Wednesday newspaper tips: Prudential, Centamin

11th Dec 2013 09:51

Unlike in 2010, when it last set out its medium-term financial targets, this time around Prudential can point to a 126 per cent rise in the stock price and 1.8bn pounds in dividends paid out over the intervening period. However, the firms needs to provide greater clarity on what it expects in terms of returns outside of Asia. Yes, at the group level the promise of producing surplus cash of at least 10bn pounds between 2014 and 2017 is credible. However, specific goals have only been set for its Asian businesses. Unfortunately, management's reputation has been built on setting and meeting cash targets for all its main operations. Furthermore, if 1bn pounds of the above amount comes from Asia then that would leave its US and European units producing no more cash than they do now. Hence, the group is left looking very reliant on Asia, the Financial Times' Lex column wrote. Diversification, at least geographically, has its virtues. That seems to be the thinking at Centamin, whose only producing asset is a gold mine in Egypt. That is a rather unfriendly jurisdiction for Western companies, although the new authorities in Cairo promised this week to honour previous agreements. Hence Tuesday's decision to acquire Burkina Faso-focused Australian miner Ampella Mining for £22.7m in an all-shares deal. Like so many small gold outfits it has come under pressure recently. Of the outfit's 12 permits only one has been drilled but the tests are promising. Centamin will have to spend about £12.2m over the next couple of years to carry out further appraisals, but "the deal looks a sensible one, but nothing is assured," says The Times' Tempus. "Centamin shares [...] have been a switchback ride over the past couple of years. There is no reason why that should not continue. A good punt, but be aware of the risks," Tempus added. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.