2020 operational achievements without major surprises
CMT's operational achievements in 2020 do not come as a real surprise. In fact, the decreases in the EBIT by -31% to MAD 158 Mn and in the recurring NIGS by -35% to MAD 120 Mn are largely integrated into our initial forecasts (Cf. Start 2021 under the cash-conversion perspective).
This underperformance is mainly explained by a negative price/volume effect. On the one hand, production fell by -9% following the disruptions caused by the health crisis. On the other hand, the average price of Lead dropped by -9% during 2020. Recall that the contribution of this metal to revenue exceed 60%.

A dividend beyond expectations, justified by a solid cash generation
After a retention year in 2019, CMT is returning to its generous dividend policy. The DPS offered is MAD 120, i.e. 60% higher than our initial estimate of MAD 75. In consequence, the stock’s D/Y is above 7.2%, one of the best yield within the Moroccan market.
Following the revaluation of CMT's stake in AMG, a provision of MAD 98 Mn was recorded in 2020.
This non-cash and non-recurring fees does not impact the operator's cash generation capacity.

Towards a significant recovery in earning power in 2021
The CMT's outlook in 2021 remain positive for the following reasons :
- A recovery in production between 7 and 10% within an improving health context compared to 2020 ;

- A positive price effect of its metals portfolio by 25% on average. This is justified by: (1) the rise of the average Silver price of +56.0%, from 16.9 $/Oz in Q1-20 to 26.0 $/Oz in Q1-21, (2) the increase of the average prices of Lead by +9.4% to 2,016 $/T and (3) the rise of the average Zinc price by +29.3% to 2,745 $/T over the same period.

We are keeping our 2021 forecast unchanged for CMT. This is a recovery in recurring earning power to MAD 192 Mn combined with a sustainable DPS of at least MAD 100.

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