Preface

As the year 2025 approaches, China's A-share market is witnessing transformative trends that are reshaping investment practices. With less than a month until 2025, new government guidelines are steering A-share listed companies toward innovations in dividend distribution and market capitalization management. These emerging trends are not fleeting occurrences; rather, they are solidifying into long-term practices aimed at enhancing the quality and investment value of these companies, establishing what could be termed as the new Lunar Year's evolving traditions.

Lazy bag

Key trends in China's A-shares include increased dividend distribution and market value management, promising long-term quality growth for listed companies, benefiting investors.

Main Body

The advent of 2025 marks a significant shift in China's A-share market, characterized by emerging customs that promise to create new, long-standing traditions for investors and listed companies. Central to these changes are the regulations introduced through revised governmental guidance, notably aimed at promoting pre-festival dividend distributions and emphasizing robust market capitalization management.

One of the most talked-about new trends is the systematic approach to dividend payouts before major festivities. As of January 23, a remarkable total of 318 listed companies have announced plans to distribute dividends in December 2024 and January 2025, accumulating over 3,400 billion yuan. The period leading up to the Lunar New Year, particularly from January 20 to 27, is expected to witness a peak in these activities, with 88 companies disbursing dividends exceeding 1 trillion yuan.

Mr. Liu, an investor with a strong holding in banking stocks, has witnessed these trends firsthand. His recent dividends from the Agricultural Bank of China and the Bank of China, though modest, are timely aid for festive preparations. Liu shares that while the monetary value might not be immense, it plays a role in concluding the financial year on a favorable note, offering a source of happiness as the year turns.

Economic analyst Li Zhan provides insight into these developments, observing that the frequency of dividend distributions offers investors more frequent cash returns, enhancing cash flow stability and providing numerous reinvestment opportunities. The introduction of the new 'Nine Government Articles' in April has significantly influenced these practices, focusing on regulating company dividend distributions more rigorously.

Notably, the announcement regarding the implementation of 2.4 trillion yuan in dividends for the 2024 fiscal year stands as a historical high, involving a substantial increase in both the magnitude and frequency of distributions. Compared to previous years, the number of companies presenting dividend plans throughout multiple financial quarters in 2024 has significantly increased, indicating a strengthening of financial positions and cash flow scenarios within these companies.

Among the noteworthy companies responding to these trends is Linglong Tire, one of the largest tire producers in China, which plans to distribute dividends across all quarters of 2024. Their quarterly performance reports have shown a striking 78% increase in net profits, and a 347% growth in net cash flow from operating activities, underscoring the benefits of these enhancements.

Efforts to entrench these trends are further reinforced by companies like Kweichow Moutai, which during its recent shareholder meeting, ratified a cash dividend return plan for the years 2024 to 2026. This plan seeks to institutionalize the tradition, aiming for dividend payouts of no less than 75% of net profits each year, with a dual annual and interim dividend strategy.

In addition to dividend strategies, significant focus is also placed on market value management, which sees an increasing number of companies, such as Binzhou Chemical, implementing valuation enhancement initiatives. Since November of the previous year, over 200 listed companies have rolled out management schemes geared towards maximizing their investment value reflective of their operational quality.

Binzhou Chemical's 'Valuation Enhancement Plan' for 2025, for instance, outlines strategies such as improving operational efficiency and profitability, active cash dividend deployment and share repurchase, investor relations management, and pursuing acquisition opportunities, all aimed at heightening company investment value.

Another aspect of this trend, highlighted by Luxshare Precision's recent disclosure of its market value management system, focuses on strategies like engaging in strategic core business investments and executing timely share buybacks. This reflects broader commitments within the market to align company transparency and investor expectations with market value management and strategic growth plans.

These ongoing shifts are supported by regulatory guidance, with the China Securities Regulatory Commission mandating that companies exhibiting long-term stock value declines adopt resolutions for valuation improvement and market value management protocols.

Finally, the notice of delisting risks, especially following new regulations that accentuate stern oversight and underscore company value orientation, has added a layer of caution for companies faltering in financial performance. With stricter financial indicators and the introduction of internal controls for financial audit opinions, companies are urged to address these promptly to avoid delisting risks.

Companies like China Communications Real Estate are, thus, actively restructuring their asset portfolios to focus on asset-light sectors like property services and management, a move that mirrors industry-wide shifts towards enhancing sustainable growth and maintaining investor interest.

Key Insights Table