Despite available lists of allocated shareholders, delayed payment of dividend is common among many enterprises.
In the light of profitability with abundant cash flows, business would perhaps not be hesitant to offer dividend payout in cash at the ratios of 10pct, 20pct,30 percent or even higher. Yet, the sluggish performance together with credit tightening has been adversely hitting their businesses. Thus, even dividend payment with negligible rate will further intensify pressure on such enterprises.
Recently, 565 Construction Joint Stock Company (NSN) has had their dividend payment date delayed to 16 August instead of 6 July, at which time such settlement was previously deferred from the former date on 24 May on account of difficulties in capital collection as well as capital concentration on several North-Western projects prior to rainy season. As such, NSN’s payment has been three months behind the expected initial date.
Likewise, Ngo Han Joint Stock Company has made an adjustment of payment date due to their failure to timely manage such adequate funds.
Unlike these two entities, Song Da 7.04 Joint Stock Company (S74) admitted that the credit tightening together with fluctuations in financial market have prompted them to channel capital into manufacturing rather than dividend payout so as to meet the year targets.
At first, such lagging payments’ reasons make sense to shareholders particularly amid capital shortages, yet in-depth investigation impliedly upset many. For instance, NSN’s recent total dividend amount of 4.42 billion dong is fairly negligible in comparison with its six-month revenue of 102.5 billion dong which indicates that timely payment could have been within its reach. In fact, Q2 saw a 54 percent year-on-year upsurge in its revenue whereas the capital cost surprisingly mounted to 69 percent over the same period a year earlier. Consequently, a larger amount of revenue ironically mean disappointing profits due to doubled year-on-year costs of borrowing leaving NSN currently in debt of 1.3 billion dong.
Shareholders who have already suffered losses due to depressing stock prices are now looking forward to even modest distribution of enterprises’ earnings. Still, the method of paying out dividend yields has been upsetting many investors. In all likelihood, a great number of businesses find lagging payments obviously acceptable; rather, some even refuse to announce any reasons for such deferral. In fact, most investors have no idea of which cash flows will cover the payout other than the general information of dividend distributed from retained earnings. Hence, shareholders have no other choice but to accept prolonged payments by reason of businesses’ difficulties.