Central Asia Metals Share Discussion Threads

[mount teide] 20/9/2018 22:40

Hi Kenmitch - i thought the H1 results were very good. Although a little behind where the QD model suggested(EBITDA of $64.6m v $69.2m), an impressive performance nonetheless and it was good to have confirmed that SASA held no surprises.

Have been running the numbers and getting clarification from the company with respect to some of the costs, which although a little higher here and there than i expected; taken together they are still very low by industry standards and are expected to stay that way over the years ahead.

There was a circa 700 tonne difference between production and sales of copper in H1/2018 as a result of holding considerably more production in stock than in the recent past. I estimate this would have increased PBT and EPS by around circa 7-8% to $42m and 18 cents if sold during H1.

I do not expect the company to be announcing further acquisitions anytime soon - in fact i would amazed if they were to announce anything in this connection before 2021/2022. For two reasons - firstly it took them 3-4 years of searching in a market full of depressed asset prices to find SASA. A process which involved evaluating over 150 companies/producing assets. Secondly, few if any copper producers seem interested in selling producing assets currently, unless offered a ridiculous premium, such is their confidence in the sector fundamentals over the next 5 years to drive up pricing/asset values.

Nigel Robinson is new to the role of CEO and although probably keen to make his own mark on the company, came across in a conversation earlier this year as much like Nick Clarke - a safe pair of hands but a disciplined, hard taskmaster who knows how to drive a Board and senior management team. I think Nick and Gavin will struggle to find assets priced to the very demanding criteria they have for acquisitions and so would expect debt repayments and dividend growth to be prioritised over the next 3 years at least.

Viewed from the perspective of a 5 year investment - i believe the fundamentals of the sector offer the prospect of an AVERAGE copper price over the next 5 years in the range of $3.25 - $3.50. Without it there is little to no chance of generating the additional production required to get close to meeting projected demand. Likewise, the Zinc and Lead markets have good fundamentals too, and should see average prices over the next five years similar to H1/2018 or better.

In such circumstances and at this stage of the recovery phase of the new copper market cycle, i believe over a 5 year outlook 100p of dividends and 225p of capital growth (450p s/p) is a very reasonable return target for the CAML business - this would be equivalent to a CAGR investment return of circa 20% a year - similar to what CAML has returned since listing in 2010.


AIMHO/DYOR

[mr roper] 20/9/2018 21:58

And you’ll get get a 7% yield to tide you over.

[push n run] 20/9/2018 21:54

Anyone willing to put the work in can estimate their profits from commodity prices, so the results weren't a surprise. Things are going fine but unless metal prices improve, the share price will stay where it is.

[kenmitch] 20/9/2018 19:23

Disappointing share price reaction to results.

Mount Teide you were very bullish ahead of result but have not posted since them. Wondering what negatives you’ve spotted beyond the obvious one that maybe investors not too keen that they are looking for more acquisitions so soon after Sasa, which seems to be going well, albeit with some cost pressures.

[arf dysg] 20/9/2018 15:56

There's a magazine for cricketers who like winged rodents...

[oohrogerpalmer] 20/9/2018 13:45

240-300 worth upto 4 batting points that!!!

[mr roper] 20/9/2018 13:15

Ken, after the bottom is formed, the 2nd half off the bowl shape should come in to play 240 and 300 by the look of it

[arf dysg] 20/9/2018 13:14

Apparently there's a book for cricket players who like fish... it's called "Bowl!"

[losses] 20/9/2018 13:10

Added today after selling out a while ago.

[ken tennis] 20/9/2018 10:19

PUZZLER you will not be disappointed im watching now and think I may top up again, I already hold a few.

ARF like the bowl pun haha

[puzzler2] 20/9/2018 09:01

Joined the party and bought a few today

[arf dysg] 20/9/2018 08:50

Mr Roper, I'm simply bowled over by your conical depression.

[ken tennis] 20/9/2018 07:47

Dear Mr Roper forgive my naivety as I am not a chartist but could you exspand what you think may happen once the sharp bottom bowl has been formed.
I look forward to your reply.
Regards
Ken

[mr roper] 20/9/2018 07:08

Chart looks like it’s forming the bottom of a sharp bowl.

[lauders] 20/9/2018 02:28

Very happy with the results and good to see the interview. Thank you for the link 40plus. The share price at 224p is slightly below by entry price last month but I feel comfortable holding and collecting the dividends as we wait for the Cu, Pb and Zn demand to increase over the years. I note that we can add electric trains to cars, mopeds and other forms of transport now:

[losses] 19/9/2018 17:01

Paid 26 Oct at 6.5p

[zebbo] 19/9/2018 16:52

Good solid interview. One thing for sure, he will be on top of the numbers:-) Think we can look forward to many years of returns with some growth thrown in "possibly"

[ken tennis] 19/9/2018 16:10

40 plus very good article sounds as though these guys can make profit at rock bottom metal prices.

[40plus] 19/9/2018 15:53

Core finance interview with Nigel Robinson CEO

[coxsmn] 19/9/2018 12:44

Analysts view, "We are buyers of copper, as we hold the view that ongoing infrastructure spending around the world, plus China's focus on reducing pollution will drive strong copper demand growth. Present weak prices are simply delaying possible supply responses, making higher prices in 2019 and 2020 more likely."

All common sense, huge amounts of money are being spent around the world to drive the EV revolution with massive expansion of infrastructure, wind turbines, electricity networks and storage systems etc etc.

All supports strong copper demand.

[eeza] 19/9/2018 11:38

XD is Thursday 4th October.

[arf dysg] 19/9/2018 10:22

If it's 16.5p dividend for the full year, that makes about 7.5% dividend. Tasty.

[justiceforthemany] 19/9/2018 10:14

This should be up 10% today! Why is it flat?
6.5p dividend only 2 weeks away 5th October

[zeusfurla] 19/9/2018 10:12

Just out of Conference call - very positive and solid, no surprises. 'No major future cost overrun risks foreseen'. I particularly liked Sasa being referred to as a 'boring, consistent performer'. Class-leading ROCE at c19%. Acquisitions more likely to be brownfield than greenfield if there are any, with intention to pay down debt to zero if not. One to hold.