YB new stock pitches (Tue, Jan 6)

X Financial (XYF), a Chinese online personal finance company making unsecured loans of $70-$7,000 to individuals, trades at $5.77 versus $5.87 TTM EPS, representing a 1x P/E ratio with 2024 earnings of $4.39 and 2023 earnings of $3.46. The company has been profitable 8 of the last 9 years (COVID exception) and nearly doubled earnings since 2021, while offering a 35% cash return yield through a 4.5% dividend yield ($0.25 dividend) plus 30% of market cap spent on buybacks ($68M in 9 months), reducing share count 14% year-over-year. Key risks include CEO Yue Tang's control (43% economic value, 93% voting power), Chinese regulatory caps of 36% annual interest/fees, rising delinquency rates (31-60 days past due increased from 1.02% to 1.85%, 91-180 days from 3.22% to 3.52%), shrinking loan portfolio with Q3 originations down 13.7% from Q2 though up 19% year-over-year, and free cash flow historically being half of reported net income ($340M vs $697M over 10 years, though closer recently at $527M vs $624M over 4 years). Bull cases include delinquency rates remaining below pre-2020 levels, management prioritizing risk management over growth, over $10/share in cash, liquidation value of $5-20/share, the stock trading as high as $20 in summer 2024, and confidence in cash flows given massive dividend/buyback spending, with the investor taking a 10% portfolio position expecting management to continue conservative underwriting and shareholder returns.

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Deckers Outdoor Corporation (DECK) was the worst S&P 500 performer in 2025, falling 49% despite strong underlying fundamentals, and now trades at a 16x P/E ratio (14x net of cash) compared to its 33% five-year EPS CAGR and 50%+ ROE. The company operates three core brands with HOKA reaching $2.2 billion in sales (+36% three-year CAGR) and UGG at $2.5 billion (+8% three-year CAGR), while maintaining a fortress balance sheet with $1.4 billion cash and no debt. Key catalysts include lapping 20% Vietnam tariffs at mid-2026 which created substantial headwinds, international expansion toward a 50/50 sales split from the current two-thirds U.S. exposure, aggressive share buybacks of ~2.5% annually with a $2.5 billion authorization, and the resumption of operating leverage as the company historically grows earnings faster than revenue. Primary risks include intensifying competition from ASICS copying HOKA's foam and design, ON Running dominating urban lifestyle markets, Nike's potential innovation comeback with products like Vomero, and execution challenges around product innovation and maintaining brand heat. Management guides for 7.5% revenue growth and flat profit growth in FY26 due to tariff headwinds, but the investor believes the 16x valuation is too conservative for a business that has delivered high-teens EPS growth through operating leverage and disciplined capital allocation, with the thesis that sustained high-single-digit revenue growth will drive mid-to-high-teens EPS growth and eventual multiple re-rating.

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Vente-unique.com SA (ALVU.PA), a French furniture e-commerce company, has achieved 18 consecutive years of profitability with €201 million revenue (+12.5% organic growth) and 10.9% EBITDA margins in FY 2024-2025. The company operates across 14 European countries through three business segments: direct-to-consumer e-commerce (core Vente-unique.com brand plus recently acquired Habitat brand), a growing marketplace (21% of French e-commerce volume, 88.9% fulfillment growth), and logistics-as-a-service for external customers. Trading at 15-16x forward earnings with an estimated 38-50% ROIC versus 7-8% cost of capital, the company generates €14.5 million operating cash flow and maintains €13-17 million net cash position. Key growth catalysts include marketplace expansion to Poland and Scandinavia, Habitat brand development (targeting €30-50 million revenue within three years), warehouse expansion in Allier (€7 million capex, 75% capacity increase), and fulfillment services scaling. The investment thesis projects 17-21% annual returns driven by 11-15% earnings growth from geographic expansion, marketplace scaling to 35-40% of volume, and margin expansion through operating leverage. Major risks include macroeconomic recession impacting discretionary furniture spending, competitive pressure from Amazon/Wayfair/traditional retailers, Habitat integration execution challenges, and potential valuation multiple compression from 15-16x to 12-13x, though the company's operational excellence, customer service awards across six countries, specialized bulky furniture logistics expertise, and disciplined capital allocation provide competitive moats in the fragmented European furniture e-commerce market.

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