IR Survey: Cash generation and dividends
Milan, 2nd February 2021 – We are always keen on helping investors to better understand the Equita investment case.
For this reason, the Investor Relations team is happy to provide to the financial community some insights that could be helpful to assess the right value of the Equita stock (EQUI:MI).
Today we focus on “Cash generation and dividends”, the option you voted in December with 47% of preferences in our LinkedIn survey (https://www.linkedin.com/company/equita).
Enjoy your reading!
The Investor Relations team
IR Equita - A highly profitable and capital light business model
The business model of Equita is unique because it combines independence and access to capital markets. Another key feature to bear in mind is the fact that Equita primarily invests in highly-profitable and capital-light initiatives.
The Investment Banking and Alternative Asset Management divisions are clear examples: their strong operating leverage contributes to improve Group’s profitability and their low capital absorption – together with the other business areas’ profitability – generates a strong cash flow. There are no significant CAPEX involved (opposite to other “capital intensive” industries) and this enables the Group to potentially distribute significant portion of annual net profits, remunerating shareholders and professionals, and preserving financial solidity.
Despite the distribution, the Group has always confirmed its strong Total Capital Ratio and over the last three years the ratio has always been higher than 26%, well above minimum capital requirements.
A growth story with sound dividends
Equita has always distributed its profits to shareholders. This decision is driven by the capital light business model, the Group's financial soundness and the direct involvement of managers and employees in the share capital of the Company.
Following the admission to AIM Italia in 2017 (and the passage to the STAR segment of Borsa Italiana in 2018) the management has decided to retain each year a minor portion of net profits in order to pursue a more conservative approach and promote stability to dividends.
In the last three years Equita has distributed to its shareholders €28.6 million, offering an average dividend yield of 7% and a payout ratio always above 90% since the IPO. The conservative approach of the management led the Group to retain €3.9 million net profits, that represent a potential distribution of €0.08 per share and that will ensure more stability to dividends if needed.
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