Indonesia Equity Strategy - How do stocks fare on potential 2026F TSR? - Verdhana Research

Indonesia Equity Strategy - How do stocks fare on potential 2026F TSR?

Indonesia Equity Strategy - How do stocks fare on potential 2026F TSR?

Macro and Strategy JT GH 471

How do stocks fare on potential 2026F TSR?

Following our previous research on TSR, in this report we analyze stocks under our coverage based on their potential 2026F TSR (total stock return), based on the upside of our analyst target prices to current market prices and expected dividend yield. Broken down further, the drivers of TSR consist of four components: 1) profit growth, 2) share buyback/issuance, 3) P/E multiple expansion/contraction, and 4) dividends. Our coverage’s market-cap weighted TSR expectation for 2026F is 35%, stemming from: 1) 17% EPS growth; 2) 13% P/E multiple expansion; and 3) 5% dividend yield.

Sector-wise, banks (19%), commodities (5.6%), and FMCG (4.5%) are the top 3 contributors to our expected TSR. Besides TSR, we also provide a list of stocks that have a likely dividend yield above Indonesia’s 10Y government bond yield.

Fig. 1: TSR Attribution Analysis Framework

Source: Verdhana research

Bottom-up assessment

We assess sector and stock-level TSR from a bottom-up perspective, based on our estimates. We find that Retail and IT services, Transports, and FMCGs screen as the top 2026F potential TSR sectors, with most of the upside driven by P/E multiple expansion as valuations remain below multi-year averages.

Retail and IT Services: ACES, ERAA, and MTDL lead the sector’s TSR expectations, supported primarily by P/E re-rating from the currently de-rated multiples.
FMCG: MLBI, ICBP, INDF, and MYOR anchor our sector’s TSR expectations, with expected earnings growth of 18 % and ample valuation upside.
Transport: We expect JSMR, ASSA, and BIRD to deliver the highest TSR, underpinned by healthy earnings growth of 12 % and meaningful room for PE expansion.

On dividends, commodity names (ITMG, ADRO, AADI, PTBA, TAPG) offer the highest 2026F yields at an average of 11 %. Other notable names such as BBRI, ACES, BMRI, AKRA, BNGA, and AUTO are also expected to provide yields in the range of 8-9 %.

Selectively positive

We view TSR as a practical framework to gauge shareholder return potential, particularly if the TSR is heavily driven by earnings growth and dividends, two components that investors can evaluate with greater clarity through consensus expectations. That said, the TSR framework must be complemented by bottom-up analysis, to avoid valuation traps or cyclical overoptimism. We remain selectively positive, favouring names with strong competitive edge, pricing power, and consistent cash-flow generation. Stock picks: AMRT, KLBF, CMRY, AKRA, NCKL, ARCI, ASSA, AUTO.

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general.

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by PT Verdhana Sekuritas Indonesia (“PTVSI”) a securities company registered in Indonesia, supervised by Indonesia Financial Services Authority (OJK) and a member of the Indonesia Stock Exchange (IDX).

This report is intended for client of PTVSI only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PTVSI.

The research set out in this report is based on information obtained from sources believed to be reliable, but PTVSI do not make any representation or warranty as to its accuracy, completeness or correctness. The information in this report is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. Any information, valuations, opinions, estimates, forecasts, ratings or targets herein constitutes a judgment as of the date of this report is published, and there is no assurance that future results or events will be consistent.

This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities or financial products. PTVSI and its associates, its directors, and/or its employees may from time to time have interests in the securities mentioned in this report or it may or will engage in any securities transaction or other capital market services for the company (companies) mentioned herein.

ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this report and certifies that the views about the companies including their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

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Research Analysts

Jupriadi Tan (jupriadi.tan@verdhana.id)

Gerald Hugo (gerald.hugo@verdhana.id)

Tags: EQUITY STRATEGY, Indonesia Equity Strategy, Jupriadi Tan, Gerald Hugo

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