YB new stock pitches (Wed, Oct 1)

Itron Inc. (ITRI) presents a 30% upside opportunity to $160/share by 2026 with a 19% IRR, driven by a generational replacement cycle as 2010-2012 AMI deployments (13M smart meters annually vs. 6M in 2009) reach their 12-15 year replacement timeline, creating an estimated 18M unit deployments by 2029 versus 16M in 2024. The company, which holds 34% market share in North American electricity meters and 63% of the network layer, is positioned to benefit from first-time AMI replacements catalyzing adoption of higher-margin Distributed Intelligence (DI) meters with 25-50% ASP premiums, as DI endpoints already surged from 1.5M in 2023 to 4.8M in 2024. Itron expects to gain market share from struggling competitor Landis+Gyr, which faces management turnover, poor organizational alignment (3.5 vs. 4.0 Glassdoor rating), and inferior DI technology, while Itron's new GenX radio shuts off Landis' network access, potentially capturing 12.5M of Landis' meters operating on third-party networks for an additional 0.83M annual meter sales. The investment thesis projects 7.5% growth in North American electricity business, 2.5 percentage points gross margin improvement from mix shift, and 16% EBITDA margins by 2027 reaching $450M EBITDA and $7.5 EPS at historical 21x NTM PE multiple, though risks include policy changes reducing utility CapEx, interoperability pushback on pricing, and potential Landis operational restructuring, with bear case showing 15% downside assuming 4% market growth and flat market share.

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Wasion Holdings Limited (3393.HK) is an undervalued data center beneficiary trading at HK$12 per share with an HK$11.9bn market cap and 7.8x FY25 EBITDA multiple, positioned to benefit from major contracts with Oracle and ByteDance through its partnership with GDS/DayOne for the Singapore-Johor-Batam AI hub project expected to reach 2GW capacity by 2028. The company operates three segments: Power Advanced Metering Infrastructure (PMI) with ~20% pretax margins, Communication and Fluid Advanced Metering Infrastructure (CFMI) operated through 59.6%-owned Willfar Info Tech listed on Shanghai Stock Exchange worth RMB11.8bn (covering entire market cap), and Advanced Distribution Operations (ADO) which handles data center cooling and power products. Management guided to RMB1.3bn in GDS orders covering 200MW (with current orders representing less than 1/10 of GDS+DayOne's total scale), plus another RMB1bn from three major carriers, expecting to deliver over RMB1bn in data center revenue this year with remaining RMB1.2bn next year, while emphasizing potential for 'big surprises' given they only provide 50% of their product catalog and aim to be a one-stop data center service. Using conservative assumptions of 10% EBITDA margins on data center business and 12-15x multiples suggests RMB5bn value from Malaysian project alone, leading to price targets above $15-20 per share in base/bull scenarios, with the 50% dividend payout ratio providing 3.8% yield. Key risks include hyperscaler capex cuts and margin compression, while catalysts include management delivering on promised surprises and continued contract execution, with the opportunity existing due to limited sell-side coverage of the GDS contract despite its transformational nature.

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FILA.MI, a global stationery leader with iconic brands like Giotto, Ticonderoga, and Canson, trades at 3-4x EV/EBITDA despite owning a 26% stake in DOMS Industries (Indian stationery company) worth €396m versus FILA's €460m market cap, implying the core business trades at under 2x EV/EBITDA with over 70% FCF yield. The company generates €40-50m normalized annual free cash flow and holds dominant market positions including over 50% market share in graphite pencils and 60% of the French school paper market. FILA has significantly deleveraged from over 5x debt/EBITDA in 2020 to 1.2x currently, with margins recovering post-COVID as the company benefits from strategic partnerships with DOMS for Asian distribution and low-cost manufacturing to replace Chinese production by 2026. Key catalysts include potential sale of a 6% DOMS stake without losing governance rights, growing industrial synergies between the companies, and the possibility of a business combination as acknowledged by CEO Massimo Candela. Bear cases include geopolitical risks, FX volatility, tariff exposure given global operations, and potential governance complexities from the DOMS relationship. The stock offers asymmetric upside potential through re-rating as the market recognizes DOMS value and FILA's transformation from a leveraged COVID casualty to a cash-generating global franchise, with management targeting capacity doubling and operational rationalization through 2029.

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