Eastern Company’s Board of Directors (BoD) has issued a decision to distribute EGP3bn in cash dividends (EGP30/share), given the company’s cash surplus (EGP5.3bn in cash as of 2Q17/18), as requested by its main shareholder, the Chemical Industries Holding Company (CIHC) from retained earnings for FY2016/17 and 1H17/18. The dividend implies a yield of 5.2% and comes in higher than our FY2017/18 forecast of EGP18.0/share. 

The BoD has also agreed to distribute one bonus stock for each two held (1:2). The bonus issue will take place following the stock 1:3 stock split (will increase number of shares to 300mn from 100mn), after which the company’s total number of shares is expected to increase to 450mn.

The move comes as a positive surprise and continues to illustrate the positive strides the company is making in improving profitability, liquidity and returning profit to shareholders. We remain Buyers of the stock.  


Nada S. Amin
 
Hatem Alaa, CFA