The State Treasury announced that it would vote for raising this year’s dividend from PLN 5.5 to PLN 10, during KGHM AGM today, beating the median expectation of PLN 7 dividend, according to the poll of analysts prepared by ‘Parkiet’ daily. The dividend of PLN 10 would mean moving the payout ratio from 48% to 87% and would result in dividend yield as high as 12%. Despite higher dividend payment KGHM would be left with over PLN 2bn cash position. KGHM would pay the highest dividend among WIG20 stocks.
We would expect a positive market reaction to the news on dividend today, despite worrying news from copper market, where copper price has contracted by 6.7% yesterday and by 22% over the past month. KGHM has declined by 38% over the past month in absolute terms and underperformed WIG index by 19% over the same period. We reiterate our Buy rating for KGHM.