MMI cans dividend to buy back shares
MMI’s embedded value inches up 2% to R43.4bn in the interim period
Newly appointed MMI CEO Hillie Meyer’s first order of business will be a R2bn share buyback, in lieu of a dividend, as the group slashes its dividend payout ratio by 20 percentage points and writes off R1.5bn on abandoned growth initiatives. MMI’s share price closed 2.93% weaker on Wednesday at R21.50, a 20% discount to the group’s embedded value per share of R27. MMI’s embedded value, a measure of the present value of future profit, inched up 2% to R43.4bn over the six months to December 2017. Income funds, which had held the share specifically for its dividend yield, were among those offloading the stock. MMI has also overhauled its dividend policy, belatedly aligning its capital structure with rule changes under Solvency Assessment and Management. It will pay out 40% rather than 60% of earnings in future, targeting dividend cover of 2.5x earnings, which is in line with some of its peers. MMI’s share buy-back, which would take place on the open market so shareholders would not be ...
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