Shandong Xinchao Energy Corporation (600777.SH): Plans to take multiple measures to solve dividend obstacles.

On the evening of April 26, Shandong Xinchao Energy Corporation (600777.SH), a listed company on the A-share mainboard, presented a beautiful report card. In 2023, the company continued to maintain a stable profit level, with oil and gas production reaching a historic high. At the same time, Shandong Xinchao Energy Corporation stated in relevant proposals that in order to enhance its ability to provide continuous returns to investors and create more value for shareholders, the company plans to take multiple measures to address the obstacles to dividends. The 2023 annual report shows that in 2023, Shandong Xinchao Energy Corporation achieved operating income of 8.849 billion yuan, net profit attributable to the parent company of 2.596 billion yuan, non-GAAP net profit of 2.696 billion yuan, and basic earnings per share of 0.38 yuan. As of the end of 2023, Shandong Xinchao Energy Corporation's total assets reached 33.581 billion yuan, net asset size reached 20.109 billion yuan, surpassing the 20 billion mark, and net assets per share reached 2.96 yuan, an increase of 19.35% compared to the end of 2022 when it was 2.48 yuan. The accumulated undistributed profits in the financial statements of the listed company reached 5.295 billion yuan, and the balance of undistributed profits of the listed company (parent company) was -2.379 billion yuan. Regarding the dividend issue, Shandong Xinchao Energy Corporation stated in the announcement that due to the parent company's distributable profits being negative, it does not currently meet the technical conditions for distributing cash dividends or bonus shares according to the current regulations of the "Guidelines for Cash Dividends of Listed Companies" and other related regulations. However, Shandong Xinchao Energy Corporation stated in the announcement that in order to actively implement the spirit of the State Council's "Opinions on Further Promoting the Healthy Development of the Capital Market," enhance its ability to provide continuous returns to investors, and create more value for shareholders, the company plans to take multiple measures to address the obstacles to dividends. It is reported that at the end of 2023, the "Company Law" underwent a major revision (referred to as the "New Company Law"), and according to Article 214(2) of the "New Company Law": Capital reserves can be used to offset losses. The "New Company Law" is set to be officially implemented on July 1, 2024. Therefore, the board of directors of Shandong Xinchao Energy Corporation plans to propose at the recent shareholders' meeting to revise the "Articles of Association" in accordance with the "New Company Law," changing relevant content in Article 153 to be consistent with the "New Company Law," allowing capital reserves to be used to offset losses. At the same time, resolutions will be passed to use the parent company's capital reserves to offset the accumulated losses, creating conditions for dividends. As of the end of 2023, the balance of the parent company's capital reserves was 6.657 billion yuan. In addition, the company is striving to reach a proper solution as soon as possible with the creditor Guangzhou Rural Commercial Bank Co., Ltd. regarding the debt relationship related to the civil ruling "(2022) Yue Min Zhong Zi No. 1734" and the enforcement procedure "(2023) Yue 01 Zhi 2856", in order to completely clear the obstacles for distributing dividends. Previously, the Chairman and General Manager of Shandong Xinchao Energy Corporation, Liu Bin, stated that due to historical reasons, the company had a heavy burden, resulting in negative undistributed profits for the listed company (parent company), making it unable to distribute dividends to shareholders in recent years. However, fortunately, after continuous efforts, the historical issues have been largely resolved, and the current board of directors will focus on returning value to shareholders, striving to achieve dividends as soon as possible, while maintaining the continuity of the company's development strategy, fully exploiting the operational benefits of existing assets to reward investors with good operating performance.