WOOD Flash – MMK: 3Q19 results – dividend beats our estimate by 60% on FCF beat
MMK released its 3Q19 financial results this morning (31 October). EBITDA rose 6% qoq (-22% yoy), to USD 525m, 3% above the Bloomberg consensus. Net income was flat (-1%) qoq (-33% yoy), at USD 268m, 9% below the consensus, due to a USD 30m impairment. The FCF rose nearly 5x qoq, to USD 289m, due to lower-than-expected capex and a USD 51m release in working capital vs. a USD 79m working capital build-up in 2Q19. As a result, MMK declared a dividend of RUB 1.65/share, 100% of the 3Q19 FCF, which exceeded our estimate by 60%. This implies a 4.6% yield on the GDR, below the c.2.6-3.1% achieved by NLMK and Severstal in 3Q19. Overall, the results should be positive for the share price, in our view, although we expect the 4Q19E results to be significantly worse in terms of both EBITDA (due to lower prices) and FCF (as capex should rise).
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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