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On Friday, UBS analyst Permada Darmono upgraded Unilever (LON:ULVR) Indonesia Tbk (UNVR:IJ) (OTC:UNLRF) stock from ’Sell’ to ’Neutral’ and increased the price target to IDR1,800.00, up from IDR1,300.00. The adjustment followed a notable increase in the company’s share price, which climbed approximately 12% subsequent to the announcement of its first quarter earnings for 2025.
Darmono noted that Unilever Indonesia’s efforts to improve its business fundamentals were yielding positive results. The company’s strategies, such as harmonizing channel prices to bolster its supply distribution system and reducing inventory to expedite market delivery, have been effective. This was evidenced by a significant quarter-on-quarter earnings recovery in the first quarter of 2025, where earnings more than doubled.
Additionally, the analyst highlighted that the decline in Unilever Indonesia’s market share was decelerating. Data from Nielsen indicated that the quarter-on-quarter market share decline in the fourth quarter of 2024 was 160 basis points in value and 130 basis points in volume. However, in the first quarter of 2025, the declines slowed to 50 basis points in value and 20 basis points in volume.
Unilever Indonesia’s stock price movement suggests that the market has factored in expectations for a compound annual growth rate (CAGR) of 3% in revenue from 2025 to 2034, which aligns with Unilever’s forecast for the Indonesian fast-moving consumer goods (FMCG) industry’s growth rate of 2-4% in 2025. Furthermore, the market anticipates a sustainable earnings before interest and taxes (EBIT) margin of 15.8%, which is an improvement of 130 basis points from the first quarter of 2025.
UBS’s own estimates, based on a reverse discounted cash flow (DCF) analysis, project a slightly higher revenue CAGR of 3.6% and a sustainable EBIT margin of 16.8%. These projections are very close to current market pricing, suggesting that Unilever Indonesia’s financial performance is on track with investor expectations.
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