Thailand, renowned for its bustling markets and beautiful beaches, is not just a travel hotspot for Singaporeans; it’s also a potential goldmine for investors looking to diversify their portfolios. Launched on 30 May 2023, Singapore Depository Receipts (SDRs) are new in the market to provide investors with more efficient access to regional markets.
Understanding SDRs
SDRs are financial instruments that represent a claim on shares of foreign stocks listed on an overseas exchange. These receipts are traded on SGX, meaning you can easily buy the stock on SGX rather than going through an overseas stock exchange.
Key Benefits of SDRs
SDRs offer global investment access, overcoming previous restrictions for local investors in navigating regional markets. This streamlined process eliminates barriers, particularly for markets like Thailand and Indonesia, making overseas investments more accessible.
Additionally, SDRs simplify costs by incorporating local brokerage and exchange fees, resulting in a lower overall fee compared to investing directly in overseas exchanges.
Furthermore, the Central Depository (CDP) custody of SDRs ensures seamless integration with investors’ CDP statements, akin to their other Singapore stock holdings, providing a consolidated overview of their investments.
Source: Singapore Exchange
Thai SDRs in Focus
The first SDRs listed on the SGX are Thai SDRs, offering investors an opportunity to invest in Thailand’s blue chip companies.
The follows a partnership between the SGX and the Stock Exchange of Thailand (SET) to expand investment options by investors through the Thailand-Singapore DR linkage.
Now, let us spotlight three Thai SDRs across three key sectors:
1. AOT TH SDR (Airports of Thailand, SGX:TATD)
AOT, a key player in the Transport sector, manages and operates six major airports in Thailand. Overall, AOT’s airports account for over 80% of Thailand’s air traffic.
In FY2022, AOT handled a total number of 46.69 million passengers. The figure soared to more than doubled to 100.06 million passengers in FY2023.
The company has reported a net profit of 8.79billion baht for FY2023, reversing losses of 11.09 billion baht incurred in FY2022.
AOT is also investing 100 billion baht for the expansion of its six international airports in Thailand over the next five years. This strategic move is in preparation for the anticipated surge in passenger numbers, as the number of passengers is forecast to rise to 200 million per year by 2027.
With growth coming from both aero and non-aeronautical revenue in FY2024, AOT presents an attractive investment opportunity. The company’s robust performance and strategic position in the aviation industry make it a compelling choice for investors.
Source: AOT’s Oct 2022 – Sep 2023 fiscal year data
2. PTTEP TH SDR (PTT Exploration and Production, SGX:TPED)
In the Energy sector, PTTEP stands out as a key player in the exploration and production of oil and gas. This leading producer of natural gas and crude oil in Southeast Asia has been making significant strides in the industry.
The company saw its net profit rise to US$1.18 billion in the first half of 2023, up from US$919 million in the corresponding period in the 2022, as its petroleum sales increased.
In recent strategic plans, it has not only ramped up production from two offshore Thailand gas projects but has also made new oil and gas discoveries in three fields offshore Sarawak, Malaysia.
As the energy demand continues to rise, PTTEP’s focus on sustainable practices and operational expansion positions it as a promising investment for those eyeing the energy market.
3. CP All TH SDR (Charoen Pokphand Group, SGX:TCPD)
CP All, a subsidiary of the Charoen Pokphand Group, operates Thailand’s largest convenience store chain, with more than 14,000 corporate and franchise 7-Eleven stores.
In its recent 3Q23 report, CP All revealed a robust performance with a consolidated net profit of 4.4 billion baht, marking a significant 20% year-on-year surge.
As of the end of 3Q23, CPALL’s store count totalled an impressive 14,391, with corporate stores comprising around 50% of the total.
Despite some challenges, such as fluctuations in swine and poultry prices and the high baseline set by the 50:50 co-payment stimulus scheme the previous year, the wholesale business will still be able to show positive same store sales growth (SSSG) at a low single-digit level for the fourth quarter to date. Similarly, the retail segment exhibited positive SSSG at the mid-single-digit level.
CPALL has expanded beyond Thailand, inaugurating its first store in Laos and exploring opportunities to introduce Laotian meals.
With the growing demand for convenient food options, CP All’s strategic expansion and innovative offerings make it an intriguing choice for investors seeking exposure to the F&B industry.
Source: CP All 3Q23 operating results
Diversification Benefits
Diversifying your investment portfolio is a key strategy for managing risk and maximising returns. By adding Thai SDRs like AOT, PTTEP, and CP All to your portfolio, you gain exposure to diverse sectors and geographical markets, potentially enhancing your overall investment performance.
How to Get Started SDRs on Syfe Brokerage
Syfe Trade provides a user-friendly platform to invest in SDRs and other international stocks. To kickstart your Thai stock journey, enjoy fee rebates* when you invest in SDR trades from now until 31 August, 2024.
Simply sign up on the Syfe Brokerage platform, explore the available SDRs, and start building a well-diversified portfolio.
*Terms and Conditions apply.
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