It was a shocking and disappointing announcement for investors to digest that Jasmine International Public Company Limited (JAS) would not offer a dividend payment for its operations in 2020.
After years of consistency in offering a dividend payment even when facing a net loss, the company would offer a dividend payment from its retained earnings, which is why investors praised JAS as a dividend stock.
JAS’ share price dropped for two consecutive days since the announcement, falling below Bt3.00 level.
Following the earnings announcement, there was a significant movement between JAS and Jasmine Telecom System Company Limited (JTS), a direct and indirect subsidiary of JAS at 50.91%, by selling all shares of Jastel Network Company Limited (JASTEL) to JTS for 1,201 million baht.
JAS is an indirect owner of JASTEL through its subsidiary, Jasmine Submarine Telecommunications Company Limited (JSTC), making this transaction somewhat an internal transfer.
The move came as a surprise to investors, and it could be implied in different ways.
First, the 1,201 million baht might be for a dividend payment. Even though the company reported a consolidated net loss of 3,126 million baht in 2020, the separate financial statement showed a 2,966 million baht of profit. This means JAS might be able to issue a special dividend payment.
Second, the transaction could add more value to the weak JTS as JASTEL itself has higher revenue and profit than JTS. JASTEL recorded a revenue of 1,600 million baht, and a net profit of 300 million baht. On the other hand, JTS’ revenue was in a range of hundred million baht and a net profit in a range of ten million baht.
This would be a similar move that Global Power Synergy Public Company Limited (GPSC) used to takeover Glow Energy Public Company Limited (GLOW), which later made GPSC’s portfolio grow tremendously.
JAS would benefit from 50.91% stakeholding in JTS, and the most benefit from this transaction from being the parent company.
This might raise some hopes for an interim dividend payment.