The company manufactures kretek cigarettes which are clove cigarettes common in Indonesia, with operations almost entirely domestic. The company has diversified its operations to include paper-related activities through its subsidiaries.
Cyborg Score Rationale
Gudang Garam is a market leader in Indonesian tobacco with strong historical performance and diversified operations beyond cigarettes. However, the business faces headwinds from rising excise taxes and weakening consumer demand, creating structural challenges despite stable market position.
Top Insights
Market leader with ~33% share in Indonesia's tobacco market, but facing excise tax increases that compress margins
Diversified beyond cigarettes into paperboard and infrastructure, reducing pure tobacco exposure
Recent analyst downgrade (RHB July 2024) reflects concerns about volume decline despite market dominance
Operating in a structurally declining category as regulatory pressures and consumer preference shifts impact demand
Named Competitors
HM Sampoerna — Second-largest Indonesian tobacco company competing in kretek and white cigarettes
Recent Developments
(July 2024) RHB Equity Research downgraded GGRM to SELL from Neutral with IDR13,700 target price citing flat-to-negative volume growth expectations
(2024) Price increases only offset 30-50% of excise tax hikes, with volumes declining as consumers downtraded
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