Zakhidenergo pays dividends, to cut net income 43% yoy in 2012

At its AGM last week, Zakhidenergo (ZAEN UK) shareholders decided to pay UAH 24.1 mln (30% of net income) in dividends (EPS is UAH 1.88, dividend yield 0.8%). Shareholders also voted in favor of a “significant deals” agenda item and decided to rename the company DTEK Zakhidenergo. Management revealed plans for 2012: net income of UAH 46 mln (down 43% yoy), and a CapEx program of UAH 1.04 bln (up 4.3x yoy), with the latter increase financed mainly by UAH 0.60 bln in debt.

Alexander Paraschiy: The company’s dividend payout of 30% was expected, as this was one of DTEK’s pre-acquisition promises. Now that the company is fully controlled by DTEK and is integrated in its coal-power supply chain, its bottom line is fully controlled by the energy holding, so we rely on management’s target for net income. More, we treat the bottom line guidance as a worst-case scenario, as management tends to underestimate profits. Following the AGM containing the “significant deals” vote, the company faces only a small risk of decreasing its free float (currently 4.09%). Shareholders that obtained a temporary embedded put option for Zakhidenergo shares (i.e. those that voted against “significant deals” at the AGM) accounted for just 0.2% of total shares outstanding.