When facing thousands of listed company announcements every day, which ones should you read? What are the key points to take away from the dozens or hundreds of pages of material announcements? Are the many professional terms in the announcements bullish or bearish? Check out Caixin's "Quick Read Announcement" column, where our reporters across the country will provide you with accurate, fast and professional interpretations on the night of the announcement.

On June 16th, Cailian News reported that due to the failure to implement cash dividends as promised, Zhejiang Zhaofeng Mechanical and Electronic (300695.SZ) has recently been issued warning letters and regulatory letters by the Zhejiang Regulatory Bureau and the Shenzhen Stock Exchange. The company has now released the mid-term dividend plan for 2024 in a "timely" manner this evening.

According to the announcement, on June 14, Zhejiang Regulatory Bureau issued a warning letter to Zhejiang Zhaofeng Mechanical and Electronic because the net income for 2020 and 2022 were CNY 160 million and CNY 165 million respectively, and the undistributed profits were positive but cash dividends were not implemented as promised, violating the promise made during the initial public offering.

Zhejiang Zhaofeng Mechanical and Electronic promised in the "Dividend Distribution Policy" section of its prospectus that "the company will prioritize cash dividends when profitable, paying no less than 10% of the distributable profits in cash dividends to shareholders every year".

In addition, the regulatory letter issued by the Shenzhen Stock Exchange today shows that the net income attributable to the parent company's shareholders in 2020, 2021, 2022, and 2023 were CNY 160 million, CNY 126 million, CNY 165 million, and CNY 184 million respectively, and the undistributed profits were positive. Except for 2021, the company did not fulfill the above promise for the other fiscal years.

In its 2023 annual report, Zhejiang Zhaofeng Mechanical and Electronic mentioned that "in order to balance the company's existing and future funding needs, the company does not plan to distribute profits for 2023." The financial data shows that as of the end of 2023, the company's undistributed profits were CNY 1.072 billion. The company stated that the remaining undistributed profits will be carried over to future fiscal years to meet business operations and working capital needs.

Cailian News reporters counted that since its listing in 2017, Zhejiang Zhaofeng Mechanical and Electronic has cash dividends four times, with a cumulative cash dividend of CNY 379 million and a cumulative net income attributable to the parent company's shareholders of CNY 1.25 billion, with a dividend payout ratio of about 30%.

Over the weekend when the warning letter was received, the board of directors and supervisors of Zhejiang Zhaofeng Mechanical and Electronic worked overtime to deliberate and pass the "Proposal on the Arrangement of Mid-term Dividends for 2024". It mentions that the lower limit of mid-term profit distribution is "the total amount of cash dividends is not less than 30% of the average net profit for the last three accounting years. If the distributable profits for the current period are lower than the above-mentioned amount, then the distributable profits for the current period shall be used as the lower limit." The upper limit for mid-term profit distribution is "the total cash dividends do not exceed 100% of the net profit attributable to the listed company's shareholders achieved in the first half of 2024".

Public information shows that Zhejiang Zhaofeng Mechanical and Electronic's main business covers various types of automotive bearing units such as automobile wheel hub bearings and separable bearings, as well as commercial vehicle chassis system components and new energy electric vehicle axles, with products applicable to both traditional fuel vehicles and new energy vehicles.