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31-05-2011, 06:35 AM
May 31, 2011
Special reason to smile for some shareholders
Bumper year sees firms small and large paying handsome dividends
By Jonathan Kwok
CASH-RICH companies large and small have been rewarding shareholders with special dividends after a strong financial year.
Corporate giants such as SingTel, Singapore Airlines and SIA Engineering have caught the headlines with their payouts but smaller firms are also issuing handsome dividends.
It is all thanks to a bumper year on the corporate scene.
The scorecard yesterday showed 63 firms in the black and 10 in the red, with combined profits of $7.67 billion, up 39.4 per cent from the $5.5 billion they made previously.
With so much cash sloshing about, firms have opted to hand some back to shareholders via special dividends.
'(These) signal to investors that they are interested in rewarding shareholders. Investors see this as a very positive signal from the company,' said Sias Research investment analyst Liu Jinshu.
And for companies that did not perform so well on the earnings front, paying dividends 'is a way to tell shareholders to stay while they work things out'.
Firms in aviation were particularly generous, thanks to the robust recovery from a tough recession.
SIA announced a special dividend of a record 80 cents a share on top of a final dividend of 40 cents. This took its full-year payout to $1.40 a share.
The carrier recorded $1.09 billion in net profit for the 12 months to March 31, a surge from $216 million a year ago.
SIA Engineering, a unit of SIA, is paying a special dividend of 10 cents a share and a final ordinary dividend of 14 cents, taking the total dividend for the year to 30 cents a share.
Sats, which provides airport services and aircraft meals, has declared a special dividend of six cents plus a final dividend of six cents, taking its full-year dividend to 17 cents.
The spotlight was also on the telcos after SingTel announced a special dividend of 10 cents on top of a final dividend of nine cents.
This took the total payout to 25.8 cents and it came despite SingTel's net profit for the year falling 2.1 per cent to $3.83 billion due to reduced contributions from its stakes in regional telcos.
It said it decided to return the cash to shareholders as it had not made significant acquisitions in the past few years.
'Many investors must have been pleasantly surprised by the willingness of cash-rich companies to return excess cash via special dividends,' said a recent note by Kim Eng Securities.
'SIA, SIA Engineering and SingTel, whose year-ends were in the quarter just concluded, all paid out cash which surpassed even the most bullish expectations... We welcome such generosity as it is always good to have a more efficient capital structure.'
Mr Liu noted that when companies return capital to shareholders, they can raise their return on equity because they will be using less cash to generate the same amount of earnings.
'This will help them to increase their valuations,' he added.
Some smaller firms have also been getting into the act.
St******, whose full-year net profit more than doubled to $60.1 million from $28.5 million, declared a special dividend of one cent a share on top of the final dividend of two cents.
Only a final dividend of two cents a share was paid last year.
But Kim Eng noted that 'the theme of higher dividends may not be applicable across the board', citing StarHub, which is 'already constrained by a 100 per cent dividend payout policy'.
StarHub, whose financial year ends on Dec 31, recently said it is unlikely to follow SingTel with a special dividend this year.
Analysts said firms looking for further investments and acquisitions may hold back on dividends, unlike mature companies which often give a high payout ratio.
Global Logistic Properties, which listed last year, will not pay a dividend.
The company reported a net profit yesterday of US$706.1 million (S$889.6 million) for the year ended March 31, reversing a loss of US$176.7 million a year ago.
Its properties in China and Japan performed better and it also acquired a stake in China's Airport City Development. Its fourth-quarter profit dipped 63 per cent from US$133 million to US$49.2 million.
jonkwok@sph.com.sg
Special reason to smile for some shareholders
Bumper year sees firms small and large paying handsome dividends
By Jonathan Kwok
CASH-RICH companies large and small have been rewarding shareholders with special dividends after a strong financial year.
Corporate giants such as SingTel, Singapore Airlines and SIA Engineering have caught the headlines with their payouts but smaller firms are also issuing handsome dividends.
It is all thanks to a bumper year on the corporate scene.
The scorecard yesterday showed 63 firms in the black and 10 in the red, with combined profits of $7.67 billion, up 39.4 per cent from the $5.5 billion they made previously.
With so much cash sloshing about, firms have opted to hand some back to shareholders via special dividends.
'(These) signal to investors that they are interested in rewarding shareholders. Investors see this as a very positive signal from the company,' said Sias Research investment analyst Liu Jinshu.
And for companies that did not perform so well on the earnings front, paying dividends 'is a way to tell shareholders to stay while they work things out'.
Firms in aviation were particularly generous, thanks to the robust recovery from a tough recession.
SIA announced a special dividend of a record 80 cents a share on top of a final dividend of 40 cents. This took its full-year payout to $1.40 a share.
The carrier recorded $1.09 billion in net profit for the 12 months to March 31, a surge from $216 million a year ago.
SIA Engineering, a unit of SIA, is paying a special dividend of 10 cents a share and a final ordinary dividend of 14 cents, taking the total dividend for the year to 30 cents a share.
Sats, which provides airport services and aircraft meals, has declared a special dividend of six cents plus a final dividend of six cents, taking its full-year dividend to 17 cents.
The spotlight was also on the telcos after SingTel announced a special dividend of 10 cents on top of a final dividend of nine cents.
This took the total payout to 25.8 cents and it came despite SingTel's net profit for the year falling 2.1 per cent to $3.83 billion due to reduced contributions from its stakes in regional telcos.
It said it decided to return the cash to shareholders as it had not made significant acquisitions in the past few years.
'Many investors must have been pleasantly surprised by the willingness of cash-rich companies to return excess cash via special dividends,' said a recent note by Kim Eng Securities.
'SIA, SIA Engineering and SingTel, whose year-ends were in the quarter just concluded, all paid out cash which surpassed even the most bullish expectations... We welcome such generosity as it is always good to have a more efficient capital structure.'
Mr Liu noted that when companies return capital to shareholders, they can raise their return on equity because they will be using less cash to generate the same amount of earnings.
'This will help them to increase their valuations,' he added.
Some smaller firms have also been getting into the act.
St******, whose full-year net profit more than doubled to $60.1 million from $28.5 million, declared a special dividend of one cent a share on top of the final dividend of two cents.
Only a final dividend of two cents a share was paid last year.
But Kim Eng noted that 'the theme of higher dividends may not be applicable across the board', citing StarHub, which is 'already constrained by a 100 per cent dividend payout policy'.
StarHub, whose financial year ends on Dec 31, recently said it is unlikely to follow SingTel with a special dividend this year.
Analysts said firms looking for further investments and acquisitions may hold back on dividends, unlike mature companies which often give a high payout ratio.
Global Logistic Properties, which listed last year, will not pay a dividend.
The company reported a net profit yesterday of US$706.1 million (S$889.6 million) for the year ended March 31, reversing a loss of US$176.7 million a year ago.
Its properties in China and Japan performed better and it also acquired a stake in China's Airport City Development. Its fourth-quarter profit dipped 63 per cent from US$133 million to US$49.2 million.
jonkwok@sph.com.sg
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