Investing in Thailand – TISCO.BK

Who would have thought? It’s already February. January didn’t really give us a fresh start into a post-covid era, which some overly optimistic people might have expected, and February doesn’t look any better. Neither does March, but let me write about that next month.

Having said that, the world is adapting to the new conditions. Stock markets are back at all-time highs as investor’s sentiment and perspectives for the future seem to be getting more predictable. So today, let me share with you my opinion on a bright star of the investment world of Thailand. A conservative pick from the world of finance: TISCO.BK

A modern specialist for finance in Thailand

The TISCO Financial Group PCL is a giant in the financial industry of Thailand. The company profile on Reuters says the following:

“TISCO Financial Group Public Company Limited is a Thailand-based holding company engaged in the financial and banking businesses. The Company primarily operates two main activities: commercial banking business and securities business. The Company and its subsidiaries provide banking services, personal loan services, corporate lending services, as well as life and non-life insurance brokerage services. They also offer securities brokerage services, asset management services, cash management services, underwriting services and others.”Source: Reuters

So there you go, nicely summarised their entire activities. The first time I stumbled upon Tisco in Thailand when I bought my first car, financed with a Tisco loan, and insured with Tisco insurance. I didn’t think much about it at that time as an investment, but I was amazed about the modern and easy way the loan was handled.

I would pay my monthly installments via online banking, at any 7/11 shop, or I could instruct them to withdraw the payments directly from my bank account. I could also make additional payments at any time I wanted, which was great as it helped me to pay off the loan much faster than the 6 years that I originally put in the contract. I paid the car back in half of that time and saved interest on top of it.

Stable growth and solid dividend

When purchasing shares, I prefer buying companies that I trust and that I have a positive experience with. So when I started investing in Thailand some 3 years ago, I naturally took a look at Tisco, and I liked what I saw.

The company has not only solid growth and an excellent share performance to show for, but it also pays annual dividends which are almost constantly growing year on year. In 2019 my yield on cost after tax was 5,84%, in 2020 it grew to 7,65%, and I am now very curious about 2021. The dividend is usually being paid out in May each year.

When COVID hit the markets and the stock dropped to levels below 70 THB, I have added to my position, which pushed my average purchasing cost to a mere 75,96 THB per share. So while I do expect the dividend to be reduced in 2021, I might still reach an excellent yield on cost.

Learning from other markets

Tisco is right now my largest holding in the Thai portfolio I manage, and I am confident that I will add more shares whenever I see the market dipping again or even if it would be just stabilizing further. One of the main reasons why I feel so confident about this company is my experience with another German financial giant: The Allianz AG.

While I never invested in Allianz (yet), it was always one of those stocks for me that I regretted not having had put money in (I still do). As boring as the business sounds in comparison with Apple or Starbucks, it’s one of the most profitable and reliable business models on the planet. It benefits from amazing profit margins and enjoys customer loyalty beyond what most other businesses can present. Not because of having such great products or services, but simply due to necessity.

If you’re investing in Thailand, Tisco should be at least on your watchlist. Do the due diligence, check the numbers, visit their investor relations website and analyze the chart. Read more articles from professional investors and get your facts straight. But I bet you will like what you see and that the stock will find its way into your portfolio.

DISCLOSURE: I have TISCO.BK in a portfolio that is managed by me.

PS: You might notice minor changes to the blogs layout. I have decided not to purchase the WordPress Premium plan this year to reduce my expenses slightly as my dividends dropped by 11% year on year. Therefore, I swapped to a free layout AND you might have to endure some WordPress commercials every now and then. Sorry for that, I will put things back into place next year.

Investing in Thailand – BDMS.BK

January is already proving to be a challenging month, with COVID still in full expansion mode. This means that we still follow all the protective measures and restrictions which have been put in place to protect the public, including full or partial lockdowns, travel restrictions, mask mandates etc.

Thailand managed the outbreak pretty well so far, but in the last 3 weeks, things also escalated here a little bit with lots of new infections and putting public life once again under pressure.

But every crisis can also be an opportunity, and as promised, I’d like to present one such potential opportunity in the investment world of Thailand on my blog.

The leader in medical services in Thailand

Things need to get worse before they can better, and for investors with some cash on hand, this is a good time to look for undervalued companies that will either recover after the crisis or which might even profit further from it. And one such company is Bangkok Dusit Medical Services (BDMS.BK).

You can find more information and investor relations for BDMS right HERE. The company operates hospitals, clinics, and other medical facilities, including the production of pharmaceuticals. The “About Us” section of BDMS describes the company as follows:

“Bangkok Dusit Medical Services (BDMS) is one of the most prestigious hospital networks in the Asia-Pacific region, with 26 hospitals and/or clinical programs out of a total of 48 hospitals across the BDMS network that have been accredited by the Joint Commission International (JCI). We are ranked in the top five private hospital groups globally in terms of Market Capitalization. BDMS offers world-class medical care and treatment to both local and international patients, complemented by the latest medical technology. Our team of qualified doctors and nurses consists of specialists in every field. These health professionals have received training from top medical schools around the world, and they are passionate about providing only top-tier health services to every patient.

I can confirm that the company has not just the reputation of being the best in Thailand, they are the best. I am living in Thailand for almost 10 years now, and I can confirm that whenever I get sick, I wouldn’t consider any other hospital than a BDMS operated hospital or clinic. And it’s the same for every single expat here that I know.

They are modern, clean, the staff is professional, the service amazing, and while they are more expensive than other medical facilities in Thailand, the value is still reasonable. Especially if you have insurance.

The Stock

The stock suffered during the crisis as you can see on the chart, but it’s already on track to recover and I expect it to thrive once the vaccinations across the country begin to take place, probably around March and April this year.

While the hospital will certainly benefit as one of the main distributors for future vaccinations, its business is currently also affected by consumer sentiment, and the lack of medical tourism, which is a very strong contributor to the companies top-line. People from all over the world are coming to Thailand to undergo essential and non-essential treatments, thus the current travel restrictions are a serious drag on the companies revenues. Once the restrictions are lifted, the stock should continue its recovery and get back to a level of around 24 THB, thus implicating a 12% upside on this factor alone.

BDMS is also a dividend payer, with the dividends usually being distributed twice a year in April and in September. In 2020 however, there was only one payment. The last dividend came in at 0,25 THB per share, so the yield was not impressive, and overall the dividend history is not showing any real care for dividend-growth or even small growth consistency.

Stability for your depot and long-term benefits

Overall I regard this stock as a good, but not very exciting opportunity. It’s a solid company with good long-term potential and a boring dividend. But boring is good. Long-term potential sounds great to me. And as it’s slowly making its way back up, for me it definitely is one of those SWAN (sleep well at night) stocks that puts stability and trust in my portfolio.

DISCLOSURE: I am managing a portfolio which owns BDMS.

Trading stocks in Thailand

I decided a few months back to open a stock account for my wife. I am not a big fan of shared or joined accounts and prefer if everyone has his/her own fair share of independence. Therefore, while we keep our bank accounts separate, it only makes sense that she also has her own source of wealth and income for her future plans, ideas, and dreams – which may or may not align with mine. Another reason is also that it’s always better to have a 2nd income under another name within the family. Saving taxes and reducing complications.

Taxes

But speaking of taxes, Thailand is a great destination for investors. There is no capital gain tax in place, so any profits collected from stock trading are completely tax-free. That is if you are living in Thailand of course. On top of that, dividend payouts are taxed at very reasonable 10 %. Therefore, no matter whether you are a trader or a long-term investor, Thailand is an attractive place to invest.

Account

I opened a securities account with the Bangkok Bank. It’s a fairly simple process, all you need to do is to go to a branch, sign some documents, show your passport and after a few days you will receive a username, password and the instruction to install an APP on your phone called STREAMING. It’s actually not easy to find information about it online so you can get a peek at how it looks HERE. The app can access your securities account with the username and password details.

There are different types of accounts. The most simple one is cash-based, meaning that you can only buy stocks with the money you put on it. If you like to have an overdraft in place or plan to short stocks, it is possible but further documents such as a work permit in Thailand or another person to guarantee for you, and/or a security deposit might be required.

I opened the account with Bangkok Bank because my main salary account is also there. Banks in Thailand are quite modern and advanced and offer much smarter solutions compared with i.e. German banks. One such function is “bill payment” which can be used to pay electric bills, water, telephone etc. in an instant. Transferring money to the securities account is also being done via this function and once the account has been verified, money will be deposited within milliseconds.

Transaction costs are extremely low, you can see the commission rates HERE. Usually, your cost will be less than 0,5% even with a very low trading volume. The system to calculate the commission is a little bit complicated because it is based on volume not only per transaction, but on your actual total daily traded volume, but from my point of view its a waste of time to elaborate on it. The cost is so low that it’s completely negligible.

Last but not least, what you also might want to do is to declare your main bank account (which must be a Thai bank) as your payout account for dividends. The service is called e-dividend and will ensure that any dividend payment will be transferred immediately to your main account. 10% in taxes are being deducted without any further action required from your side, so there is also no hassle about this later with any authorities.

You will need to do a tax declaration by the end of the year where your dividends need to be listed, but doing taxes in Thailand is amazingly simple. You do it completely online and it’s literally one A4 page that contains all the information.

Stocks & Information

The first source for information about Thai stocks should be the SET website (Stock Exchange of Thailand). It’s pretty comprehensive and full of information about every single listed stock. I encourage you to explore this site in detail. It has a dividend calendar, detailed company information, daily news updates and more.

The 2nd source of information is the Streaming App. It has plenty of built-in evaluation tools, to quickly identify stocks according to your preferred investment strategy. Dividend Growth, Small Caps, Value Stocks… the integrated stock screener is extremely useful to quickly identify companies that are worth a second look.

Probably the only and biggest restriction is, that you can trade only Thai stocks and Thai ETFs. I would have loved to add some US stocks or REITs but that’s unfortunately not possible for now.

Dividends

There are plenty of successful, dividend-paying companies in Thailand and yields are great. My wife’s account will probably reach a yield of 4,5 % this year and dividend growth is also a thing here. Most companies pay dividends only once or twice a year. The main dividend season is around April / May and then later again around September / October. However, as an income investor, you can find companies that pay out a dividend on different months as well. My target is to create a monthly-income portfolio and I think I can have it up and running within a year.

…. and go!

This is almost everything you need to know to get started. Happy investing!

Retiring in Thailand…

… or in any other place with a low cost of living, low taxes, and a solid infrastructure.

I have been in Thailand now for 8 years. Originally the plan was to work here only for a year and then to move back to Korea, China or Japan. However, things seldom turn out as planned and usually something happens that requires us to adjust. For me, the career opportunities in Thailand kept just popping up and there was simply no reason to go anywhere else.

Having lived and worked here for a while, I often get asked about the idea of retiring in Thailand and I would say that by now, I probably wouldn’t think of retiring anywhere else.

In the first line of this article, I already brought up some crucial points, but let me put a small list together for you for a more detailed overview:

  • Low cost of living: A small house with 3 bedrooms, 2 bathrooms, a garden, garage, fully furnished with gardener service, water, electricity will cost you approx THB 25.000 a month in Phuket, Pattaya or even less in Chiang Mai. That’s 650 EUR.
  • Low taxes: Planning on retiring on my stock account(s), I might benefit in Thailand from a low 10% tax on dividends and no tax on profits from capital gains.
  • Safety: I almost always felt and still feel safe here. Surely you got to use your common sense, study a little bit about your area where not go by night and avoid picking fights with locals or with tourists, but then you will have no need to worry about almost anything. One point that you might want to keep in mind is that free speech is limited here, so spilling out your political views or pursuing certain legal matters might not always be a smart move.
  • Medical support: Private hospitals offer excellent medical support throughout Thailand and a private insurance that will cover you in almost any serious situation will cost you THB 30.000 a year. That’s 750 EUR. Simple medical services usually need to be paid by yourself, but those costs are truly negligible, with a regular doctor visit usually not costing more than 1500-2000 THB – including medication. That’s roughly 40-55 EUR. Also, just so you know, it never happened that I needed to wait longer than 15 minutes for a doctor to be available for me, even if I came without an appointment.
  • Infrastructure: Excellent road conditions, stable water, and electric supply, fast internet, and no issues whatsoever with buying anything you want or need offer great convenience across the country.
  • Culture: Friendly and helpful people. Of course one should always be careful whom to trust, but you won’t find another country where it’s so easy to talk and get along with people like in Thailand.
  • Food: Thai food is excellent, but you can find here anything that you like. Asian food is very affordable, imported goods, especially from Europe, tends to be expensive. Cheese is a true luxury here and so is good wine, but if you want to keep saving, then street food will be your favorite place to hang out at. You can literally fill your stomach with sticky rice, sweet pork and fried chicken for 60-80 THB a meal. Approx. 1,5-2 EUR.
  • Language: For me, Thai is quite difficult as I am not very good with hitting the tones. Similar to the Chinese language, it requires a lot of practice and while the grammar is rather simple, speaking is a challenge. However, I believe that the majority of people can learn it quicker than I. My brain is geared more towards Korean (which I speak fairly good) and Japanese. Chinese and Thai is just not my thing… however, to get back to the topic, you get along with a mix of Thai and English pretty well. Thai + English = TENGLISH. Grab a few Thai words so you can pinpoint or emphasize what you want to say, combine it with English and in most cases, you will be good to go.
  • Weather: Chose your region wisely and you will enjoy great weather. Thailand is actually quite big and has many different regions. For retirement, I am planning to move up to the north where it’s not that hot and the rainy season not that long. You will mostly enjoy a lot of sunshine (we got here more sunny days a year than Italy) and temperatures that do not require to have any jackets in the closet – all year long.

These are the most important things that come up to my mind for now. If you would like to know more details on anything, just leave me a comment and I will add more to the list.

Of course, there are also downsides. As we like to say, the grass is always greener on the other side, Thailand has some specific issues that might require some adjustments in attitude and expectations:

  • General lack of law enforcement: In 8 years, I have never seen the police pulling crazy drivers or damaged cars over or enforcing the law when it comes to disputes. You can rely on the police when things get serious, but for anything that is not life-threatening, the police will usually let the involved parties clarify the issue among themselves and try to net get involved.
  • General lack of rules and regulations: Again, as long as there is no serious danger to anyone else, people can pretty much do here what they want. While you get a great sense of freedom, it can also create some frustrations along the way. For example, if your neighbor plays loud music every day until 3 am, there is literally nothing you can do and no one who would have any right to stop your neighbor from doing it.
  • Dangerous traffic: Thailand has the 2nd highest rate of fatal road accidents in the world. Cars are not monitored for damage by the police, plenty of people on the road have none or expired driving licenses, there is no effective road patrol by the police anywhere in the entire country and the worst of all is the huge amount of damaged motorbikes and scooters on the road. When driving in the late evening or night, you have to really seriously watch out all the time for scooters that appear out of nowhere on the road, without any lights and the people sitting on them with dark clothes and without any safety helmets. In the 8 years that I spent in Thailand, I have seen more people dying than anywhere I have been before, and most of those people were involved in car or motorbike accidents.
  • Mosquitos, insects, and wildlife: This is probably the most annoying part of all. You can’t get out from bed without something biting you. Mosquitos are literally everywhere, so are ants and all kinds of other insects. While you do get used to it, it never goes away. You can learn to live with it, but you will surely never embrace it. Other things to keep in mind are basic protection measures against snakes, scorpions, commodores, geckos, and plenty of other animals that are strolling around everywhere. The geckos, in particular, are quite annoying, as they tend to crawl in everything and everywhere. So if you are living here, make sure to always lock up and close off all your food properly. You don’t want to pour your cereals into a bowl in the morning and watch a gecko jumping off out the box.
  • Stray dogs and cats: I could have put this one into the point above, but it’s such a big problem that I think that it deserves to be listed separately. Thailand has a huge problem with stray dogs and cats. Since pet ownership is not regulated and most people don’t want to spend money on animal care, most of the pets here are neither sterilized nor castrated and tend to multiply rather quickly. Unfortunately, most of those pets end up on the streets. It’s not only sad, but it’s also a little dangerous. They tend to run in front of cars and motorbikes, stroll in the dark in search of food and of course also spreading diseases. Just a few months ago there was a quite big rabies outbreak all across the country. This is something that most of us didn’t hear about for many years in Europe.

So, to sum it up, if you are flexible enough to adjust to a more “free” and less regulated type of life, can adapt to the food and sometimes close one eye to all those things that are different from “home”, then you can enjoy a very comfortable retirement in Thailand with a frankly pretty low living cost of something around 80.000 THB per month for 2 persons. That’s 2000 EUR a month or 24.000 EUR a year. This is a pretty good deal.

Following the 4% rule, you would need to save up 600.000 EUR to be able to retire here at the above mentioned annual cost basis. A significantly lower number compared to Europe or the US, where you would need to double that amount to reach a comparable lifestyle.

So yes, I think retiring in Thailand is a great idea.