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Thai companies cut dividends to save cash in pandemic

Central Retail and Minor International ask shareholders to skip payouts

A woman disinfects her hands at the Central World shopping mall in Bangkok: Thai companies, including the owner of the mall, are playing it safe, conserving cash during the pandemic.   © AP

BANGKOK -- Thailand's major companies are playing it safe, socking cash away instead of paying big dividends to shareholders in the first half of 2020, as they brace for more financial turbulence from the novel coronavirus pandemic.

Central Pattana, a mall developer and a part of retail conglomerate Central Group, received approval from shareholders on July 10 to cut its interim dividend to 0.8 baht per share from an initially planned 1.3 baht per share. The resolution will save Central Pattana 2.2 billion baht ($69 million) on payouts.

The company's board of directors said in a statement that the lower dividend was appropriate "[in] order to manage the [company's] liquidity and to maintain its cash flow during the fluctuated situation, as well as to ensure the well-being of all stakeholders including the beneficial interest of shareholders."

Central Retail, the group's department store operator, proposed on June 25 scrapping additional dividends for the 2019 business year. The company went public Feb. 20, raising 78 billion baht in an initial public offering. Those who bought shares after the listing will not receive a dividend in the first year.

Central Retail, which operates department stores including Central, Robinson, Supersports, and Italian department store Rinacente, made two interim dividend payments in December 2019 ahead of the share listing. The payouts, which were made for restructuring purposes, according to the company, totaled 32.2 billion baht. Central Retail's annual shareholders meeting is scheduled for Aug. 26.

Stock Exchange of Thailand President Pakorn Peetathawatchai touted the Thai stock market in May, calling companies listed on the bourse high-flyers. At the time, such companies offered a 4% dividend yield on average, compared with an average 3.3% at regional peers. But the recent string of dividend cuts may push the yield lower.

The COVID-19 pandemic has torn the Thai economy apart. On June 24, the Bank of Thailand lowered the kingdom's economic growth projection for 2020 to a contraction of 8.1%. If realized, that will be larger than the 7.6% shrinkage recorded in 1998 when it was the epicenter of the Asian financial crisis.

Among other big names, shareholders in hotel operator Minor International passed a resolution forgoing a dividend for 2019 on June 19. Construction giant Italian-Thai Development is set to ask its shareholders to skip the 2019 dividend at its shareholders meeting on July 24.

Thailand's central bank has advised commercial banks to withhold interim dividends to preserve their capital. They were also told to suspend stock buybacks. In June, Bank of Thailand Gov. Veerathai Santiprabhob told banks to work on management plans for the next three years and to put payouts and share buybacks on hold.

The directive may have come too late for 2019 dividends. Bangkok Bank, the largest Thai bank by assets as of May, said that it had already made its second interim dividend payout on April 30, based on operating results for 2019, according to an announcement on July 10 regarding resolutions at the regular annual shareholders meeting.

Siam Commercial Bank and Krungthai Bank also made interim dividend payments on April 22 and 23, respectively. But the central bank's guidance will put downward pressure on their payouts for 2020.

Corporate caution notwithstanding, investors' appetite for Thai stocks appears undiminished for now. Average daily trading value rose 27.8% in June compared with the same month a year ago. It was also up 38.2%, year-on-year, in the first half of 2020 to 68.6 billion baht.

Retail investors traded actively, hunting for stocks that were depressed by the COVID-19 pandemic, according to SET Senior Executive Vice President Soraphol Tulayasathien.

More than 100,000 new retail trading accounts have been registered with the Thai stock market since the beginning of the year. Most of the new investors trade online, he said. The exchange has cut trading fees and other operations to lower investors' costs and to encourage stock trading during the coronavirus outbreak.

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