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On question12, OPMI Tan gave a good summary on the quantum of cash. From a capital efficient perspective, the cash is probably too much.
Chairman Xu is 80 years old. So he was born in the year just before liberation from the Japs. As a teen and young adult, he went through the Great Leap Forward and Cultural Revolution. Could this have explained the cash retained within the Group?
The company is structured in this way - a BVI incorporated company owns 61% of the listed entity (incorporated in Spore). The Spore listed co 100% owns another Chinese holding company, which in turn owns 100% of all its subsidiaries. From this:
- An upwards declaration of dividends will attract 10% withholding taxes. So the more dividends, the more taxes.
- Money paid to OPMIs are paid to the BVI incorporated company. Putting taxes and the ability to bring the money offshore aside, will offshoring your profits earned in the Mainland to BVI, attract unnecessary attention from the Party?
RESPONSE TO THE QUESTIONS FROM OUR SHAREHOLDERS FOR THE PURPOSE OF AGM
After achieving a net cash position (RMB 196 mln) in 2015, cash has been building up fast to reach RMB 1,688 mln eight years later, in 2023. Had notes receivables been kept low, cash would have been around RMB 2,000 mln.
For perspective, RMB 2,000 mln is:
7.8 times 2023 employment benefits of RMB 257 mln; almost the same as 2023 raw material purchases of RMB 2,040 mln; and also higher than capital expenditures (RMB 1,255 mln) plus incremental working capital (RMB 629 mln) over seven years between 2017 and 2023. Helped by the "flexible pricing" strategy that pursues sales volume growth, Sunsine has been profitable every year since listing in 2007 despite shifting Aniline prices.
In the past seven years, profit peaked at RMB 606 mln in 2022 for a 15.8% net margin. When COVID-19 was at its worst in 2020, sales volume still edged up 1% with a profit of RMB 219 mln. When product prices were brought down by weak Aniline prices in 2023, sales volume grew 11% with a good profit of RMB 372 mln. The net margins for 2020 and 2023 were both a respectable 9.4% and 10.7% respectively. In 2020, only 0.4% of revenue was impaired. With such solid foundations and resilience to weather unexpected headwinds, why can’t the management be more liberal in dividend payout? For perspective again, every SGD 0.01 dividend entails RMB 50m.
https://links.sgx.com/FileOpen/20240423%...eID=797767
Chairman Xu is 80 years old. So he was born in the year just before liberation from the Japs. As a teen and young adult, he went through the Great Leap Forward and Cultural Revolution. Could this have explained the cash retained within the Group?
The company is structured in this way - a BVI incorporated company owns 61% of the listed entity (incorporated in Spore). The Spore listed co 100% owns another Chinese holding company, which in turn owns 100% of all its subsidiaries. From this:
- An upwards declaration of dividends will attract 10% withholding taxes. So the more dividends, the more taxes.
- Money paid to OPMIs are paid to the BVI incorporated company. Putting taxes and the ability to bring the money offshore aside, will offshoring your profits earned in the Mainland to BVI, attract unnecessary attention from the Party?
RESPONSE TO THE QUESTIONS FROM OUR SHAREHOLDERS FOR THE PURPOSE OF AGM
After achieving a net cash position (RMB 196 mln) in 2015, cash has been building up fast to reach RMB 1,688 mln eight years later, in 2023. Had notes receivables been kept low, cash would have been around RMB 2,000 mln.
For perspective, RMB 2,000 mln is:
7.8 times 2023 employment benefits of RMB 257 mln; almost the same as 2023 raw material purchases of RMB 2,040 mln; and also higher than capital expenditures (RMB 1,255 mln) plus incremental working capital (RMB 629 mln) over seven years between 2017 and 2023. Helped by the "flexible pricing" strategy that pursues sales volume growth, Sunsine has been profitable every year since listing in 2007 despite shifting Aniline prices.
In the past seven years, profit peaked at RMB 606 mln in 2022 for a 15.8% net margin. When COVID-19 was at its worst in 2020, sales volume still edged up 1% with a profit of RMB 219 mln. When product prices were brought down by weak Aniline prices in 2023, sales volume grew 11% with a good profit of RMB 372 mln. The net margins for 2020 and 2023 were both a respectable 9.4% and 10.7% respectively. In 2020, only 0.4% of revenue was impaired. With such solid foundations and resilience to weather unexpected headwinds, why can’t the management be more liberal in dividend payout? For perspective again, every SGD 0.01 dividend entails RMB 50m.
https://links.sgx.com/FileOpen/20240423%...eID=797767