Seeking out a double windfall

SUPALAI GRAND TOWER stands majestically on Rama III Road in Bangkok. Holders of Supalai stock can expect a high interim dividend payment.

With the Thai stock market having fallen over 20 per cent since its 52-week-high close on October 25, many analysts forecast that the downside risk is limited.

Besides, announcement of listed companies' second-quarter earnings is around the corner, and it is normal for interim dividend speculation to occur this month and next, so it is time for investors to snap up certain stocks for a double windfall from capital gains and dividends.

Regardless of capital gains, 1 per cent of dividend from holding a stock for one month is equivalent to 12 per cent per annum, far above the average inflation rate, estimated at 7-8 per cent this year. Investors can enjoy this handsome return on investment if they snap up a stock in July and hold it until it is posted "XD" (excluding dividend) for an interim dividend normally in August or September.

Asia Plus Securities' research report "A Chance to Accumulate Dividend Stock" found 22 securities that have a potential interim dividend yield of over 6 per cent per year and a potential upside gain of over 10 per cent from closing prices on July 10.

Navanakorn was expected to offer the highest dividend yield among the 22 stocks at 6.33 per cent for the interim dividend. The XD sign for the semi-annual dividend payment typically is posted in September. The industrial-estate developer also had a 125.32-per-cent potential upside gain from a fair value estimated by the broker at Bt3.56.

The broker forecast that Navakorn would pay another Bt0.05 dividend per share for its second-half operation.

Supalai was ranked as the expected second highest interim-dividend yield stock at 5.56 per cent; its XD sign is posted in September. The broker estimated that the property developer would have a 67.36 upside gain from fair value of Bt4.82.

The property-developer will pay another dividend of Bt0.17 per share for the operation period between July and December.

Precious Shipping (PSL) was estimated to pay a quarterly dividend of Bt0.87 per share, representing a 4.53-per-cent dividend yield. Its XD sign is normally posted in August.

The broker said it was under its fair value of Bt27.32 by 27.66 per cent.

The shipping company will pay an additional dividend of Bt0.64 per share for its second half.

With its XD sign posted in August, MCS Steel will pay an interim dividend of Bt0.15 per share, accounting for 4.29 per cent in dividend yield.

The steel firm's fair value for 2008 stands at Bt4.25, a 21.43-per-cent upside gain from the closing price on July 10.

Another Bt0.20-per-share dividend for the second half is expected.

Kiatnakin Bank (KK) is expected to be on par with MCS in terms of dividend yield at 4.29 per cent from an interim dividend payment forecast at Bt1 per share. The stock will post its XD sign in August. KK had a 68.31-per-cent upside gain from its 2008 fair value of Bt39.31.

The small bank will pay a higher dividend of Bt1.30 per share for its last-six-months operation.

SNC Former will pay an interim dividend of Bt0.30 per share for its first-half operation, accounting for a 4.23-per-cent dividend yield; it posts its XD sign next month.

The stock had a 68.45-per-cent upside gain from fair value of Bt11.96.

The leading manufacturer of air-conditioning parts for automobiles and houses is expected by Asia Plus Securities to pay an additional dividend of Bt0.25 per share for its second-half performance.

Samui Airport Property Fund  and Cal-Comp Electronics (Thailand) (CCET) will offer the same dividend yield of 4.05 per cent. Their stocks will post XD signs in August.

However, the potential upside gain of the former at 37.14 per cent is greater than that of CCET at 23.08 per cent.

The property fund will pay another dividend of Bt0.46 per share for the second half while CCET will pay an additional dividend of Bt0.20 per share.

Advanced Info Service, Thailand's largest mobile-phone service-provider, is expected to pay an interim dividend of Bt3.25 per share, representing a 3.67-per-cent dividend yield for its first half.

The stock at the market close on July 10 had a 25.14 potential upside gain from fair value of Bt110.75.

The cash-cow firm is expected to pay a dividend of Bt3.67 per share for its second half.

Thai Union Frozen Products will pay an interim dividend of Bt0.55 per share, or 3.29-per-cent dividend yield, for the first half and offer an almost 30-per-cent upside gain from fair value of Bt20.54.

The canned-seafood manufacturer and exporter is expected to pay an additional dividend of Bt0.56 per share for its July-December operation.

Thai Oil will pay an interim dividend of Bt1.75 per share, representing a 3.24-per-cent dividend yield, for its first six-months operation. Thailand's leading oil-refiner is expected to pay another dividend of Bt2.75 per share for the second half.

The stock had a 50.93-per-cent upside gain from the fair value of Bt81.50.

Asia Plus Securities said in the same paper that another 17 stocks based on the closing prices on July 10 were expected to offer dividend yields that would beat the 7-per-cent inflation.

Thai Metal Trade will offer an annualised dividend yield of 12.8 per cent for its 2008 operation, followed closely by Esso (Thailand) at 12.27 per cent and SC Asset Corp at 11.88 per cent.

Property Perfect's annualised dividend yield will be 11.88 per cent for the 2008 operation, with Major Development at 9.57 per cent, Tisco Securities at 9.47 per cent, Vanachai Group at 8.56 per cent, MK Real Estate at 8.21 per cent, KGI Securities (Thailand) at 8.13 per cent and Noble Development at 8 per cent.

Baan Rock Garden, Ticon Industrial Connection, Delta Electronics (Thailand), Capital Nomura Securities, Sahamit Machinery, Siam Steel International  and GPFT are expected to give an annualised dividend yield of around 7 per cent.

KGI Securities (Thailand) said CCET, Thai Oil and Advanced Info Service were three stocks likely to see "interim dividend speculation" and investors could trade on them.

"We are sticking with our interim dividend theme," the broker said.

"We did a study on dividend stocks and found that CCET, Thai Oil and Advanced Info performed abnormally well in July, which is the month that speculation for mid-year dividends occurs."