Hot Chili (ASX:HCH): Assessing Valuation After La Verde Phase Two Drilling Expands Higher-Grade Copper-Gold Zones

Hot Chili (ASX:HCH) has drawn fresh attention after its latest La Verde drilling update confirmed a larger, more continuous higher grade copper gold core, including a roughly 60m eastern extension and multiple wide mineralised intersections.

See our latest analysis for Hot Chili.

The market seems to be waking up to La Verde’s potential, with a powerful 30 day share price return of 63.46% and an 84.25% one year total shareholder return signaling building momentum rather than a short lived spike.

If this kind of drilling driven rerating has your attention, it might be a good time to broaden your search and explore fast growing stocks with high insider ownership.

With drilling success accelerating and the share price already surging, the key question now is whether Hot Chili remains undervalued on its long term copper growth story, or if the market is already pricing in future upside.

Price-to-Book of 1x: Is it justified?

Hot Chili currently trades around A$1.28 per share, and its 1x price to book ratio suggests the market is not paying a premium for its asset base compared with peers.

Price to book compares a company’s market value to its net assets on the balance sheet, a common benchmark for asset heavy metals and mining businesses where near term earnings can be volatile or negative.

For a pre revenue, loss making explorer like Hot Chili, a modest 1x price to book implies investors are willing to value the company roughly in line with its reported equity, despite ongoing losses and the absence of meaningful revenue. This may indicate some skepticism about how quickly Costa Fuego and La Verde can be de risked and ultimately monetised.

Relative to the Australian Metals and Mining industry average of 2.2x, and an even higher 23.9x for its closer peer set, Hot Chili’s 1x price to book looks markedly conservative, underscoring how much less investors are currently paying per dollar of book value compared with comparable names.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price to book of 1x (UNDERVALUED).

However, lingering exploration, permitting, and funding uncertainty at Costa Fuego and La Verde could quickly cap sentiment and derail the recent re rating.

Find out about the key risks to this Hot Chili narrative.

Build Your Own Hot Chili Narrative

If you see the data differently or would rather dive into the numbers yourself, you can build a personalised view in under three minutes: Do it your way.

A great starting point for your Hot Chili research is our analysis highlighting 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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