Back to index page

Total Shareholder Return : the key to value

Growth in share prices is often used as a guide to the rate of return to sharholders, but this can be misleading as investors receive returns in a number of other ways, including dividends, simple capital transactions such as rights issues, and complex capital changes such as share restructuring.

A single, composite measure is required to combine them, and this is the purpose of the Total Shareholder Return (TSR).

In this, the inaugural L.E.K. Consulting/Bangkok Post Share holder Scorecard, listed Thai companies are compared using this measure, based on basic financial data provided by Reuters (Thailand) and Datasteam of Thomson Fianacial.

It is defined as the annualised total return to shareholders from maintaining their investment in a stock over a period. Maintaining the investment means not taking any net cash out during the period. This involves immediately reinvesting all cash receipts (such as devidends), participating in all capital transactions (such as rights issues) and selling stock as required, so as not to contribute any new capital. Let's look at the TSR for Thai Union Frozen Products (TUF). As of June 30, 200, the company had a share price of 83.50 baht.

In September 2000, TUF incurred a one-for-two stock split. During the following full-year period, TUF paid 5.10 baht to shareholders in dividends. The ending share price for the company was 68.50 baht per share on June 30 this year.

Based on these results, an investment of 1,000 baht of TUF shares (approximately 12 shares at 83.50 baht) at June 30, 200, with 122 baht in dividends (including price appreciation on shares boutht when dividents were re-invested) during the period, and a value of the share holding at June 30, 2001 was 1,640 baht. There fore, the total value of the investment at the end of the 12-month period is 1,762 baht giving a 76.2% Total Share holder Return.

However, consideration must also be given to the risk profile of companies when comparing their relative performance. Naturally, investors expect a higher rate of return from companies with higher levels of risk. For example, they will have different expectations for returns from a mobile-phone company comared with an exporter of food products.

To make some allowance for risk, the Scorcard groups companies by industry, using the sectors defined by the Stock Exchange of Thailand.

TSR queries: score@lek.com

You can click to see the full information down below ...

• Full List by Market Capitalisation
• Industry Returns
• Industry Ranking
• Top 100 Ranking
• Small Cap Rankings