Energoprojekt (Bloomberg: ENHL SG) shareholders approved a 1:25 dividend stock issue at the shareholder meeting held on 15 July 2009. The company decided to distribute RSD 144.1m as a stock dividend through the issue of 360,347 shares (4% of total outstanding shares) paid from retained earnings of RSD 841.8m from 2008. The management also presented medium-term guidance for the period 2009-2013 at the shareholder meeting. According to the presented financials, Energoprojekt expects net earnings to drop to € 6.3m (-26.8% y/y) in 2009 on the back of the current economic turmoil. The company forecasts total sales at € 209.1m (-5.0% y/y) in 2009, also reflecting the deteriorating market conditions on all of the firm’s markets. The management also guides for an 82bp y/y improvement in the firm’s EBITDA margin in 2009 due to expected efficiency gains after the ongoing organizational changes. Energoprojekt expects revenues to grow 4% annually to reach an average of € 240m a year over the next five years. On average, the management expects 87% of revenues to relate to the execution of projects, whereas 13% of revenues should relate to consultancy and design. In terms of market segments, 15% of revenues are expected to come from projects in energy sector developments, 33% from infrastructural development and 52% in residential and commercial construction. According to the management, most of the firm’s revenues will come from Europe (45%), while CIS countries are expected to generate 25% of revenues, Africa 18%, the Middle East 7% and South America 5%.
Most of the presented figures came in line with the broad market expectation. We do not expect a significant impact on the stock’s market price. The decision to issue a stock dividend is in line with last year’s dividend policy and market participants probably expected a similar decision this year. In addition, since the stock is already trading ex dividend (ex dividend date 19 May 2009) we believe the market has already adjusted the stock’s price. The presented management guidance is broadly in line with our forecast.