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Central Asia Metals' smooth pivot

The market has responded favourably to last year's move beyond Central Asia's copper roots
April 13, 2018

With last year’s $403m (£283m) acquisition of Lynx Resources, Central Asia Metals (CAML) added zinc and lead to its asset base, debt to its liabilities, and Macedonia to its geographical footprint. The long sought expansion beyond its Kazakh roots was well-supported by the market, and well-timed to a copper price rendered volatile by diverging opinion on the size and timing of a supply deficit.

IC TIP: Buy at 325p

As full-year results show, Kounrad’s unique and highly-profitable features were as reliable as ever, and kept the group’s adjusted cash profit margin at a mighty 62 per cent. And though the timing of the Lynx deal meant just 17 per cent of Sasa’s annual output was attributable to CAML, its operating performance has so far left management “delighted”.

At current prices, the 21,585 tonnes of zinc and 29,881 tonnes of lead produced last year would sell for around $140m. That helps to explain consensus forecasts for adjusted pre-tax profits of $118m and EPS of 53¢ in 2018, compared with last year’s estimates of $47m and 25¢.

With these results, chairman Nick Clarke relinquished the ‘executive’ prefix to his job title, allowing CFO Nigel Robinson to take the CEO role and the reins of a business which now employs more than 1,000 people in two continents. The board continues to debate the merits of a switch to the main market, though brokers tell Mr Clarke “there are very few fund managers we can’t get to see because we’re Aim listed”.

CENTRAL ASIA METALS (CAML)  
ORD PRICE:325pMARKET VALUE:£ 571m
TOUCH:324-325p12-MONTH HIGH:346pLOW: 203p
DIVIDEND YIELD:5.1%PE RATIO:16
NET ASSET VALUE:192¢NET DEBT:41%
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (p)
201354.155.454.99.0
201476.670.356.312.5
201567.332.720.212.5
201666.733.624.315.5
201710749.729.016.5
% change+60+48+20+6
Ex-div:26 Apr   
Payment:25 May   
£1=$1.42