Launch of Depository Receipts under DR Linkage with Stock Exchange of Thailand - What You Need to Know - THE SINGAPOREAN INVESTOR | I3investor

Singapore Exchange (SGX) released an announcement last Tuesday (23 May 2023) that it will be launching a new product by the name of Singapore Depository Receipts under the Thailand-Singapore DR Linkage on 30 May 2023 (you can read the announcement in full here.)

With this, institutional and retail investors will be able to gain diversification into the Thailand stock market – in that you can buy and sell counters listed in the Stock Exchange of Thailand (SET) via your local brokerage platforms (very much like how you buy and sell Singapore-listed counters.)

However, at this point in time, only 3 counters are available for trading (all of which are constituents of Thailand’s benchmark index, the SET Index), and they are:

1. Airports of Thailand Public Company Limited, under the ticker symbol SGX:TATD
2. CP All Public Company Limited, under the ticker symbol, under the ticker symbol SGX:TCPD
3. PTT Exploration & Production Public Company Limited, under the ticker symbol SGX:TPED

In case you’re wondering, the 3 counters above are among the top 5 in terms of weightage in the SET Index.

You can trade the above 3 counters during Singapore’s trading hours, and using Singapore dollars (hence, you do not have to worry about forex here.) If you are buying these counters using a CDP-linked brokerage account, these holdings will be included in your CDP statement (likewise, if you are buying these counters using a local custodian account [the option to trade the 3 counters is currently not available on foreign brokerage platforms such as Interactive Brokers], your shareholdings will be held by the brokerage company which you are using to trade – again, this is very much like how you trade Singapore counters.)

Also, in terms of lot size, it’s also the same as trading Singapore-listed counters – in multiples of 100.

While you will be entitled to all dividends declared by the companies, but you do not have any voting rights – meaning you are not able to vote for resolutions in the companies’ general meetings, even if your shareholdings are held in a CDP account.

The next question, what are these 3 companies, and how is their financial performances and dividend payout like? In this post, you’ll find a brief introduction, along with financial performance of each of them:

1. Airports of Thailand Public Company Limited (SGX:TATD)

Listed on the Stock Exchange of Thailand since March 2004, as the name implies, Airports of Thailand (or AOT for short) is the operator of Thailand’s airports.

At the time of writing, the company is involved in the management and development of the country’s 6 international airports: Suvarnabhumi, Don Mueang, Chiang Mai, Mae Fah Luang-Chiang Rai, Phuket and Hat Yai – if you visit Thailand frequently, the names of these airports should be familiar to you.

AOT has a financial year end every 30 September, and the following table is the company’s financial performance over the last 5 years (between FY2017/18 and FY2021/22):

The reasons for a sharp decline in AOT’s financial performance between FY2019/20 and FY2020/21 was because of the Covid-19 pandemic – where border closures and lockdowns around the world saw the airport operator’s business adversely impacted.

While it was still in a net loss position as at the latest financial year FY2021/22 ended 30 September 2022, but with normalcy more or less returned (even in China, which have reopened its travel borders since the start of 2023), the airport operator’s financial performance for the full year 2022/23 ahead should see a sharp improvement – in fact, since the first quarter of FY2022/23, it has already went back into a net profit position.

In terms of dividend payout, it is as follows:

As the company fell into a net loss position in FY2020/21 and FY2021/22, no dividends were declared. In the years before, the management pays out a dividend to its shareholders once every year.

Looking ahead, with the company already reversing into a net profit position in the first 2 quarters of the current financial year 2022/23, I foresee dividend payouts to resume.

2. CP All Public Company Limited (SGX:TCPD)

How many of you visit the ‘7-Eleven’ convenience stores when you are in Thailand? Most of us probably would – either to buy snacks, or cold drinks (you’d definitely need one in such a hot and humid country!), or both.

CP All Public Company Limited, or CP All for short, was established in 1988 by the Chaoren Pokphan Group to operate the convenience store business in Thailand under the ‘7-Eleven’ trademark – where they are the sole operator. To date, there are more than 13,000 stores (and counting) scattered across the whole of Thailand.

On top of that, the company also operates other related businesses such as bill payment collection service, manufacturing and sale of convenience food and bakery products, sale and maintenance of retail equipment, information technology services, marketing services, educational institution, and trading and business seminar services.

However, its convenience store business contributes a big percentage towards the company’s total revenue (about 43% in FY2022) – that said, the performance of this business segment will have a direct impact on the company’s financial performance, and dividend payout to its shareholders. Also, one of the risks is that the company’s financial performance will be adversely impacted should it fail to secure the contract to continue to be the country’s sole operator (but in my opinion, the risk of this happening at this point in time is very low.)

The following is the company’s financial performance between FY2018 and FY2022 (it has a financial year end every 31 December):

Similar to AOT, CP All’s net profit was impacted during the pandemic years in FY2020 and FY2021, but it still remained in a net profit position.

Looking at the company’s dividend payout, the management declares a dividend payout on an annual basis, and the following table is its dividend payouts and payout ratios between FY2018 and FY2022:

From the looks of it, CP All maintains a payout ratio of about 50.0% – as a result of a weaker net profit in FY2020 and FY2021, its dividend payout fell accordingly.

While its dividend payout have improved in the latest financial year under review (i.e. in FY2022, where it was at THB0.75), but it is still lower compared to pre-Covid levels in FY2018 and FY2019.

3. PTT Exploration & Production Public Company Limited (SGX:TPED)

PTT Exploration & Production Public Company Limited, or PTTEP for short, is perhaps the only company you may not be familiar with – it is a leading Thai E&P (‘E’ stands for ‘Exploring for Lower Carbon E&P Portfolio’, while ‘P’ stands for ‘Production and Planet in Balance’) company committed to sustainably explore, develop, and produce energy supply to Thailand and other countries it invests in.

It proactively prepare for the upcoming energy transition by focusing on an integrated natural gas businesses, while upholding the sustainability statement and framework – including reducing greenhouse gas emissions, investing in low carbon and future energy business, and creating sustainable values for stakeholders.

Just like CP ALL, PTTEP have a financial year end every 31 December, and the following is its financial performance over the last 5 years (between FY2018 and FY2022):

In my opinion, PTTEP’s performance is a very stable one, where it saw year-on-year improvements in its top- and bottom-line in 4 out of 5 years – the only exception was in FY2020, due to a slump in oil prices.

In terms of the compound annual growth rate of its revenue and net profit over a 5-year period, it was at 14.0% and 15.6% respectively – and I’m sure you’ll agree with me that the growth is quite strong.

Looking at the company’s dividend payout over the years, the management of PTTEP declares one on a half-yearly basis. Over the last 5 years, its dividend payout, along with its payout ratio, is as follows:

Apart from in FY2020, where its payout ratio spiked to 75.2%, all the other years saw the company maintaining a payout ratio of about 50+%.

The company’s payout over the last 5 years have also saw a CAGR of 13.1% – quite in-line with its financial performance.

Closing Thoughts

The purpose of me writing this post today is to share with you what you need to know about the Singapore Depository Receipts under the Thailand-Singapore DR Linkage, which is officially launched this morning (30 May 2023), how you can trade the 3 Thai companies with your local brokerage account, along with an introduction about the businesses of each of the companies, as well as their financial performance and dividend payout over the last 5 years.

As always, I hope you’ve found the contents above useful, and do take note that this post is not any recommendation to buy or sell any of the 3 Thai companies above. You are strongly advised to do your own due diligence before you make any investment decisions.

Disclaimer: At the time of writing, I am not a shareholder of any of the 3 Thai companies mentioned in this post.