Dniproenergo, Dniprooblenergo may pay 30% of income in dividends

DTEK-controlled Dniproenergo (DNEN UK) and Dniprooblenergo (DNON UK) will consider distributing 30% of the companies’ 2012 profit in dividends at their AGMs this week, according to draft proposals released on April 15. If shareholders vote in favor, Dniproenergo will pay UAH 47.2 DPS (implying a dividend yield of 22%), and Dniprooblenergo will pay UAH 8.60 DPS (yielding 5%). Another DTEK-related company, the Komsomolets Donbassa mine (SHKD UK) won’t pay dividends, according to its AGM draft proposal.

Alexander Paraschiy: We don’t know for sure why DTEK’s management is considering dividends for its related companies, but it’s most likely motivated by the state retaining its 25% stakes in the companies. The other three companies that DTEK controls, in which the state also has a 25% stake, are Donetskoblenergo (DOON UK), Zakhidenergo (ZAEN UK) and Kyivenergo (KIEN UK). If they decide to distribute 30% of their profit in dividends, the yields will be 17% for Donetskoblenergo, 1% for Zakhidenergo and 57% for Kyivenergo. We expect Kyivenergo will pay no dividends, as its record-high profit in 2012 was generated solely due to a subsidy from the state budget (refer to our news on KIEN from Feb. 21).