Whether it’s short-term trading or long-term holding, dividends are always an important benefit for shareholders of companies. However, not all companies pay dividends on time. There are names that continuously extend the dividend payment deadline, even up to the 10th time for a dividend payment that has been declared for many years.
“Suffering” as the postponed dividend shareholder
The biggest “suffering” is probably for shareholders of SD3 (Song Da 3 Joint Stock Company). In late 2023, the company announced another extension of the payment date for the 2015 dividend, from December 29, 2023, to December 31, 2024, extending it by another year. The reason for the adjustment is that the investor has not been able to arrange the capital to pay the amount for the Company, so the cash flow cannot meet the dividend payment needs as outlined in the plan.
SD3 continues to postpone the dividend payment from 2016
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The ex-dividend date for this payment has occurred since October 5, 2016, which is nearly 8 years ago. Although it is only a 5% rate (1 share receives 500 VND), equivalent to about 8 billion VND, this is already the 10th time that SD3 has rescheduled the payment for this dividend.
The business situation of SD3 is also gloomy. The company incurred a net loss of nearly 3.3 billion VND in the fourth quarter of 2023 (compared to a profit of nearly 10 billion VND in the same period), due to the interest expense incurred in the second and third quarters being combined into the period. Although it still made a net profit of over 7.7 billion VND for the year – flat compared to the previous year, the company still has accumulated losses of nearly 231 billion VND, making the dividend story of SD3 shareholders even more… heart-wrenching.
A similar story is also happening to shareholders of L44 (Lilama 45.4 Joint Stock Company). Moreover, it is even more bitter because it is for dividends that have been declared nearly 9 years ago (in 2015).
Specifically, in mid-December 2023, L44 announced the postponement of the payment date for the dividends of 2012 (14%) and 2013 (3%) for another year, from December 29, 2023, to December 31, 2024. In total, L44 needs to pay about 6.8 billion VND.
This is the 9th change by L44 for these 2 dividends. The reason is that the company is temporarily suspending production and business activities to implement a business restructuring plan; at the same time, it is facing many financial difficulties, with outstanding debts of wages for employees, and obligations to pay taxes and insurance contributions with large amounts of money. Therefore, it has not been able to arrange the money to pay dividends.
The above reasons partly reflect the difficult situation of L44. In fact, the company has had to announce the liquidation and sale of assets, with the reasons being “unable to rent out because they are old and dilapidated” and “not enough ability to pay for supervision”. In its 2022 financial statements, the accumulated loss of L44 is nearly 196 billion VND (189 billion VND in 2021), and its shareholders’ equity is negative nearly 139 billion VND. Meanwhile, in the market, L44’s stock is still maintaining a trading restriction because it has been out of business for more than 1 year, late in submitting its 2022 audited financial statements, and negative shareholder equity in its 2021 audited financial statements.
C12 (Cau 12 Joint Stock Company) is not far behind, with 8 times of dividend postponement for 2016. The latest time, the company postponed the dividend payment date for another year, from November 29, 2023, to November 29, 2024. This dividend payment has a rate of 12%, equivalent to an amount of over 58 billion VND.
C12 has also postponed the dividend payment 8 times for 2016
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The reason for the adjustment is that from 2019 until now, due to the impact of the COVID-19 pandemic along with the internal difficulties of the company, C12 has not been able to arrange the money to pay dividends to shareholders.
Not only postponing the dividends’ payment, but C12 has also not been able to complete the audited financial statements for the years from 2019 to 2022, leading to the need to postpone the annual General Meeting of Shareholders in 2023 to “as soon as possible” – as stated in the company’s announcement.
C12 is also a name that has wasted ink for the media when it was in debt to employees’ wages and social insurance (BHXH) millions of VND. On August 1, 2019, hundreds of C12 employees and workers gathered in front of the company’s headquarters, carrying many banners with the content: “Requesting the company to pay 7 months of wages and 30 months of social insurance premiums”. The company later confirmed this incident. By June 2019, the company owed nearly 24 billion VND in social insurance premiums for workers and several billion VND in wages.
Not as bitter as the shareholders of the above 3 companies, but shareholders of LG9 (Licogi 9) are also unlikely to be happy with the cash dividend payment for 2018, which was finalized on September 28, 2023.
Since listing in December 2017, this is only the 2nd time the company pays dividends to shareholders. The last time was in December 2018, which was a dividend for the year 2017 with a rate of 10%.
It’s the 2nd time paying dividends since listed, but LG9 has also delayed the payment 3 times
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This dividend payment has a rate of 10%, equivalent to over 5 billion VND, and was expected to be paid on October 17, 2023. Everything seemed smooth, but then the company issued 3 documents to postpone the payment, shifting the expected date to March 28, 2024. The reason is that the revenue from the projects did not meet the Company’s plan to recover capital, so it needs more time to balance the capital source in order not to affect the operation.
In terms of business performance, the latest financial statement for LG9 is the audited report for 2022. Accordingly, the company made a net profit of nearly 838 million VND, equal to half of the previous year. The debt to be paid at this time is 296 billion VND, equal to 92% of current assets, and 4 times shareholders’ equity. The accumulated profit is only over 4.6 billion VND.
Taking bitter gourds to make them sweet
Understandably, bitter gourd is naturally bitter, but it needs to be said that it becomes sweet in the sense of endurance. And shareholders who have had their dividends postponed are also like that, they have to endure without any solution.
There are countless reasons that companies give to postpone dividend payments, usually explained as accidents or unexpected cash flow events. However, in reality, postponement can be seen as a weakness in management. And in essence, announcing dividend payments without actually paying them means that the company owes investors.
But considering the small holdings of small investors, this debt is often not significant, so few people make the effort to seek justice for themselves through filing lawsuits. Moreover, looking at reality, companies that postpone payments often face major business challenges. There is an ancient saying that “you can hold onto someone with hair, but you can’t hold onto someone who is already bald.” The company has already complained about the lack of money, and it will be difficult for small “creditors” to achieve anything significant.
Continuously postponing payments, if scaled up, can have negative impacts on the market. Investors will gradually become impatient, shifting to “surfing” instead of holding and investing in stocks in the long term.
