Cambodia Investment Review

Investors remain cautious of ACLEDA stock as regulators allow dividend

Investors remain cautious of ACLEDA stock as regulators allow dividend

Harrison White

Cambodia’s only publicly traded commercial bank – ACLEDA Bank Plc (CSX:ABC) – is continuing to trade at record low levels of KHR 10,300 a share (36% lower than its 2020 IPO price of KHR 16,200 a share) despite record profits expected in 2021.

Investors have been wary of the stock after July last year when the company allowed more than 11,000 members of the ACLEDA Bank staff association to partially sell their shares on the open market.

Industry insiders have cited the investment hesitancy is mainly due to the potential for ongoing selling pressure as an additional 89 million shares (20% of total company shares or four times is IPO) may need to be absorbed into the open market over the next few years.

They added, investors may need large margins to cover the kind of selling pressure that is there at the moment from staff who are generally not as concerned about what price they sell at.

The National Bank of Cambodia recently approved the company’s 2021 annual dividend after making a requirement to suspend dividend for all financial institutions until they prepared an appropriate ‘exit strategy’ from COVID measurements.

NBC allows 2020 dividend payout on ACLEDA stock

The Bank released a statement that the company will distribute the remaining cash dividend for the financial year 2020 net profit after tax of $40.36 million to the shareholders who have not received it yet.

This equated to approximately KHR 399.267 a share according to the official exchange rate or 2.46% of IPO price.

ACLEDA stock
Dr. In Channy the President and Group Managing Director of ACLEDA Bank Plc during the company’s 2020 IPO

The currently ultra-low share price has damped the initial celebrations of the listing in 2020 which was heralded as the start of a new era for Cambodia’s under-listed stock exchange – with only six companies having listed from 2011 to 2020.

The falling share price has pulled the overall index down – which is heavily weighted by the stock to its lowest level since 2018 currently at 466 points – down from over 833 points in June 2020 after the ACLEDA IPO.

Record profits expected for ACLEDA Bank

The company will announce its full annual results to the market next month however it posted a record first half-yearly profit in 2021 of $81 million, an increase of 27.4% compared to the same six-month period last year.

The stock currently has a price-to-earnings ratio of 6.98 and has embarked on an aggressive digitalization strategy to expand its self-automation capacity, as a result, the company reported a slight reduction in staff despite the increase in income.

Key drivers for the company are growth of loans outstanding, good loan monitoring, the proper management of operational expenses, along with the attainment and receipt of targeted funds that bore at low costs.

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