Kalbe Farma (KLBF IJ/Maintain) - Volume Carries Growth, Margins Still Compressing

KLBF posted 2Q26 revenue of IDR9.80tr (+19.0% YoY, +1.3% QoQ), PATMI of IDR891bn (-0.8% YoY, -13.5% QoQ), and EBITDA of IDR1.36tr (+8.8% YoY, -9.5% QoQ). 1H26 revenue, PATMI, and EBITDA reached 50%/51%, 49%/53%, and 50%/54% of our/consensus FY26F, inside their five-year 1H ranges, which we read as in line. Volume drove nearly all growth, with pricing adding under 1%, while gross margin fell to 36.8% (-3.8ppt YoY, -4.2ppt QoQ) on sales mix, raw material costs, and IDR depreciation.

Consumer Health rose to IDR1.31tr (+20.5% YoY), the fastest-growing manufacturing segment and the only one that expand gross margin to 64.0%. Pharmaceutical reached IDR2.67tr (+8.6% YoY) on branded generics under B2C at 46.6% GPM (-4.6ppt YoY), and Nutritionals IDR2.10tr (+12.1% YoY) at 52.8% (-3.8ppt YoY). Distribution grew fastest at IDR3.72tr (+32.2% YoY) on new principals, lifting its revenue share to 38% from 34%. That mix shift explains only 0.9ppt of the 3.8ppt YoY group contraction, as manufacturing GPM fell to 52.5% from 55.4%.

Management guides toward further margin correction, as 1H26 still ran on lower-cost inventory, with pressure from purchasing power, the currency, and oil prices. To mitigate this, management build raw material inventory, diversify procurement, and tighten SGA control, prioritizing operating cash flow while acquisitions stay under review. We leave our projections unchanged given the in-line result and maintain Buy with a TP of IDR1,030. Key risks: prolonged IDR depreciation, elevated oil prices, and higher input costs.