Broker: PT UOB Kay Hian Sekuritas
Date of Report: Thursday, 22 May 2025
Indonesia Market Insights May 2025: State Budget Surplus, Sector Strategies, and Key Stock Picks
Executive Summary: State Budget Surplus Sets the Stage for Market Opportunity
Indonesia’s state budget turned a corner in April 2025, posting a surplus and signaling potential reforms and improved fiscal management. Despite a year-on-year decline in overall state revenue and spending, improved tax collections and a focused strategy on regional transfers and non-ministry spending have set a constructive tone for the market. Coupled with sector-specific growth and highlighted stock picks, investors are presented with a nuanced landscape of opportunities and risks.
Market Overview: Positive Momentum Amid Global Volatility
- JCI Index: Closed at 7,142.5, up 0.7%.
- LQ-45 Index: Rose 1.2% to 812.2.
- Foreign Trade: Net foreign buy of US\$58.8m, with foreign investors accounting for 34% of IDX turnover.
- Top turnover stocks: Bank Rakyat Indonesia, Bank Central Asia, Bank Mandiri, Aneka Tambang, and GoTo Gojek Tokopedia.
- Commodity trends:
- Rupiah at Rp16,399/US\$, down 2.4% over the past month.
- Crude Oil: US\$61.6/bbl, down 4.8% in a month.
- Coal: US\$100.5/tonne, up 5.7% in a month.
- Nickel: US\$15,602/tonne, nearly flat month-on-month.
- Tin: US\$32,854/tonne, up 7.2% in a month.
- Gold: US\$3,311.9/oz, down 0.5% in a month.
- CPO: MYR3,891/tonne, down 5.5% in a month.
Indonesia State Budget Update: Surplus Returns, Reform in Sight
Indonesia’s state budget posted a surplus of Rp4.3 trillion in April 2025, reversing the deficit trend seen in the first quarter. Key figures include:
| Item |
3M25 |
4M25 |
2025 Target (APBN) |
% of Target |
YoY Change |
| State Revenue |
516 |
811 |
3,005 |
27.0% |
-12.4% |
| Tax Revenue |
400 |
657 |
2,491 |
26.4% |
-8.7% |
| Income Tax |
323 |
557 |
2,189 |
25.4% |
-10.7% |
| Customs & Excise |
78 |
100 |
302 |
33.3% |
4.8% |
| Non-Tax Revenue (PNBP) |
116 |
153 |
514 |
29.8% |
-24.7% |
| State Expenditure |
620 |
806 |
3,621 |
22.3% |
-5.1% |
| Central Gov’t Spending |
413 |
547 |
2,701 |
20.2% |
-7.6% |
| K/L Expenditure |
196 |
254 |
1,160 |
21.9% |
-16.6% |
| Non-K/L Expenditure |
217 |
293 |
1,541 |
19.0% |
1.9% |
| Transfers to Regions |
207 |
259 |
920 |
28.2% |
0.7% |
| Primary Balance |
18 |
174 |
(63) |
-274.7% |
-26.7% |
| Surplus/(Deficit) |
(104) |
4 |
(616) |
-0.7% |
-94.3% |
| Budget Financing |
250 |
279 |
616 |
45.3% |
283.5% |
Key drivers included a decline in non-tax revenue due to a shift in SOE dividends from the state budget to Danantara for long-term investment strategies. Leadership changes at the Directorate General of Tax and Directorate General of Customs and Excise are expected to accelerate ongoing tax reforms and boost collections.
The government targets a 2025 budget deficit of 2.53% of GDP (Rp616 trillion net debt issuance). With Bank Indonesia cutting policy rates by 25bp to support growth, the fiscal outlook is cautiously optimistic.
Sector Ratings and Top Stock Picks: Where Are the Opportunities?
- JCI Target: 7,500, based on 12x 2025F PE.
- Top sector ratings:
- Banking, Healthcare, Plantation, Property, Retail, Technology: Overweight
- Automobile, Cement, Consumer, Mining, Telecommunications: Market Weight
- Coal: Underweight
Top Stock Picks and Valuations:
| Company |
Recommendation |
Price (Rp, 21 May 25) |
Target Price (Rp) |
Market Cap (US\$m) |
2025F PE (x) |
2026F PE (x) |
2025F Div Yield (%) |
2025F ROE (%) |
Gearing (%) |
| Bank Central Asia (BBCA) |
BUY |
9,700 |
10,500 |
69,702 |
20.5 |
19.0 |
3.2 |
21.2 |
(30.0) |
| Bank Mandiri (BMRI) |
BUY |
5,450 |
6,000 |
31,068 |
9.1 |
8.4 |
7.1 |
19.2 |
17.3 |
| Bank Tabungan Negara (BBTN) |
BUY |
1,275 |
1,420 |
1,067 |
5.4 |
4.8 |
4.0 |
9.5 |
40.8 |
| BRIS |
BUY |
2,930 |
3,450 |
8,049 |
16.4 |
13.9 |
1.0 |
16.9 |
(77.6) |
| Aneka Tambang (ANTM) |
BUY |
2,910 |
3,300 |
3,857 |
12.4 |
12.4 |
4.8 |
16.8 |
(28.6) |
| Merdeka Copper Gold (MDKA) |
BUY |
2,050 |
1,900 |
2,879 |
n.m. |
24.8 |
0.0 |
(0.7) |
42.9 |
| CMRY |
BUY |
4,880 |
6,000 |
2,171 |
22.8 |
20.1 |
2.4 |
22.6 |
(36.4) |
| ICBP |
BUY |
10,825 |
15,000 |
7,844 |
12.7 |
11.2 |
2.9 |
20.0 |
26.7 |
In-Depth Company Analysis: Aspirasi Hidup Indonesia (ACES)
Company Overview
Aspirasi Hidup Indonesia (ACES) is a leading retailer specializing in tools, home improvement, lawn and garden supplies, plumbing, furniture, sporting goods, and pet supplies. With a market capitalization of US\$549 million and 17,120.4 million shares outstanding, ACES continues to expand its footprint across Indonesia.
Recent Performance and Growth Strategy
- Share Price: Rp525
- Target Price: Rp565 (Upside: +7.6%)
- 2025F PE: 9.3x
- Dividend Yield: 6.0–7.0%
- Major Shareholder: Kawan Lama Sejahtera (60%)
ACES reported a sharp SSSG (same-store sales growth) decline of 14.1% in April 2025, primarily due to softer consumer spending and a shift in Ramadan timing (March this year vs April last year). 4M25 SSSG decelerated to -2.3% (from +2.2% in 3M25). Nevertheless, 4M25 indicative sales increased by 4.2% year-on-year to Rp2.9 trillion, supported by five newly opened stores.
- Expansion focus: Opened five new stores in 4M25, bringing the total to 250 stores. Targeting 25–30 new store openings in 2025, emphasizing second- and third-tier cities.
- Promotional strategy: Nationwide promotions in May 2025 to celebrate the company’s 30th anniversary and the opening of its 250th store.
Financial Highlights and Outlook
| Year Ended Dec 31 |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover (Rpb) |
7,620 |
8,583 |
9,205 |
10,269 |
11,398 |
| EBITDA (Rpb) |
1,135 |
1,291 |
1,325 |
1,558 |
1,716 |
| Operating Profit (Rpb) |
1,007 |
1,167 |
1,191 |
1,409 |
1,550 |
| Net Profit (Rpb) |
770 |
892 |
907 |
1,069 |
1,185 |
| EPS (Rp) |
44.9 |
52.1 |
53.0 |
62.4 |
69.2 |
| PE (x) |
11.7 |
10.1 |
9.3 |
8.4 |
7.6 |
| P/B (x) |
1.5 |
1.4 |
1.4 |
1.3 |
1.2 |
| EV/EBITDA (x) |
6.2 |
5.8 |
4.9 |
4.2 |
4.1 |
| Div Yield (%) |
5.9 |
6.4 |
7.1 |
8.4 |
9.2 |
ACES’ management maintains guidance for SSSG at ≥1% and sales growth of ≥5%. Net profit is expected to grow 1.6% in 2025, underpinned by cost normalization as salary and allowance expenses return to more typical levels in 2Q25.
Q1 2025 Performance and Cost Dynamics
- Q1 2025 net profit: Rp142 billion, down 30.9% year-on-year.
- Opex: Up 24% year-on-year, mainly from a 37.7% jump in salaries (due to 13th month salary/THR) and a 122.5% rise in advertising & promotion expenses.
- Margins:
- Gross profit margin: 48.0% (down 0.5pp y-o-y)
- Operating profit margin: 9.0% (down 4.4pp y-o-y)
- Net profit margin: 6.6% (down 3.7pp y-o-y)
Despite the weak start, ACES is expected to recover as the impact of seasonal salary expenses fades and promotional spending normalizes. The company has a track record of higher earnings in the second half of the year and a consistent dividend payout (50–80% in 2021–2024).
Technical Insights: AKR Corporindo (AKRA) and Bumi Serpong Damai (BSDE)
AKR Corporindo (AKRA)
- Technical Buy with 6% potential return.
- Entry: Buy at Rp1,360, take profit at Rp1,450.
- Resistance: Rp1,400, Rp1,470; Support: Rp1,230, Rp1,160; Stop-loss: Rp1,305.
- Technical indicators: RSI at 72.16 (overbought), bullish MACD crossover, strong volume.
- Institutional research target: Rp1,350 (fundamental BUY).
Bumi Serpong Damai (BSDE)
- Technical Buy with 7.5% potential return.
- Entry: Buy at Rp910, take profit at Rp975.
- Resistance: Rp940, Rp975; Support: Rp895, Rp870; Stop-loss: Rp890.
- Technical indicators: RSI above centerline, bullish MACD crossover, strong price breakout.
- Institutional research target: Rp1,440 (fundamental BUY).
Conclusion: Navigating Indonesia’s 2025 Investment Terrain
Indonesia’s fiscal turnaround, combined with sector-specific opportunities and disciplined corporate strategies, offers investors a roadmap for navigating the market in 2025. Emphasis on tax reform, measured spending, and targeted expansion by key corporates like ACES, AKRA, and BSDE underpins a cautiously optimistic outlook. Investors are advised to monitor developments in fiscal policy, consumer sentiment, and sector rotation to capture value in this evolving landscape.
For investors seeking growth, value, and defensive plays, PT UOB Kay Hian Sekuritas’ top picks and strategic sector weightings provide actionable guidance for portfolio positioning in Indonesia’s dynamic market.
