Shareholders of KGHM will hold an AGM today to decide on the dividend payout from 2005 earnings. The management has proposed a 48% payout ratio resulting in PLN 5.5 per share dividend, however, there are rumours, that the State Treasury, the largest shareholder would press for higher dividend.
Apart from that, personnel changes to company’s board are rumoured, some for good, such as ‘Solidarity’ proposal to abolish the seat of employee representative in BoD, currently held by former CEO Mr. Bladek, and some for bad, such as dismissal of current CEO Mr. Skora, demanded by left wing unions or nomination of populist party ‘Samoobrona’ representative to the Board. Recently, leader of ‘Samoobrona’ Mr. Lepper demanded management seats for his party members in all major state co-owned companies, including PKN Orlen and Lotos. Overall we expect that the market would focus on the dividend issue, where some positive development is likely. We reiterate our Buy rating for the stock with PLN 146.9 fair value estimate.