A-share "Iron Rooster" Beings: Some of them are mired in losses and difficult to make returns, and new trends in dividend plans appear under regulatory pressure|Titanium Media Focus
With the announcement of the new "National Nine Articles", the dividends of listed companies in 2023 have become a hot spot in the market. According to incomplete statistics, there are 923 A-share listed companies that have "not pulled out a dime" in the three years from 2020 to 2022, and some of them have never implemented dividends since their listing, which can be described as a fighter in the "iron rooster".
The above-mentioned "iron roosters" are mainly concentrated in machinery and equipment, medicine and biology, electronics and other industries. Many listed companies continue to have negative cash flow, and the past performance is deep in losses, and the undistributed profits that are difficult to make up for the losses in recent years have also become an important reason why many "iron roosters" cannot pay dividends. Ironically, some of the "iron roosters" have little return to investors, but they are not soft on attracting money from the capital market. Now, after the announcement of the new "National Nine Articles", the enthusiasm of listed companies for dividends is gradually improving, and continuous quarterly dividends may become the norm.
Nearly 1,000 "iron roosters" have not paid dividends for three consecutive years
According to the public data of the China Securities Regulatory Commission in 2023, a total of 3,291 listed companies in Shanghai and Shenzhen will pay cash dividends in 2022, with a dividend amount of 2.1 trillion yuan, of which 1.6 trillion yuan will be distributed to domestic investors, a year-on-year increase of 22.7%, and the number of dividends will account for 67.1%. However, as far as the current dividend situation in the A-share market is concerned, there are many "iron roosters" who are stingy with dividends.
In view of the fact that the disclosure of the 2023 annual report has not yet ended, based on the disclosure data of the 2020-2022 annual report, the statistics of the companies listed after 2023 are excluded, and among the more than 5,000 A-share listed companies, a total of 653 listed companies on the main boards of the Shanghai and Shenzhen stock exchanges have not implemented dividends for three consecutive years, and the number of ChiNext and Science and Technology Innovation Board is 195 and 75 respectively, totaling 923.
If the time is extended, there is also a "super iron rooster" that has never paid dividends since it was listed. Excluding companies listed after 2023, a total of 107 companies have zero dividends after listing, such as Boxin shares (600083. SH), Broadcom (600455. SH), Dasheng Culture (600892. SH), BD Industry (000595. SZ) and so on. Among them, 24 were listed before 2020, and 20, 18, and 45 were listed between 2020 and 2022, respectively.
In terms of time, the number of companies that have not paid dividends for more than 10 years is 20 in the above-mentioned "super iron rooster". The data shows that Jinbei Automobile (600609. SH), Zhongyida (600610. SH), Xueda Education (000526. SZ) has not paid dividends for more than 30 years.
However, the education situation of Xueda is more special, and it only returned to A from the US stock market in 2016. Jinbei Automobile and Zhongyida were listed on July 24, 1992 and August 5, 1992 respectively, and are both veteran listed companies in the capital market. According to the data of Oriental Wealth Choice, Jinbei Automobile only had 10 free shares in 1993, and Zhongyida only gave away shares and transferred shares in 1992, 1993 and 1996 respectively.
Machinery and equipment, medicine and biology "iron rooster" piled up
According to the classification of Shenwan level 1 industry, the above-mentioned 923 "iron roosters" come from 31 industries, mainly in the machinery and equipment, pharmaceutical biology and electronics industries, with 85, 85 and 82 respectively. The power equipment and computer industries followed closely with 56 and 54 respectively. The banking industry has the least iron rooster, only Bank of Zhengzhou (002936. SZ) 1.
For these "iron roosters" who have not paid dividends for a long time, the reasons for insisting on not paying dividends are "replenishment", the need for reinvestment, and the need for daily liquidity. In fact, many iron roosters are not in a good cash flow situation. For example, in 2020-2022, Kexin Technology (300565. SZ) three-year cash flow of -30.8835 million yuan, -140 million yuan, -24.1311 million yuan respectively, Longjin Pharmaceutical (002750. SZ) three-year cash flow was -6.7769 million yuan, -14.8042 million yuan and -14.4431 million yuan respectively.
According to statistics, there are 609 listed companies that have not made money in the past. For example, HNA Holdings (600221.SH) will have a distributable profit loss of 71.242 billion yuan in 2022, and BeiGene (688235.SH), China Eastern Airlines (600115. SH), China Southern Airlines (600029. SH) losses of more than 30 billion yuan, -50.972 billion yuan, -44.527 billion yuan, and -32.639 billion yuan respectively. A total of 13 listed companies will have an undistributed profit loss of more than 10 billion yuan in 2022.
Titanium media APP understands from relevant companies that the long-term negative undistributed profits of some companies are not unrelated to their large losses in previous years. China Southern Airlines' attributable net profit loss for three consecutive years from 2020 to 2022 was 38.9 billion yuan, and the company's capacity investment and revenue passenger kilometers in 2022 decreased by 55.3% and 64.2% respectively compared with 2019. Petrochemical Oil Service(600871. SH) lost 26.7 billion yuan in 2016 and 2017, Salt Lake (000792.SZ) suffered a huge loss of 45.86 billion yuan in 2019, and BAIC Blue Valley (600733.SH) lost 17.191 billion yuan for three consecutive years from 2020 to 2022. BeiGene's innovative drugs are an industry with a long cycle, high investment and high risk, and the company has been in a loss-making stage since its listing. So far, the above-mentioned companies' profits have not been able to close the hole caused by the losses.
Among the "super iron roosters" with zero dividends since their listing, there are still many companies in deep trouble, and 72 companies have negative undistributed profits or attributable net profits in 2022, which do not meet the dividend conditions. Among them, the "Iron Rooster" in the fighter Jinbei automobile business sales for many years declined, becoming a drag on the company's performance of the "wrongdoer", in 2017 after the divestment of the vehicle business in the early loss of profits still need to continue to make up. Zhongyida has changed hands many times, and frequent mergers and acquisitions have led to a loss of 1.731 billion yuan in undistributed profits by the third quarter of 2023, and Zhongyida is expected to have an attributable net profit of -116 million yuan to -91 million yuan in 2023, and there is still no hope for dividends. Pingtan Development (000592. SZ) is not in good shape, and has been making up for past losses since its restructuring in 2008. In recent years, the performance has begun to decline again, and the attributable net profit from 2020 to 2022 has accumulated a loss of 800 million yuan, and the company expects the attributable net profit to be -340 million yuan to -230 million yuan in 2023.
In addition, there are 81 listed companies with positive net profit and distributable profit, which meet the basic conditions for dividends but do not share performance benefits with shareholders. Among them, the machinery and equipment and electronics industries still occupy the majority, with 14 and 11 respectively.
One of the most profitable is SMIC (688981. SH), the distributable profit in 2022 will reach 30.927 billion yuan, followed by Yongtai Energy (600157.SH) with 9.086 billion yuan. In 2022, there are 21 companies with distributable profits of more than 1 billion yuan. It is worth noting that SMIC's revenue and net profit will both increase in 2023, but it will still be "a dime".
Holding large profits is still arrogant "absorbing gold"
For a long time, there has been a phenomenon of "heavy financing and light returns" in the A-share market, resulting in some companies only wanting to raise funds through the market, but ignoring the feedback to investors.
Judging from the statistics, some listed companies with dividend conditions are not shy in their pockets. Taking 2022 as an example, Chifeng Gold (600988. SH) achieved attributable net profit of RMB451 million and distributable profit of RMB3.079 billion, while Kaiying Network (002517.SZ) achieved attributable net profit of RMB1.025 billion and distributable profit of RMB2.08 billion.
SMIC and Yongtai Energy, two listed companies, held undistributed profits of more than 9 billion yuan 600338; SH), Shengda Resources (000603. SZ), Guizhou Bailing (002424. SZ) and other 19 companies have undistributed profits of 10-5 billion yuan, and only 4 listed companies have undistributed profits of less than 100 million yuan.
Looking further, many companies have plenty of cash on their books. Taking the data of 2022 as an example, SMIC has 74.922 billion yuan of monetary funds, Yandong Micro (688172.SH), Shanghai Silicon Industry (688126. SH), China Iron (000927. SZ) has a monetary capital of more than 5 billion yuan. The book money funds of 19 listed companies are between 1 billion and 5 billion yuan.
However, even with abundant funds, some "iron roosters" are still arrogant and wealthy. Statistics show that SMIC, Yongtai Energy, and China Iron have raised 46.287 billion yuan, 22.24 billion yuan, and 15.011 billion yuan respectively. Kyrgyzstan Electric Co., Ltd. (000875. SZ), Huaihe Energy (600575. SH), Kaiying Network, Shanghai Silicon Industry, Shengda Resources, Qinchuan Machine Tool (000837. SZ) raised a total of 50-10 billion yuan. The largest number of cumulative fundraising is Gaohong shares (000851. SZ), since its listing in 1998, the total amount of funds raised has reached 4.257 billion yuan.
Listed companies that have never paid cash dividends are also not relentless in attracting money. Since its listing in 1992, Jinbei Automobile has raised funds from the capital market four times, with a cumulative amount of about 1.477 billion yuan. Pingtan Development (000592. SZ) has only given shares and converted shares 4 times, but the total amount of funds raised in 6 times is about 3.251 billion yuan.
Under regulatory pressure, there are already company adjustment plans
The new "National Nine Articles" have strengthened the supervision of cash dividends of listed companies, restricting the reduction of major shareholders and implementing risk warnings for companies that have not paid dividends for many years or have a low dividend ratio. Increase incentives for high-quality companies that pay dividends, and take multiple measures to promote the increase in dividend yields. In order to support the new "National Nine Measures", the Shanghai and Shenzhen Stock Exchanges have successively issued consultation drafts, which include companies that have not paid dividends for many years or have a low dividend ratio into the "implementation of other risk warnings" (ST).
In terms of the main boards of Shanghai and Shenzhen, 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 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 yuan. At the same time, companies with cumulative R&D investment accounting for more than 15% of their cumulative operating income in the last three fiscal years, or companies with a cumulative R&D investment of more than 300 million yuan in the last three fiscal years, can be exempted from ST.
Guo Ruiming, director of the Department of Supervision of Listed Companies of the China Securities Regulatory Commission, said that the implementation of other risk warnings (ST) if the dividends do not meet the standards is mainly aimed at improving the stability and predictability of dividends of listed companies, focusing on companies that have the ability to pay dividends but do not pay dividends for a long time or have a low dividend ratio. Based on the 2020-2022 data, the number of companies in Shanghai and Shenzhen that may touch this standard is only more than 80.
The above adjustments are planned to be implemented from 1 January 2025, with 2022 to 2024 as the latest three fiscal years.
In this case, the regulation has also increased the pressure on the "iron rooster". Since the disclosure of the 2023 annual report, Jilin Expressway (601518. SH) and Fangda Special Steel (600507.SH) received inquiries from the Shanghai Stock Exchange because they have been profitable for many years but have not implemented dividends. Subsequently, Jilin Expressway and Fangda Special Steel quickly adjusted the profit distribution plan.
Fangda Special Steel disclosed on the evening of April 8 that the company's undistributed profit at the end of the period was 2.122 billion yuan, and it planned to distribute cash dividends of 0.1 yuan per share to all shareholders, with a total share capital of 2.331 billion shares, a total of 233 million yuan in dividends, and a cash dividend ratio of 33.84%. On April 18, Jilin Expressway announced that the company's cumulative year-end distributable profit was 2.65 billion yuan, based on the total share capital of 1.891 billion shares at the end of the year, and cash dividends of 0.9 yuan per 10 shares, with a total cash dividend of 170 million yuan and a cash dividend ratio of 31.14%, and the required cash dividend funds were solved by the company's working capital.
At the same time, there are also listed companies that respond to the call for dividends with real money. On the evening of April 19, Sanqi Mutual Entertainment (002555. SZ) announced its profit distribution plan for 2023, proposing to distribute a cash dividend of 3.7 yuan (tax included) to all shareholders for every 10 shares, and the amount of the dividend plan for 2023 is expected to be 820 million yuan, accounting for 30.84% of the attributable net profit for the year.
At the same time, the board of directors of Sanqi Mutual Entertainment also deliberated and approved the proposal of profit distribution in the middle of 2024, and intends to distribute dividends in the first quarter, half year and third quarter of 2024 in combination with undistributed profits and current performance, with a total amount of cash dividends of no more than 500 million yuan and a total dividend amount of no more than 1.5 billion yuan. Since 2018, Sanqi Mutual Entertainment has steadily maintained a twice-a-year dividend measure, and this proposal will increase the frequency of dividends to once a quarter, making it the first listed company in A-share to propose a continuous quarterly dividend plan.
This is also in line with the goal of "enhancing the stability, sustainability and predictability of dividends, and promoting dividends multiple times a year, pre-dividends, and dividends before the Spring Festival" proposed by the new "National Nine Articles". In addition, the Shanghai and Shenzhen stock exchanges also actively promote listed companies to pay dividends multiple times a year, requiring listed companies to determine the frequency of dividends based on 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.
In the view of industry insiders, under the encouragement of supervision and market appeal, listed companies have actively responded to the new dividend regulations, which is conducive to the continuous improvement of the dividend atmosphere of A-shares. Some listed companies may increase dividends in order to avoid ST's possible increase in dividends, and the continuous quarterly dividend plan may become a new trend in the cash return of A-shares. (This article was first published in Titanium Media APP, author: Lu Wenyan)