2 ideas in 200 words #8

We have made our first purchases in...

GemLife Communities Group (ASX: GLF)

GLF listed on the ASX in early July at $4.16 per share and traded strongly on listing. However shortly thereafter, a key competitor Lifestyle Communities Ltd (LIC) announced a damaging adverse legal judgement pertaining to deferred management fees (DMF). LIC dropped 37% on the day and is still trading close to its lows. GLF appears to have been caught in the down draught, despite not charging DMFs.

GLF has substantial upside in our view. GLF is a founder-led business (owns 40% with nil sell-down in IPO) operating in an industry with an enormous tailwind and with a pipeline of secured sites >3x their current inventory.

Also topping up...

West African Resources Ltd (ASX: WAF)

WAF recently produced the first gold from the large-scale, long-life and low-cost Kiaka mine in Burkina Faso. True to form, the development was ahead of schedule and below budget. Combined with the neighbouring Sanbrado mine, the company is on track to produce 500kozpa in the coming years. We model free cash flow yields (after all costs and capex) in excess of 30% per annum from CY26. On current forecasts, WAF’s cash balance will exceed its total market capitalisation by CY28.

Chinese investors are hungry for gold and have a penchant for African assets. Given the scale, geology and cost profile, we would expect WAF to be firmly in their sights.