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Investing.com - JPMorgan upgraded Astra International Tbk PT (ASII:IJ) (OTC:PTAIY) from Neutral to Overweight and raised its price target to IDR6,250.00 from IDR4,800.00.
The upgrade marks JPMorgan’s first Overweight rating on the Indonesian conglomerate in two years, citing an improved risk-reward profile following Astra’s announcement of a strategic review during its second-quarter earnings report.
JPMorgan noted that other companies within the Jardine group have significantly outperformed benchmark indexes after implementing measures focused on total shareholder return, including asset disposals, special dividends, and share buybacks.
The investment bank identified several opportunities for Astra, pointing to poor capital allocation in recent years and a discrepancy between the company’s 13-15% free cash flow yield and its 8% dividend yield.
JPMorgan’s new price target continues to be based on an 8% dividend yield, but incorporates an increased payout assumption from 50% to 65%, compared to Astra’s current guided payout of 45%.
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