YaSheng Group (HERB)

[RealDutch]

This is what the company did in 2014 with the assets that belong to HERB now

Page 58 DEFM14C
http://www.sec.gov/Archives/edgar/data/1123312/000119983515000565/yasheng_defm14c-16686.htm

Dividends paid $139,821,705.27
Or $0.89 per share

That's basically money transferred to the parent company. That's free cash flow.

The company has 3 options going forward
A) Do the same
B) Reduce dividends
C) No dividends

If it's A) or B) then the shareholders will get their share. Up to $0.89 per share. But 90% of that cash will flow to the parent because 90% of the stock is owned by the parent.

If it's A) or B) and the parent needs the money for some reason, then the stock will surge.

The market seems to be 100% convinced it will be C) apparently. But then again, the market ain't too bright.

Here comes the ironic part. Suppose it's C). Then 90% of that cash will NOT flow to the parent. It will be available for growth/investments. Which should be a good thing for the shareholders. But the market doesn't think so. Not yet anyway.

$140M of free cash flow every year, worst case, and nobody seems to be able to get the message across. Not even the company.

Anyway, this is what the company had to say about paying dividends.

The holders of Common Stock are entitled to receive pro rata dividends, when and as declared by the Board of Directors in its discretion, out of funds legally available therefore, but only if all dividends on the preferred stock have been paid in accordance with the terms of such preferred stock and there exists no deficiency in the sinking fund for the preferred stock.

Dividends on the Common Stock are declared by the Board of Directors. The payment of dividends on the Common Stock in the future, if any, will be subordinate to the preferred stock, must comply with the provisions of the California Corporation Code and will be determined by the Board of Directors. In addition, the payment of such dividends will depend on the Company's financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.