Yesterday, CAML published unaudited financial statements for FY2014.
Revenue grew by 42% YoY to $73.1mn, mostly due to consolidation of Kounrad stake. Operating costs increased by 50% YoY to $13.8mn mainly on production increase, higher electricity costs and consolidation of Kounrad stake. EBITDA grew by 46% YoY to $47.3mn, while EBITDA margin improved by 5ppt to 65% due to slower growth of SG&A expenses.
The management proposed dividend of 7.5 GBp for the 2H2014, implying a dividend yield of 7.7% to yesterday's close price. This brings the total dividend for FY2014 to 12.5 GBp (28% payout ratio off revenue).
|in $ mn||2014A||2013A||y/y||HF 2014E||Above/(below) HF 2014E|
|Revenue||73 141||51 483||42%||76 446||(4%)|
|Cost of sales||13 812||9 232||50%||13 681||1%|
|Gross profit||59 329||42 251||40%||62 765||(5%)|
|Depreciation||11 336||4 583||147%||6 425||76%|
|SG&A||12 083||9 882||22%||12 421||(3%)|
|EBITDA||47 322||32 400||46%||50 344||(6%)|
|Net income||33 297||20 805||60%||35 343||(6%)|
|Dividends per share (GBp)||12,5||9,0||39%||10,0||25%|
|Cash balance||46 144||42 774||8%||46 347||0%|
|Sources: Company data, HF Research estimates|
The company reiterated its 2015 production guidance of 13,000 tons and expects costs to stay in the lowest quartile. The expansion project is on budget and within the timeline. The management also mentioned that they have an opportunity to hedge up to 30% of their production volume. However, no hedge is in place as of the year-end as the management sees no reason to hedge now when copper prices are at historical lows.
The company did not provide any significant update on the Copper Bay project, but did mention that pre-feasibility study completion is set for the 2Q2015 and that JORC-compliant resource report was undergoing final revisions.
Yesterday, the stock closed 4.5% higher.
Our view. The dividend increase surprised the market as it was not expecting higher payout ratio in the current commodity price environment. We have updated our model to reflect expectation of higher dividend payout ratio in the medium term (from 25% to 28%). Revenue was 4% lower than we expected mainly due to lower realized sale price. Company's profitability was more or less in line with our estimates, and far better than the market with EBITDA margin of 65%. We have cut our 12-month target (ex-dividend) price by 4.6% to 208 GBp mainly due to lower expected realized sale price. We reiterate a Buy recommendation as the stock offers attractive dividends and additional upside could come from the growth projects.