The Western Areas Ltd (ASX: WSA) share price has jumped by 14.94% to $2.66 per share at the time of writing. This significant jump comes on the back of the miner reporting successful drilling results from its Sahara prospect within the Western Gawler project in South Australia. 

What did Western Areas report?

The company discovered over 200 metres (down-hole length) of nickel and copper-bearing sulphides at the Sahara prospect within the Western Gawler Project. This was the first diamond hole completed by the company on the lluka farm-in and joint venture ground. 

Western Areas managing director Mr Dan Lougher said:

This is an excellent result from our first drill hole at the Sahara prospect, intercepting broad widths of nickel and copper bearing mineralisation. We keenly await the assay results, but it is already clear from what we have seen in the drill core, that we have a significant exploration result that merits immediate follow up work.

Importantly, we originally targeted this area due to its geological similarities to the Nova-Bollinger and Nebo-Babel nickel/copper deposits and this result adds to our belief that this area could host similar mineral accumulations. A lot more work is required to determine the extent of this mineralisation and we are in the process of updating our exploration plans to focus on this area.

According to the company, the drilling site was selected following an extensive campaign of target generation and assessment in 2019. The diamond drilling project commenced at Sahara on 10 June.

Western Areas reports that it is highly encouraged by these results, commenting that they vindicate its “long-held belief that the Fowler Domain has the potential to host significant magmatic nickel and copper sulphide accumulations.”

The Sahara prospect lies within 10km of the Trans Australian railway.

How has the Western Areas share price performed recently?

The Western Areas share price is up 60% from its 52-week low of $1.62, however, it is down by 11%, year to date. It reached a 52-week high of $3.48 in October 2019. Since 2015, the Western Areas share price is down by 22%. 

At its current share price, Western Areas trades on a fully franked trailing dividend yield of 1.3%. 

More reading

• ASX 200 flat: Westpac tumbles, Woolworths reveals strong sales growth, Challenger sinks
• Why Afterpay, Flight Centre, TPG Telecom, & Western Areas are charging higher

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Western Areas share price blasts 14% on successful drilling results appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37SehaB

If you’re looking to diversify your portfolio with international shares, then you might want to take a look at the three shares listed below.

Jacob Mitchell, the Chief Investment Officer at Antipodes Global Investment Company Ltd (ASX: APL), has been running the rule over the Chinese share market and has found a few gems which he believes are undervalued.

Yum China

The first share that Antipodes rates highly is Yum China. It is the largest operator of quick service restaurants in China, with a number of popular brands including KFC and Pizza Hut.

Mr Mitchell believes the company offers a compelling opportunity for investors, particularly given its long runway for growth.

He explained: “Chain restaurant penetration in China is only 5% versus the US at 65%, so there is a long runway for growth and a major opportunity to take market share. With a sustainable growth rate approaching 10%, we believe the company is cheap on a normalised P/E of about 22x.”

Another reason to like Yum China is its lead over the competition. This is in respect to its delivery network and its digital footprint.

The chief investment officer commented: “… it has built a big digital distribution platform, with 180 million digital users. It is also receiving about 30-40% of all online orders through its own app, which is a significant lead versus other online players.”

Alibaba

The second share which Antipodes believes is undervalued is ecommerce giant Alibaba.

The fund manager notes that Alibaba is 14x the size of the largest offline player and hugely dominant across all retail. This is very different to the U.S. market where Amazon’s retail business is only half the size of Walmart.

Despite Alibaba’s size, Antipodes sees plenty of opportunities to grow in this post-COVID-19 world.

Mr Mitchell explained: “Organised channels for fresh grocery sales are hugely under-developed in China compared to those in the US, where established super/hypermarkets account for more than 90% of sales.”

“In China, wet markets – the Asian equivalent of farmers markets – still account for more than 70% of fresh grocery. Given the COVID-19 outbreak likely originated in a wet market, China will now permanently modernise its fresh food supply chain. Alibaba is deploying multiple strategies to attack this opportunity,” he added.

Alibaba is currently priced on a CY21 price to earnings ratio of 20x, which Antipodes believes is an attractive multiple relative to its forward growth profile. Especially when compared to other large retail and internet platform peers globally.

Ping An

A final Chinese share which Antipodes believes is undervalued is Ping An Insurance. It is a life insurance powerhouse and the leader in digital distribution.

Mitchell notes: “Life insurance in the largely underpenetrated market is the safety net for Ping An, which is an innovator of protection products. It also has industry leading tech and the fact it holds data on +750m Chinese residents leads to competitive advantages – including the effective cross-selling of insurance products.”

And despite the company growing its earnings at 20% per annum, with a return on capital employed of 30%, its shares are changing hands at just 10x earnings today. Another positive is that the company holds an investment portfolio worth 15% of its market capitalisation.

How can you invest in these shares?

If you don’t have direct access to the Chinese market, don’t worry.

Antipodes has an exchange traded fund (ETF) which give you exposure to a wide range of quality global businesses, including the three listed above. That ETF is the Antipodes Global Shares ETF (ASX: AGX1).

More reading

• Why the AMP share price is up 9% today
• Is a Fortescue Metals mega-merger on the cards?
• Leading brokers name 3 ASX 200 shares to sell today
• ASX shares in danger? Why the gold price is creeping towards all-time highs
• Renewed US-China trade war puts these ASX 200 stocks in the firing line

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Leading fund manager names 3 undervalued Chinese shares to buy appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2YXg4XX

Fortescue Metals Group Limited (ASX: FMG) has been one of the best shares to own in 2020. Whilst the S&P/ASX 200 Index (INDEXASX: XJO) is still down around 10.7% year to date, the Fortescue share price is actually up nearly 30% since 1 January.

High iron ore prices, a supply squeeze in Brazil and an ultra-low-cost basis have all helped Fortescue achieve multiple all-time highs in a year where most ASX shares have tanked.

When a company is flush with cash and surrounded by potentially distressed competitors, the merger and acquisition (M&A) rumour mill often go into overdrive. And that’s what we are being treated to a slice of today.

A Fortescue merger down south?

According to reporting in the Australian Financial Review (AFR), analysts at Citi Bank have been running the numbers on a potential merger of Fortescue Metals with South32 Ltd (ASX: S32).

South32 is a ~$10 billion diversified ASX miner that was spun out of BHP Group Ltd (ASX: BHP) back in 2015. Back then BHP’s management restructured the businesses to focus on its ‘core’ assets of oil, coal, copper and iron ore.

Everything else was shunted off into the newly-formed South32, which became a separately listed entity in its own right. Today, that ‘everything else’ includes metallurgical coal, lead, alumina, aluminium, nickel, zinc and silver operations.

Fortescue gets more than 95% of its earnings from purely iron ore mining. Citi Bank analysts clearly see South32 complementing Fortescue, diversifying the company away from iron ore.

Would Fortescue shares benefit from a merger?

In a sense, this could be a great move by Fortescue in my view. You have to make hay while the sun shines. Right now, Fortescue is getting so much sun it’ll soon have the best winter tan in Australia. The company is cashed up and is benefitting from the highest iron ore prices in years.

Iron ore is also a highly volatile commodity. It has whipsawed between US$40 and US$120 a tonne over the past 5 years. Diversifying through M&A right now makes great sense from this perspective.

However, South32 has had problems of its own in recent years. Its shares are sitting not too far from 4-year lows right now. The company is not benefitting from the same kind of commodity pricing tailwinds as Fortescue. It’s coal mines in South Africa have also faced significant production issues in recent years and the company is now trying to exit the market completely.

Foolish takeaway

Fortescue is one of the best ASX miners in the country in my view, and I think that its shareholders would benefit enormously if this rumoured acquisition comes to pass. Andrew Forrest, Elizabeth Gaines and the rest of Fortescue’s management team have almost as many runs on the board as Sir Donald and would bring some fresh energy to South32 in my view. But we’ll have to wait and see if Fortescue acts on this idea or looks for greener grass elsewhere.

More reading

• Why the AMP share price is up 9% today
• Leading fund manager names 3 undervalued Chinese shares to buy
• Leading brokers name 3 ASX 200 shares to sell today
• ASX shares in danger? Why the gold price is creeping towards all-time highs
• Renewed US-China trade war puts these ASX 200 stocks in the firing line

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is a Fortescue Metals mega-merger on the cards? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2By8rim