July 16, 2025
Benefitting from Indonesia's B40 Transition

Market Commentary
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In early 2025, Indonesia officially implemented its B40 mandate, requiring all diesel fuel sold domestically to contain 40% palm oil-based biodiesel. The regulation, aimed at bolstering energy self-sufficiency, supporting the domestic palm oil industry, and reducing greenhouse gas emissions, has significantly reshaped the country’s fuel landscape.

As a result, national biodiesel demand surged to 15.7 million kiloliters in 2025, up 13% year-on-year, and is poised to rise even further with the planned rollout of the B50 program in 2026, which could push demand to approximately 19 million kiloliters. This aligns closely with President Joko Widodo’s energy vision: achieving partial energy independence within five years by deepening the use of locally produced biofuels.
 


Against this favorable regulatory backdrop, TBLA emerged as a clear beneficiary. The company reported a strong 1Q25 biodiesel sales volume of 177k KL, representing 114% YoY growth. This performance was underpinned by a sharp increase in its FY25 delivery contract to 809k KL, also up 114% from the previous year. The successful commissioning of its second biodiesel plant—bringing total refining capacity to 765 ktpa—has enabled TBLA to meet surging demand and scale its supply
commitments efficiently.


Beyond operational strength, TBLA offers a compelling dividend profile. Assuming a conservative 40% payout ratio, the company is expected to deliver an average dividend yield of 8.3% over the next three years.

With capex projected to decline by approximately IDR350bn following the completion of the second plant, there is potential for the payout ratio to increase to 60%, which could lift the three-year average dividend yield to 12.3%—positioning TBLA as a high-yield defensive growth stock in the energy transition space.
 


We maintain our BUY rating on TBLA and raise our target price to IDR1,200, implying a still-attractive 8.3x FY25 P/E and 5.7x EV/EBITDA. In our view, TBLA offers a rare combination of regulatory tailwinds, capacity-driven growth, and rising shareholder returns—making it a prime vehicle to ride Indonesia’s biofuel megatrend.


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