Investors have not taken kindly to Sandfire cut its interim dividend to 3.0 cents per share fully franked from the 8.0 cents interim dividend paid a year earlier. We are of the view,Sandfire withholding part of its interim dividend to ensure the smooth integration of MATSA financially as prudent.Sandfire completed, the game changing $1.86 billion (A$2.56 billion) MATSA acquisition, on 1 February 2022.We expect MATSA will be value accretive well into the future and will easily compensate shareholders for the loss in value in not receiving a higher 2022 interim dividend.
Sandfire,in our view posted, on Monday, an impressive1H22result, on a 21% surge in revenue to a record $331 million, the company reported a 24% rise in net profit after tax of $55 million.Driving this strong result were higher copper sales for the half and an accompanying higher copper price. The combination of higher copper sales and copper price surged cash flow from operations ahead 32% to $101 million.This result was exactly what Sandfire would have wanted to report on the eve of completing a major acquisition.
Earnings per share for1H22of 14.2 cents was lower on the1H21result of 24.0 cents per share, on the issue of equity to fund the acquisition of the MATSA mine in Spain. The earnings benefit of this acquisition has yet to flow back into Sandfires’ financial metrics, as it had yet to complete as of 31 December 2021.Sandfire expects MATSA will be earnings accretive immediately.
In the meantime,we will maintain our buy recommendation on Sandfire Resources for Members with no exposure to the stock.We will provide an update on the interim result in the following Tuesday’s Australasian report and in the Global Mining report tomorrow.