Some of the choicest companies trading on the Ukrainian Exchange – the leading equity trade platform – are going to pay out generous dividends for 2013. Raiffeisen Bank Aval, and energy generators Centrenergo, Donbasenergo, are among them.
Centrenergo and Donbasenergo, in which the state has a 78 percent and 25
percent stake, respectively, will have to spend half of their net profit on dividend
payments, according to recent government decree that regulates the size of
dividends for companies where the state holds a stake.
As a result, this may affect their financial condition quite negatively,
comments Oleksandr Parashchiy, a leading analyst for Concorde Capital
investment house.
Most of their 2013 profits were earned through charging higher tariffs that
were supposed to cover modernization costs. Now these higher tariffs will
rather lead to larger dividends and income tax payments than any upgrades, he
adds.
However, Centrenergo shareholders so far have chosen to spend only 30
percent of the company’s Hr 487 million net profit in 2013 on dividends. “We
expect them to hold another meeting where they will decide to implement the government’s
measure regarding the 50 percent norm for dividends,” says Dmytro Churin, head
of research at Eavex Capital investment boutique.
Ultimately, the company will pay Hr 243.5 million in dividends. The return
on a single share will be 11 percent, taking into account the current share
price.
Meanwhile, Donbasenergo with Hr 531.5 million of net profit for last
year will have to pay shareholders Hr 265.75 million, a 25 percent return. When
Donbasenergo was privatized in August 2013, conditions included a requirement
to spend only 30 percent of net earnings on dividends. Thus, Energoinvest
Holding – its parent company – may contest the government’s 50 percent dividend
payout requirement in court. A shareholders meeting on April 26 decided to pay out
only 30 percent of the company’s net profit – Hr 159.45 million – as dividends.
Another meeting is expected in the nearest future.
Shareholders of Raiffeisen Bank Aval decided to spend Hr 900 million on common
stock dividends, while its net profit last year was Hr 730 million, according
to local accounting standards. A single share’s return will be 16.7 percent,
based on its current share price. Since the central bank banned all banking capital
transactions before May 7, due to problematic balance sheets at many banks,
shareholders will not be able to receive their dividends before this date.
Viktor Ovcharenko, an analyst for Kinto asset management company,
wonders why Northern and Central ore enrichment plants did not pass a decision
to pay out dividends. “They have excessive money on their accounts,” he told
the Kyiv Post. Both of them are controlled by Metinvest, whose major
shareholder is Rinat Akhmetov, while Vadim Novinsky holds a minority stake in
it.
Shareholders are very excited about the dividend payouts.
Share prices will be corrected to reflect the hryvnia devaluation,
foresees Eavex Capitals’s Churin. “We expect the Ukrainian stock market to grow
quite substantially this year after receiving all the international financial
help,” he says, referring to an $17 billion bailout package expected from the
International Monetary Fund.
The probability of this scenario is 70 percent, according to Churin.
So far, local investors are a major force on the Ukrainian Exchange,
their share is around 80 percent of the market, says Oleksandr Kulyk, an asset
manager at Univer Capital in Kyiv.
Kyiv Post associate business editor Ivan Verstyuk can
be reached at [email protected].
