Heliad: forecasts continuous dividend
Stock: Heliad Equity Partners
Code: HPBK GR
Last price: €3.81
Recommendation Buy
Target price: €6.32
Fact: Heliad Equity Partners plans to introduce consistent dividend policy, with first distribution
planned for 2010 financial year. Distribution quota: 25% to 50% of annual surplus is planned, as
Heliad sees a stable earnings growth at its portfolio companies. By introducing this dividend
policy, Heliad Equity Partners is accounting
for its pleasing and stable long-term performance. The portfolio, with its strict focus on direct
investments in medium-sized companies, has been optimised in recent years by scaling down
those investments not consistent
with the company's strategy. Currently consisting of eight core shareholdings, the portfolio
provides a strong foundation for repeated earnings contributions.
Comment: The distribution of dividends was already discussed at the AGM this year.
Heliad plans to pay a ‘base’ dividend out of recurring earnings. Additional payments
would, however, be possible as a result of profits from asset sales. Here, Heliad aims to
sell 1 – 2 subsidiaries annually and acquire up to four subsidiaries during the same time,
re-investing the funds. If extraordinary profits are recorded, Heliad indicated additional
step-up dividends.
Action: Based on the €2m profit in H1, around €3.5 – 4.5m should be expected for 20101,
suggesting a dividend of around €0.10 – 15/share for this year, based on the company’s
statement. This would suggest a dividend yield of around 4-5%, rather attractive for growth
orientated companies. Heliad trades well below its NAV of around €6.30. The stock is a buy
at these levels. The shift in business focus and the successful integration of TIG has not
been reflected in the share price development. Ytd, Heliad shares are flat, while the SDAX
shows a 20% performance |
