KONTAN.CO.ID – JAKARTA. Indonesia’s manufacturing sector is demonstrating a nascent recovery. A recent report from S&P Global highlights a significant upturn, with the Purchasing Managers’ Index (PMI) for Indonesian manufacturing climbing to 50.0 in May 2026, a notable improvement from the 49.1 recorded in the preceding month.
This positive shift, marking a transition from a contractionary zone to an expansionary one, signals a highly encouraging initial outlook for the performance of listed companies, particularly those within the real and manufacturing sectors. Investment Specialist at Bahana Sekuritas, Yazid Muamar, emphasizes that while this increase is a promising indicator, it will not instantly translate into a surge in companies’ net profits. Instead, he points out that a transmission process is involved, alongside several risk factors that warrant close monitoring. “However, this increase will not immediately boost net profits; there’s a transmission process and several risk factors that need to be observed,” Yazid told Kontan on Wednesday, June 3, 2026.
Despite Stalled Performance in Q1, AADI’s Prospects for 2026 Remain Attractive
Amidst this strengthening economic data, several key sectors present compelling investment opportunities. Firstly, the automotive and components sector typically acts as an early beneficiary, quickly reflecting the positive impacts of such economic shifts. Enhanced factory activity often correlates directly with a rise in vehicle sales volumes and improved production capacity utilization for companies like ASII, IMAS, and VKTR.
Secondly, the consumer goods sector also stands to gain. Companies such as ICBP, INDF, and MYOR are well-positioned, as manufacturing expansion frequently signifies a strengthening of domestic purchasing power. This robust consumer demand, in turn, fuels growth for consumer staples and discretionary items.
Thirdly, the logistics and raw materials sector is poised for benefits. A surge in factory activity naturally escalates the demand for goods distribution and essential raw materials. Consequently, logistics and raw material providers like ASSA, SMDR, and TMAS are likely to see increased activity and profitability. Yazid further commented, “Stock performance can be affected as company financial reports are likely to improve.”
Offering a different perspective, Ike Widiawati, Head of Retail Research at Sinarmas Sekuritas, notes that even with the Manufacturing PMI returning to a neutral level of 50.0 in May 2026, companies might still contend with elevated operational burdens. This challenge is primarily driven by the high costs associated with importing raw materials and capital goods, exacerbated by the weakening exchange rate of the rupiah. “The best strategy for the manufacturing sector right now is short-term trading, capitalizing on brief technical bounces, or ‘wait and see’ if the trend remains sharply downward,” Ike explained to Kontan on Wednesday, June 3, 2026.
For investors seeking active positions, Ike recommends keeping ICBP and SMSM on their watchlist. From a fundamental standpoint, SMSM has consistently achieved high and stable net profit margins, largely due to its extensive export presence, reaching over 70% of its production to more than 100 global countries. Meanwhile, ICBP boasts robust operating cash flows and significant foreign currency revenue contributions from its subsidiaries, providing a strong financial foundation.
In a separate recommendation, Yazid maintains ASII as his top stock pick, projecting a long-term target price of Rp 7,300 per share, underscoring its potential for sustained growth in the current economic climate.
IHSG Potentially Continues Weakening on Thursday (4/6), See Its Projection
Summary
Indonesia’s manufacturing Purchasing Managers’ Index (PMI) rose to 50.0 in May 2026 from 49.1, indicating a shift from contraction to expansion and signaling a promising outlook for listed companies. While this improvement is positive, Bahana Sekuritas noted it wouldn’t immediately boost net profits due to a transmission process and risk factors. Key sectors identified for potential gains include automotive (e.g., ASII), consumer goods (e.g., ICBP), and logistics (e.g., ASSA), anticipating improved financial reports.
Conversely, Sinarmas Sekuritas highlighted potential operational burdens from high import costs and a weakening rupiah, suggesting short-term trading or a “wait and see” strategy. From this perspective, ICBP and SMSM were recommended for their strong fundamentals. Bahana Sekuritas maintained ASII as a top long-term stock pick with a target price of Rp 7,300.