THR Payout: Time to Hunt Sharia-Compliant "Mercedes at Bajaj Price" Stocks
Jakarta — As Eid approaches, many Indonesians will receive annual bonuses in the form of THR (Tunjangan Hari Raya). This presents an opportune moment to consider investment options, particularly affordable quality shares.
Famed investor Lo Kheng Hong describes cheap quality stocks as “buying a Mercedes at Bajaj prices.” The stock exchange currently offers many such opportunities, particularly given the current sluggish market conditions.
In downturn markets, numerous cheap stocks are available, though not all cheap stocks merit selection. Investors should complement their choices with fundamental and technical analysis to strengthen their investment rationale.
This analysis focuses on low-cost shares within the Jakarta Islamic Index (JII), a sharia-compliant equity index operated by the Indonesia Stock Exchange (BEI) comprising the 30 most liquid and largest-capitalisation sharia stocks in the Indonesian market.
The JII was established to provide a benchmark reflecting stock performance aligned with Islamic principles, serving as a reference for investors seeking to invest without violating sharia regulations.
Stocks included in the index automatically pass debt screening criteria, whereby total interest-bearing debt relative to agreed-upon assets must remain below 45%. Additionally, income must derive from halal business sources, with non-halal revenue not exceeding 10% of total income.
The JII was first launched in 2000 by the Indonesia Stock Exchange in partnership with Danareksa Investment Management.
From this investment universe, the analysis applies relative valuation indicators, specifically identifying shares with Price-to-Book Value below 2x and Price-to-Earnings Ratio below 20x.
Disclaimer: This article represents journalistic analysis based on CNBC Indonesia Research. This analysis does not aim to encourage readers to buy, hold, or sell any investor products or sectors. All investment decisions remain the reader’s sole responsibility, and CNBC Indonesia bears no responsibility for any losses or gains resulting from such decisions.