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Centamin offers chunky dividend yield, Berenberg says
22nd Apr 2020 14:11
(Sharecast News) - Centamin is on track for 2020 production guidance and its dividend looks set to deliver a chunky yield, Berenberg said as it increased its price target for the gold miner.
The first half of 2020 is important for Centamin to rebuild confidence among investors after rejecting a takeover approach in December, Berenberg said.
The company's first-quarter trading was pleasing with production and costs in line with full-year guidance, the broker said as it increased its price target to 148p from 137p and left the shares' 'buy' rating intact.
Centamin's production is expected to dip in the second quarter but the third quarter should offset this, leaving Centamin placed to achieve guidance of 510-540koz for the year, Berenberg said, though its forecast is at the low end of the range.
The first interim dividend of 6 cents a share should instil confidence in the company's ability to achieve a sector-leading yield of 9%, Berenberg said. The Egypt-focused miner also has a strong balance sheet with $379m (?307m) of cash and liquid assets.
"We maintain our 'buy' rating, but note that, given the strong demand for gold exposure, shares have been a recent strong performer and we therefore would look to add to positions on any meaningful pullback," Lauren Kimman and her fellow analysts wrote in a note to clients.
In its first-quarter update on 21 April, Centamin said it had no recorded cases of Covid-19 at its Sukari mine and there had been no material disruptions to operations, supply chains or gold shipments. The company's shares have risen by almost two-thirds since 18 March as investors have turned to gold during the Covid-19 crisis.
Centamin shares were up 8.9% to 154p at 14:43 BST.
The first half of 2020 is important for Centamin to rebuild confidence among investors after rejecting a takeover approach in December, Berenberg said.
The company's first-quarter trading was pleasing with production and costs in line with full-year guidance, the broker said as it increased its price target to 148p from 137p and left the shares' 'buy' rating intact.
Centamin's production is expected to dip in the second quarter but the third quarter should offset this, leaving Centamin placed to achieve guidance of 510-540koz for the year, Berenberg said, though its forecast is at the low end of the range.
The first interim dividend of 6 cents a share should instil confidence in the company's ability to achieve a sector-leading yield of 9%, Berenberg said. The Egypt-focused miner also has a strong balance sheet with $379m (?307m) of cash and liquid assets.
"We maintain our 'buy' rating, but note that, given the strong demand for gold exposure, shares have been a recent strong performer and we therefore would look to add to positions on any meaningful pullback," Lauren Kimman and her fellow analysts wrote in a note to clients.
In its first-quarter update on 21 April, Centamin said it had no recorded cases of Covid-19 at its Sukari mine and there had been no material disruptions to operations, supply chains or gold shipments. The company's shares have risen by almost two-thirds since 18 March as investors have turned to gold during the Covid-19 crisis.
Centamin shares were up 8.9% to 154p at 14:43 BST.