(Ecofin Agency) - Uniwax said it will pay out up to 100% of its net profit in dividends, by 2021. The BRVM-listed firm explained that it reduced its dividend payout ratio to 46.47% in 2015 from 87.5% in 1999 because it wanted to gather enough equity to invest and improve its financial results.

In its forecasts, the company’s net income rose from FCFA4.35 billion in 2015, to 10.18 billion in 2021. However, to achieve this, the firm decided to augment its capital through a public offering of 400,000 new shares, to individual and institutional investors, at FCFA25000 per share. Proceeds will be used to improve infrastructures and boost volume of products sold.

Uniwax believes that its market which includes Cote d’Ivoire (22% in 2015) and 12 other Central and West African nations will record a significant demand as earnings of these countries’ inhabitants increase and middle class expands. If the firm achieves its forecasts, having overall 4.15 million shares, dividend per share would be around FCFA2403 thus 4.2 times this value in 2015.

After losing in value on Tuesday and Wednesday, Uniwax’s shares rose by 1.5% on Sept 15, 2016. Volumes traded (15 shares) however remain too low to estimate investors’ reaction.

78% of the firm is held by FRAGECI, an Ivorian company fully owned by Vlisco BV, which was also acquired in 2010 by British private equity firm Actis.

Besides having a solid major shareholder, the firm also counts on the Ivorian market where cashflow has improved, with value and volumes of shares traded increasing after security split. However, some of the firm’s indicators still have to improve. Among these is the Price-to-Earnings ratio or P/E (indicates number years of net profit to reaching current stock price) which was 23.2 on Aug 25, 2016 against 3.9 at the end of 2012.

At FCFA25000, the share’s price in public offering is not much different from its stock value (slightly more than FCFA26000). Technically, the P/E’s value could be due to a growing interest from old investors, but it means new investors will have to wait a longer time to offset their investments. Over the same period, dividend yield moved from 11.9% in 2012 to 2% only on Aug 25, 2016.

Subscription period for Uniwax’s new capital increase (after 2007’s) procedure is opened from September 14 to October 5, 2016.

Idriss Linge