Guy Le Page

RM Corporate Finance

China’s making moves to boost the property sector and Our Guy Le Page has sent out a carrier pigeon with the latest gossip on the Middle Kingdom’s latest moves.

Le Page says it “appears China is taking some affirmative measures to boost their economy with more favourable policies to assist the property sector”.

In addition to those measures, a recent Politburo meeting seems to want to boost big-ticket item consumption (autos, electronics, household goods) and service consumption (sports, leisure, tourism), as well as address local government debt risks (a figure that is often omitted in official debt reporting).

PMI data on Monday showed China’s manufacturing index rising modestly to 49.3 above market expectations of 48.9 level and the non-manufacturing sector dropped to 51.5 from expectations around 53.0.

Something to keep an eye on, for sure… but we’re here for the stocks, right? And Le Page says he most recently brought American West Metals (ASX:AW1) to the attention of the Stockhead faithful back in May 2023 as it was about to commence this year’s field season on its Storm project in the Nunuvut region of northern Canada.

Back then, the immediate interest was the potential for a 0.5-1Mt per annum direct shipping ore (DSO) operation with the potential to produce in the order of 15-25,000 tonnes a year of copper.

So far, the 2023 RC and diamond drilling of the near-surface copper mineralisation has proved a winner with most of the drilling hitting potentially ore grade intersections.

That kind of near-surface work has Le Page licking his lips at the Storm project area on its own, which now looks like it has the potential to conservatively host +12Mt of potential DSO material that could be beneficiated to a 30-50% copper concentrate.

Anyway, we will find out as the company intends to publish a maiden JORC Resource and complete a mining study later this year.

Le Page’s personal view? Every bit as typically understated as we’ve come to expect:

“Storm and its surrounding prospects could be bigger than Elvis and Texas.”
 

Alexander Barkley and Paul Wiggers de Vries

Analysts, RBC Capital Markets

RBC Capital Markets has initiated a $1.80/sh price target and an ‘Outperform’ rating on De Grey (ASX:DEG), thanks to its “remarkable large-scale, low-cost project with high upside value potential”.

$1.80/sh would be an all-time high for the $2bn-capped stock, which was trading at just 5c when it uncovered the game changing Hemi deposit in the Pilbara early 2020.

The 9.5Moz Hemi deposit underpins production at the 11.7Moz, ~550kozpa Mallina gold project, which is pencilled in for 2026.

Mallina would be a top 5 producing Australian gold mine, says RBC analysts Alexander Barkley and Paul Wiggers de Vries.

But if the company boosts output to 15Mtpa, Mallina could produce an industry leading 750-850kozpa.

RBC says DEG’s “high takeover appeal” could push its valuation even higher to $3.14/sh – a big 135% increase on the current share price.

Mallina’s high production scale, low-cost, long-life, and location in a tier one mining jurisdiction could improve the portfolio of most gold miners, say Barkley and Wiggers de Vries.

“… if any hypothetical acquirer has a bullish outlook on gold, their peak valuation for the asset might approach our spot upside case of $3.14/sh.”
 

John So

VP Capital

According to So, Cettire (ASX:CTT) is an interesting beast that has transformed itself from around $100 million market cap to $1.15bn today.

Cettire is global online fashion retailer, offering a large selection of personal luxury goods via its website, cettire.com.

It has an extensive catalogue of more than 2,500 luxury brands and more than 400,000 products around clothing, shoes, bags, and accessories.

“What’s really interesting about Cettire is its ability to consistently deliver growth, and the fact that it only has a very small market share in Australia and US of under 1%,” So said.

“So all the company needs to do is continue to deliver on that growth to increase market share.”

According to So, if Cettire is able to grow market share, around 20 to 30% of that extra revenue will be converted directly to bottom line earnings.

“And what would happen is that its current earnings would basically go up four or five times, and suddenly CTT would be looking very cheap.”

Then there’s Azure Minerals (ASX:AZS), which used to be South American-focused lithium player, but it has since moved on and become a lithium explorer in WA.

“What’s exciting about Azure is that at a market cap of around $700 million, it’s got the potential to host a resource deposit the size of something like Liontown,” said So.

Based on the drilling they’ve done and the data received, So believes Azure can initially put out somewhere between a 50-100Mt resource, which is very substantial in the lithium mining world.

“That’s an initial resource, but as they continue to drill out their deposit, that could get to a much bigger resource size.”

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

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