Strategy
Strategy: Small/Mid-Cap High Dividend Yielders With Solid Fundamentals
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Company List
Highlights
- We met with several small/mid-cap names that, aside from solid fundamentals, also offer high dividend yields, with positive balance sheets and profit outlooks supporting consistent dividend pay-outs, namely ARNA, ASGR, BIRD, MSTI, SPTO, TOTL and WIIM.
- We see scope for about 8-12% yields on this year's earnings, with BIRD, MSTI, ASGR and SPTO at the top of the range.
- All seven also have undemanding valuations, trading below 10x TTM PE with double-digit ROE, though liquidity is the main constraint.
What’s New
- Met several small/mid-cap names with high dividend yield. We recently met with several small- and mid-cap names (outside banks and commodity-linked sectors) that, aside from strong fundamentals and undemanding valuations, also happen to screen well for dividend-style investing, with positive balance sheet and profit capability outlook for consistent dividend payouts. Most offer yields (LTM) above the 10-year government bond yield of about 7% and the JCI dividend yield of 6.4%. Moreover, the backdrop has turned more supportive. The 10-year yield and the rupiah, both of which weakened through most of the year, have stabilised since early-August, with the 10-year yield at 6.95% against a June peak of 7.45% and the rupiah at Rp17,694/US$ from a low of Rp18,187. With both pressures easing, it is worth taking a closer look at high-yield names as an alternative strategy.
The names we met are as follows:
- Arwana Citramulia (ARNA IJ, NR) – Ceramic tile market leader, selling through the mass-market Arwana and higher-priced UNO brands.
- Astra Graphia (ASGR IJ, NR) – Exclusive FUJIFILM partner, 77% owned by Astra, now reweighting its strategy toward enterprise IT solutions via its subsidiary AGIT (Astra Graphia Information Technology).
- Blue Bird (BIRD IJ, NR) – Indonesia's largest taxi operator, now a broader mobility platform, with non-taxi already contributing about 30% of revenue and expected to grow faster than taxis going forward.
- Mastersystem Infotama (MSTI IJ, NR) – One of Indonesia's largest ICT infrastructure providers, with major clients across banking and telco.
- Surya Pertiwi (SPTO IJ, NR) – Sole distributor of TOTO sanitaryware in Indonesia since 1978 and sister company to the manufacturer, a contractual moat serving 3,000+ dealers nationwide.
- Total Bangun Persada (TOTL IJ, NR) – A private sector building contractor established in 1970 with 900+ projects delivered, building vertical structures such as offices, data centres, hospitals and hotels.
- Wismilak Inti Makmur (WIIM IJ, NR) – A family-controlled Tier 2 cigarette producer, machine-made cigarettes made up 69% of sales led by Diplomat and Galan.
- Beyond the companies we met, we also screened the IDX for names offering LTM dividend yields above 7%.
- We see scope for BIRD, MSTI, ASGR, and SPTO to yield about 10-12% on this year's earnings. BIRD guides for revenue growth of 13% and profit growth of around 9% for 2026, with the non-taxi business the key growth driver. Capex steps down to about Rp1.7t from the Rp2.1t peak in 2025, and free cash flow is expected to turn positive. The company indicated the possibility of increasing its payout ratio, which was 65% last year; assuming 70%, the implied yield is around 11.8%. MSTI guides for mid- to high single-digit
revenue growth, with contracts secured as at June up 7.5% yoy. On top of that, there is potential upside as management noted it has received several enquiries from data centre operators, though it remains conservative in assessing project feasibility. At an unchanged 70% payout, the implied yield is about 10%, based on consensus earnings growth of around 8%. ASGR holds the largest net cash position in the group at Rp1.65t (~69% of market cap), with minimal capex at only about 5% of operating cash flow. 1H26 net profit was also strong, up 30% yoy, primarily driven by growth in information technology services as it shifts away from the FUJIFILM business. Last year it paid out 120%, and while it has given no guidance, assuming a 90% payout would imply a yield of around 11%. Meanwhile, SPTO guides mid-single-digit revenue growth and about 10% net profit growth this year. At an unchanged 70% payout, that implies an around 12.8% yield. No major capex is planned this year, and management is considering lifting the payout above 70% and shifting from semi-annual to quarterly payments. It is the leading distributor of sanitary ware and bathroom fittings in Indonesia and, as the exclusive sole distributor of TOTO, also holds a structural cost advantage against Chinese competitors, as the products are manufactured locally, avoiding import duties and freight. Pricing power is intact, with two increases in March and June of 5-10%.
Highlights
- We met with several small/mid-cap names that, aside from solid fundamentals, also offer high dividend yields, with positive balance sheets and profit outlooks supporting consistent dividend pay-outs, namely ARNA, ASGR, BIRD, MSTI, SPTO, TOTL and WIIM.
- We see scope for about 8-12% yields on this year's earnings, with BIRD, MSTI, ASGR and SPTO at the top of the range.
- All seven also have undemanding valuations, trading below 10x TTM PE with double-digit ROE, though liquidity is the main constraint.
What’s New
- Met several small/mid-cap names with high dividend yield. We recently met with several small- and mid-cap names (outside banks and commodity-linked sectors) that, aside from strong fundamentals and undemanding valuations, also happen to screen well for dividend-style investing, with positive balance sheet and profit capability outlook for consistent dividend payouts. Most offer yields (LTM) above the 10-year government bond yield of about 7% and the JCI dividend yield of 6.4%. Moreover, the backdrop has turned more supportive. The 10-year yield and the rupiah, both of which weakened through most of the year, have stabilised since early-August, with the 10-year yield at 6.95% against a June peak of 7.45% and the rupiah at Rp17,694/US$ from a low of Rp18,187. With both pressures easing, it is worth taking a closer look at high-yield names as an alternative strategy.
The names we met are as follows:
- Arwana Citramulia (ARNA IJ, NR) – Ceramic tile market leader, selling through the mass-market Arwana and higher-priced UNO brands.
- Astra Graphia (ASGR IJ, NR) – Exclusive FUJIFILM partner, 77% owned by Astra, now reweighting its strategy toward enterprise IT solutions via its subsidiary AGIT (Astra Graphia Information Technology).
- Blue Bird (BIRD IJ, NR) – Indonesia's largest taxi operator, now a broader mobility platform, with non-taxi already contributing about 30% of revenue and expected to grow faster than taxis going forward.
- Mastersystem Infotama (MSTI IJ, NR) – One of Indonesia's largest ICT infrastructure providers, with major clients across banking and telco.
- Surya Pertiwi (SPTO IJ, NR) – Sole distributor of TOTO sanitaryware in Indonesia since 1978 and sister company to the manufacturer, a contractual moat serving 3,000+ dealers nationwide.
- Total Bangun Persada (TOTL IJ, NR) – A private sector building contractor established in 1970 with 900+ projects delivered, building vertical structures such as offices, data centres, hospitals and hotels.
- Wismilak Inti Makmur (WIIM IJ, NR) – A family-controlled Tier 2 cigarette producer, machine-made cigarettes made up 69% of sales led by Diplomat and Galan.
- Beyond the companies we met, we also screened the IDX for names offering LTM dividend yields above 7%.
- We see scope for BIRD, MSTI, ASGR, and SPTO to yield about 10-12% on this year's earnings. BIRD guides for revenue growth of 13% and profit growth of around 9% for 2026, with the non-taxi business the key growth driver. Capex steps down to about Rp1.7t from the Rp2.1t peak in 2025, and free cash flow is expected to turn positive. The company indicated the possibility of increasing its payout ratio, which was 65% last year; assuming 70%, the implied yield is around 11.8%. MSTI guides for mid- to high single-digit
revenue growth, with contracts secured as at June up 7.5% yoy. On top of that, there is potential upside as management noted it has received several enquiries from data centre operators, though it remains conservative in assessing project feasibility. At an unchanged 70% payout, the implied yield is about 10%, based on consensus earnings growth of around 8%. ASGR holds the largest net cash position in the group at Rp1.65t (~69% of market cap), with minimal capex at only about 5% of operating cash flow. 1H26 net profit was also strong, up 30% yoy, primarily driven by growth in information technology services as it shifts away from the FUJIFILM business. Last year it paid out 120%, and while it has given no guidance, assuming a 90% payout would imply a yield of around 11%. Meanwhile, SPTO guides mid-single-digit revenue growth and about 10% net profit growth this year. At an unchanged 70% payout, that implies an around 12.8% yield. No major capex is planned this year, and management is considering lifting the payout above 70% and shifting from semi-annual to quarterly payments. It is the leading distributor of sanitary ware and bathroom fittings in Indonesia and, as the exclusive sole distributor of TOTO, also holds a structural cost advantage against Chinese competitors, as the products are manufactured locally, avoiding import duties and freight. Pricing power is intact, with two increases in March and June of 5-10%.
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Analyst
Company List
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