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The dividend payout announced by the GAZ group has met market expectations on common shares and exceeded them on preferred stock. However, in our view, the company continues to pay low dividends due to the need to finance its capital investments.
On April 23, the GAZ group's BoD recommended that an AGM of GAZ shareholders approve a dividend payout of USD 2.34 (RUB 55.2) per common share and USD 3.11 (RUB 73.32) per preferred share. The shareholders register was closed on May 12, 2008.
In all, the GAZ group is to allocate around USD 47.9 mn for the dividend payout, at 16.3% of its consolidated net profit. In our view, a payout on this scale should not adversely affect the company's program of capital investments. The payout per common share has risen by 30.5%, which corresponds to revenue growth of 29.6%. The payout on preferred shares has surged by 73.3%. In our opinion, the dividend yield of 2.7%, although beating market expectations, remains low.
We estimate the fair value of one common share in GAZ at USD 263 per share, which implies an upside potential of 39% to the current stock valuations and corresponds to BUY recommendation. The fair value of the preferred stock should be USD 144.7 per share, with an upside 23.1%, which corresponds to BUY recommendation. Konstantin Romanov
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GAZ
Capitalization: $233 331 990,00
Common shares:
Price: $11,50
Delta week: 4,6%
Delta month: -42,5%
Delta year: -91,8%
Preferred shares:
Price: $14,00
Delta week: 7,7%
Delta month: -20,0%
Delta year: -87,1%
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0.569
0.073
