The board of Central Asia Metals (CAML) wasn’t unanimous in its decision to cut the final dividend for the first time in five years, according to chief executive Nigel Robinson. Judging by the negative initial market reaction to the high-yielding miner’s full-year results, the move wasn’t roundly welcomed by shareholders, either.
Investor concern with a 14 per cent rise in group cash costs was probably more warranted, although Central Asia said this was in part due to zinc and lead prices. But there can’t be too many complaints with a payout equivalent to 44 per cent of adjusted free cash flow, towards the top end of a 30-50 per cent target range and reflective of tighter capital allocation.
This includes efforts to clear all debts incurred in 2017’s purchase of the Sasa mine within the next four years. In 2018, gross repayments hit $38.5m (£29.4m) and a similar reduction is planned for this year, which in theory lays the groundwork for another acquisition, if an opportunity rears its head.
On that front, engagement has stepped up. As industrial prices were dropping last year, management screened 22 companies, signed seven non-disclosure agreements and made three site visits, although as yet no discussions have moved to the advanced stage, Mr Robinson tells us.
Peel Hunt forecasts adjusted earnings of 36.5¢ a share in 2019, and 42.6¢ in 2020.
| CENTRAL ASIA METALS (CAML) | ||||
| ORD PRICE: | 256p | MARKET VALUE: | £451m | |
| TOUCH: | 254-256p | 12-MONTH HIGH: | 330p | LOW: 200p |
| DIVIDEND YIELD: | 5.7% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 185¢ | NET DEBT: | 34% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
| 2014 | 76.6 | 70.3 | 56.3 | 12.5 |
| 2015 | 67.3 | 32.7 | 20.2 | 12.5 |
| 2016 | 66.7 | 33.6 | 24.3 | 15.5 |
| 2017 | 102 | 49.8 | 29.1 | 16.5 |
| 2018 | 192 | 72.7 | 31.3 | 14.5 |
| % change | +88 | +46 | +8 | -12 |
| Ex-div: | 25 Apr | |||
| Payment: | 20 May | |||
| £1=$1.31 | ||||
