TAPG posted a slightly softer performance in 3Q25 due to normalization in the CPO segment, which still contributes >80% of revenue. Although CPO ASP rose to IDR14,218/kg (+2.3% QoQ; +10.1% YoY), revenue declined to IDR2.24tn (-5.1% QoQ; +19.9% YoY), driven by lower sales volume (-7.3% QoQ). Kernel-based products, which had been key growth drivers, also moderated: PK revenue dropped -9.4% QoQ while PKO fell -27.4% QoQ, in line with lower volumes and ASP adjustments.

COGS decreased -8.8% QoQ (+13.7% YoY) to IDR1.61tn, supported by lower raw material usage (-20.7% QoQ), driven by reduced external FFB purchases. Cost stability helped support profitability, with net profit rising to IDR986bn (+10.9% QoQ; +51.4% YoY), bringing 9M25 earnings to IDR2.68tn (+65.7% YoY), or 73.4%/82.2% of our/consensus estimates. NPM expanded significantly to 36.5% (vs 30.8% in 2Q25), aided by higher contributions from associates (IDR294bn, +7.9% QoQ) and sharply lower finance costs (-89.2% QoQ).

Internal FFB production fell to 651k tons (-13.5% QoQ), cascading into softer CPO and PK production (-12.6% and -14.8% QoQ). Despite the near-term pressure, TAPG’s young estate profile (avg. 14 years) continues to underpin sustainable productivity potential. Accelerated replanting initiatives and the upcoming 30–45 TPH palm oil mill in East Kalimantan are positioned to support medium-term volume growth as more trees enter peak production.

We downgrade TAPG to HOLD (from BUY) with an unchanged TP: IDR 1,700, as the previous valuation target has been reached (See Our Previous Report). While long-term fundamentals remain intact, we anticipate potential continuation of production pressure into 4Q25 due to weather disruptions that may cap near-term momentum. Upside risks: (1) CPO prices staying firmer-for-longer, (2) faster-than-expected volume recovery driven by improved weather.

By PHINTRACO SEKURITAS | Research
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