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Phnom Penh port investors split over unchanged annual dividend at AGM

Phnom Penh Autonomous Port’s state and private investors have been split over the KHR 332.80 per share annual dividend ultimately approved by shareholders during the company’s Annual General Meeting.

The company has exclusive rights to operate within Phnom Penh’s 166-kilometer Port Commercial Zone and operates under the supervision of the Ministry of Public Works and Transport and the Ministry of Economic and Finance. PPAP shares were publicly listed on the CSX in 2015 but retained majority state ownership.

The vote was officially recorded as approved 92.3% and disagree 7.7%. Cambodia Investment Review was informed that if counting excluded the majority government-held “Class B” shares, PPAPs dividend resolution would have been defeated 34% to 66% (or 751k shares to 1475k shares).

The company’s set dividend yield has been a long-standing complaint amongst non-government shareholders or “Class A” as the stock price has tripled from its IPO in 2015 currently around KHR 15,600 a share.

“Class B” shares held by the Ministry of Economy and Finance were approved at KHR 166.19 a share. The MEF owns 80% of the company’s total voting shares – meaning no vote can be won without government approval.

PPAP has been one of the best-performing stocks on the Cambodia Securities Exchange which has been unable to generate a strong return on the initial investment for the majority of its seven listed companies. PPAP has the exchange’s second-lowest Price to Earnings ratio at around 7.9.

Last year total revenue was $27.04 million (93.91% of planning) and net profit $9.86 million (88.74% of planning), a decrease of $1.69 million compared to 2019. In 2018, PPAP increased dividend payouts related to IPO from 5% to 6% and then to 6.5% in 2019.

“The annual dividend should be at least double,” Co-Founder of Mekong Strategic Partners, Stephen Higgins told Cambodia Investment Review. “Even if the dividend was doubled, the payout ratio would still be just half of its peer average, and still the lowest among ports in Asia.”

Higgins is a major shareholder of Mekong Strategic Infrastructure Ltd (the only other substantial shareholder besides the MEF) of PPAP with a 6.67% holding of listed shares. Cambodian tax laws require foreigners to pay a 7% tax on all dividend payouts compared to a 0% tax for locals.

In 2019, Higgins’s advisory firm released a report the stated comparing profit to earnings, PPAP is trading at least 48% discount to its peer, outlining this was a conservative estimate of peer comparison analysis.

“Our forecasted earnings in 2019 suggests that PPAP’s annual dividend per share to both Class A and Class B shareholders could increase to KHR 538 if the company’s dividend distribution is at the median peer payout ratio (~39%),” the report found.

Deputy Director-General of PPAP Hei Phanin said although the five years 5% dividend guarantee has now ended our board of directors has always expressed that they hope to maintain or continue the positive growth of the company’s dividend policy.

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