XA Update Report | PT Industri Jamu Dan Farmasi Sido Muncul Tbk. (SIDO) – Second Guidance Cut, Downside Priced In

 

 

By Steven Willie

14-August-2026

 

 

1H26 revenue declined -20% YoY to IDR 1.47 tn (40% of our new FY26F estimates), missing our prior estimates as distributor inventory normalization extended through May. 2Q26 revenue fell -21% YoY (+29% QoQ). Herbal & Supplements revenue dropped -48% YoY (+38% QoQ) on continued sell-in restraint, while F&B rose +47% YoY (+22% QoQ). GPM compressed to 51% (vs. 57% in 1H25) on volume deleverage and a heavier F&B sales mix, while OPM fell to 29% (vs. 41% in 1H25) as A&P spend rose +12% YoY. Net profit declined -44% YoY to IDR 334 bn (39% of our new FY26F estimates), with NPM at 23% (vs. 33% in 1H25). We downgrade our rating on SIDO to HOLD with a revised target price of IDR 350 (from IDR 510 previously).

 

 

🔹1H26 & 2Q26 Financial Performance

 

 

• Revenue contraction extends into a second quarter. 1H26 revenue fell -20% YoY to IDR 1.47 tn, missing our estimates (35% of our old FY26F, 40% of our revised FY26F). 2Q26 revenue declined – 21% YoY (+29% QoQ), as the Company continued withholding shipments to distributors through a normalization process that has now run four months without full resolution.

 

 

 

• Sell-in and sell-out gap persists. Management maintained that the revenue contraction reflects suppressed sell-in rather than weaker demand, citing flat sell-out in 1H26 and +8% YoY growth in 2Q26. We note, however, that this gap has now weighed on reported results for two straight quarters, and we treat the sell-out narrative with more caution until sell-in visibly converges.

 

 

• Herbal remains the primary drag; F&B growth partly offsets but does not fully compensate. 2Q26 Herbal & Supplements revenue fell -48% YoY (+38% QoQ), the segment most exposed to the ongoin  sell-in restraint. F&B revenue rose +47% YoY (+22% QoQ) on C+ Collagen scaling and new Alang Sari variants, but this segment carries lower margins, limiting its ability to offset the earnings impact. Pharmacy revenue declined -4% YoY (+26% QoQ).

 

 

• Export growth moderated by pricing and shipment timing. 1H26 export revenue grew +3% YoY (+28% YoY excluding essential oils), with the gap reflecting softer patchouli oil prices and shipment timing rather than weaker underlying volume, while 2Q26 export sales rose +11.2% YoY (+3.8% QoQ).

 

 

• Margin erosion compounds the top-line miss. GPM fell to 51% in 1H26 (vs. 57% in 1H25) on volume deleverage in Herbal and a mix shift toward lower-margin F&B. OPM contracted more sharply to 29% (vs. 41% in 1H25) as A&P spend rose +12% YoY despite the revenue decline. Net profit fell -44% YoY to IDR 334 bn, just 27% of our old FY26F estimates (39% of our revised estimates), with NPM at 23% (vs. 33% in 1H25).

 

 

 

🔹 Second Guidance Cut for FY26F

 

 

• Management cuts revenue guidance for a second time. At the 2Q26 earnings call, management lowered FY26F revenue guidance to -10% YoY (from flat YoY previously) and did not reissue net profit guidance (prior: flat YoY). Management also expects sell-in to realign with sell-out starting 3Q26.

 

 

• We lower our FY26F estimates accordingly. Following the revised guidance, we cut our FY26F revenue forecast to -10% YoY to IDR 3.7 tn, reflecting a slower and more back-loaded recovery in sell-in than we had previously expected. Our FY26F net profit forecast is lowered further to -31% YoY to IDR 850 bn, with NPM compressing to 23% (vs. 30% in FY25).

 

 

• Dividend per share to moderate in line with lower earnings. With net profit down in FY26F, we also project a lower dividend per share of IDR 26/share, translating to a dividend yield of 7% based on our TP.

 

 

 

🔹 HOLD Recommendation with Target Price of IDR 350/Share (Prev. IDR 510/share)

 

 

• We downgrade our rating on SIDO to HOLD with a revised target price of IDR 350 (from IDR 510 previously). The downgrade is primarily driven by our lower revenue forecast, which flows through to a corresponding cut in our net profit estimate and, in turn, reduces our expectation for SIDO’s dividend payout. We look to 3Q26 as the key quarter to validate management’s recovery timeline, as it should mark the first quarter operating on a fully normalized inventory base.

 

 

• Key risk(s): (1) Distributor inventory normalization extends beyond 3Q26; (2) Sell-out trends weaken in subsequent quarters; (3) Weaker-than-expected consumer purchasing power delays the anticipated 2H26 recovery; (4) Essential oil price volatility continues; (5) A lower-than-projected dividend payout.

 

 

 

 

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