Following the results of KEGOC extraordinary general meeting of shareholders held on October 26, the shareholders of the Company amended the Regulations on Dividend Policy, established threshold and target values of financial stability ratios for 2017-2019, and decided on the amount and timing of dividend payment based on 1H2017 results .
The dividend payment period in accordance with the new provision will not exceed 90 days after the decision is made (previously 60 days).
The Company has set threshold and target values of financial stability ratios (consolidated) for 2017-2019, implying a restriction on the debt / EBITDA indicator of no more than 3.5x at a target value of 3.0x. The EBITDA / Interest expense ratio is aimed at keeping the level at least 7.0х (threshold - 3.0х) and the ratio of Debt to Equity at the level no more than 0.8х (threshold - 1.0х).
The General Meeting of Shareholders approved the decision to send 70% of net income (T12.5bn) to pay dividends, which is T48.4 per share. The date of registry fixation is set for November 6. Recall that by the end of 2016 KEGOC sent to pay dividends 50% of net income (Т13.8bn), which was T28.13 / share.
Establishing threshold and target values of financial stability indicators, in our opinion, enables investors to compare the Company's forecasts with current indicators and assess their adequacy. According to our calculations, the ratio of Debt to EBITDA based on 1H2017 results exceeds the Company's thresholds. At the same time, according to the Company's statements, the coefficients fit into the threshold values, which indicates differences in the calculation methodology.
The decision to pay dividends was expected by us. We do not see any pressure on cash flows and consider the news neutral for the value of the shares.
We maintain our Hold recommendation on KEGOC shares with 12M T1 257 / share, taking into account the Company's intention to pay dividends and, at the same time, maintain the risk of debt load in foreign currency.