YB new stock pitches (Tue, Oct 28)

OMS Energy Technologies (OMSE), a Singapore-based manufacturer of precision wellhead systems and steel pipes for the oil and gas industry, trades at an extremely cheap valuation of 4.8x P/E, 1x P/S, and <2x EV/EBITDA despite being GAAP profitable from 2022-2024. The company, which was spun out from Sumitomo in 2023 and went public via IPO at $9 per share (currently trading at $5.07), has grown revenue aggressively from $57 million in 2022 to $203 million in fiscal 2025, with trailing twelve-month EPS of $1.06. OMSE secured a ten-year contract with Saudi Aramco worth $120-200 million annually, providing significant revenue visibility, and maintains a clean balance sheet with no long-term debt and $96 million in net current assets plus $75 million cash. CEO How Meng Hock owns 62% of the company and has stated intentions to pursue a rollup acquisition strategy rather than pay dividends, with his lockup period ending November 10th serving as a key test of his commitment to growth versus exit. The stock sold off from its $9 IPO price due to the oil bear market and momentum selling, but recent oil narrative shifts have provided some support. With operating cash flow of $40 million, operations spanning Southeast Asia and the Middle East, and potential benefits from a future commodity supercycle, the company has a $20 price target by end of 2028, assuming management can grow revenue to $400 million with $80 million net income and achieve a 10x P/E multiple.

Read the full article here. Read time: 4 min

ZIGUP PLC (ZIG.L), a UK mobility solutions leader formed from the 2020 merger of Redde and Northgate with a fleet of 130,000 vehicles across 180 branches in the UK, Ireland, and Spain, trades at compelling valuations of 3x EBITDA, 5.8x P/E, and 0.75x book value despite generating GBP 464.5M EBITDA and GBP 166.9M profit before tax on GBP 1.8bn revenue in fiscal 2025. The company's conservative 1.6x debt/EBITDA ratio (versus 2.5-3x for peers) and forecasted GBP 200M free cash flow for 2027 provide management with capital return optionality through special dividends or share buybacks, while the current 8% dividend yield offers attractive income. ZIGUP represents a prime takeover target in the UK's ongoing M&A boom (50+ completed bids in the last 12 months), with private equity's preference for cash-generative businesses in 'boring' industries with recurring revenue and under-leveraged balance sheets making it an ideal candidate. The 2025 KKR acquisition of comparable UK asset leasing business Dawsongroup at 5.5-10x EBITDA suggests potential 100-200% upside for ZIGUP, supported by abnormally high bid premiums of 50-150% in the current UK market environment. Key risks include the stock's 17-year flat performance due to limited demand from fund outflows in UK mid-cap markets, though management has already begun addressing low valuations through GBP 90M in share buybacks since the merger, creating a limited downside, significant upside investment profile.

Read the full article here. Read time: 5 min

Alliance Entertainment Holding Corporation (AENT), a physical media distributor trading at $5.30 with a $270.9M market cap, is positioned for a growth inflection after three years of decline as the company distributes vinyl, CDs, DVDs, gaming hardware, and consumer products across five segments representing 32%, 11.8%, 26.2%, 24%, and 3.5% of revenues respectively in FY2025. The company achieved 15.8% gross margins in Q4 (versus 9% in 2023) and 5.8% EBITDA margins, driven by cost cuts, reduced promotions, and a Paramount deal starting January 1st that adds $60-80M in revenue at 30%+ margins compared to traditional DVD distribution margins of 12-13%. Management projects FY26 EBITDA of approximately $70M (100% growth) as gaming bottoms out with the Switch 2 release in June 2025 and GTA6 launch in Q4, vinyl grows with Taylor Swift's album release and a $20M UMG distribution deal, and the collectibles segment returns to growth after destocking. Revenue decline over the past three years was primarily due to gaming and consumer products declining by $189M while other segments actually grew 16%, and with gaming now representing only 28% versus 41% in FY23, growth catalysts include Q2 earnings showing return to topline growth, potential M&A opportunities, and additional licensing deals similar to Paramount that could add $50-150M in revenues each. Trading at 5x EBITDA versus a target of 7-8x EBITDA presents 80-100% upside to $9.50-$11.00, with blue sky scenarios reaching $13.50-$15 at 9-10x multiples, though risks include accelerated decline in key categories like CDs and DVDs, further industry shifts away from physical media, and potential delays in major gaming releases like GTA6.

Read the full article here. Read time: 8 min