---
endpoint: analytics
pattern: Consumer
status: done
latency_ms: 148844
conversation_id: 4854b376-8b05-4b08-b92f-8dabd4e34b03
citations: 0
created: 2026-05-31 19:20:59Z
---

# What’s the bull case bear case for Unilever Indo?

# Unilever Indonesia (UNVR IJ) — Bull / Bear Case

Latest CLSA coverage rates UNVR **HOLD** with a target price of **Rp1,400** (derived from a 15.5x target PE on 25CL EPS — slightly below -2SD of its 5-yr historical average) [5]. Below is the structured bull vs bear framing drawn from CLSA's most recent UNVR notes (24-Apr-2025 "Holding steady" and 13-Feb-2025 "Challenging moments").

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## Bull Case — "Transformation is bedding in; margin recovery is visible"

**1. Self-help is starting to show up in numbers.** UNVR delivered a stronger-than-expected 1Q25 result, with earnings beating CLSA's number "mainly on margin expansion and efficiencies" [1]. The 1Q25 print showed a +34% sequential profitability improvement (Q3'24 → Mar-25) [9] and non-factory people cost dropped from 3.5% of sales (2023/2024) to 3.1% in 1Q25 [10].

**2. Two of four transformation pillars are DONE; the other two are on-track.** Management has marked customer **stock reduction** and **price harmonization** as COMPLETED, while DT digital transformation and store-coverage expansion are flagged "on track" [8]. This removes the largest drag that hammered FY24 sales.

**3. Strategy framework supports a longer-term volume/sales upside.** Business division segmentation enables faster decision-making, higher marketing budgets, faster distributor replenishment (stock reduction), and narrower price gaps across channels — "if successful, despite not in a short-term, the company might see upside to its volume and sales" [11].

**4. Management guidance points to a 2H25 acceleration.** "It remains optimistic of better performance in 2H25" [1]; management's focus has now pivoted to enhancing brand equity, expanding distribution and cost efficiencies, and "is on track to book better growth in 2H25" [2].

**5. Re-rating catalysts are identifiable.** "Any improvement in its performance, especially in volume and sales, could provide a potential rerating catalyst for the stock, as this might suggest the success of its transformation strategies." [4] Stronger Indonesian consumer purchasing power is the other catalyst CLSA flags [12].

**6. Forecast trajectory shows profit inflection in 25CL onwards.** EPS growth swings from -29.8% in 24A to +4.9% in 25CL, +8.2% in 26CL and +8.3% in 27CL on CLSA's forecasts [3]. Dividend yield stays attractive at 5.8%–6.6% over 25–27CL [3].

**7. Margin profile remains best-in-class regionally despite the slump.** UNVR's 25F gross margin of 48.1% and EBIT margin of 13.0% compare favourably vs the domestic peer average (gross 37.8%, EBIT 19.0%) on profitability per unit of revenue, and its 25F ROE of 109.2% dwarfs the domestic average of ~21.8% [6].

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## Bear Case — "Top-line is still broken, market share is still bleeding"

**1. Sales and volume growth are still negative.** Despite the 1Q25 earnings beat, "Sales on a yearly basis were still weak, with volume growth still negative" [1]. CLSA's 25CL revenue forecast (Rp35,495bn) is only marginally above 24A's Rp35,139bn and well below 23A's Rp38,611bn — a multi-year top-line erosion that has yet to reverse [3].

**2. Market share is on a clear downtrend.** Value share has fallen from 38.3% (9M22) to **33.5% in 1Q25**, and volume share from 30.7% to **26.7%** over the same period — i.e., roughly **5pp of value share and 4pp of volume share lost in under three years** [7]. This is structural, not cyclical.

**3. Boycotting risk persists.** CLSA explicitly calls out that "the boycotting impact, though at a milder scale, is also another risk to its performance" [5] — a reference to the consumer boycott of multinational brands in Indonesia that has weighed on UNVR (and others) since late 2023.

**4. Trading-down headwind from weaker purchasing power.** "A trading-down trend, given softer purchasing power, could hurt the company, as most of its products are priced at quite a premium vs peers." [4][13]

**5. FX and commodity exposure on the COGS side.** 55–60% of COGS is US$-linked, so rupiah weakness flows straight into expenses. Oil and CPO price swings are additional risk [4][13].

**6. Competition is intensifying.** "The continuously intensifying competition could also erode Unilever's market share in several segments (eg, personal care division)" [4] — consistent with the value/volume share losses already in evidence [7].

**7. Near-term seasonality is unhelpful.** CLSA expects a ~10% QoQ sales drop in 2Q25 from post-Eid normalisation, and is "yet to take into account the expectation of softer purchasing power" or to confirm "sustainability of its cost efficiency initiatives" [2] — i.e., the 2H25 recovery thesis is not yet de-risked.

**8. Valuation no longer screens cheap on growth.** UNVR trades at 15.4x 25F PE — broadly in line with Indonesia peer average (12.2x) but with materially weaker 25F sales growth (1.0% vs 8.1% peer avg) and the lowest absolute EPS growth in the domestic peer set (4.9% vs 11.9% peer avg) [6]. PEG of 3.1x in 25F is well above the domestic 1.3x average [6].

**9. CLSA's own multiple-cut sequence tells the story.** Target PE has been cut from 18.5x to 15.5x (now slightly below -2SD of the 5-yr historical average) to justify "the company's current condition" and the view that "the transformation strategies will take some time and the company still has a long journey to recover to where it was before." [5]

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## CLSA House View (Synthesis)

CLSA sits on **HOLD with TP Rp1,400** — explicitly a "wait-and-see" stance. The thesis: efficiency wins are showing, but volume/sales recovery is unproven and structural (market share, boycott, trading-down). They want to see proof of sustainable volume growth before re-engaging on the upside [2][5][11].

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**Sources**
[1][2][3][5][6][7][8][9][10] — CLSA, "Unilever Indo – HLD (Holding steady)", 24-Apr-2025 (document_id 607956782)
[4] — CLSA, "Unilever Indo – HLD (Holding steady)", 24-Apr-2025 — Investment Risks section
[11][12][13] — CLSA, "Unilever Indo – HLD (Challenging moments)", 13-Feb-2025 (document_id 607950575)

