Financial management 2 assignment october 2020 factors affecting enterprises dividend policy

Dividend policies of Binh Minh Plastic joint stock company...14 2.. Dividend policies of COMECO joint stock company...16 V.. Binh Minh Plastic joint stock company...16 2.. Binh Minh Plas

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Table of Contents

I INTRODUCTION ABOUT THE SELECTED COMPANIES 3

1 Binh Minh Plastic joint stock company 3

2 COMECO joint stock company 4

II COMPUTATION OF COMPANIES’ DIVIDEND PAYOUT 6

III FACTORS AFFECTING ENTERPRISE'S DIVIDEND POLICY 12

1 Definition of dividend 12

2 Factors affecting dividend payment policy 13

IV ANALYSIS OF THE COMPANIES’ DIVIDEND PAYOUT 14

1 Dividend policies of Binh Minh Plastic joint stock company 14

2 Dividend policies of COMECO joint stock company 16

V EVALUATION OF THE COMPANIES’ DIVIDEND PAYOUT 16

VI SUMMARY 19

References 20

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I INTRODUCTION ABOUT THE SELECTED COMPANIES

1 Binh Minh Plastic joint stock company

Binh Minh Plastic joint-stock company is a company specializing in manufacturing anddistributing plastic pipes such as PVC-U pipes and fittings, pipes used in plumbing systems,pipes, and fittings of HDPE, PP pipes -R, agricultural sprays, etc The head office is located at

240 Hau Giang, Ward 9, District 6, HCMC The contact phone is 02839690973 Website address

binhminh@binhminhplastic.com.vn

Image 1 Logo of Binh Minh Plastic joint

stock company(http://www.binhminhplastic.com.vn, 2020)

Binh Minh Plastic Factory was established on November 16, 1977, under the model of private partnership on the basis of merging Vietnam Chemical Plastic Pipe Company (KEPIVI)and Kieu Tinh Plastic Company The factory specializes in manufacturing all kinds of civilplastic products and some plastic pipe products with fittings In 1990, Officially registered forexclusive protection of trademark, trademark, and logo of Binh Minh Plastic in Vietnam Afterthe equitization process, the company officially operated under the name of Binh Minh PlasticJoint Stock Company on January 2, 2004 This is an extremely important milestone marking afundamental change in the Company's operating mechanism In 2006, the Company's shareswere officially traded on the HOSE with the stock code BMP In 2013, the Certificate ofconformity for products according to the regulations of the Ministry of Construction, increasedcharter capital to VND 454,784,800,000 In 2017, completing the conversion of the new eco-friendly additive system and launching a new product line of PP-R spare parts Currently, themarket capitalization of Binh Minh Plastic Company is over 818 billion VND The productdistribution system has about 1890 stores in Vietnam

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public-Vision: maintain its position as the leading enterprise in the plastic building materials industry inVietnam proactively improve capacity and spirit to be ready to compete in the region andinternationally.

Mission: To supply products and services to meet the growing needs of the market ensure theharmonization of interests of customers, employees, shareholders, and society

Core value: high consensus - respect for the past - strong present - confidence in the future.90stores which are widely distributed throughout the country of Vietnam

2 COMECO joint stock company

PETRO Vietnam joint-stock company (COMECO) operates mainly in the petroleum and oilbusiness, in addition to fuel supply services, car wash services, petrol pump cylinder business,construction of civil and industrial projects, office for lease, premises, warehouse, etc The headoffice is located at COMECO Building Floor, 549 Dien Bien Phu, Ward 3, District 3, Ho ChiMinh City Phone (84-28) 3832 1111, Fax: (84-28) 3832 5555, Email:comecopetro@hcm.vnn.vn, Hotline: (84-28) 38 300 222

Image 2 Logo of COMECO joint stock company

(comeco.vn,2020)

On December 13, 1975, COMECO was born, formerly known as the Petroleum ManagementDepartment under the Department of Transport of the City At that time, COMECO was incharge of managing petrol stations and supplying fuel for more than 5,000 public passenger andfreight vehicles in Ho Chi Minh City In 2000, COMECO was chosen by the City People'sCommittee to develop the enterprise equitization project COMECO has built a solid foundationfor development, becoming a strong brand in the petroleum business, the average growth rateafter 15 years of equitization of the enterprise is over 24%/year The charter capital of theCompany has increased from VND 16.2 billion in 2000 and now has increased to VND 141,206

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billion The Company's shares have been listed on the Ho Chi Minh City Stock Exchange sincethe beginning of August 2006 under the code COM At present, COMECO has 38 petroleumbranches in Ho Chi Minh City and neighboring provinces such as Long An, Ben Tre, BinhDuong, Dong Nai, Lam Dong.

Vision: Developing COMECO brand name is of service quality, leading to service quality inpetrochemical business in Vietnam Improve service quality, satisfy customers' needs At thesame time, to upgrade the infrastructure and invest in developing the petroleum retail network.Diversifying business lines and developing added value for customers

Mission: Training and coaching employees to create a difference to increase competition inbusiness; developing COMECO Culture and Brand Preserve and develop capital Interested inthe interests of customers, suppliers, shareholders, employees, and the community, society

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II COMPUTATION OF COMPANIES’ DIVIDEND PAYOUT

1 Binh Minh Plastic joint stock company

Earnings per share= Net income

Number of ordinary share=887,000,000,000

45,478,480 =13,787 VND

Stock price= Equity

Number of ordinary share=2,297,000,000,000

45,478,480 =51,000VND Profit available

Dividend per share=¿ordinary share ¿

45,478,480 =11,610 VND Stockholder value pershare =Stock price +Dividend pershare=51,000 11,610+ =62,610 VND

2017

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81,860,938 =5,680 VND

Number of ordinary share=2,449,000,000,000

2018

81,960,938 =5,228 VND

Number of ordinary share=2,454,000,000,00081,960,938 =29,998 VND

Profit available Dividend per share=¿ordinary share ¿

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In general, we can see a clear difference in dividend ratios between 2016-2017 and 2017-2018 ofBinh Minh Plastic JSC Looking at the chart, it can be seen that the period 2016-2017 has astrong decline between the indices, when 2016 is of very high value but almost halves in 2017.The period 2017-2018 is not much the volatility, it can be said that these indices are notsignificantly different.

First, the change of earning per share, in 2016 earning per share is 13,787VND, but in 2017 thisvalue is only 5,680VND, down 8,107VND, approximately 58.8% over the previous year.Second, dividend per share also showed signs of a sharp decline from 11,610 VND in 2016 to5,106VND in 2017, a difference of 6,504VND or more than 56% Next, in 2016, the stock price

is 51,000VND, but only 30,000VND, down 21,000VND, that is more than 41% compared to theprevious year Finally, the stockholder value per share also fell similarly due to the decline instock price and dividend per share, namely VND 62,610 in 2016 and VND 35,106 in 2017, adecline of VND27,504 by 44%

The reason for the strong volatility of stock indices during 2016-2017 is mainly due to thechange in the number of ordinary shares In 2017, Binh Minh Plastic Joint Stock Companyannounced a resolution on issuing bonus shares to increase charter capital from equity BinhMinh Plastic Company will issue approximately 36.4 million additional shares to existing

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shareholders at the ratio of 10:8 After the issuance, the company's charter capital will increasefrom VND 455 billion to about VND 819 billion This increase in charter helps enterprises havemore potentials for business capital, bringing more opportunities in business activities At theend of 2016, the State Capital Investment Corporation SCIC had a plan to divest, causing BMP'sstock to increase continuously, then the stock price gradually decreased when SCIC did notdivest at the end of 2017 2018 is also the year that recorded a significant change for Binh MinhPlastics when the State Capital Investment Corporation (SCIC) sold the state capital to TheNawaplastic Industries Group (Saraburi) of Thailand In 2018, Saraburi continued to buy moreshares in Binh Minh Plastic to increase his holding to 54.39% of the company's capital, and atthe same time introduced staff to key positions of the company in which Mr SakchaiPatiparnpreechavud is Binh Minh Plastic President This event also affects stock volatility butnot by much BMP's business results in 2017 with net revenue of VND 3,825 billion, an increase

of 10% but profit before tax and net profit decreased by 25%, to VND 627 billion and VND 465billion due to cost of goods sold and expenses sales soar

2 COMECO joint stock company

2016 2017 2018

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14,120,628 =7,790 VND

14,120,628 =30,098 VND Profit available

2017

14,120,628 =6,728 VND

Number of ordinary share=467,000,000,00014,120,628 =33,072 VND

Profit available Dividend per share=¿ordinary share ¿

2018

14,120,628 =6,374 VND

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20160 2017 2018 5,000

In general, stock indices of COMECO Joint Stock Company do not have a strong transformation

in 2016, 2017, and 2018 Stock price and stockholder value per share show signs of increasingover the years, in contrast, earnings per share decreased slightly and dividend per sharedecreased and then increased again

More specifically, dividend per share fluctuated slightly when 2016 reached 5,940 VND but in

2017 decreased to 4,037 VND by 32% compared to the previous year, to 2018 continued todecrease to 2,974VND, about 50% lower than 2,966VND compared to 2016 and about 26%lower than 1063VND, about 26% compared to 2017 The reason for this uneven fluctuation isthat the dividend paid each year is different base on company’s operating activities, 2018 is thelowest because the business keeps the account retain earnings for other investment activities.Earning per share value decreased steadily over the years, in 2016 was 7,790 VND, in 2017decreased to 7,728 VND, about 0.8% lower than 62 VND compared to the previous year, thisdecrease was also negligible However, it is reduced more in 2018, earning per share is6,374VND, about 17% lower than 1,354VND compared to 2017, 1,416VND lower,approximately 18% compared to 2016 This decline is directly affected by the Net income

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company COMECO is increasing in the years 2016, 2017, 2018 In these years, the company'sbusiness activities are growing but Increasing market fees leads to a decrease in net income.Although other values fluctuate, the stock price has steadily increased over the years.Specifically, in 2016 the stock price was 30,098VND, in 2017 the stock price was 33,072VND,

up 2,974VND, nearly 9% over the previous year Continuing to 2018 the stock price is35,622VND, about 16% higher than that of 2016, 2,250VND about 7% higher than in 2017 Thereason why the stock price increased steadily from 2016 to 2018 is due to COMECO's equityincreased during this period In addition, in 2018, Comeco sets a target of 3,800 billion VNd inrevenue and 45 billion VND in profit after tax As a result, in the first 9 months of 2018,COMECO reached 3,169 billion VND in revenue, up 12% over the same period The profit aftertax reached 65 billion VND, exceeding 44% of the profit target assigned for the whole year.Before the news of high dividend payment, COMECO's share price rose sharply at the end of

2018, at a time of trading at 59,500 VND/share

Similar to the stock price, stockholder value per share also shows signs of increase, especially inthe period of 2017-2018 In 2016, this value was 36,038VND In 2017, it was 37,109VND, about2.9% higher than in 2016 In 2018, the stockholder value per share continued to increase to38,596VND, the difference was 1,487VND about 4% compared to 2017, about 7% higher than2,558VND Compared to 2016 Since the stockholder value per share is the value dependent ondividend per share and stock price, the stakeholder value per share also increases when these twovalues increase, but the stockholder value per share increases here mainly because the stock priceincreases steadily for years

III FACTORS AFFECTING ENTERPRISE'S DIVIDEND POLICY

1 Definition of dividend

The dividend is the company's after-tax profit paid to current shareholders

Dividends can be paid to shareholders in various forms, such as in cash, in shares, or by property.The selection of different forms of dividends has certain effects on the book value of shares,company value, and investment capital

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For a joint-stock company, the Board of Directors will decide the rate and method of dividendpayment based on business results and the dividend policy that the General Meeting ofShareholders has approved.

2 Factors affecting dividend payment policy

Legal provisions: Dividend distribution must comply with certain legal regulations

Needs to repay loans: If the company has used a lot of long-term debt to invest, it is necessary toretain a lot of profits to prepare for debt repayment

Investment opportunities: If a company has investment opportunities that promise high growthpotential, the company tends to keep most of its net profits reinvested

The company's capital return: If the company has a higher capital return than other companies,shareholders tend to want to leave the majority of net profits for reinvestment and vice versa.The stability of the company's profit: If the company has a relatively stable profit margin or issure to increase in the future, the company can spend most of its net profit to pay dividend andvice versa

Cash Flow: Paying dividends means an outflow of cash Firms only claim high dividends whenthey have a cash balance In the face of a lack of cash, the company claims no or very lowdividends

The ability to penetrate the capital market: Large companies, with a long operation time,relatively stable profits, high reputation often have the ability to easily mobilize capital in thefinancial market So these companies can spend a high percentage of their profit after tax to paydividends and vice versa

Growth opportunity: If a company has some investment plan then it should reinvest thecompany's income To invest in investment projects a company has two options, one to raisemore capital or invest in its retained earnings Withholded income is a cheaper source becausethey have nothing to do with the cost of converting assets and any legal proceedings

Trends of the economy: During the economic recession, there are few investment opportunities,the market interest rates drop If the company has a need for capital, can easily borrow large

Tiêu đề	Factors Affecting Enterprises Dividend Policy
Tác giả	Phan Thi Nhu My
Người hướng dẫn	Nguyen Thi Minh Thuy PTS.
Trường học	Hutech Institute of International Education
Chuyên ngành	Financial Management
Thể loại	Assignment
Năm xuất bản	October 2020
Thành phố	Ho Chi Minh City

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