Indonesian Stocks Diverge: GGRM & Tobacco Underperform Market Amid Ministerial Change

JAKARTA – Indonesian cigarette company stocks witnessed a remarkable surge at the close of trading on Monday, September 8, 2025. This unexpected rally coincided with the official announcement of a cabinet reshuffle, specifically the replacement of Finance Minister Sri Mulyani with Purbaya Yudhi Sadewa, who previously served as the Head of the Deposit Insurance Corporation (LPS).

Interestingly, this significant climb in cigarette stock values occurred despite the broader market, as the Jakarta Composite Index (IHSG), concluded the day with a 1.28% decline, settling at 7,766.84. In stark contrast, shares of PT Gudang Garam Tbk. (GGRM) soared by 12.50% to Rp9,900, while PT H.M Sampoerna Tbk. (HMSP) experienced an impressive 17.76% increase to Rp630. Similarly, PT Wismilak Inti Makmur Tbk. (WIIM) climbed 16.35% to Rp925, and PT Indonesian Tobacco Tbk. (ITIC) rose 11.61% to Rp250.

According to M. Nafan Aji Gusta, a Senior Market Analyst at Mirae Asset Sekuritas Indonesia, this market behavior signals investors’ anticipation. The market appears to be betting on the new Finance Minister to adopt a more lenient approach to the tobacco excise tax (CHT) policy, often referred to as the cigarette tax.

Also Read: The Conglomerate Behind Gudang Garam, The Cigarette Giant Amidst Mass Layoff Rumors

Over the past five years, under the leadership of Sri Mulyani, the Ministry of Finance had aggressively increased cigarette excise taxes by a cumulative 67.5% since 2020. Specifically, the average cigarette excise tax rose by 23% in 2020, followed by a 12.5% increase in 2021, and an average 12% hike in 2022. Subsequently, 2023 and 2024 saw average increases of 10% each. However, in 2025, the government opted not to raise the cigarette excise tax.

“Previously, Sri Mulyani was very much in favor of policies increasing cigarette excise taxes. Now, the market will be looking to Purbaya Yudhi Sadewa, the new Finance Minister, to implement more flexible cigarette excise tax policies,” Nafan commented on Monday, September 8, 2025.

Also Read: Prospects for GGRM-HMSP Cigarette Stocks as Sales Momentum Stalls

In light of this, Mirae Asset Sekuritas has issued a “buy” recommendation for both GGRM and WIIM shares. For GGRM, the current price has already reached Target Price 1 (TP1) at Rp9,550, with TP2 set at Rp10,650. The brokerage advises a “buy” with an entry level ranging from Rp9,100 to Rp9,400.

As for WIIM, its current price has hit TP1 at Rp915, while TP2 is set at Rp1,015 and TP3 at Rp1,100. Mirae Asset Sekuritas recommends “add” (increasing ownership) for WIIM, with an entry level between Rp850 and Rp880.

Also Read: Sampoerna (HMSP) Cigarette Issuer’s Revenue Projected to Be Strained by Purchasing Power

Meanwhile, Oktavianus Audi, VP Equity Retail at Kiwoom Sekuritas Indonesia, stated that the market is eagerly awaiting official statements from Purbaya. These statements are particularly crucial concerning future fiscal policy and budget plans, which are expected to affirm the continuity of government programs and reassure the market about the mitigation of future fiscal risks.

“Therefore, we believe that issuers with solid fundamentals will be the preferred choice if the reshuffle only leads to a technical correction,” Oktavianus explained.

It is worth noting that before President Prabowo announced the “Red-White Cabinet” reshuffle this afternoon, the IHSG had actually strengthened by 0.58% to 7,912.95 at the close of the first trading session. Trading charts further show that the IHSG remained at 7,901.30 as late as 3:29 PM WIB.

Oktavianus suggested that the pressure on the IHSG today was primarily driven by sentiment related to economic policy uncertainty and concerns over fiscal credibility. This situation was compounded by previous demands from demonstrators advocating for changes in tax and fiscal policies.

Consequently, he believes the cabinet reshuffle, which includes a change in the critical Finance Minister position, indicates more tangible potential risks until new policies are clearly defined and gain credibility.

“Nevertheless, if the government quickly provides a roadmap for new policies that maintain fiscal discipline, the current pressure on the IHSG will likely be temporary and could see a faster recovery,” he concluded.

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