Shanghai Energy: In Recent Years, The Aluminum Processing Industry Has Been In A Downturn And The Market Competition Is Fierce. The Company's Aluminum Plate And Strip Factory Is In A State Of Loss.
According to Securities Star, Shanghai Energy () responded to investors’ concerns on the investor relations platform on April 3.
Investors:> Dear leaders of China Coal Energy, although your company is the controlling shareholder of Shanghai Energy, you hope to stand on the standpoint of all investors and not excessively interfere with the independent development of Shanghai Energy. For example, Shanghai Energy's share price has been below its net assets and unallocated shares per share for a long time. Profits, but Shanghai Energy's annual dividend remains the same as that of major shareholders. Why do they always look at the faces of major shareholders?
Secretary of the Board of Directors of Shanghai Energy:> The company's profit distribution policy is to mainly distribute cash dividends and maintain the continuity and stability of the profit distribution policy. When formulating a distribution plan, attention should be paid to reasonable returns for investors. The specific dividend ratio is determined by the company's shareholders' meeting. Companies can distribute dividends in cash or stock. The company can make interim cash dividends. The company's profit distribution policy remains basically stable: from 2017 to 2023, the company's annual cash dividends account for more than 30% of the consolidated statement's net profits attributable to ordinary shareholders of listed companies.
Investors:> Dear Secretary-General Hello! Why not get rid of the aluminum processing business that has been losing money?
Secretary of the Board of Directors of Shanghai Energy:> In recent years, the aluminum processing industry has fallen into recession and market competition is fierce. The company's aluminum plate and strip factory is in a state of loss. In 2024, the company will seriously carry out special work on loss-making enterprises and strive to improve the operating quality of aluminum plate and strip factories. The measures taken are: adjust product structure and increase efforts to develop high value-added products; increase market development efforts to add new markets and new customers; strengthen full-process control of product quality and improve yield rate; strengthen cost control and increase waste input proportion; strengthen market research and judgment, keep up with the market rhythm, and reduce the impact of aluminum price fluctuations on operating results. The company has no plans to sell the aluminum processing business or spin it off as a public company.
Investors:> Is the company involved in the hydrogen energy business?
Secretary of the Board of Directors of Shanghai Energy:> The company is not involved in the hydrogen energy business, thank you for your attention.
Investors:> Secretary, thank you very much for your work. The ESG performance of coal companies is a direction that we attach great importance to. I noticed that some ESG third-party agencies have poor ratings on your company. For example, Huazheng's ESG rating is only CCC, which is still far behind the leading companies in the industry. Especially in terms of environment, only CC has greater risks and lags behind in the industry. May I ask what work the management has arranged in this regard to assume more environmental responsibility? Will any improvements be shown in future ESG reporting?
Secretary of the Board of Directors of Shanghai Energy:> Since the company released its first social responsibility report in 2008, it has released a total of 15 social responsibility reports, and has been continuously awarded the "Excellent Enterprise for Publishing Social Responsibility Reports in the Coal Industry" by the China Coal Industry Association. In 2023, the company will prepare and disclose the 2023 Environmental, Social and Corporate Governance Report (ESG Report) for the first time. The company's 2023 ESG report can be found on the website of the Shanghai Stock Exchange for details. Thank you for your attention.
Investors:> Dear leaders of China Coal Energy and Shanghai Energy, senior leaders have repeatedly emphasized the need to build a financial power. The State-owned Assets Supervision and Administration Commission of the State Council requires central enterprises to do a good job in market value management. The China Securities Regulatory Commission requires an increase in the dividend ratio. How do your company leaders understand market value management? Shanghai Energy's stock price has been lower than its net assets per share all year round, and has been lower than the number of undistributed shares per share for a long time. It has taken huge provisions and losses in the fourth quarter for many years in a row. Why? Why turn a blind eye to high-level propaganda?
Secretary of the Board of Directors of Shanghai Energy:> Shanghai Energy will conscientiously implement the regulations of the State-owned Assets Supervision and Administration Commission on improving the quality of listed companies, strengthen the protection of investors' rights and interests, comprehensively consider the overall interests of all shareholders and the company's sustainable development, determine the annual cash dividend ratio, and reward investors with positive attitudes. Excellent operating performance. The main reasons for Shanghai Energy's sharp decline in profits or even losses in the fourth quarter: affected by the year-end shutdown for maintenance, coal production and sales generally declined compared with the first three quarters, and coal revenue decreased; the progress and completion settlement of special repair and other projects were mainly due to the increase in project costs in the fourth quarter compared with the previous three quarters. Quarterly increases; annual performance rewards and other rewards are generally issued at the end of the year; the company hires an asset appraisal agency to conduct impairment testing on relevant asset groups with signs of impairment in accordance with accounting standards. Provision for asset impairment is made based on the assessment results. Thank you for your attention.
Investors:> Shanghai Energy's undistributed profits amount to 10 billion, but the company's current profits are only 3 billion. Excuse me, where did these 7 billion undistributed profits go? Is it occupied by a major shareholder? What to do with the interest on occupied funds?
Secretary of the Board of Directors of Shanghai Energy:> A company's dividend policy must consider the needs of shareholder returns and sustainable corporate development. The remaining operating accumulation after dividends is mainly used for coal resource acquisition and infrastructure investment. It has successively invested in the construction of large-scale infrastructure power projects such as the third phase reconstruction and expansion of Kongzhuang Coal Mine, Xinjiang 106 Coal Mine, Xinjiang Weizigou Coal Mine, 100,000 tons of high-precision aluminum strips, 2×350MW combined heating, and new energy demonstration bases (I period), etc., which have enhanced the company's sustainable development capabilities.
Investors:> The State-owned Assets Supervision and Administration Commission improves the quality of listed companies: on the basis of promoting central enterprises to include factors related to the stock price realization of listed companies into the performance evaluation system of listed companies in the early stage, management effectiveness is included in the assessment of the heads of central enterprises, and the heads of central enterprises are guided to pay more attention to and pay more attention to listing. The company's market performance is controlled, and the market is used in a timely manner to boost confidence and stabilize expectations through directional methods such as shareholding increase and buyback, increase cash dividends, and better reward investors. 1. What is the specific score of Chairman Mao’s performance evaluation in 2023? 2. How is your company implementing the requirements of the State-owned Assets Supervision and Administration Commission? 3. What do you think of your company’s price-to-book ratio of 0.8 times? What steps are you taking to increase its market value?
Secretary of the Board of Directors of Shanghai Energy:> The company will conscientiously implement the regulations of the State-owned Assets Supervision and Administration Commission on improving the quality of listed companies, strengthen the protection of investors' rights and interests, and determine the annual cash distribution ratio based on the overall interests of shareholders. The sustainable development of all shareholders and the company. The company's management will continue to adhere to the company's production and operation management, improve the company's performance, and reward investors with better performance.
Investors:> What is the main reason for the 44.3% year-on-year decrease in net profit of your company's 2023 annual report?
Secretary of the Board of Directors of Shanghai Energy:> The company's net profit in 2023 has declined year-on-year, mainly due to the comprehensive impact of the sharp year-on-year drop in coal prices due to the market environment, the deterioration of production conditions, which has led to a large reduction in coal output, and the poor geological conditions of some mines, and increased investment in safety production, resulting in an increase in raw coal production costs. .
Investors:> Dear leaders of China Coal Energy and Shanghai Energy, Shanghai Energy's 2023 annual report shows that its financial deposits in China Coal Energy are 2.575 billion yuan (rounded), with interest rates ranging from 0.35% to 1.485%. At the same time, the loan amount is 531 million, and the interest rate is 3.17% to 3.2% (22-year loan interest rate is 3.27% to 4.35%). The difference between deposit and loan interest rates is nearly ten times. I would like to ask whether the controlling shareholder is suspected of using financial operations to misappropriate or illegally occupy the legitimate rights and interests of Shanghai Energy's small and medium-sized shareholders?
Secretary of the Board of Directors of Shanghai Energy:> The company's deposit and loan interest rates in China Coal Finance Company are determined by both parties through fair negotiation with reference to the current financial market conditions and in compliance with national laws, regulations and policies. As of December 31, 2023, the company's existing loans in China Coal Finance Company were long-term loans, with loan interest rates ranging from 3.17% to 3.2%, which was significantly lower than the then-effective 5-year LPR (4.2%) by more than 100BP; The deposit interest rate of Coal Finance Company is at least no lower than the listed interest rate of major commercial banks for deposits of the same type and term. The relevant deposit and loan interest rates are in line with the principles of fairness and reasonableness, and the deposit and loan balances are lower than the prescribed limits. There is no situation where the controlling shareholder infringes upon the legitimate rights and interests of the listed company and its shareholders.
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