Flash Focus: Sumber Alfaria Trijaya (AMRT IJ/Not rated) - Margin Expansion; Growth Still on Track

AMRT reported in-line 2Q26 earnings, with 1H26 PATMI reaching IDR2.0tr (+7.5% YoY), or 52% of FY26 consensus estimates. Revenue growth moderated to 5.4% YoY in 2Q26, with SSSG easing to 2.7% from 6.2% in 1Q26, largely due to the Ramadan timing shift. Nevertheless, demand remained resilient despite c.4–5% price increases, while sales continued to shift towards higher-margin categories. Improving sales trends in early Jul’26 support management’s FY26 guidance.

We view the margin performance positively, with GPM expanding despite softer topline growth. GPM rose to 22.9% in 2Q26 (+0.9ppt YoY, +1.1ppt QoQ), while market share increased to 14.2% in YTD Jun’26 from 13.6% in YTD Jun’25, suggesting limited impact from its more disciplined promotional strategy. We expect margins to remain supported by pricing and mix, with further operating leverage from the maturation of six recently opened DCs.

Management continues to focus on execution, with online penetration and Lawson providing additional growth opportunities. Online sales reached 8.4% of revenue in 1H26, still below the 10% FY26 target, leaving room for further penetration, while a third-party delivery pilot should support online profitability. Lawson’s losses also continued to narrow, although profitability remains a longer-term story as store rationalisation and assortment optimisation continue.

We remain positive on AMRT, supported by resilient demand, margin expansion and improving operating leverage. The stock trades at an undemanding 13.9x FY26F PE, c.2SD below its five-year average, with sentiment weighed by the MSCI reclassification and potential KDMP-related constraints on store expansion. We see solid earnings trajectory with key risks including weaker SSSG, store expansion execution, and shifting consumer preferences.