Cash Pocket Lining Bear Market Red Envelopes

"Cash is king" is known as one of the important rules of survival in the bear market. Perhaps it is because of its profound understanding that Hong Kong stock listed companies have raised a special dividend in the bear market.

Following the merger of two listed companies, hehe industrial and hehe highway infrastructure and Li Jiacheng's Hutchison Telecommunications, consumer shares Lining and China Wangwang also announced the consideration of special dividends.

At the same time, the "red envelope" market triggered by the distribution of special dividends has also become a rare bright spot in the recent market.

Lining issued a notice recently that he would convene the board of directors in November 27th to discuss the issue of special dividends.

Lining's Investor Relations Department told the daily economic news yesterday that the aforesaid announcement is only a proposal stage, and it also needs the board meeting to pass. As for the reasons for announcing the possibility of dividends, it will be accountable to the public after the end of the board meeting.

If it is proposed to be passed next Thursday, it will be the Li Ning Co's second special dividend payment for about half a year.

In May 2nd this year, Lining announced a dividend payment of 9.13 cents per share besides the final dividend, which is the first time that Lining has paid a special dividend since its listing in 2004.

(Li Ning Co) in its 2007 fiscal year performance report, the Li Ning Co said, "in view of the outstanding performance of the 2007 year, for the greater return of shareholders, the board recommended that a dividend of 9.13 points per share be distributed on the basis of consistent dividend levels."

In a statement issued yesterday, China Wangwang said, "in order to thank shareholders for their strong support to the company under such difficult capital market environment", the company decided to distribute a special dividend of 0.6 cents per share.

The "red packet" quotes to start the bear market of listed companies can also send "red packets", investors naturally flocking.

Hongkong's Hang Seng index plunged 4.5% yesterday, and the index of state-owned enterprises also fell 5.3%. Lining's intraday also rose 4.28%, closing at HK $10.14, or 1.36%. After announcing the special dividend news, Wangwang dropped almost 0.3% days, reporting HK $3.27, and both won the market.

And the share price movements of listed companies before special dividends can also provide us with reference.

In October 24th, the Hang Seng Index in Hongkong plunged by 8.3%, but the hehe department, which announced the issuance of special dividends, went against the trend.

Among them, hehe highway infrastructure rose 11.38%, closing at HK $4.60, the largest increase in intraday rise of 23.5%; hehe industries also closed up 4.545%, at HK $23.

In November 12th, Hutchison Telecom International announced that it paid HK $7 special cash dividend per share, which surged 30.68% on the day and closed at HK $9.80, or 11.36%.

As for Lining's future trend, Da he general research released a research report yesterday, saying that the news of Lining's special dividend payment will become a short-term incentive factor for the stock.

The bank expects Li Ning Co to have net cash of 797 million yuan by the end of this year. According to the 2007 special dividend equivalent to 20% of earnings per share, the company may distribute a special dividend of 0.13 yuan per share in January next year.

But Cai Tiekang, an analyst with Kai Ji securities, told the daily economic news that if Lining announces that the special dividend payable is relatively high, it is also likely that there will be a short-term speculation in the stock market.

The largest shareholder directly benefited from the special dividend. "Hutchison Telecom's re distribution of special dividends after a year's sale of India Telecom assets is undoubtedly the biggest support for the largest shareholder in Whampoa (00013, HK)", Cai Tiekang pointed out. "While the listed company pays the special dividend, the most beneficial shareholder is also the largest shareholder".

Take Hutchison Telecom as an example, the Hutchison Whampoa holding more than 60% will be allocated more than HK $20 billion in cash.

For Li Ning Co, the company declared a special dividend of 9.13 cents per share in the 2007 financial year report.

According to the company's annual report, by the end of 2007, Lining held nearly 365 million shares of the company, accounting for 35.171% of the company's issued share capital, and the chief executive officer of the company, Zhang Zhiyong, also held 6 million 533 thousand and 200 shares of the company, accounting for 0.63%.

According to the special dividend of 9.13 cents per share, Lining and Zhang Zhiyong will get a special dividend of 33 million 300 thousand and 596 thousand and 500 yuan respectively.

The Li Ning Co interim report 2008 shows that by the end of June this year, the company's cash equivalents amounted to more than 1 billion 429 million yuan, representing a net increase of 579 million yuan compared with the end of 2007.

Although the company's intention to re distribute special dividends has not yet been finalized, according to the company's interim results in 2008, by the end of June this year, Lining still held nearly 333 million shares, accounting for 32.039% of the company's issued share capital, and Zhang Zhiyong held 7 million 737 thousand and 700 shares of the company, accounting for 0.745%.

Obviously, if Lining finalise the special dividend issue, the big shareholder Lining will be the biggest individual beneficiary.

Who will be the next Lining? Guess who will be the next Lining?

Merrill Lynch released a research report yesterday that Lining's possible distribution of special dividends has important implications for himself and similar companies.

In fact, the cash stock of some similar sporting goods companies is even higher than that of Lining.

Merrill Lynch pointed out in its report that Anta sports and China trend held 3 billion 300 million and 5 billion 700 million yuan cash in the first half of the year respectively.

In addition, the bank also pointed out that sporting goods listed companies have low debt ratio and low capital expenditure demand, so they have high dividend payout conditions.

Cai Tiekang, an analyst at Kai Kai securities, pointed out that there are two reasons for the distribution of special dividends by listed companies. One is that they receive additional cash receipts for completing a paction. The other is that companies have ample cash flow and no good investment projects.

Therefore, companies with strong cash flow and listed companies with extra earnings may distribute special dividends.