Reasons For Many Investors Interested In TUGU Shares

JAKARTA - The shares of PT Asuransi Tugu Pratama Indonesia Tbk (TUGU) are one of the general insurance stocks recommended by capital market analysts.

Ajaib Sekuritas' latest research report revealed a number of reasons.

Ajaib Sekuritas analyst Rizal Rafly in his research said that TUGU is the largest public insurance company in Indonesia.

This can be seen in terms of obtaining premiums, assets to capital or equity owned by issuers that have a branding name Tugu Insurance.

Rizal said that although the controlling shareholder is PT Pertamina (Persero), the dependence of TUGU as a subsidiary on the parent is relatively small.

In his notes, it shows that TUGU has superior competitiveness in the general insurance sector both in the BUMN and non-BUMN segmentation.

In its report, TUGU shares are said to be trading below 0.4x from price to capital ratios (Price to Book Value/PBV) which show a deep discount compared to competitors who are generally valued above 1x PBV.

In addition, Rizal also highlighted the dividend distribution policy of 40 percent supporting stable Book Value per Share growth of around 5 percent per year, while lower share prices increase the attractiveness of dividend yields.

"With enough equity buffers, TUGU is in a strong position to maintain dividend distribution above 40 percent, which we believe will provide added value by increasing ROE." as quoted from the research report written by Rizal.

In terms of future prospects, TUGU premium growth is predicted to reach 8-11 percent for the medium term and exceed industrial growth, resulting in an increase in market share.

On the other hand, good risk management is also expected to be able to maintain or even reduce loss ratio so that the margin from underwriting TUGU will be thicker.

"We estimate the growth of underwriting results by +14 percent of CAGR in the medium term, provided that TUGU can maintain the loss ratio below 60 percent." added Rizal.

With the above considerations, Ajaib Sekuritas provides recommendations for buying TUGU shares with a target price of IDR 1,800 per share or equivalent to the PBV ratio of 0.6x for 2025 using the assumption of a dividend ratio of 40-50 percent per year.

Regarding dividends, last week on May 8, 2025, it also coincided with the cum date for the distribution of the TUGU dividend for the 2024 financial year.

The company distributes 40 percent of the profit attributable to the parent entity as dividends or equivalent to IDR 78.8 per share.

When cum date, the share price of TUGU is closed at Rp1,040 so that the yield (yield) of the TUGU dividend is equivalent to 7.6 percent.

One day after cum date, the share price of TUGU dropped 7.7 percent or equivalent to the yield of the dividend paid.

However, after the long holiday and trading was reopened, the share price of TUGU seemed to be rebounding.

In the first trading session on Wednesday (14 May 2025), TUGU's share price closed up 1.56 percent to Rp 975.