YB new stock pitches (Tue, May 5)

ChipMOS TECHNOLOGIES INC. ($IMOS), an OSAT (Outsourced Semiconductor Assembly and Test) provider, appears undervalued versus peers despite strong financial performance, potentially due to lack of equity research coverage and its ADR status causing the market to miss the opportunity. The company reported robust Q4 2025 results with revenue of NTD 6,521 million (up 6.1% quarter-over-quarter and 20.8% year-over-year), gross margin of 14.3% (up 190 basis points quarter-over-quarter), operating profit margin of 9.7% (up 3.7 percentage points quarter-over-quarter), and net profit of NTD 500 million (up 41.9% quarter-over-quarter), translating to NTD 0.72 per basic common share. Full year 2025 revenue reached NTD 23,933 million (up 5.5% year-over-year) with net earnings of NTD 0.70 per share (down from NTD 1.95 in 2024) and free cash flow of NTD 1,555 million compared to a net outflow of NTD 938 million in 2024. Memory products represented just under 50% of Q4 revenue (up 8% quarter-over-quarter and over 55% year-over-year), with DRAM at about 20% of revenue (up 20% quarter-over-quarter) and Flash at about 29% (up 1.6% quarter-over-quarter and over 46% year-over-year), while automotive and industrial revenue comprised just under 27% of total revenue (up 13.4% quarter-over-quarter and over 27% year-over-year). The company maintains cash and cash equivalents of NTD 14,859 million as of December 31, 2025, with 2025 CapEx of NTD 3,666 million, and trades at a low PEG ratio relative to comparable OSAT names that have experienced significant recent moves.

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Haivision Systems Inc. (HAI.TO), a best-in-class video streaming company serving defense and entertainment clients including NASA, US Navy, CNN, META, and JPM, offers sub-100ms latency encoders and software with an impressive 72.5% gross margin. Trading at $6.60 per share, the stock represents 8.6x FY26 EBITDA and 7x FY27 EBITDA (assuming $165M revenue at 15% margins), with current EBITDA margins of 9.3% expected to expand to 20% as recurring revenue grows from 21% to 33%. Key catalysts include a partnership with ShieldAI for drone streaming, NATO and defense tailwinds, operating leverage expansion, market share gains from legacy players through their open-sourced SRT protocol, and potential synergistic acquisitions in the fragmented industry. Management has demonstrated excellent capital allocation with well-timed buybacks and acquisitions, holding 33% insider ownership. Risks include potential defense contract delays despite ongoing wars, memory price pressures, competition from players like Vitec, LiveU, and Dejero, and management's history of moving goal posts on margin targets, though the competitive industry features Haivision as the premium choice with strong pricing power. The stock has retraced most of its early-year gains and offers attractive risk/reward with limited downside, with upside potential from new contracts including DHS, NATO, Airbus, and Olympics not yet modeled into conservative projections.

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The Magnum Ice Cream Company N.V. (MICC), a Unilever spin-off and the world's largest ice cream company, was added as a new position to the dividend growth portfolio at a market capitalization of €6.84 billion, trading at 7.6x forward EV/EBITDA and 12x forward P/E. The company operates in a slow-growth ice cream market projected to expand 3-4% annually and has strong pricing power with globally diversified revenue weighted toward Europe, featuring popular brands like Magnum. Q1 results showed volume growth of 2.9% and pricing growth of 1.6%, though full-year 2025 operating profit fell to €599 million from €764 million in 2024 due to €118 million in one-off separation and restructuring costs related to the spin-off. The company completed an acquisition of 61.9% of Kwality Wall's (India) Limited from Unilever in March-April 2026, with a mandatory takeover planned, and targets a 50% payout ratio in the mid-term. The 2025-2026 transition years include one-off spin-off costs, a cost-cutting plan, and increased capital expenditure, with the defensive nature of the business and low valuation fitting the portfolio's goal of providing upside and income while limiting downside relative to initial investment. The stock has been sold off by impatient funds and investors, and quality defensive dividend growth stocks remain underrated despite exhibiting favorable characteristics for replacing cash holdings.

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