Berenberg has cut its rating on Central Asia Metals PLC (AIM:CAML, OTC:CAMLF) to “hold”, lowering the price target to 170p after a sharp fall in the shares following half-year results.
The stock dropped more than 13% when management swapped part of the expected interim dividend for a $10 million share buyback.
Investors also baulked at guidance that future payouts would be brought back in line with policy, at 30–50% of free cash flow, compared with an average of 67% in 2023 and 2024.
The pressure point remains Sasa, the zinc and lead mine in North Macedonia.
Production guidance was maintained, but only after being revised down in July because of geological variability.
CAML has hired consultants and is stepping up drilling to improve understanding of the orebody, but Berenberg warns this carries execution risk, the potential for higher costs and downside to its forecasts.
The other headache is growth. Kounrad, the low-cost copper dump leach operation in Kazakhstan, is reliable but finite.
Replacing it will require acquisitions.
CAML has already walked away from a bid for New World Resources, which briefly lifted the shares, but Berenberg says the overhang from possible deals remains.
The market is still pricing in successful M&A, leaving the stock vulnerable if that does not materialise.
On the numbers, first-half revenue was slightly lower than expected, while costs were higher.
A $4.8 million negative change in the fair value of a share-based payments liability added to the bottom-line drag.
Berenberg has trimmed 2025 EBITDA estimates and cut dividend payout assumptions to 45% for the second half and 50% thereafter.
The buyback cushions the blow, but income investors used to generous payouts may not be satisfied.
Valuation is not stretched. The shares trade on 0.9 times net asset value and 3 times 2026 EBITDA, with the new target implying 15% upside.
Dividends and buybacks together equate to a forward yield of around 8.5%.
But with Sasa still needing work and the growth story dependent on deals, Berenberg has decided caution is the better part of valour.