YB new stock pitches (Mon, Sep 7)

Motonic is a profitable Hyundai/Kia Tier-1 supplier trading at 57% of NCAV, with ₩385 billion of cash equal to 175% of its ₩220 billion market cap and a 7.8% dividend yield covered by operating profit and interest income. Its patented LPI/LPDI fuel-system components are integrated into Hyundai/Kia platforms, and fuel-system revenue rose 50% as Korea’s ban on new diesel 1-ton trucks drove adoption of LPG replacements. Normalized operating profit of ₩15–18 billion, valued at 8x alongside full recognition of cash, implies ₩505–529 billion of equity value, or 130–140% upside. Capital allocation remains the central question. The third-generation CEO has overseen a 76% dividend increase in two years and published a Corporate Value-Up Plan, but the family controls roughly 59%, only two of six directors are independent, and there is no formal shareholder-return policy. Continued elevated dividends could make the cash tangible to minorities, but the recent increase may prove temporary; the position is therefore basket-sized.

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Franklin Electric pairs a high-quality, replacement-driven industrial business with an emerging data-center liquid-cooling opportunity that could materially change its growth profile and remains largely absent from current estimates. The company already has the pumps, motors and drives central to coolant distribution unit architecture and is investing in dedicated U.S. manufacturing capacity. The key step is qualification and direct specification into major CDU platforms, which could convert thematic exposure into repeatable OEM production revenue tied to liquid-cooled megawatt deployments. Even $100–200M of incremental data-center revenue would be meaningful against a roughly $2.2B revenue base, and qualification with a handful of platforms could create a sticky revenue stream as customers scale cooling systems. The thesis remains unvalidated because management has not announced meaningful design wins. Marketing and roadshows, additional disclosure expected in 2H26 and the March 2027 Investor Day should provide evidence, while the existing business offers support if adoption takes longer than expected.

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Worldex makes vertically integrated silicon and quartz consumables for semiconductor etch tools, selling directly to fabs below certified toolmaker prices. Because these parts wear out within weeks, revenue tracks wafer starts rather than new-fab construction; rising NAND layer counts also increase etch intensity. The model proved resilient in the 2023 memory slump, when NAND utilization fell toward 70% but Worldex still earned ₩53.8 billion, followed by roughly ₩65 billion in 2024. At ₩26,000, the ~₩435 billion market capitalization includes ₩190-230 billion of net cash and no debt, leaving an enterprise value near ₩235 billion, or ~2.4x estimated 2027 EBITDA. The base case values the shares at ₩47,000-50,000 by end-2027, with a mid-twenties IRR. Following activist pressure, the company committed to a ₩20 billion buyback, share cancellations and returning 40% of net income in 2027 and 2028; the March 2027 auditor election offers further leverage. The pitch also advances, explicitly as an inference, that the founder kept payouts and valuation low to reduce succession tax, with the family’s incentives potentially reversing after a transfer to his sons. Key risks are a 2028 memory-supply downturn, Chinese aftermarket competition and deployment of the planned ₩50 billion acquisition budget in unrelated industries.

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