Good Morning,
Some tangents this morning and very limited time. With
Centamin Egypt (CEY) unaudited
results for the Q1 2015 are identical to Q1
2015 Preliminary Production Results. With a dire ROE (Return on Equity) of a
smidge under 10% (annualised around 38%) which is dire! With the warped nature
of CEY not paying tax, simply put there's a requirement for a write-down.
Today's results certainly do not justify the uptick in the
price, without more news 'on other developments' and expansion, CEY is
about the money. We'll ignore the number of shares in issue being wrong and
distorting performance slightly, but even so a performance improvement.
CEY at the current gold price and likely outlook, is likely to be range bound.
Staying in gold, Caledonia
Mining (CMCL) Q1 are about the mark, costs a fraction up, profits down
but dividend maintained. A positive for CMCL is the management have concluded
that its best way forward is to focus on 'what's working at the moment.' To
quote CMCL, Caledonia has increased its strategic and operational focus
on the Blanket Mine and intends to close and dispose of non-core operations in
Zambia and South Africa and to reduce operating and administrative expenses. Shareholders
should be thankful the management realise this, often there is a tendency to
spin too many plates.
With a focus on costs, CMCL 'appear' to know what they need
to do, one hopes there's not a raft of options or salary/bonus awards as a
result of their likely successes in saving monies! Pending the success of the
expansion plans for the Blanket Mine, expect some rewards going forward in 6-9
months. Other than a gold price improvement do not expect the stock to
appreciate too much (in trend/range). With the absence of an indicated resource
statement as defined in the PEA December 2014, confidence should be limited
until the resources are measured with confidence, rather than "inferred
currently.
Sabmiller (SAB) will find it hard to justify any form of
independence with results that are below the management forecasts. As a result
of flat sales (poor I known) and the strength in the dollar SAB's bottom line
has been impacted. Any strength, save for speculation of M&A is yet another
justification to sell the stock. Its ironic soft drinks are performing better,
perhaps as the trend suggests, SAB will have to work harder to maintain beer
sales. The best hope for SAB is a take-out, over to Anheuser-Busch InBev
whom today had a good justification to limit any premium if it were "going
to make a move at the end of the month."
There's a growing trend on the price of the "Asian High
Yield Bonds", certainly for Chinese Property developers isn't looking
good. With the Asian equities on a bull run, those higher leveraged companies
would be wise to take advantage and raise cash to reduce debt. It’s always of
concern when the Chinese Government (via State owned media) promotes
speculation on the markets. The Shanghai Stock Exchange Composite Index
(SHCOMP), has ironically mirrored the growth in speculation (margined
trading).
With second-home down-payment percentages becoming
"flexible" it’s envisaged that there will be an uptick in
down-payments and completions figures for the next set of data. As a result of
the imbalance of supply, it’s likely those speculating will be knife catching
to a degree. Over to Kaisa to look to sort its debt woes out, its certainly at
the price for their bonds, save for Sunac interventions. Zhang Zhiron's
majority shareholder in Glorious Property is at risk of being reduced. Zhang
should thank his lucky starts a privatisation motion he made previously was
rejected!
Limited time,
Atb Fraser
Fraser- Hi- back briefly here. Its a hell of a week, meeting old friends and colleagues none of whom regret moving on from the world of the global bank.
ReplyDeleteRe SAB- plenty of negatives now for me, toppy at best and possibly ex growth too, which isn't always a Sell for me, but the yield is low (2.1%) and the PE not great at 22, so some were sold and moved to DGE (Diageo) as they seem better value to me. The ride was good (2008 from £12.70) but I cant hold hoping for a takeover everywhere and so some diversification from me today.
Re CMCL- the 8% yield supports and they have a great idea re Blankets prospects from their neighbouring mines, which have found the bottom of the deposit and also helped re grade assumptions too. The Blanket area has a few other good prospects too and whilst the jury will give them no credit for the work until it is done, Im happy to play long and wait for the numbers to follow and the mkt to rerate here. I would expect mid 50s in 12 months, but in the meantime the yield is great.
Re SOU- Ive been looking at Tendrara, which was a key asset for Fastnet before they had the licence withdrawn and the work Fastnet did there and their plans too. The deposit is potential huge (HEC of 892BCF) and the stranded asset can fairly easily be unstranded but a larger partner will be needed, which was Fastnets Achilles heel and downfall with keeping the licence. The fact that it is partially proven up is a massive positive, but this will all come out at the Corp Pres tomorrow. Its a clear Buy for me today, Nervesa has high expectations which should be met and so added some more here today.
Cheers. The Leggie