KEY HIGHLIGHTS
- Strong volume, weaker mix. 2Q26 revenue rose 18.2% YoY to IDR 9,800 Bn and 1H26 14.0% to IDR 19,479 Bn — the strongest top line in the sector this season. But gross margin fell 4.0pp YoY to 36.8% in 2Q26 and 3.4pp to 37.6% across the half, as cost of goods sold rose 20.7% in 1H26 against 14.0% revenue growth.
- The cause is mix, not input-cost inflation — and the distinction matters. Note 28 shows KLBF’s own manufacturing cost rose just 3.6% in 1H26: raw and packaging materials +5.8%, direct labour +6.3%, overhead down 3.2%. The overshoot is bought-in goods. Purchases of finished goods in the manufacturing segment more than doubled, up 106.9% to IDR 1,275 Bn, and distribution purchases rose 35.1%. Distribution and logistics revenue grew 32.2% YoY in 2Q26 and now accounts for 38.0% of group sales against 33.9%, at an 11.3% gross margin. Roughly 1.6pp of the 4.0pp is that mix shift and 2.4pp is within-segment rate, led by prescription pharma margin down to 46.6% from 51.5% and nutritionals to 52.8% from 56.5%.
- Operating leverage more than absorbed the margin loss. Operating expenses rose only 2.5% YoY on revenue up 18.2%; the selling expense ratio improved to 19.8% of 1H26 revenue from 21.0% and R&D fell 13.4% in the quarter, helped by a lower obsolescence provision (IDR 89 Bn vs IDR 133 Bn). Core operating profit rose 9.4% YoY to IDR 1,165 Bn. Pre-tax profit was nonetheless flat at -0.1% and net profit fell 0.8%.
- Two below-the-line items explain that gap, both concentrated in a single quarter. The entire 1H25 gain on disposal of fixed assets of IDR 80 Bn fell in 2Q25, against only IDR 14 Bn in 2Q26 — a drag of IDR 66 Bn. Separately, 2Q26 carried a net FX loss of IDR 44 Bn against a IDR 1 Bn gain in 2Q25, a swing of IDR 45 Bn. Adjusting for both, 2Q26 pre-tax profit rose about 9.3% rather than falling 0.1%, consistent with the operating line.
- Against consensus, margin is the live risk — and coverage here makes the read meaningful. The Bloomberg set (19 contributors on revenue, 18 on net income) already assumes FY26 gross margin of 38.3% against 39.8% in FY25, yet the 1H26 actual of 37.6% is below even that reduced assumption. Revenue runs ahead at 51.4% of FY26F vs a 48.3% share in 1H25, but pre-tax profit (54.2%) and net profit (53.5%) sit marginally below their own seasonal share. Balance sheet unstressed: net cash of IDR 4,005 Bn, capex +36.4% to IDR 394 Bn. Valuation: LTM P/E 9.1x against a 5-year mean of 22.2x — 2.4 SD below, and outside the -2 SD band all year. Key watch: whether the distribution and traded-goods mix permanently resets group gross margin lower.
Regards, Aldiracita Research
