YB new stock pitches (Fri, Jan 2)

Marex Group plc (MRX) is a recently listed UK financial small-cap that serves as an indispensable intermediary in global energy, commodity, and financial markets, possessing sustainable competitive advantages through high barriers to entry including technology, global reach, regulation, and credit rating requirements. The company is positioned to benefit from an improving competitive environment as large banks retreat from the space and smaller independents lack the necessary scale to compete effectively, allowing Marex to leverage its scale, technology, and global platform to gain market share in a market with secular growth tailwinds. The investment thesis centers on Marex being mispriced due to its recent listing, small-cap status, and perceived complexity, despite being a high-quality business set up to 'grow through the cycle.' Key risks include execution challenges from its active M&A strategy and integration risks, market risk from potential sharp declines in market volatility or trading volumes that could impact revenue, and reputational risk given the paramount importance of trust for a key market intermediary. The path to value realization involves continued successful M&A to consolidate the fragmented industry, sustained organic growth driven by secular market trends, and increased market recognition leading to a re-rating of its valuation multiple as its track record grows.

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Séché Environnement SA (SCHP.PA) is a hazardous waste management company that the market misunderstands, trading at €70 per share with an estimated €550 million valuation despite generating an estimated €120 million in owner earnings by 2025, representing approximately a 22% free cash flow yield. The company operates in a deeply moaty, defensive, crisis-resistant business with heavy regulation, scarce permits, tangible assets, and long-term contracts with indexation clauses that cannot be disrupted by startups or crushed in recessions. In 2019, the founder stepped back and his son, an EDHEC graduate with M&A experience at Société Générale and private equity background at Rothschild, took over as CEO, shifting the strategy from preservation to expansion through disciplined capital deployment, operational efficiency, and international growth in regulated, high-barrier markets. The accounting massively understates the actual cash generation, and the new CEO thinks in terms of IRR, WACC, ROI, and opportunity cost, transforming the boring waste company into an environmental infrastructure platform. The market still prices Séché as a stagnant, safe French industrial company, but under a coherent scenario, the €70 stock could be worth closer to €310.

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Netcompany Group A/S (NETC.CO), a leading European IT services firm specializing in digital infrastructure, has been unfairly de-rated following a 2023 guidance miss, creating a quality GARP investment opportunity according to Nordic Investment Partners. While the market sees a company facing IT spending slowdowns due to geopolitical uncertainty and potential AI disruption risks, Nordic sees a high-quality company where management is now 'lowballing' guidance after the 2023 experience. The investment thesis centers on new high-growth platforms including Verá for defense (targeting 20-30% revenue contribution) and Easley AI for AI integration that mitigate disruption risk, plus clear margin improvement from SDC acquisition synergies driving EBITDA margins toward 20%. Key risks include AI disruption replacing traditional IT services faster than expected, failure to harvest SDC synergies, and prolonged geopolitical uncertainty impacting IT investments. With 2026E EBITDA of 1.6 billion DKK, a forward multiple of 20x (vs historical PE ranges), and moderate net debt/EBITDA of 2.1x, the price target is 480 DKK versus the current 320 DKK, implying over 20% annual returns as synergies boost margins, Verá contributes meaningful revenue, and market sentiment shifts as management delivers on conservative guidance.

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