4Q16 financial results – increasing dividend payout ratio
MMK has reported its 4Q16 financial results. EBITDA was USDÂ 456m, in line with the consensus, but net income was 6% behind the consensus at USDÂ 208m, while FCF was weaker than expected on higher capex and a USDÂ 50m working capital outflow. The main positive news, however, was that management plans to recommend to the Board of Directors that it: a) pays out 60% of the 2H16 FCF as a dividend (USDÂ 239m, USDÂ 0.28/GDR vs. our USDÂ 145m forecast, based on a 30% payout), implying a 3% semi-annual yield based on the current share price and 8.4% for the full year based on the average GDR price in 2016; and 2) increases the payout ratio for all future dividends from a minimum of 30% of FCF to 50%. This is the main positive catalyst that we have been hoping for from MMK, but we expected it to happen later in the year, after management announced the strict leverage targets that it wanted to reach, during the 3Q16 conference call. Overall, the market should take these results positively, in our view, although we suspect that the exceptional recent share price performance was due to the anticipation of this news. Â
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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