109 main board "dividends iron rooster" may be ST

In order to implement the "Several Opinions of the State Council on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market" (hereinafter referred to as the "New "National Nine Articles"), on April 12, the Shanghai and Shenzhen Stock Exchanges solicited opinions from the public on specific business rules such as the "Rules for the Review of Stock Issuance and Listing" and the "Rules for Stock Issuance and Listing", involving improving listing conditions, standardizing shareholding reduction, and strict delisting standards.

Among them, the Shanghai Stock Exchange proposed, first, to take strong restraint measures for dividends that do not meet the standard. The focus is on including companies that have not paid dividends for many years or have a low dividend ratio in the "implementation of other risk warnings" (ST). In terms of the main board, ST will be implemented for companies that meet the basic conditions for dividends, the cumulative total cash dividends in the last three fiscal years are less than 30% of the average annual net profit, and the cumulative dividend amount is less than 50 million yuan. In terms of the Science and Technology Innovation Board, taking into account the characteristics of different sectors and the differences between companies, the absolute value of the dividend amount will be adjusted to 30 million. At the same time, companies on the STAR Market with cumulative R&D investment accounting for more than 15% of their cumulative operating income in the last three fiscal years or more than RMB 300 million in R&D investment in the last three fiscal years can be exempted from ST. The amount of repurchase cancellation is included in the calculation of cash dividends.

The Shenzhen Stock Exchange said that the new "net profit in the most recent fiscal year is positive, and the company's consolidated statements and the company's undistributed profits at the end of the year statement of the parent company are positive, and the cumulative cash dividend amount in the last three fiscal years is less than 30% of the average annual net profit in the last three fiscal years, and the cumulative dividend amount in the last three fiscal years is less than 50 million yuan (30 million yuan on the Growth Enterprise Market and considering the company's R&D investment)" ST situation, urging companies with dividend ability to increase the level of dividends.

Cash dividends are one of the most direct and effective ways for listed companies to return to investors. Focusing on further improving the stability, timeliness and predictability of cash dividends, the Shanghai and Shenzhen Stock Exchanges have adopted strong restraint measures against dividends that do not meet the standards. The focus is on including companies that have not paid dividends for many years or have a low dividend ratio in the "implementation of other risk warnings" (ST).

In terms of the main board, ST will be implemented for companies that meet the basic conditions for dividends, the total cumulative cash dividends in the last three fiscal years are less than 30% of the average annual net profit, and the cumulative dividend amount is less than 50 million yuan.

In terms of the Science and Technology Innovation Board and the Growth Enterprise Market, taking into account the characteristics of different sectors and the differences between companies, the absolute value of the dividend amount will be adjusted to 30 million. At the same time, companies on the STAR Market and ChiNext that have invested more than 15% of their cumulative R&D investment in the last three fiscal years or have invested more than 300 million yuan in the last three fiscal years can be exempted from ST. The amount of repurchase cancellation is included in the calculation of cash dividends.

This adjustment is planned to be officially implemented from January 1, 2025, when the "most recent three fiscal years" correspond to the fiscal year 2022 to 2024.

At the same time, the Shanghai and Shenzhen stock exchanges also actively promote listed companies to pay dividends multiple times a year. Listed companies are required to determine the frequency of dividends by comprehensively considering factors such as undistributed profits and current performance, and increase the frequency of dividends when conditions are met, so as to stabilize investors' dividend expectations. Further clarify the basis of interim dividend profits, and eliminate differences in understanding the requirements for financial statement audit.

As for the new dividend ST rules, how many listed companies will be affected?

In order to ensure the integrity of the data, the financial industry selected the Shanghai and Shenzhen main board companies listed before 1 January 2020 as the research sample, and found that a total of 109 main board "dividend iron roosters" may be ST.

There may be 56 companies on the main board of the Shanghai Stock Exchange that do not meet the dividend standard

A total of 1,292 companies are eligible for dividends.

Among the 1,292 profitable enterprises in the past three years, 1,191 have paid cash dividends, while 101 have not paid any dividends during the period. It is worth noting that according to the distributable profit index of Dongcai Choice, there are 40 companies with positive distributable profits, which indicates to a certain extent that the companies have the conditions for dividends. But he chose not to pay dividends. In addition, although 16 companies pay dividends in a profitable state, their dividend ratio does not reach 30% of the average annual net profit. Based on this calculation, a total of 56 (excluding duplicates) Shanghai Main Board companies in the past three years (2020-2022) could not meet the requirements of the Draft.

For the sake of convenience, the Institute of Listed Companies in the Financial Sector takes specific enterprises as examples:

(1) Since the listing of the company, the distributable profit has been positive, but no dividends have been paid for three years, a total of 49 companies.

(2) The company has made a profit in the past three years, but the cumulative dividend amount has not reached 50 million yuan, and it has not reached 30% of the average net profit, a total of 15 companies. For example, the cumulative dividend amount from 2020 to 2022 is only 13.887 million yuan, and in 2021, it will distribute 0.1 yuan per 10 shares, accounting for only 5.32%.

There are 53 companies on the Shenzhen Stock Exchange that may fail to pay dividends

A total of 1,295 companies were sampled on the main board of the Shenzhen Stock Exchange. Further screening of enterprises with positive average annual net profit shows that 986 companies have achieved profitability in the past three years.

Of the 986 companies that have been profitable in the past three years, 857 have paid cash dividends, while 129 have not paid any dividends during the period. It is worth noting that according to the distributable profit index of Dongcai Choice, there are 25 companies with positive distributable profits, which indicates to a certain extent that the enterprises have the conditions for dividends. But he chose not to pay dividends. In addition, although 28 companies paid dividends in a profitable state, their dividend ratio did not reach 30% of the average annual net profit. This means that the dividend levels of a total of 53 Shenzhen Main Board companies in the past three years (2020-2022) cannot meet the requirements of the Draft.

For the sake of convenience, the Institute of Listed Companies in the Financial Sector takes specific enterprises as examples:

(1) The distributable profit of the enterprise has been positive since its listing, but it has not paid dividends for three years, a total of 25 companies.

(2) There are 28 enterprises that have made profits in the past three years, but the cumulative dividend amount does not reach 50 million yuan and does not reach 30% of the average net profit. For example, Peking University Pharmaceutical, although its cumulative dividends accounted for nearly 30% of its net profit in the past three years, the cumulative dividend amount was only 13.708 million yuan.

According to some institutions, the Shanghai and Shenzhen Stock Exchanges revised the relevant terms of cash dividends, mainly focusing on further improving the stability and predictability of cash dividends. On the one hand, strong restraint measures are taken against companies that have the ability to pay dividends but do not meet the dividend standards; on the other hand, the rules point out that if a listed company uses cash as consideration to repurchase shares and cancel them by way of offer or centralized bidding, it shall be included in the calculation of total cash dividends.

"There are concerns that it is too strict, but in fact, the new rules take into account the company's distributable profits, profits, and the long-term nature of no dividends or low dividend ratios. Moreover, the dividend rules set a transition period arrangement that will be officially implemented from January 1, 2025, and companies that do not meet the requirements still have time to improve their dividend situation. Hard constraints on companies that have conditions but do not pay dividends and have a low dividend ratio, while reminding investors that the company's dividend ratio is low, will effectively urge more companies that have the ability to pay dividends, increase dividend repurchase, and effectively enhance investors' sense of gain. The above-mentioned agency said.

(Source: Securities Times, Financial Circles, China Business Network)