Indonesia Consumer: Navigating Generational Investment Opportunities After the US-Iran War

We maintain a NEUTRAL rating for the Indonesian consumer sector, with Top BUYs: ACES, KLBF, INDF and Top SELLs: UNVR, LPPF, GGRM. A US-Iran peace deal has the potential to reduce inflationary pressure from oil prices and exchange rates, positively impacting the sector’s earnings prospects. We maintain our FY26E earnings growth projections of +22% YoY for staples and +10% YoY for retailers, with sales growth of +12% YoY and +18% YoY respectively. The opening of the Strait of Hormuz is a material positive catalyst for the sector, given significant exposure to oil-based inputs (2%–42% of FY26E sales) and USD-based imported goods (approximately 10%–80% of FY26E COGS). Sensitivity analysis shows that every 10% decline in input and logistics costs could increase sector net profit by 1.0%–17.1%, while every 1% appreciation of IDR/USD boosts earnings by 0.3%–5.5%. With sector valuations at PER 8–11x, already bearish consensus expectations, and attractive dividend yields, the Indonesian consumer sector offers valuation re-rating opportunities, especially for Top BUYs that have clear business execution, active innovation, and effective cost control.