Zakhidenergo AGM: USD 1.5 mln Dividend Payout, More Power for Supervisory Board

Shareholders of generation company Zakhidenergo (ZAEN: HOLD) yesterday approved the company’s 2007 net income of USD 9.89 mln (as preliminarily reported) and decided to pay out 15% of net income (USD 1.48 mln) as dividends: DPS is USD 0.116, dividend yield 0.12%. Dividends will be paid from May 1 to December 31, 2008. Shareholders also approved the management’s preliminary financial plan for 2008, which foresees a 9.9% yoy increase in power supply and 8.4% yoy decrease in net income. Other important decisions included amending Zakhidenergo’s charter to transfer power to appoint the management board and CEO from the AGM to the supervisory board; the AGM also elected new supervisory board representatives for the NC ECU that are loyal to the new NC ECU President. Alexander Paraschiy:  Zakhidenergo’s production plan for 2008 looks realistic, but we believe the management’s net income forecast for 2008 is based on the most pessimistic scenario. Typically, GenCos have beaten their profit forecasts. We are currently revising our forecasts for the company, though we are now more optimistic for the stock.  The AGM’s decisions to increase the powers of the supervisory board and to make a 15% dividend payout are in line with a policy the NC ECU has been implementing since 2007. Still, we believe Donbasenergo (DOEN: BUY) (whose AGM is scheduled over the next two weeks) will continue to their practice of not paying out dividends.