YB new stock pitches (Thu, Aug 14)

SR Bancorp (SRBK) is a New Jersey bank trading at $14.54, representing 0.78x tangible book value ($18.67 per share). The company was formed through a September 2023 thrift conversion and merger between Somerset Savings and Regal Bank, adding $89.6 million to the balance sheet without dilution. SRBK has an exceptionally clean loan portfolio with only 0.075% delinquent loans, a strong 15.86% Tier 1 capital ratio (well above the 9% 'well-capitalized' threshold), and a diversified portfolio (53.7% residential mortgages, 44.7% commercial loans). While the bank maintains a solid 2.93% net interest margin, its profitability is hampered by a high 85.32% efficiency ratio. Management is aggressively returning capital to shareholders through two consecutive 10% share repurchase programs, and insiders have purchased significant shares over the past year. The stock offers acquisition potential after the September 2026 three-year post-conversion moratorium expires, with potential bids likely between 1.0-1.2x tangible book value, similar to nearby Magyar Bancorp (MGYR), which trades around book value.

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Manolete Partners Plc (MANO.L) is a UK-based company that buys claims from insolvent businesses, previously achieving a 17% return on capital pre-COVID with potential for mid-20s ROE with modest leverage. The UK insolvency freeze during COVID (ending April 2022) severely impacted profits, with a 2-year lag in financials due to the 13-month settlement and 12-month cash collection cycle. Average revenue per case dropped from £200K pre-COVID to £100K currently, but management expects to return to and exceed £200K/case as larger cases, which take longer to process, begin to be reflected in 2025 financials. With significant operating leverage, returning to £200K/case would add approximately £30M in annual EBIT (£100K additional profit × 300 cases) with minimal extra costs, compared to the company's current £16M enterprise value and £35M market cap. The company continues scaling by adding 30-50 cases annually, potentially reaching 400-500 cases. Additionally, Manolete has a cartel claim settling in the next few years worth its entire enterprise value. Recent developments suggest a potential acquisition, including the founder's unexpected departure, appointment of his COO (in her 60s-70s) as CEO, a large stake purchase by a US fund, and management frustration with the share price.

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EuroEyes (1846.HK) is a premium vision correction clinic network trading at less than 3x FCF, with 34 clinics across Germany (55% of revenue), China/HK (20%), UK (16%), and Denmark (10%). The company delivers 11% 5-year revenue CAGR, 15% net margins, and has HKD 653M cash with no debt. EuroEyes operates on a self-pay model with premium pricing, specializing in laser surgeries and lens replacements, particularly trifocal lens implants. Recent 7% price increases in Germany demonstrate pricing power despite competition from Sanoptis, Veonet, Clinica Baviera, and others. The company faced operational challenges in 2024 with new clinics in Wiesbaden, Kiel, London, and Hong Kong, resulting in profit decline to HKD 82M from HKD 131M in 2023, but expects to return to 2023-level profitability in 2025. Management likely plans to deploy its substantial cash pile for M&A rather than buybacks, despite the stock's attractive valuation. H1 2025 results in August will be key to see if management executes effectively, with potential for 2x returns within 2 years and 4x within 4 years.

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