Case Study On The Dividend Policy Of Seasen Corp.

As a case study,the dividend policy of Seasen Corp.is researched in my paper.Seasen Corp.is the private real estate company that first landed on the A-share market from B-share market in China on Dec.4,2015.Driven by the dual-wheel-driven business model of residential and commercial development and high turnover strategy,Seasen Corp.has developed rapidly in the past few years.On Dec.31,2017,Seasen Corp.got a nearly 100% net profit growth and entered into the top ten of the real estate industry.In the capital market,Seasen Corp.also has its own features.On the one hand,as a family firm,Seasen Corp.is managed by the private controlling shareholder,which is different from general listed companies or public companies.The first kind of agency conflict is weak,but the second kind of agency conflict is obvious in family firms.On the other hand,as a new member in A-share market,Seasen Corp.is characteristed by sub-IPO which is different from other real estate listed companies.The controlling shareholder's share are not allowed to trade in the first three years after IPO.Using the dividend theories,my paper analysis the dividend policy of Seasen Corp.and applies the theories to individual cases.The study has a theoretical and practical significance,and finds that:Firstly,the solvency of Seasen Corp.is weak and financial risk is high.From the aspect of short-term solvency,low liquidity ratio,high liquidity ratio and cash ratio indicate that Seasen Corp.may use more long-term liabilities to meet short-term operating needs,and the financing cost may increase accordingly.From the aspect of long-term solvency,the asset-liability ratio,property right ratio and property right multiplier are high,and the interest guarantee multiple is low.Which means that leverage of Seasen Corp.is so high that the ability to pay principal and interest is weak.Secondly,the operational capability of Seasen Corp.is strong and the assets turnover rate of Seasen Corp.is high due to its fast turnover strategy which emphasize quick financing and quick investment.Therefore,in terms of financial indicators,the turnover rate of total assets,current assets and fixed assets are all high.Furthermore,the efficiency of total assets turnover rate is mainly affected by current assets turnover efficiency,not fixed assets turnover efficiency.Thirdly,profitability of Seasen Corp.is strong and the growth of performance is drived by high leverage.Seasen Corp.'s net operating interest rate and total asset yield are almost lower than the industry's 75% quantile level,but the return on net assets is much higher than the 75% quantile level.Which means Seasen Corp.is not the industry leader in net operating interest rate and total asset return,but the leader in net asset return rate.It shows that Seasen Corp.'s profitability is mainly driven by high leverage.Fourthly,the payout motivations of Seasen Corp.are tunneling and signaling.On the one hand,three factors include the separation of cash flow power and controlling power,the non-tradable shares of main shareholders,and the abnormal high dividend may lead to the tunneling.On the other hand,the signaling is mainly reflected in the fact that the change of dividend per share is not consistent with the change of earnings per share,but is related to the change of future earnings.Moreover,the market reaction is positive on the dividend announcement day,but it is negative on dividend payment day.Which shows that the motivation of tunneling is more significant than signaling.Finally,this paper puts forward scientific suggestions on dividend policy of Seasen Corp.from three aspects: dividend strategy,dividend payment level and dividend form.The company should construct a dividend distribution strategy,maintain a moderate cash dividend,and try to diversify the dividend distribution.