Strategy
Strategy: Dividend Opportunities: Selectivity And Entry Discipline
Analyst
Highlights
- Narrowing the dividend opportunity set. We select 10 names from a 45-stock watchlist, balancing income, cash generation and balance-sheet strength.
- BUY-rated opportunities under coverage. ELSA, ASII and AADI offer distinct earnings and shareholder-return drivers; seven additional names broaden the income screen.
- Entry discipline remains essential. Benchmark selling could pressure large caps, while thin liquidity constrains smaller names. Accumulate selectively through further weakness.
What’s New
- Broadening the search while maintaining entry discipline. Following our previous report “Strategy: MSCI Standalone Market Overhang, Follow the Dividends”, we reviewed a broader universe of Indonesian dividend-paying stocks. We identified an initial 45-name watchlist using dividend yields, payment history, valuation and balance-sheet indicators, then narrowed our focus to 10 names: ELSA, ASII, IPCC, AADI, MSTI, IPCM, PBID, SPTO, RALS and DLTA. These represent a range of income opportunities rather than equally weighted recommendations. Should valuations correct further, we would accumulate selectively.
- Among the top 10, three of the stocks are under our coverage universe: ELSA, AADI, and ASII, all of which have BUY ratings with respective target prices of Rp1,450, Rp14,300, and Rp7,500.
- ELSA (BUY/Target price: Rp1,450). We maintain BUY on ELSA, which offers a 12.8% 2026F dividend yield as government support for the oil and gas sector should boost demand for oil and gas services, while higher seismic revenue in 2H26 is expected to provide additional revenue.
- ASII (BUY/Target price: Rp7,100). We maintain BUY on ASII, supported by its total shareholder return (TSR) framework, including an ongoing Rp8t share buyback programme from Jul 26 to Jul 27 and a minimum 45-50% payout ratio with ASII offering an 11.8% 2026F dividend yield.
- AADI (BUY/Target price: Rp14,300). We maintain BUY on AADI, supported by the ongoing coal upcycle and stronger seasonal demand during the winter. AADI offers an 11.9% 2026F dividend yield, with additional upside from a potential special dividend that could deliver a yield of over 12% following the divestment of Kestrel Mine.
- ELSA (BUY/Target price: Rp1,450). We maintain BUY on ELSA, which offers a 12.8% 2026F dividend yield as government support for the oil and gas sector should boost demand for oil and gas services, while higher seismic revenue in 2H26 is expected to provide additional revenue.
- Although IPCC, MSTI, IPCM, PBID, SPTO, RALS and DLTA are outside our coverage universe, we included them in our dividend screen based on their yields, cash generation and balance-sheet profiles. Some have relatively low foreign ownership, potentially limiting exposure to foreign selling. However, thin trading liquidity could constrain entry and exit, warranting smaller positions and staged execution.
- MSTI: Stable business backed by regulated bank IT spending. MSTI is one of Indonesia’s largest IT infrastructure providers. About 54% of its revenue comes from banks, which must keep upgrading systems and expanding data centres regardless of the economic cycle. 1H26 net profit grew 4.4% yoy to Rp205b, and net cash stood at Rp832b as of Jun 26. 2025 DPS of Rp122 (70% payout) gives a 10.9% trailing yield at Rp1,120. A 70% payout on consensus 2026 net profit of Rp580b implies an 11.5% yield.
- MSTI: Stable business backed by regulated bank IT spending. MSTI is one of Indonesia’s largest IT infrastructure providers. About 54% of its revenue comes from banks, which must keep upgrading systems and expanding data centres regardless of the economic cycle. 1H26 net profit grew 4.4% yoy to Rp205b, and net cash stood at Rp832b as of Jun 26. 2025 DPS of Rp122 (70% payout) gives a 10.9% trailing yield at Rp1,120. A 70% payout on consensus 2026 net profit of Rp580b implies an 11.5% yield.
Highlights
- Narrowing the dividend opportunity set. We select 10 names from a 45-stock watchlist, balancing income, cash generation and balance-sheet strength.
- BUY-rated opportunities under coverage. ELSA, ASII and AADI offer distinct earnings and shareholder-return drivers; seven additional names broaden the income screen.
- Entry discipline remains essential. Benchmark selling could pressure large caps, while thin liquidity constrains smaller names. Accumulate selectively through further weakness.
What’s New
- Broadening the search while maintaining entry discipline. Following our previous report “Strategy: MSCI Standalone Market Overhang, Follow the Dividends”, we reviewed a broader universe of Indonesian dividend-paying stocks. We identified an initial 45-name watchlist using dividend yields, payment history, valuation and balance-sheet indicators, then narrowed our focus to 10 names: ELSA, ASII, IPCC, AADI, MSTI, IPCM, PBID, SPTO, RALS and DLTA. These represent a range of income opportunities rather than equally weighted recommendations. Should valuations correct further, we would accumulate selectively.
- Among the top 10, three of the stocks are under our coverage universe: ELSA, AADI, and ASII, all of which have BUY ratings with respective target prices of Rp1,450, Rp14,300, and Rp7,500.
- ELSA (BUY/Target price: Rp1,450). We maintain BUY on ELSA, which offers a 12.8% 2026F dividend yield as government support for the oil and gas sector should boost demand for oil and gas services, while higher seismic revenue in 2H26 is expected to provide additional revenue.
- ASII (BUY/Target price: Rp7,100). We maintain BUY on ASII, supported by its total shareholder return (TSR) framework, including an ongoing Rp8t share buyback programme from Jul 26 to Jul 27 and a minimum 45-50% payout ratio with ASII offering an 11.8% 2026F dividend yield.
- AADI (BUY/Target price: Rp14,300). We maintain BUY on AADI, supported by the ongoing coal upcycle and stronger seasonal demand during the winter. AADI offers an 11.9% 2026F dividend yield, with additional upside from a potential special dividend that could deliver a yield of over 12% following the divestment of Kestrel Mine.
- ELSA (BUY/Target price: Rp1,450). We maintain BUY on ELSA, which offers a 12.8% 2026F dividend yield as government support for the oil and gas sector should boost demand for oil and gas services, while higher seismic revenue in 2H26 is expected to provide additional revenue.
- Although IPCC, MSTI, IPCM, PBID, SPTO, RALS and DLTA are outside our coverage universe, we included them in our dividend screen based on their yields, cash generation and balance-sheet profiles. Some have relatively low foreign ownership, potentially limiting exposure to foreign selling. However, thin trading liquidity could constrain entry and exit, warranting smaller positions and staged execution.
- MSTI: Stable business backed by regulated bank IT spending. MSTI is one of Indonesia’s largest IT infrastructure providers. About 54% of its revenue comes from banks, which must keep upgrading systems and expanding data centres regardless of the economic cycle. 1H26 net profit grew 4.4% yoy to Rp205b, and net cash stood at Rp832b as of Jun 26. 2025 DPS of Rp122 (70% payout) gives a 10.9% trailing yield at Rp1,120. A 70% payout on consensus 2026 net profit of Rp580b implies an 11.5% yield.
- MSTI: Stable business backed by regulated bank IT spending. MSTI is one of Indonesia’s largest IT infrastructure providers. About 54% of its revenue comes from banks, which must keep upgrading systems and expanding data centres regardless of the economic cycle. 1H26 net profit grew 4.4% yoy to Rp205b, and net cash stood at Rp832b as of Jun 26. 2025 DPS of Rp122 (70% payout) gives a 10.9% trailing yield at Rp1,120. A 70% payout on consensus 2026 net profit of Rp580b implies an 11.5% yield.
Analyst
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