YB new stock pitches (Wed, Sep 16)

Nomad Foods is Europe’s leading savory frozen-food manufacturer, with 15% share across its active markets, the #1 position in 15 geographies, localized heritage brands and a difficult-to-replicate cold-chain network spanning 17 plants. The shares trade at roughly 6.0-6.5x adjusted earnings and 6.6x EV/EBITDA, while management targets at least 90% adjusted free-cash-flow conversion to support a roughly 6.1% dividend yield and repurchases. The $25 target implies approximately 124% upside from $11.18. The near-term business remains weak: 2026 guidance calls for organic revenue to decline 2-5% and adjusted EBITDA 5-10%, after Q2 volume fell 5.9%. However, Q2 adjusted gross margin expanded 110 basis points as planned price increases and supply-chain productivity took hold, and a €200M cumulative efficiency program through 2028 underpins targets for 1-3% adjusted EBITDA CAGR and approximately 15% free-cash-flow growth from the 2023-2025 baseline. Executives have also committed personal capital to an option plan with $16-$25 vesting hurdles through 2031. Risks include private-label pressure, ~3.9x net leverage, control weaknesses and whitefish exposure that management says cannot be replaced in the short to medium term if Russian supply is disrupted.

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General Oceans supplies underwater sensors, sonar, autonomous vehicles and robotic manipulators, with defence changing its growth profile and subsea oil and gas offering a potential second engine from 2027. At NOK 18.08, the shares trade around 14% below the IPO price despite H1 defence revenue rising 59%, Robotics revenue increasing 219% and the group delivering a 20% adjusted EBITA margin. The valuation is approximately 11x 2026E EV/EBITA, falling to 9–10x in 2027 and 8x in 2028 under base estimates. New defence awards extending the backlog beyond 2026 are the key catalyst: a reasonable rerating supports a NOK 26 base case, sustained defence momentum could reach NOK 36, while a temporary order surge could reset earnings and send shares toward NOK 12. The main risk is that only NOK 122m of the NOK 548m Q2 backlog extends beyond 2026 as the current 41% Robotics margin normalises. Cash conversion is also weak despite NOK 546m of cash, no borrowings and NOK 325m of undrawn facilities. Acquisition execution is an additional risk because management’s 2030 revenue ambition includes M&A, and value depends on what it buys, at what price and how transactions are funded.

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Boustead Singapore is a speculative investment in an underappreciated energy-engineering division representing 30% of group revenue. The exposure is obscured first by limited analyst coverage and second by the conglomerate structure. The division supplies mission-critical equipment across the oil-and-gas value chain and serves 70% of the world’s top 20 energy corporations across 93 countries. The thesis is that disruption around the Strait of Hormuz will encourage capacity expansion outside the Middle East while damaged regional facilities require repair, replacement equipment and servicing; recent revenue at Boustead International Heaters has largely come from FPSO engineering solutions. A SOTP valuation applying a 30% conglomerate discount produces fair value of S$3.97 per share, implying 96% upside. New contract announcements are the clearest rerating catalyst, with management’s energy-engineering guidance at the July AGM expected to test the thesis. Risks include clients’ recent caution on final investment decisions and succession execution, as CEO FF Wong will turn 83 this year and is expected to be succeeded by deputy CEO Wong Yu Loon.

Read the full article here. Read time: 5 min