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Telekomunikasi Indonesia: Attractive Yield Play Notwithstanding Headwinds

Published Tue, 30 Jun 2020 03:35:03 -0400 on Seeking Alpha

Seeking AlphaDividend Ideas | Tech  | IndonesiaTelekomunikasi Indonesia: Attractive Yield Play Notwithstanding HeadwindsJun. 30, 2020 3:35 AM ET|| About: Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (TLK)by: The Value PendulumThe Value Pendulum Asia Value & Moat StocksUncover cheap stocks, great businesses listed in Asia focusing on HongKong SummaryTelekomunikasi Indonesia is an attractive yield play with a forward dividend yield in excess of 5%.
Telekomunikasi Indonesia's various businesses do face headwinds relating to Covid-19, but the company is expected to deliver positive earnings growth this year.
Telekomunikasi Indonesia trades at 8.5 times trailing 12 months' EV/EBITDA and 8.7 times consensus forward next 12 months' EV/EBITDA.

Elevator Pitch
I upgrade my rating for PT Telekomunikasi Indonesia Tbk (TLK) (OTCPK: TLKMF) [TLKM:IJ], Indonesia's largest integrated telecommunications company, from Bearish to Neutral.
In the current low interest rate environment, Telekomunikasi Indonesia stands out as an attractive yield play with a forward dividend yield in excess of 5%. This is especially true, when one compares Telekomunikasi Indonesia to its Indonesian telecommunications peers, which either offer a very low dividend yield or do not pay any dividends at all. Furthermore, Telekomunikasi Indonesia's dividend payout ratio has been consistently high in the 60%-90% range for the past seven years, and its future dividends are supported by a relatively low net debt-to-equity ratio of 28.4% as of end-FY2019.
Telekomunikasi Indonesia's various businesses do face headwinds relating to Covid-19, so there are downside risks to the company's FY2020 earnings, which means that a Bullish rating for the stock is not warranted. Nevertheless, the company is still expected to deliver positive earnings growth this year, driven by data revenue growth for the mobile business and new subscribers for the broadband business. As... Read more