Numis downgrades Centamin to 'hold' from 'buy'

Numis on Monday downgraded its rating on Centamin to ‘hold’ from ‘buy’ and left its target price unchanged at 170p, following the gold mining company’s recent share price appreciation.

The Egyptian miner last Wednesday reported its full year results. Revenue jumped 35% to $687m and pre-tax profits gained 78%to $267m.

Basic earnings per share rose to 18.61 cents from 4.51 cents the prior year.

Production grew 26% while the average price for gold rose 8% to $1,256 per ounce.

The dividend was lifted to 13.5 cents a share versus 1.97 cents a year ago, bringing the full year payment to 15.5 cents.

Numis said the EPS was slightly below its estimate of 20 cents per share but the full year dividend surged ahead of its forecast of 7 cents per share.

The dividend represented a payout ratio of 70% of 2016 free cash flow (FCF), well above the newly stated 15-30% of FCF policy, Numis said.

Meanwhile, Centamin said it expects production of 540,000 ounces in 2017 at cash costs of $580 per ounce and AISC of $790 per ounce, representing a more cautious outlook than 2016.

“We maintain our 170p target price but lower our recommendation to ‘hold’ from ‘buy’ based on the recent share price appreciation, rather than a fundamental change in thesis.”

Shares rose 0.82% to 169.78p at 1058 GMT.