Speaking of dividends, given that the company has been able to grow at an extraordinary rate without any need for capex or reinvestment in the business, why aren't they paying 100% of cash flow as a dividend, rather than the "token" 5% to 10% of cash flow that has been proposed?
I think it's pretty clear at this point that there are not going to be any substantial investment opportunities that will afford CCME a return on invested capital (ROIC) similar to the ROIC that it has enjoyed in its core bus media business. The company has had a year and a half to make an acquisition or find some other productive destination for the money, and yet nothing has happened. The growth initiatives that the company has pursued to date--SWITOW and airport express--have required extremely small capital investments.
So why not distribute all of the operating cash flow to shareholders and management, rather than let it collect dust in a bank at a subpar .3% interest rate?
Unlike a token 20 or 30 cent dividend, a 2.00 or 3.00 dividend would not be sustainable if payed from the proceeds of the company's public offerings, and so the company's act of paying a regular dividend of that size would conclusively settle any debate about fraud. More importantly, it would allow antsy insiders like Ou Wen Lin to monetize their investment holdings without having to embarass the company by selling to the market at firesale valuations.
Of course, there is the "currency controls" excuse, but I've only heard that excuse come from cash-heavy fraud-accused RTO's (such as JGBO), never from a tier 1 name. I can give plenty of examples of private and public chinese companies listed here and in HK that pay out many times the raw dollar value that CCME would have to pay out if it were to pay out 3.00 a share annually.
That's one reason I'm cautious on the name. If the story is fully legit, then there is just no reason why it shouldn't be paying a 2.00 to 3.00 annual dividend right now.
Even better, if the company is legit, then it should never have gone public in the first place, especially not for the laughable 5 times earnings that it received from the SPAC (actually less, due to rerdemptions). Think: if the company were still private, then the management could be paying $100MM-$150MM in a dividend to themselves every year. Instead, they get to spend their time playing useless, back-and-forth games with with short sellers, and tarnishing their reputation in the process.
I think people should email Jacky and tell him, look, .20 is not enough. We want a 2.00 regular annual dividend paid quarterly. Why not? The stock would skyrocket, and the fraud debate would be conclusively settled.
AI
