Since HSBC Holdings (0005) announced the suspension of dividends after the net ex-dividend in 2019, it has aroused criticism and concern from many shareholders.
Since then, many shareholders have begun to pay attention to HSBC's profit distribution, and more and more voices hope that HSBC will spin off its Asian business to release potential value.
The representative of HSBC's minority shareholders and the convener of the "Spin-off HSBC Concern Group" Lu Yujian (Ken Sir) has made another move recently, saying that he has gathered the support of 100 minority shareholders and submitted the proposal for the spin-off of HSBC Asia to the HSBC shareholders' anniversary General Assembly (AGM), hoping to protect the interests of minority shareholders and gain support from more institutional investors.
Lu Yujian, the convener of the "Spin-off of HSBC Concern Group", said in an interview with "Hong Kong 01" that he has obtained the consent of 100 minority shareholders in accordance with the "UK Companies Act 2006", and will be held at HSBC in Birmingham, England on May 5 this year. The relevant resolutions are discussed at the annual general meeting.
1. To propose that HSBC formulate, implement and report quarterly plans and strategies aimed at enhancing the value of HSBC through methods including but not limited to spin-offs, strategic restructuring, and restructuring of its Asian business.
2. To propose that HSBC formulate and implement a long-term and stable dividend policy, and on the premise that HSBC has sufficient distributable profits, distribute dividends to shareholders at the same level as before the 2019 coronavirus epidemic, that is, (paid quarterly) not less than A $0.51 dividend per share.
Lu Yujian and 100 HSBC shareholders submitted a proposed resolution to the board of directors
As a minority shareholder representative, Lu Yujian emphasized that the point of submitting the proposal to the annual general meeting for discussion this time is not whether the spin-off is successful, but the purpose is to successfully communicate the wishes of minority shareholders to the management and major shareholders. The agenda allows minority shareholders to participate and express their opinions, rather than making decisions based solely on reports written by third-party consultants.
Alleged that the consultant's report is biased "there is a problem with the system"
As for HSBC’s citing of consulting reports in the past to respond to the spin-off proposal, Lu Yujian directly criticized that “all consultants are biased and there is no need to look at it.”
He reiterated that minority shareholders should have the right to vote on the spin-off decision, and even used the analogy of "Brexit" to believe that the British have the right to make decisions about Brexit, even if they face an economic downturn, it is their own choice.
Lu Yujian revealed that after the relevant resolution is implemented at the annual general meeting in May, he will visit HSBC’s 20 largest shareholders, including Ping An (2318) and BlackRock (BlackRock).
Lu said frankly that he had contacted some institutional investors in the past, and they all said, "Let's talk about it first." Therefore, he plans to contact these institutional investors and family offices after putting the proposal on the AGM agenda.
The "Split HSBC Concern Group" submitted an open letter to HSBC management.
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Spin-off HSBC Asia dividend yield can be seen at 20%
HSBC announced its full-year results on February 21. Not only did its business performance satisfy the market, it also announced that it would resume paying quarterly dividends in the new fiscal year and increase buybacks.
However, even if the performance is on the board, it will not hinder the protection of minority shareholders' rights and continue to strive for maximum returns.
Lu Yujian said bluntly that the two agendas submitted to the annual general meeting are closely related, namely discussing a stable dividend distribution mechanism and spinning off the Asian business.
He explained that since 78% of HSBC’s profits come from its Asian business, if it were to be spun off, the market value of HSBC Asia would roughly be about 500 billion yuan. As long as the dividend payout ratio reaches 100%, the interest return will increase by a “multiple”. The dividend rate is estimated to be as high as 20%. "How many small shareholders want a 20% stock?" For existing shareholders, when HSBC Asia can give a 20% return, the market will naturally give a higher valuation accordingly, in disguise " Market value releases value".
Ping An Insurance, the largest single shareholder of HSBC, is regarded as the main driver of the proposed spin-off. Lu Yujian has repeatedly emphasized that he was not instructed by others to promote the spin-off of HSBC Asia as a representative of minority shareholders, and reiterated that he is protecting the rights and interests of minority shareholders.
He mentioned that HSBC suspended the dividend payment after the ex-dividend three years ago. At that time, he began to recover through judicial procedures, but eventually lost the lawsuit. The judgment stated that "promises are not equal to debts", so he felt that it was necessary to continue to fight for his own rights. strive for.
