Avangard to distribute 25% of its 2013 income in dividends

Обзоры по компаниям и отраслям 16.09.2013 Shareholders of Avangard (AVGR LI), the world’s second-biggest egg producer, approved the company’s new dividend policy at their September 12 AGM, the company stated in its release. Avangard will distribute 15-40% of its annual income in dividends, according to the statement. In 2014, Avangard will pay 25% of 2013 profit as dividends. In the same release, Board Chairwoman Natalia Vasylyuk stated that following the commissioning of its new poultry farms, Avangard will increase its laying hen population by 6 mln by year end. Alexander Paraschiy: Avangard’s decision to start paying dividends was broadly expected, and thus will have limited effect on the company’s stock price. Given that Avangard is going to scale down its capital expenditures significantly this year (to cut more than twice from USD 306 mln last year) and its operating profit shouldn’t decline (at minimum), its large free cash flow will enable the payment of hefty dividends. We expect the company’s 2014 DPS at about USD 1.0, which would yield about 9% at the current market price. We also see the Avangard’s aggressive plan to raise its laying hen flock in 2H13 as an encouraging development. Its 1H13 operating update disappointed investors with its absence of growth in the number of its laying hens (it was flat YTD as of end-June 2013 at 22.8 mln), even though the company started commissioning its brand new capacities. The recent plan suggests that laying hen population growth should be 26% just in the second half of 2013, which will enable it to report double-digit growth in egg production next year.