23 Enterprises Pay Dividends More Than The Annual Net Profit, A-Share Super Large Proportion Cash Dividends Must Be Vigilant Against Moral Hazard

Entering the annual report disclosure season, the A-share market has successively appeared plans for large amount and high interest dividends, constantly refreshing various historical records and causing widespread market attention.

Wind data shows that as of April 1, 1190 A-share companies have disclosed their 2020 annual reports. Among them, 1016 companies disclosed the net profit distribution plan in 2020, and 900 companies planned to carry out cash dividend and disclosed the dividend plan, with a total cash distribution of 946.598 billion yuan. Industrial and Commercial Bank of China, China Construction Bank, China Shenhua, China Merchants Bank, Ping An and other 21 listed companies intend to pay more than 10 billion yuan in cash.

Dividend cash dividend, which is advocated by the capital market, is an important means for listed companies to give back to investors. However, in recent years, some listed companies have been paying large dividends frequently and even "bankrupt" dividends, which gradually make the investors unable to bear it. For example, Jiangling Motor Co., Ltd., which has distributed net profits for more than five years at a time, has aroused the market's concern about "how to develop the company in the future".

According to the 21st century economic report, as of April 1, 68 listed companies had a dividend yield of more than 4%, and three of them had a dividend yield of more than 10%. Is it a good thing or a bad thing that "local tyrants" pay large dividends frequently? For the market, it seems to be a difficult question to answer.

"Corporate dividends are real gold and silver dividends, but not moderate (may) affect the future development of enterprises. Because cash flow is the safety cushion for enterprises and the cornerstone of new business development in the future. " Pan Helin, executive director and professor of Digital Economy Research Institute of Central South University of finance, economics and law, told reporters of the 21st century economic report.

The dividends of 23 enterprises exceeded the annual net profit

As one of the important criteria to measure whether an enterprise has investment value, the dividend intensity and dividend yield have always been valued by investors. Generally speaking, the industry distribution of High Dividend Stocks is mainly concentrated in financial, real estate, telecommunications services, public utilities and other cyclical industries, such as Agricultural Bank of China, Bank of communications, Bank of China and other long-term dividend yield of more than 5%.

However, in recent years, with the annual report disclosure of A-share listed companies entering the accelerated period, listed companies planning to make large annual dividends appear frequently. 21st century economic report reporters have noticed that the total amount of dividends of many companies exceeds the annual net profit, which has caused great market disputes.

According to wind data, as of April 1, 23 enterprises planned to pay more cash dividends than the annual net profit, and 48 enterprises accounted for more than 70% of the net profits. In this group, the dividend yield of many enterprises is astonishingly high, among which the dividend yield of three enterprises is more than 10% -- the dividend yield of Jiangling Automobile, Sifang shares and Fangda special steel reaches 12.19%, 12.16% and 11.75% respectively.

The most typical is Jiangling Motor. On March 29, Jiangling Motor closed trading at a price of 25.39 yuan per share. After the closing, Jiangling Automobile issued a high dividend distribution plan. In 2020, the company realized a net profit of 551 million yuan, and planned to distribute 34.76 yuan (tax inclusive) cash dividend for every 10 shares. Based on the total capital stock of 863 million shares as of December 31, 2020, the total dividend fund was 3 billion yuan, more than five times of the non net profit deducted, and also exceeded the net profit of Jiangling Motor in the past five years of 2.8 billion yuan.

This is not an exception. According to the reporter's analysis, Longyuan technology's planned cash dividend amount is five times of its net profit. Based on 513 million shares, Longyuan technology distributed a cash dividend of 1 yuan (including tax) to all shareholders for every 10 shares, with a total amount of 513 million yuan.

It is worth mentioning that in 2020, due to the negative impact of Xinguan pneumonia on the normal development of the company's business, the company's business income decreased by 10.72% year-on-year; the net profit attributable to the shareholders of the listed company was 9.7957 million yuan, down 29.95% year-on-year, while the non net profit after deducting non net profit was negative, with a loss of 10.1844 million yuan. In the past three years, the non net profit deducted by Longyuan technology was negative.

Although the main business continues to be depressed, Longyuan technology has "excessive" dividend behavior in the past two years. In 2019, Longyuan technology also issued a net profit distribution plan, distributing cash dividends of 2 yuan (including tax) per 10 shares, totaling 103 million yuan of cash dividends, which is 7.34 times of the company's net profit of that year.

In addition, some listed companies with insufficient cash flow and certain debt pressure have joined the army of "excess" dividends. A typical example is Yutong Bus. In 2020, affected by the epidemic situation and other factors, the company realized a business income of 21.705 billion yuan, a year-on-year decrease of 28.82%; the net profit attributable to the shareholders of the parent company was 516 million yuan, a year-on-year decrease of 73.43%; the net cash flow from operating activities was 3.568 billion yuan, a year-on-year decrease of 33.32%.

However, in 2020, Yutong Bus launched a net profit distribution plan of "5 yuan per 10 shares (including tax)" and planned to issue cash dividends of 1.107 billion yuan, more than twice of the company's net profit of the year. By the end of 2020, the current liabilities of Yutong Bus totaled 15.015 billion yuan, and the asset liability ratio was 53.64%. The financial expenses paid by the company in that year exceeded 70 million yuan.

"Big money" leads to controversy

From the amount of dividend per share, "dividend king" also emerge in endlessly. According to statistics, this year, there are 44 companies with more than 10 yuan for 10 schools and 8 companies with more than 20 yuan for 10 schools.

Among them, Guizhou Maotai, gibbet and shuoshi biology ranked first, second and third with 192.93 yuan (including tax), 120 yuan (including tax) and 55 yuan (including tax) per 10 shares respectively; Yunnan Baiyao, aimike, Jiangling Automobile, and Yingke Medical Co., Ltd. were ranked second. Many of these enterprises were sought after by investors.

However, as high dividend schemes emerge in endlessly, the market is gradually concerned about the impact of excessive dividend on the future development of the company.

For example, on February 8, AMEC, which had been listed less than half a year ago, put forward a plan to distribute cash dividends of 35 yuan (including tax) per 10 shares to all shareholders based on 120 million shares, and increase 8 shares per 10 shares to all shareholders with capital accumulation fund. The proposed dividend amount reached 421 million yuan, accounting for 95.68% of the net profit in 2020.

The high transfer scheme quickly attracted the attention of the regulatory authorities. On February 9, the Shenzhen Stock Exchange issued a letter of concern asking AMEC to explain whether the net profit distribution plan matches the performance growth.

"There are good and bad signals for dividend release. On the good side, dividend shows that the enterprise has strong profitability and has enough cash to repay the shareholders in the capital market; but the bad thing is that the dividend shows that the enterprise has no new investment plan and lacks imagination in future operation, so the net profit is distributed to investors as much as possible. And divide the net profit of many years in one breath, it is likely to show that the enterprise has entered the contraction period. Enterprises should plan dividends according to the characteristics of their industries and their industry status. " Pan and Lin said.

Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, also pointed out: "the level of cash dividend per share is high, of course, it is good! However, we believe that cash dividends should be consistent, stable and sustainable. If the cash dividends are just "one hammer deal" or one-time distribution, it is irresponsible and unfair to new and old investors. "

In Dong Dengxin's view, especially when a high proportion of one-time dividends occur, the market should be alert to whether there is interest transmission or moral hazard behind it.