YB new stock pitches (Wed, Jun 3)

KWHIY (new position): Kawasaki Heavy Industries is a Japanese industrial conglomerate (aerospace, energy, precision machinery/robotics, rolling stock/trains, ships) at a $15B market cap, trading ~15-16x its ~$1B 2026 profit guidance, offering a good price relative to market comps with solid growth in key markets (Aerospace, Energy, and especially Precision Machinery & Robot, which has 17% revenue growth and >100% operating income growth). The investor bought primarily for the recently announced NVIDIA robotics partnership (Omniverse/Isaac Lab/Jetson, with a San Jose design center), which Jensen Huang highlighted across medical, service, humanoid robots, and mobility systems—giving free call option upside on Hinotori (surgery robot) and Kaleido (humanoid robot), with comps trading much higher ($BOT), fitting the theme of legacy industrials being rerated as they enter humanoid robotics. The heavy industrial business is viewed as undisruptable by AI and even a beneficiary (similar to Mitsubishi Heavy, whose backlog roughly equals its market cap). Bear concerns: the 9th-gen Kaleido robot looks weak versus Figure or Boston Dynamics ('a bit of a clanker'/Gundam fantasy), and Kawasaki's robotics timeline is too slow—humanoids only in controlled factory/plant settings around 2030 (where Figure, Tesla, and Boston Dynamics already operate, leaving KHI ~3 years behind) and autonomous unstructured-environment work (heights, confined spaces, disaster sites) only by 2040, which the investor finds a realistic and compelling vision but far too long to wait for a near-term multibag. The investor concedes buying Kioxia may have been the better move to keep AI exposure lower.

Read the full article here. Read time: 4 min

Sakai Chemical Industry ($4078.T) is a Japanese chemical company viewed as a big winner due to its exposure to the growing MLCC market. The company holds roughly 40% operating profit exposure to MLCC through its highest-margin 'Electronic Materials' segment (or 29% of operating profit before unallocated companywide costs), which is approximately 99% exposed to MLCC applications, as nearly all of its electronic materials are for MLCC use. Its core material is BaTiO₃, the highest BOM component in an MLCC at around 50% of the cost. The BaTiO₃ market consists of hydrothermal (13.5% share), oxalate (21.4% share), and solid-state (61.8% share), with hydrothermal and oxalate used in high-end MLCCs because their processes produce very fine, highly uniform particles. Sakai uses the hydrothermal process, giving it roughly 40% operating exposure to an AI server market growing at 80% annually. The stock is cheap, trading at 7.6x EV/EBITDA, 18x adjusted P/E, and 0.97x P/B, especially when factoring in MLCC market growth.

Read the full article here. Read time: 1 min

DG (short): SNAP cuts ($187B, largest ever) destroy core rural customer spending power—participation -6% pre-enforcement, no trade-down available. DG 21.7% pricier than Walmart; Aldi/Walmart taking share. CEO turnaround architect Vasos leaving; mix shift compresses margins. Baa3, 3:1 op leverage. Base EPS $6.24 (-14%), bear $4.28 (-41%); target 14-15x from ~$118. Catalyst: Q1 (late May). - link

Read the full article here. Read time: 14 min