Xinhuanet Suspends Trading in Its Shares Following Shanghai Stock Exchange Inquiry
Yicai Global
/SOURCE : Yicai
Xinhuanet Suspends Trading in Its Shares Following Shanghai Stock Exchange Inquiry

(Yicai Global) April 18 -- Xinhuanet Co. [SHA:603888] has received immediate inquiries from the Shanghai Stock Exchange following the release of its dividend distribution plan. Trading in Xinhuanet Co.'s shares has been suspended starting from today.

 Xinhuanet has received inquiries from the Exchange about its plan to pay stock dividend of 10 shares per 10 shares and give additional 5 shares per 10 shares. The company has been asked to explain whether its latest handsome dividend payout is in line with its earnings growth and good for its long-term development. The Shanghai Stock Exchange also asked the company to fully disclose risks involved.

 The company's revenue reached CNY1.3 billion (USD197 million) last year, up 36.4 percent from a year ago, according to its 2016 annual report released yesterday. Net profit came in at CNY280 million, an increase of 6.78 percent year-on-year.

 Upon the Exchange's inquiry, Xinhuanet Co. has suspended trading in its shares today to prevent abnormal volatility in share prices and said it will resume trading upon addressing issues raised in the inquiries and after making the relevant disclosures.

 Xinhuanet is an online news portal owned by state-run Xinhua News Agency, sending out 15,000 news articles per day via a number of terminals and in various languages. It was listed on the Shanghai Stock Exchange in October 2016.

 Regulation of handsome dividend payout has become substantially stringent after China Securities Regulatory Commission (CSRC) Chairman Liu Shiyu lambasted the recurring practice of handing out handsome annual profit distribution in recent years, noting that the phenomenon of paying stock dividend of 30 shares per 10 shares can not be found anywhere else in the world and must be strictly regulated.

The Shanghai and Shenzhen stock exchanges already monitored such practices well before Liu voiced his criticism. They have sent inquires to the listed companies which gave out handsome annual profit dividends, asking them to disclose whether their major shareholders have cut their shareholdings and if such payouts are in line with earnings growth.

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Keywords: China , Business , Stock , High Bonus Shares