Research On Dividend Distribution Ability Of ZHENGHUA HEAVY INDUSTRIES CO.,LTD

In the mature Western capital markets, a stable dividend is often seen as a sign ofgood and healthy development of an enterprise.Companies often give the achievednet profits back to shareholders by a certain percentage each year, increasing thevalue of investors`wealth with the businesses growing. By such a way thatinvestors have confidence in the enterprise, and are willing to buy stocks of thecompany, thus it could push up the company’s share price. The increase of thebusiness`s market value allows companies to establish a good image in the capitalmarkets.When the enterprise has financing needs in its development process,theresponse from investors allows the company to raise funds by lower cost of capital.Due to the imperfection of China`s captial market and the regulatory system, manycompanies often choose less dividends or no dividends, which resulted in investors`wealth difficult to get value-added with the development of listed company and onlyto earn a fortune from capital gains of stock price volatility, which leads seriousspeculation in A-share market,and it has disadvantage for the country to improve thecapital market. Therefore, the research on how to enable listed companies have theability to back investors and improve its dividend distribution capacity has realmeaning. The paper researchs on the state-owned enterprise Zhenhua HeavyIndustries Co,Ltd,analyzing the current situation of its dividend distribution andfinding out the existing problems of its dividend distribution capacity,and putingforward corresponding countermeasures in order to boost the company`s image in thecapital markets.Thus similar enterprises learn from the typical case of thestate-owned enterprises and it helps promote the healthy development of the nationalcapital market.This paper uses the case study method, descriptive analysis and documents toanalyze and research on the problems of dividend distribution capacity of Zhenhua Heavy Industries. Using the case study to analyze the problems about the actualstatus of its dividend distribution,the continued decline of its stock price and theweakness of its financing ability and so on,and describing the business backgroundand the enterprise background,business conditions and development strategies to do adetailed analysis of the related factors affecting the dividend distribution capacity ofZhenhua Heavy Industries.By reading relevant documents and using managementtheory learned from MBA class to analyse the problems at the theoretical level andfind out appropriate solutions.Through finding out the issues of Zhenhua Heavy Industries`profitability,Ownership Structure and cash flow generation capabilities which affects its dividenddistribution capacity,the paper put forwards four countermeasures to solve theseissues,including introducing strategic partners、 increasing investment scalescientificly and reasonably plus the adjustment of product structure and managementmode transformation and Strengthening cost management and increasing the profitspace in order to help the company improve its future dividend distribution capacityand perfect the whole capital market at the same time.