YB new stock pitches (Tue, Apr 8)

Fortune Brands Innovations (FBIN) has undergone significant restructuring under Nicholas Fink, focusing on high-margin digital home solutions and divesting its lower-margin cabinet business. The company operates in three segments: Water Innovations, Outdoors & Security, and Security, with a growing focus on smart home technology. Despite macro headwinds and near-term challenges, FBIN remains undervalued at 11x EV/EBITDA, with potential for double-digit EPS growth. The company's growth is supported by strategic acquisitions, housing and renovation trends, and operational efficiencies. A persistent U.S. housing shortage of 3.7-5.5 million units underpins long-term demand. FBIN recently announced a $1 billion share buyback, representing about 12% of its float. The company's price target is $91, offering a 100% upside. Key risks include macroeconomic sensitivity, supply chain volatility, and competition. Catalysts include growth in the undersupplied U.S. housing market, expansion of the digital products business, the buyback program, and potential accretive acquisitions.

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Kri-Kri Milk Industry S.A. (KRI.AT), a Greek yogurt and ice cream producer with a market cap of EUR510 million, has demonstrated consistent growth with an 18% 5-year revenue CAGR and 70% EBITDA to operating cash flow conversion. The company holds a 16% share in the Greek branded yogurt market, 40% in the kids' segment, and produces 70% of private label supermarket yogurt. Kri-Kri has expanded internationally, particularly in Europe and recently entered the US market. Founded in 1954, the company rebuilt its factory in 2013 after a fire, improving efficiency and product quality. Founder-CEO Panagiotis Tsinavos drives innovation and reinvestment, contributing to the company's ability to adapt to market challenges and consumer trends. Despite its strong fundamentals and growth potential, Kri-Kri trades at a relatively low PE of 14x, with cash exceeding debt on its balance sheet.

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UEKI Corporation (1867.T) is a construction company operating in eastern Japan, trading at almost Net-Net value with a PER of 6.5x and a 5.3% dividend yield (39% payout ratio). The company has a balanced business model, with architecture (private) and civil engineering (government) segments. Over the past 10 years, sales have grown by 10% while operating profit has increased by 50%, benefiting from high margins due to supply constraints in the construction industry. Q3 FY2025 results show decreased sales but increased profits. The stock has a 66-79% margin based on cash + PER valuation, strong financials, and stable demand. UEKI's domestic focus limits its exposure to Trump's tariffs, creating a buying opportunity. The company's dividend is expected to remain stable at 80 yen per share (4.7% yield), with potential for increased shareholder returns in the future.

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