YB new stock pitches (Thu, Sep 4)

Ziff Davis (ZD), a digital media conglomerate of 90+ niche acquisitions across 5 verticals (Technology & Shopping, Gaming & Entertainment, Health & Wellness, Connectivity, and Cybersecurity & Martech), trades at just 2.8x EBITDAS and 4x EBITA despite generating 35% EBITDA margins on $1.4 billion revenue and $494 million Adj EBITDAS in 2024. The company has historically achieved 16-17% ROIC on M&A while targeting 20% returns, with $3.2 billion spent on acquisitions over 12 years producing current EBITDA of $523 million. Management has repurchased 10% of the float in the last 12 months at ~$50/share and made insider purchases at $40-50, with the CEO buying $500k in shares and indicating they will be aggressive if the stock remains low. While organic revenue has been declining at -3% in Q1 2025 (improving from -5% in 2022), 2025 guidance calls for $1.472 billion revenue (5% growth), $523 million Adj EBITDAS (6% growth), and $6.96 Non-GAAP EPS (5% growth). The stock trades at $30.96 with a $1,310 million market cap and $267 million net debt, representing an EV of $1,577 million. The primary risk is AI disruption to the content business, though management notes only 14% of traffic comes from search, and the company's focus on niche apps with user-generated content and data provides some differentiation from generic websites.

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Basic-Fit N.V. (BFIT.AS), the dominant Western European low-cost gym operator with 1,616 locations across six countries, trades at a trough multiple of 5.3x 2026E EBITDA versus its historical 9-13x range, presenting compelling risk/reward with a target price of €65 (>100% upside) based on 10x 2027E EBITDA of €529 million. The company's competitive advantages include being 15-20% cheaper than competitors, superior cost structure with 30-40% lower equipment costs than independents, faster payback periods (3-4 years with 30% ROIC), and a clustering strategy that creates market dominance. Four major catalysts center on France (54% of clubs): 1) an 80% probability that a French labor law change will eliminate the current €35 million annual staffing cost for 24/7 operations, 2) expanding 24/7 access across all 875 French gyms which should add ~170,000 members generating €50 million revenue and €40 million EBITDA, 3) insourcing expensive contractors to reduce labor costs by half, and 4) progressing toward fully staffless operations. These catalysts could drive 2026 EBITDA to €455-500 million versus €404 million consensus, representing 15-20% upside to estimates. The company has overcome post-COVID headwinds in France where gyms were closed 11 months and recent cohorts underperformed, but 2023-2025 openings have returned to historical performance levels. Long-term growth remains attractive with European gym penetration at 11-18% versus mid-twenties in the US, and management targeting 3,000-3,500 total clubs with significant expansion opportunities in Germany (37 gyms targeting 650-900), Spain (220 gyms with capacity to double), and continued growth in France where Basic-Fit holds 16% market share in a fragmented industry.

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Grand Banks Yachts Limited (G50.SI), a premium yacht builder trading at S$0.58 per share, presents an 84% upside opportunity with a target price of S$1.07 based on multiple expansion from its current 5.9x TTM P/E to 9x (compared to European peers at 10-17x P/E). The company has transformed with a new +25% capacity Johor composites facility that just came online, a Newport Rhode Island marina acquisition for deeper U.S. market penetration, and a record S$156.6 million net order book (+31% YoY) comprising 33 new boats plus 13 trade-ins. Despite temporary margin dilution from trade-ins reducing blended gross margins to 29.9% in FY2025, build-to-order (BTO) unit economics still generate ~36% gross margins, and revenue has grown from S$96.1m (FY2021) to S$162.3m (FY2025) with profit after tax increasing from S$4.2m to S$18.2m over the same period. The company maintains a strong balance sheet with S$51.5 million in cash against S$7.2 million in borrowings, trading at 3.3x EV/EBIT and 1.06x P/B. Key catalysts include margin normalization as trade-ins recede and BTO reasserts itself, operating leverage from the new Johor facility enabling larger models and better throughput, aftermarket revenue growth from the Newport beachhead, and new higher-ASP models like the PB107 and GT50 RS Outboard. Bear case risks include continued soft backdrop with lingering trade-ins and weak USD leading to a 6x multiple and S$0.50 target, while the base case assumes backlog conversion and mix normalization driving the 9x multiple and S$1.07 target.

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