A stock that offers shelter from Trump’s mayhem

[SINGAPORE] With global trade under pressure from US President Donald Trump’s tariffs, there could be a significant slowdown in economic activity and big cuts to corporate earnings forecasts in the months ahead. Meanwhile, higher inflation could push bond yields up.

So, what’s an investor to do? Thinking long-term goes without saying. Preserving cash for opportunities that might emerge during the coming shake-out is probably a good idea too.

For investors with time on their hands, however, scouring the remote corners of the market for promising small-cap companies that do not usually attract attention could be rewarding.

One tiny Singapore-listed company that seems far removed from the global economic uncertainty is CNMC Goldmine, which operates a gold field spanning some 10 sq km in the Malaysian state of Kelantan.

Over the past two years, CNMC has reported a steep rise in revenue and earnings, fuelled by capacity expansion and firm metals prices. This growth momentum is very likely to continue into 2025 and 2026.

Here’s why: On Apr 11, CNMC announced that it had completed a RM9 million (S$2.7 million) expansion programme at its carbon-in-leach (CIL) facility. This added 300 tonnes per day of ore processing capacity to the CIL facility, which previously had a capacity of 500 tonnes per day.

CNMC said earlier that the increased capacity will also provide it with greater operational flexibility, as the new 300-tonne-per-day processing line can continue running while the older 500-tonne-per-day line undergoes periodic maintenance and repairs, and vice versa.

The enlarged CIL facility is expected to support an increased extraction of higher-grade gold ores once the company completes a new underground mine later this year.

This capacity expansion comes less than three years after CNMC opened a flotation plant back in September 2022. Built at a cost of RM20 million, the plant was designed to process up to 550 tonnes of base-metal ores per day, and provided the company with an additional revenue stream from selling lead and zinc concentrates.

In 2023, the first full year the flotation plant was in operation, CNMC more than doubled its revenue to nearly US$52.2 million. Earnings came in at nearly US$4.1 million, versus just US$117,582 the previous year.

CNMC said the sale of gold dore bars accounted for US$33.7 million of its revenue. The remaining US$18.5 million came from shipments of metal concentrates.

In 2024, CNMC achieved a further 25 per cent improvement in revenue to US$65.2 million. Earnings increased 140.3 per cent to more than US$9.8 million.

Nearly US$44.1 million of its revenue came from the sale of gold dore bars while the remaining US$21.1 million came from metal concentrates.

Much of the company’s revenue growth last year was driven by rising gold prices. While CNMC’s gold production rose less than 4.5 per cent to 17,958.95 ounces, it achieved an average selling price of US$2,455 per ounce versus US$1,960 per ounce in 2023.

Given the unabated rise in gold prices through 2024 and into 2025, on top of CNMC’s capacity expansion, it seems very likely that the group’s earnings will increase substantially again this year.

Going by Bloomberg data, gold is currently trading above US$3,200 per ounce, up from US$2,624.5 per ounce at the end of last year.

Against this bullish backdrop, CNMC’s shares have climbed 73.5 per cent so far this year, versus the Straits Times Index’s decline of 4.3 per cent. CNMC closed at S$0.425 on Tuesday (Apr 15), putting CNMC’s market capitalisation at S$172.2 million, or US$130.5 million.

Are CNMC’s shares still worth buying at their current level? Or, have they already run up too much?

Phillip Securities Research said in an Apr 2 report that it is forecasting a 46.6 per cent increase in CNMC’s earnings for 2025 to US$14.4 million, based on the assumption of 20 per cent growth in production and an 18 per cent rise in the price of gold to US$2,900 per ounce.

The research house is projecting that CNMC will pay a dividend of S$0.019 per share for 2025, up from S$0.014 per share for 2024.

It has a target price of S$0.49 for the stock, based on a discounted cash flow model – which is 15.3 per cent above CNMC’s last closing price.

Clearly, much depends on where gold goes from here. If the price of the precious metal holds up, or climbs higher amid all the uncertainty around the world, it could just be a matter of time before analysts hike their target prices for CNMC’s shares.

Conversely, a slump in the price of gold will certainly knock the stock down.

For now, the market is valuing CNMC at just over 9 times its 2025 earnings, and its shares offer a projected dividend yield of 4.5 per cent. Investors have to decide if that’s attractive enough for a small-cap stock that seems to be on the right side of the turmoil caused by President Trump.