital transformation, the company is also expanding its retail reach and improving contributions from both direct and indirect networks, while growing its Health & Beauty (HABA) and e-commerce businesses. However, management noted that restructuring costs will likely rise in 4Q25, though they should remain broadly in line with 4Q24 levels at ~Rp300-400bn.

Turning positive with attractive div; upgrade to Buy with higher TP of Rp3,200

Overall, we are turning more positive on the stock supported by 1) a strong volume recovery in both categories while ASPs continue to rise, and 2) the expectations of sustained improvement in 4Q25 and FY26F as the company’s transformation and structural changes take full effect in FY26. Following the solid 3Q25 results, we raise our earnings estimates by +5.9/4.7% in FY25/26F. The company also remains committed to distributing 100% of FY25 earnings as dividends, with potential upside from the ice cream business divestment, offering a total dividend yield of 6.9%. Given these factors, we upgrade our rating to Buy with higher TP of Rp3,200, implying 27.5x FY26F PE. The stock is currently trading at 23.2x PE FY26F, above -1std of its 3yr mean level.

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