Garment factory Grand Twins International (GTI), one of the two companies listed on Cambodia’s fledgling stock exchange, will pay 50 per cent of its net income after tax in dividends to shareholders by the 22nd of this month.
According to an announcement from the Cambodia Securities Exchange (CSX), GTI will pay over 7 billion riel (about $1.76 million) in dividends from its total post-tax income of 14.1 billion riel, with dividends per share at 177 riel.
Svay Hay, president and CEO of Acleda Securities brokerage firm, said the firm’s dividend payment showed both the company’s good will towards shareholders and intention to attract more investors.
“Firms which do not pay dividends are rated negatively by investors, affecting the share price,” he said.
“Even if profits double [in the future], the 50 per cent dividend would be higher than the average yearly rate of return on deposits made in the banking sector.”
However, Svay Hay added that even short-term investors do not only focus on dividends, saying they also pay attention to “fundamental factors” such as the quality of management, trust and brand recognition.
GTI said in its announcement that the remaining 50 per cent of income would be retained by the firm, which Hay said was needed for the company to expand.
“At the growth stage, retained earnings are a good source for financing investments within the firm.”
GTI, the first private company to be listed on the CSX, began trading when it opened in June of last year at 9,700 riel a share.
Share prices have since fallen. It closed yesterday at 4,720 riel.
On March 27, the other company listed on the CSX, the state-owned Phnom Penh Water Supply Authority, gave more than $2.2 million in dividends to its shareholders.
It paid out 105.2 riel per share, doubling the amount it gave last year.