Pawel Szalamacha, Deputy Minister of Treasury, said yesterday that if PKN is not successful with the acquisition of Mazeikiu, the Treasury would expect a dividend payout ratio of 35-50% from the Company.
We see the news as neutral. Originally, we did not assume dividend payout after last year's results given PKN's divdend payout hisotry, however given the low indebtedness of PKN, we see the Treasury’s request as justifiable. In case PKN misses out on the acquisition of Mazeikiu Refinery, in light of the absence of major acquisition targets, PKN could distribute its excess cash to the shareholders. However, we believe chances lately increased for PKN to win the tender of Lithuanian Refinery Mazeikiu as the Lithuanian Government indicated to neglect political considerations when selling 94.4% stake in the Company. We reiterate our Buy rating for PKN Orlen with PLN 70.5 fair value estimate.