Dividend-in-specie (Tencent and JD)

Q&A
1

How to handle dividend-in-specie such as Tencent issue JD.com shares?

I’ve added JD.com shares and checked the Scrip Dividend box, is this correct?

Will this be reflected in the dividend yield calculation?

2

Hmm… This is actually not a situation StocksCafe handles at this moment as usually dividends are either cash or shares in the same company.

I need to think more about how to handle this “properly”.

At this moment, the “best” will be to just create JD.com shares with cost 0. But this would not be reflected in dividend yield computation :frowning:

1 Like
3

After thinking about it a bit. I think another way to do so that will add the dividend yield would be the following.

  1. I override the system by added a dividend with payout equal to the amount of JD.com shares that are given at the same ExDate

  2. Then users add the scrip transaction using the “Create” link here → https://stocks.cafe/portfolio/collected

This way, it will emulate Tencent giving out “cash” dividends and users use that “cash” to buy JD.com shares.

@haven @acidgerm If you all can give me the details such as how many JD.com shares were given and how much they are valued at per share of Tencent, I can fill up the above with more concrete numbers.

4

21:1 rounded down

5

Hi Evan, yes there will be times where listco pays out dividend in another company shares, known as dividend-in-specie.

For tencent’s case, the dividend-in-specie ratio is 21 Tencent HK share will be entitled for 1 JD.com HK share (1/21 = 0.04761905) round down to the nearest whole number (e.g. 100 Tencent HK shares will receive 4 JD.com HK shares).

I had five Tencent HK share positions at 100 shares each, so I received 4 JD.com shares with five positions.

At moment I created 5 such positions at 0 cost each, and checked both the cash and scrip box. Not sure if I should check the cash or the scrip box.

Let us know how to best update to reflect correctly as I need to track closely my performance. Thanks a lot.

6

Question: Is the ExDate today? Also, is it just for HK listed or is it happening also for the US listed Tencent?

7

Hi Evan, I believe TCEHY which is the Tencent shares listed on the US OTC market also received the equivalent number of JD.com shares listed on Nasdaq in same ratio.

The ex-date was 20 Jan 2022. Similar to dividends, some products will receive the corporate actions such as dividends/scrip dividends/dividends-in-specie/bonus, etc on ex-date or payment date.

Please allow user to choose either ex-date or payment date.

8

Hi Evan,

After reading the official news, only US shareholders which should include holders of ADSs (via ADRs) will receive cash in-lieu of the distribution-in-specie in JD.com shares. These US shareholders if the cash in-lieu is above HK100, they will receive cash, else the cash will be retained by Tencent due to certain reasons such as inefficiency to distribute such amount.

Shareholders who own Tencent shares listed in the US OTC markets are ADS holders, which the equivalent number of ADRs are held with a Depositary Bank in US, which are likely to be registered with a US address, therefore they should be deemed as shareholders with US address, which will receive cash-in-lieu.

Reference:

9

@all

Based on everything I gathered now, I believe the following would be more suitable.

My suggestion: Each user create dividend override to handle their situation that applies to them.

  1. Dividend Override
    a) Go to https://stocks.cafe/portfolio/toaddoverride to add a dividend for just yourself
    b) Fill up all fields accordingly. For the “Dividend Per Share” field, this is what I recommend.
    Dividend Per Share = JD.com Close on the day you received the shares x Number of shares of JD.com you received / Total shares of Tencent that you own

e.g. If you received 4 JD.com shares per 100 shares of Tencent on 20 Jan 2022 and since JD.com close that day was HKD 299.8. Then put it to be 4 x 299.8 / 100 = 11.992 HKD

  1. Add Transaction
    a) Go to https://stocks.cafe/portfolio/transactions/update to add the transaction to BUY JD.com
    b) Enter all field accordingly. Do check the “scrip” dividend box and also ensure that the “Total” field you entered is the same value as the total dividend value in step 1.

e.g. If you entered 11.992 HKD in “Dividend Per Share” in step 1 and you own 100 shares of Tencent, then you should enter 1,199.2 HKD in the “Total” field in step 2.

Basically, what we are doing in these two steps are 1) Record the JD.com shares received from Tencent as “cash” dividends and 2) Use that “cash” dividend to buy JD.com shares

Hope that is clear.

Cheers,
Evan

ps: @haven Thanks for the information!

1 Like
10

Hi Evan,

Thanks for your advice.

Appreciate if you could help me see if I’ve entered correctly.

On the transaction page, the box scrip dividend for all my five positions created due to the dividend-in-specie are red color. They add up correctly which is the same as the dividend amount I created under dividend override.

Should I create one transaction instead of five?
In my trading account, five transactions were created arising from five Tencent positions of 100 shares each.

11

Hi Evan,

To add on, the dividends paid/due (based on Ex-date) under the Report page does not seem to include this dividend.

Please help.

12

Hi Haven,

They look good to me.

As for them being red, it is simply because the system is warning in case you made a mistake since Tencent and JD.com are different stocks but that will not affect anything.

Yes, one is sufficient. No need five since they are from the same portfolio

They did not? I am seeing SGD 1,037.39 in 2022 which looks correct.

Evan

13

Thanks for guide above.

Just as a suggestion, given that everyone who has Tencent shares in stockscafe would have same problem with this dividend-in-specie treatment, if there’s a standard way of managing this dividend in stockscafe, can it be made standard automatically rolled out to everyone in stockscafe?

14

Yes, there is an initiative/ticket to do it automatically for users with a simple accept button → https://stocks.cafe/friend/viewissue?issue_id=148

So, in the future, definitely we want to make such events handled easily for users.

15

Thank you very much - Looking forward to this feature!

Stocks cafe rocks :slight_smile:

1 Like
16

Hi Evan, there’s a similar dividend distribution where CityDev is issuing shares of CDL H Trust (XD, XE earlier in May). Would a similar workaround do as well?

17

Hi there,

All these are manually done by me. You should have to give the exact details before I can do that.

Thanks,
Evan

18

Slide 6 of the AGM presentation covers it: https://links.sgx.com/FileOpen/CDL_AGM_2022_Presentation.ashx?App=Announcement&FileID=714479

Basically each CDL shareholder to receive 0.159 CDLHT share at the record date (5 May) in addition to their existing dividends.

Thanks a bunch!

19

In this case, does it mean that the ExDate is 5 May as well?

What I can do is create the following

  1. Buy transaction of 0.159 J85 for every share of C09 at price 1.2 on 5 May
  1. I will also create a dividend override of $0.19 with ExDate = 5 May since CDL holders basically got $0.19 and “spent that” to buy J85

Strike out this instead. Please create a dividend override for your own account and I started receiving several enquires but people confused by this.

20

That sounds right. Thanks!