Reasons for buying:
- P/E ratio of 6.5 is lower and dividend yield of 6% is higher compared to historical averages. The dividend looks well covered due to its conservative dividend payout ratio of around 40%. It's also down -62% from the all time high of 52.76 reached in 2013.
- Southeast Asia exposure- Astra International, Tunas Ridean, Truong Hai Auto Corporation, Siam City Cement, Refrigeration Electrical Engineering Corporation and Vietnam Dairy Products. The bulk of its core net profit derives from its 50.1% stake in Astra International. Astra International in itself is an Indonesian conglomerate with business interest in automotive, financial services, heavy equipment, mining, construction, energy, agribusiness, infrastructure, logistics, information technology, and property. This heavy reliance on the Indonesian economy does bring about its own set of risks.
- Consumer sentiment is expected to remain weak for some time and for sure the groups performance will be impacted, but I see this as an opportunity to accumulate at depressed prices.
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