Guangzhou Golden Medical Examination Group Co., Ltd. (Golden Medical) recently announced that it will distribute a cash dividend of 400 million yuan (RMB), while the company is expected to incur a loss of 350 million to 450 million yuan in 2024. Some industry insiders have raised concerns that this “hollowing-out dividend distribution” is prioritizing the needs of major shareholders at the expense of the interests of small and medium-sized shareholders.
According to the equity distribution implementation announcement for the first three quarters of 2024 released by Golden Medical on February 15, the profit distribution is based on a total share capital of 463,258,275 shares before the implementation of the plan. A cash dividend of 0.88 yuan per share (including tax) will be distributed, totaling 407,667,282.00 yuan, with the distribution date set for February 21, 2025.
The annual performance forecast announcement for 2024 released by the company on January 25 indicated an expected net profit attributable to shareholders of the listed company of -350 million to -450 million yuan for the year 2024, resulting in a loss compared to the same period last year. The company estimates that the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses for the year 2024 will be -155 million to -225 million yuan.
On March 1, the Hua Xia Times reported that the operating cash flow net amount for the first three quarters of 2024 for Golden Medical was approximately 312 million yuan, surpassing the dividend amount allocated this time.
Simultaneously, as of the end of the third quarter of 2024, Golden Medical’s accounts receivable reached 5.116 billion yuan, accounting for over 90% of the revenue, with the aging structure of accounts continually worsening, and accounts aged over 1 year showing a significant increase. The company plans to make provisions for credit impairment losses of 650 million to 720 million yuan.
Analysts suggest that if Golden Medical fails to improve its accounts receivable management, the 5.1 billion yuan debt poses a risk of bad debt, further intensifying cash flow pressure.
Typically, companies reduce or suspend dividends when facing losses to preserve cash flow. Regarding Golden Medical’s unusual operation of “high dividends despite huge losses,” Zhang Yue, Chairman of AOYOU International, stated, “Persisting with high dividends, considering the company’s first annual loss and tight cash flow situation, may harm the interests of small and medium-sized shareholders. High dividends may further reduce the company’s cash flow, impact its normal operations and development, and even lead to financial distress.”
According to public information, Guangzhou Golden Medical Examination Group Co., Ltd., headquartered in Guangzhou International Bio-Island, Guangdong Province, is a high-tech service enterprise with third-party medical testing and pathological diagnosis services as its core business. In 2017, Golden Medical was listed on the Shanghai Stock Exchange, and its academic committee is chaired by Zhong Nanshan.
After the outbreak of the COVID-19 pandemic, due to the stringent lockdown measures imposed by the Chinese authorities, various industries in China experienced a downturn. However, vaccine companies and nucleic acid testing institutions across China thrived, including Golden Medical. But after the wave of profits from COVID-19 testing subsided, companies providing nucleic acid testing, testing laboratories, and enterprises producing antigen test reagents all saw significant declines in revenue and net profit in 2023. In its financial announcement for 2024, Golden Medical stated that it achieved a net profit of 643 million yuan in 2023, a decrease of 76.64% year-on-year.
As of the close on February 28, Golden Medical’s stock was priced at 33.98 yuan per share, declining by -5.27%, with a total market value of 15.742 billion yuan.