China’s Gree plunges after skipping dividend

HONG KONG • A favourite Chinese consumer stock among foreign investors lost US$4.2 billion (RM16.46 billion) yesterday after the company skipped its dividend for the first time in 11 years.

China’s biggest air-conditioner maker Gree Electric Appliances Inc slumped 9% in Shenzhen, its biggest drop since December 2016, following the surprise omission of a dividend when the company released results on Wednesday night.

The value of shares traded hit a record US$2.7 billion and was the most actively traded stock through the Shenzhen-Hong Kong stock link with foreign investors selling a net 2.36 billion yuan (RM1.46 billion) of shares.

Citigroup Inc said the dividend decision is likely a oneoff and Gree could still maintain a payout ratio of about 60% going forward. In its earnings statement, the company said it’s withholding cash for possible spending on capacity expansion, smart factories, production facility upgrades and other uses.

Yesterday’s share price slide presents a good opportunity for investors to buy, as Gree’s valuation is attractive and its plan to expand advanced manufacturing and integrated circuits is positive longer term, said Liu Guanghuan, an analyst at New Times Securities Co.

Others are unlikely to follow Gree’s decision on the payout, given that China’s securities regulator urges companies to pay dividends, Liu said. Gree trades at 11 times estimated earnings, according to data compiled by Bloomberg. — Bloomberg