VEON - Downgrade to HOLD on Reduced Dividend Visibility
VEON has unveiled a new strategy framework. It seems reasonable and improves transparency in terms of future capital allocation, growth and monetization. Key, of course, will be how well VEON executes it, identifying new services and future assets (especially in its core market of Russia) and exploring monetization options in frontier markets (including Algeria and Bangladesh). Meanwhile, a new dividend policy seeks to give VEON more flexibility with capital allocation, but it also significantly reduces the visibility of future payouts. We now expect a dividend yield for the next 12 months of 3.2% (half of which is the final payment for 2019 and the other half the interim for 2020). We downgrade VEON to HOLD and our target price by 8% to $3.05 per ADS, which is attributable mostly to the deteriorated dividend outlook.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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