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Acerinox: Stainless Steel With A Confirmed 7% Dividend

Published Sat, 17 Oct 2020 11:35:00 -0400 on Seeking Alpha

Seeking AlphaDividend Ideas | Basic Materials | SpainAcerinox: Stainless Steel With A Confirmed 7% DividendOct. 17, 2020 11:35 AM ET|| About: Acerinox S.A. (ANIOF), ANIOYby: The Investment DoctorThe Investment Doctor European Small-Cap IdeasWe zoom in on capital gains and dividend income in European small-capsSummaryAcerinox is navigating through the current muddy waters, and although the income statement shows a net loss in H1, the company remained FCF positive.
The AGM next week will decide on a 0.50 EUR dividend payable in December.
This represents a 7% dividend yield while the company is trading at an EV/EBITDA of just 8 for this year and around 6 for FY2021.
Introduction
I have been keeping an eye on Acerinox (OTC:ANIOF) (OTCPK: ANIOY) for the past two years, and in an April 2019 article I was very satisfied to see the dividend yield increase to 5.4% based on the share price of around 9.25 EUR back then. Since that article, a lot has happened as Acerinox pursued an interesting value-add acquisition in the specialty metals business (to have less exposure to the more cyclical nature of its core business) and I was looking forward to see how the company is getting through the COVID-19 pandemic.

Source: Yahoo Finance
Acerinox has a primary listing on the Madrid Stock Exchange where it’s trading with ACX as ticker symbol. The average daily volume of almost 700,000 shares is clearly superior to the volume on any of the secondary listings. The current market capitalization is approximately 1.9B EUR.
The H1 results were quite strong
Acerinox obviously wasn’t able to get through the COVID-19 pandemic unharmed as its revenue decreased by almost 5% to 2.33B EUR, and this resulted in an operating profit of just 33.7M EUR, down more than 60% from the 99.6M EUR in H1 2019. However, as you can see in the image below, the low operating income was caused by a 42.5M EUR impairment charge, and excluding this impairment, the operating profit would... Read more