Q: Dundee has doubled since your last (Nov 28) opinion, which focused on its static book value and well-below-book share price. Do its actions since then lead you to re-evaluated its prospects? Given its momentum and P/E, has its P/B turned into an asset?
5i Research Answer:
Stock momentum is certainly very impressive, as it has enjoyed the sector rally. It remains cheap on all metrics. Still no analysts cover the company. BV was $3.45 as of March 31 (Bloomberg numbers). DC.A's prior plan to clean up its portfolio, reduce debt and focus on mining is paying off. The Q1 report was solid and cash flow is set to increase with royalties. Some assets were sold and debt reduced. Fundamentals have indeed improved here and a cleaner structure has attracted more investors. It is still a small, thinly-traded company within a volatile sector, but the fundamental and stock momentum make us more interested in it than before, even at the higher price.