[Click eStock] "Coway, Expected Dividend Yield 2% This Year... Will Accelerate Financial Structure Improvement"

[Asia Economy Reporter Minji Lee] Mirae Asset Daewoo forecasted on the 31st that although Coway's dividend payout ratio and frequency were confirmed to be lower than market expectations, the company's financial structure improvement speed could accelerate.

Coway announced that its dividend policy plan for the next three years is to pay a year-end dividend once a year within a dividend payout ratio range of 20% based on consolidated net income. Considering that the company's average dividend payout ratio from 2012 to 2018 was 71%, this represents a reduction of 51 percentage points. Additionally, the quarterly dividend paid four times a year since 2017 will be reduced to once a year starting this year.

Jaegwang Lee, a researcher at Mirae Asset Daewoo, said, "The expected dividend per share (DPS) for this year is 1,100 KRW, and the expected dividend yield based on the closing price is about 2%," adding, "Although this falls short of the expected dividend payout ratio (30%), the uncertainty related to dividends is considered resolved."

Accordingly, the speed of the company's financial structure improvement is expected to accelerate. As of the end of 2019, the company's consolidated debt ratio was 165%, which is 46.3 percentage points higher than 118.7% at the end of 2018. Of the 871 billion KRW in borrowings, 861 billion KRW are short-term borrowings, most of which are estimated to have been borrowed for dividend purposes.

Researcher Jaegwang Lee explained, "The reduction in dividends will lead to a sharp decrease in short-term borrowings," and added, "Furthermore, the dividend reduction is likely already reflected significantly in the stock price."

This content was produced with the assistance of AI translation services.