Selamat Sempurna (SMSM IJ) (Buy) - On track to be Indonesia's dividend aristocrat

On track to be Indonesia's dividend aristocrat

Maintain Buy with TP of 2,500

A dividend aristocrat refers to a company that has paid a consistently growing dividend over 25 years (according to S&P), signaling both earnings resilience and strong shareholder return commitment (read our note on TSR here). SMSM has, over the past 20 years, consistently increased dividends, and the company is committed to delivering at least another four years of growing dividend, increasing the likelihood of becoming Indonesia's Dividend Aristocrat. SMSM is the only company in Indonesia that is closest to this criterion (BBCA IJ, Buy] only has 17 years of dividend growth).

Indeed, in 1H25, the company again proved its growth capability by recording NPAT growth of 18% y-y. Assuming a profit CAGR of 6.6% in 2024-2027F and a steady payout of 76%, we forecast a cumulative dividend of IDR2,646bn over 2025F-2027F (equivalent to 24% of the current market cap or roughly a 7-8% yield p.a.).

Understanding SMSM market – commercial vehicles harder to shift to EV

About 65-70% of SMSM’s products are heavy-duty commercial vehicles, such as trucks, excavators, and cranes, among others. These segments are less prone to EV transition, in our view. Commercial vehicles require high energy storage and thus are harder to pivot to EVs, in our view. According to the IEA, the global stock of heavy-duty trucks is ~35mn units (assuming 20 years of usage). EV penetration remains minimal, with only 94k EV trucks sold in 2024, equivalent to ~0.3% of global stocks. This means virtually all trucks on the road still use internal combustion engine (ICE) and will continue to have demand for regular filter replacements. We believe this will provide opportunities for SMSM in the auto spare parts replacement market. The transition to EV for other commercial vehicles such as excavators will be slower than trucks, in our view, because they have higher energy consumption.

For passenger vehicles, while EV sales are growing, growth is plateauing, especially in China (Fig. 5). Plug-in hybrids are also equally important, in our view, as they require filters, similar to gasoline-based vehicles. Thus, this offers support to SMSM.

Room to re-rate: current 10x → potential 12x P/E; maintain Buy

Our TP of IDR2,500 is based on a target 12.4x 2026F P/E, equivalent to its average P/E from 2019. The stock is currently trading at 10x FY25F P/E. Downside risks include: sharp IDR appreciation, continued weakness in the body maker segment, and significant jump in raw material costs.

Year-end 31 Dec	FY24		FY25F		FY26F		FY27F
Currency (IDR)	Actual	Old	New	Old	New	Old	New
Revenue (bn)	5,165	5,793	5,444	0	5,750	0	6,069
Reported net profit (bn)	1,024	1,052	1,084	0	1,161	0	1,241
Normalised net profit (bn)	1,024	1,052	1,084	0	1,161	0	1,241
FD normalised EPS	177.85	182.68	188.27		201.62		215.48
FD norm. EPS growth (%)	8.5	7.1	5.9		7.1		6.9
FD normalised P/E (x)	10.6	–	10.0	–	9.3	–	8.7
EV/EBITDA (x)	6.8	–	6.1	–	5.5	–	5.0
Price/book (x)	3.1	–	2.9	–	2.7	–	2.5
Dividend yield (%)	7.2	–	7.6	–	8.1	–	8.7
ROE (%)	30.6	28.6	30.1		30.0		29.8
Net debt/equity (%)	net cash	net cash	net cash		net cash		net cash

Source: Company data, Verdhana estimates

Key data on Selamat Sempurna

Income statement (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Revenue	5,100	5,165	5,444	5,750	6,069
Cost of goods sold	-3,271	-3,251	-3,434	-3,623	-3,821
Gross profit	1,830	1,914	2,011	2,128	2,249
SG&A	-550	-539	-563	-589	-615
Employee share expense	0	0	0	0	0
Operating profit	1,280	1,375	1,448	1,539	1,633
EBITDA	1,409	1,511	1,619	1,714	1,812
Depreciation	-129	-136	-171	-175	-179
Amortisation	0	0	0	0	0
EBIT	1,280	1,375	1,448	1,539	1,633
Net interest expense	11	21	66	83	102
Associates & JCEs	8	6	4	2	2
Other income	0	0	0	0	0
Earnings before tax	1,300	1,402	1,517	1,625	1,736
Income tax	-263	-284	-334	-357	-382
Net profit after tax	1,037	1,118	1,183	1,267	1,354
Minority interests	-92	-94	-99	-106	-114
Other items	0	0	0	0	0
Preferred dividends	0	0	0	0	0
Normalised NPAT	944	1,024	1,084	1,161	1,241
Extraordinary items	0	0	0	0	0
Reported NPAT	944	1,024	1,084	1,161	1,241
Dividends	-605	-777	-823	-881	-942
Transfer to reserves	340	247	261	280	299
Valuations and ratios
Reported P/E (x)	11.5	10.6	10.0	9.3	8.7
Normalised P/E (x)	11.5	10.6	10.0	9.3	8.7
FD normalised P/E (x)	11.5	10.6	10.0	9.3	8.7
Dividend yield (%)	5.6	7.2	7.6	8.1	8.7
Price/cashflow (x)	9.7	9.2	7.1	6.7	6.4
Price/book (x)	3.4	3.1	2.9	2.7	2.5
EV/EBITDA (x)	7.3	6.8	6.1	5.5	5.0
EV/EBIT (x)	8.0	7.5	6.8	6.2	5.5
Gross margin (%)	35.9	37.1	36.9	37.0	37.0
EBITDA margin (%)	27.6	29.2	29.7	29.8	29.9
EBIT margin (%)	25.1	26.6	26.6	26.8	26.9
Net margin (%)	18.5	19.8	19.9	20.2	20.4
Effective tax rate (%)	20.2	20.3	22.0	22.0	22.0
Dividend payout (%)	64.0	75.9	75.9	75.9	75.9
ROE (%)	39.4	30.6	30.1	30.0	29.8
ROA (pretax %)	43.7	38.0	34.5	33.1	34.4
Growth (%)
Revenue	4.2	1.3	5.4	5.6	5.5
EBITDA	7.0	7.2	7.2	5.9	5.7
Normalised EPS	11.3	8.5	5.9	7.1	6.9
Normalised FDEPS	11.3	8.5	5.9	7.1	6.9
Source: Company data, Verdhana estimates

Cashflow statement (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
EBITDA	1,409	1,511	1,619	1,714	1,812
Change in working capital	-97	-128	-821	-127	-125
Other operating cashflow	-199	-200	737	24	18
Cashflow from operations	1,113	1,182	1,535	1,611	1,705
Capital expenditure	-257	-337	-256	-266	-270
Free cashflow	855	845	1,279	1,346	1,435
Reduction in investments	0	0	0	0	0
Net acquisitions	0	0	0	0	0
Dec in other LT assets	-44	11	-13	-12	-12
Inc in other LT liabilities	-7	-3	0	0	0
Adjustments	103	94	0	0	0
CF after investing acts	908	946	1,267	1,334	1,423
Cash dividends	-605	-777	-823	-881	-942
Equity issue	0	0	0	0	0
Debt issue	-20	-27	0	0	0
Convertible debt issue	0	0	0	0	0
Others	-141	-153	-13	-11	-10
CF from financial acts	-765	-958	-836	-893	-952
Net cashflow	143	-11	430	441	471
Beginning cash	982	1,125	1,114	1,544	1,985
Ending cash	1,125	1,114	1,544	1,985	2,456
Ending net debt	-928	-986	-1,416	-1,857	-2,328
Balance sheet (IDRbn)
As at 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Cash & equivalents	1,125	1,114	1,544	1,985	2,456
Marketable securities	0	0	0	0	0
Accounts receivable	1,082	1,075	1,134	1,197	1,264
Inventories	1,082	1,075	1,134	1,197	1,264
Other current assets	20	336	1,093	1,136	1,173
Total current assets	3,309	3,600	4,904	5,515	6,157
LT investments	64	71	75	77	79
Fixed assets	851	933	861	793	720
Goodwill	0	0	0	0	0
Other intangible assets	0	0	0	0	0
Other LT assets	351	317	310	304	298
Total assets	4,575	4,920	6,150	6,689	7,254
Short-term debt	95	51	51	51	51
Accounts payable	259	369	390	411	434
Other current liabilities	285	349	381	403	425
Total current liabilities	640	769	822	865	910
Long-term debt	104	77	77	77	77
Convertible debt	0	0	0	0	0
Other LT liabilities	201	148	1,024	1,209	1,392
Total liabilities	945	994	1,923	2,151	2,379
Minority interest	414	453	491	526	562
Preferred stock	0	0	0	0	0
Common stock	199	198	198	198	198
Retained earnings	3,000	3,251	3,512	3,791	4,090
Proposed dividends	0	0	0	0	0
Other equity and reserves	17	24	28	23	25
Total shareholders' equity	3,216	3,473	3,737	4,012	4,313
Total equity & liabilities	4,575	4,920	6,150	6,689	7,254
Liquidity (x)
Current ratio	5.17	4.68	5.96	6.37	6.76
Interest cover	–	–	–	–	–
Leverage
Net debt/EBITDA (x)	net cash	net cash	net cash	net cash	net cash
Net debt/equity (%)	net cash	net cash	net cash	net cash	net cash
Per share
Reported EPS (IDR)	163.96	177.85	188.27	201.62	215.48
Norm EPS (IDR)	163.96	177.85	188.27	201.62	215.48
FD norm EPS (IDR)	163.96	177.85	188.27	201.62	215.48
BVPS (IDR)	558.38	603.01	648.94	696.67	748.96
DPS (IDR)	105.00	135.00	142.91	153.04	163.57
Activity (days)
Days receivable	77.5	76.5	74.0	74.0	74.0
Days inventory	113.2	121.5	117.4	117.4	117.6
Days payable	28.9	35.4	40.4	40.4	40.4
Cash cycle	161.7	162.5	151.1	151.0	151.2
Source: Company data, Verdhana estimates

Company profilePT Selamat Sempurna Tbk. (SMSM), established on January 19, 1971, is a leading manufacturer of automotive and industrial parts in Indonesia. The company has a diverse portfolio of manufacturing filters, radiators, oil coolers, condensers, brake pipes, fuel pipes, fuel tanks, exhaust systems, and press parts. The core of SMSM’s business is its Sakura Filter and ADR Radiator brands.

Valuation MethodologyOur TP of IDR2,500 is based on our target 2025F P/E of 12.4x (equivalent to its average P/E from 2019). The benchmark index is JCI.

Risks that may impede the achievement of the target priceDownside risks include: sharp IDR appreciation, continued weakness in the body maker segment, and significant jump in raw material costs.

ESGAs an auto parts manufacturer, SMSM continues to invest in responsible manufacturing, primarily in waste treatment and energy usage. Company gradually streamlines production activity to be more energy efficient. Besides that, SMSM also allocate funds for social matters, related to health, education, and surrounding society development.

Fig. 1: SMSM’s dividend growth (2004–2029F)

Source: Company data, Verdhana estimates

Fig. 2: Profit and revenue – still growing strongly despite EV growth globally

Source: Company data, Verdhana research

Fig. 3: Growing dividend comparison

Source: Company data, Verdhana research

Fig. 5: Electric truck sales penetration – very sluggish

Source: IEA, Verdhana research

Fig. 7: Peer comparison

Note: Bloomberg consensus estimates for Not rated (NR) stocks; pricing as of 15 September 2025 Source: Bloomberg L.P., Verdhana estimates

Fig. 8: Target price determination

Earnings 2026F (IDR bn)	1,161
Target PE (x)	12.4
Mkt cap (IDR bn)	14,397
# of share outstanding (bn)	5.8

TP/share (IDR)	2,500
Current Price (IDR)	1,885
Upside/(downside)	33%

Source: Company data, Verdhana estimates

Fig. 9: PE chart

Source: Company data, Verdhana research

Fig. 10: Price and EPS

Source: Company data, Verdhana research

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.

RESTRICTIONS ON DISTRIBUTION

By accepting this report, the recipient hereof represents and warrants that you are entitled to receive such report in accordance with the restrictions and agrees to be bound by the limitations contained herein. Neither this report nor any copy hereof may be distributed except in compliance with applicable Indonesian capital market laws and regulations.

Rating Table

Rating Remains	Buy
Target price Remains	IDR 2,500
Closing price 15 September 2025	IDR 1,880
Implied upside	+33.0%
Market Cap (USD mn)	659.9
ADT (USD mn)	0.1

Relative Performance Chart

Source: LSEG, Verdhana

M cap (USDmn)	659.9
Free float (%)	41.5
3-mth ADT (USDmn)	0.1

(%)	1M	3M	12M
Absolute (IDR)	-1.6	-1.1	-10.0
Absolute (USD)	-3.1	-1.7	-15.6
Rel to Jakarta Stock Exchange Composite Index	-1.0	-10.7	-10.6

Research Analysts

Jupriadi Tan (jupriadi.tan@verdhana.id)

David Tjahjadi (david.tjahjadi@verdhana.id)

Tags: AUTOS AND AUTO PARTS, Selamat Sempurna, SMSM, SMSM JK, SMSM IJ

Selamat Sempurna (SMSM IJ) (Buy) - On track to be Indonesia's dividend aristocrat

On track to be Indonesia's dividend aristocrat

Key data on Selamat Sempurna

Fig. 1: SMSM’s dividend growth (2004–2029F)

Fig. 2: Profit and revenue – still growing strongly despite EV growth globally

Fig. 3: Growing dividend comparison

Fig. 4: SMSM market – heavy equipment and commercial vehicle segment

Fig. 5: Electric truck sales penetration – very sluggish

Fig. 6: China – PV market EV penetration trends – flat for the past 1 year at 50-55%

Fig. 7: Peer comparison

Fig. 8: Target price determination

Fig. 9: PE chart

Fig. 10: Price and EPS

Rating Table

Relative Performance Chart

Research Analysts

yudi Administrator

Astra International ASII IJ - Buy - Assessing the drivers of Astras profit

Astra Otoparts - AUTO IJ - Buy - Associates and trading business yield fruit

Dharma Polimetal - DRMA IJ - Buy - Agnostic nature and efficiency help margin

Indonesia Autos - Impact of doubling new car prices on used car market

Indonesia Autos - Why car sales may fall from 1mn to 0.9mn in 2024F

Indonesia Autos - Downtrading price hike and weak demand

Selamat Sempurna (SMSM IJ) (Buy) - On track to be Indonesia's dividend aristocrat

Fig. 1: SMSM’s dividend growth (2004–2029F)

Fig. 2: Profit and revenue – still growing strongly despite EV growth globally

Fig. 3: Growing dividend comparison

Fig. 4: SMSM market – heavy equipment and commercial vehicle segment

Fig. 5: Electric truck sales penetration – very sluggish

Fig. 6: China – PV market EV penetration trends – flat for the past 1 year at 50-55%

Fig. 7: Peer comparison

Fig. 8: Target price determination

Fig. 9: PE chart

Fig. 10: Price and EPS

Related Books

Password

Embed Code

Report Issue

Site Languages