The second of Myanmar’s two Yangon exchange-listed firms has posted annual financial results. Myanmar Thilawa SEZ Holdings (MTSH) announced a large jump in profits and a higher dividend and saw its share price strengthen after a recent slump.
The firm, which was set up to invest in the Thilawa special economic zone, reported K20.8 billion (US$17.6 million) in post-tax profits for the 2015-16 financial year – a 28 percent jump on 2014-15.
MTSH draws a significant chunk of its revenue from subsidiaries that sell industrial, residential and commercial land in the SEZ to other companies. Of the K20.8 billion in profits, over K14 billion came from associate firms, typically defined as firms of which the parent owns less than 50 percent.
The MTSH subsidiary and associate companies receive up-front payments from firms buying 50-year leases for land in Thilawa SEZ, according to KBZ SC analysts.
Most of the land in the 400-hectare Zone A has gone to light industrial manufacturers, according to the chair of Myanmar Japan Thilawa Development (MJTD) – an MTSH associate firm.
MTSH receives a share of these up-front lease payments, but has little in the way of capital expenditure because much of surrounding SEZ infrastructure, which includes a power plant, port and roads, is being built by other entities, according to KBZ SC analyst Michael Ong.
Construction of Zone B is set to start later this year. Along with its annual results MTSH announced a K2500 dividend – K500 higher than the one it paid after the 2014-15 financial year – which will be submitted for approval at the annual general meeting in September.
MTSH shares finished yesterday K4000 higher at K51,000 after the results were released, having closed at their lowest level yet on June 28.
The Yangon Stock Exchange’s other listed firm – First Myanmar Investment – also closed at a new low on June 28. FMI finished that day at K20,500 after releasing its own annual results on June 27.
Although the drop in both firms’ shares coincided with FMI publishing its results, financial sector sources did not feel confident blaming the slump entirely on FMI.
That company announced much higher revenues but also much lower profits, although in both cases this was down more to a group restructuring the previous financial year than any shift in outlook.
The firm also announced a dividend of K135, slightly higher than the previous financial year’s K125.
Officials at securities firms and the Yangon Stock Exchange (YSX) said it was possible investors were expecting a larger FMI dividend and reacted to the drop in that firm’s profits.
CB Securities managing director U Thaung Han said investors had sold shares after being disappointed with the FMI dividend, but that some shareholders had also thought the MTSH dividend was low.
“People just think they will make a profit investing in the stock market, but are getting fed up because that hasn’t been the reality,” he said.
The perception of the MTSH dividend as low came partly from the fact that the firm paid a 20pc of share value dividend for the 2014-15 financial year.
The latest dividend, although higher than the previous year, looked less generous as a percentage of recent share price.
However, last year’s dividend was based on a K10,000 share price in the over-the-counter market, said U Thaung Han.
U Tun Tun, FMI’s chief financial officer, said their K135 dividend was low relative to FMI’s earnings this year, but advised investors to “wait and see” how the company delivered over the long term.
FMI also recovered from its drop yesterday, and finished the day at K23,000.
Ref: http://www.mmtimes.com/index.php/business/21131-mtsh-shares-bounce-back-post-results.html