#16 ValueStream
$NRP - $SYZLF - $BELFB - $MAGN - $TITC - $CBL - $NLOP - $MCB.L - $ZEG.l - $GTX - $CRAWA - $QQ.l - $CNH - $CNC - $BATS - $BTI
Disclaimer
This content is for informational purposes only and does not constitute financial advice; we recommend always verifying the ideas presented here and conducting your own research, as there may be errors in interpretation and translation.
Today we have compiled the following theses:
Thesis on QinetiQ - QQ.l - Jan 15, 2025 by Upslope Capital Management
Thesis on Titan Cement International SA - $TITC - Jan 24, 2025 by Alluvial
Thesis on CBL & Associates Properties, Inc. - $CBL - Jan 24, 2025 by Alluvial
Thesis on Net Lease Office Properties $NLOP - Jan 24, 2025 by Alluvial
Thesis on McBride Plc - $MCB.l - Jan 24, 2025 by Alluvial
Thesis on Zegona Communications Plc - $ZEG.l - Jan 24, 2025 by Alluvial
Thesis on Garrett Motion - $GTX - Jan 24, 2025 by Alluvial
Thesis on Crawford United Corporation - $CRAWA - Jan 24, 2025 by Alluvial
Thesis on Natural Resource Partners - $NRP - Jan 20, 2025 by Greystone Capital
Thesis on Sylogist - $SYZLF - Jan 20, 2025 by Greystone Capital
Thesis on Bel Fuse - $BELFB - - Jan 20, 2025 by Greystone Capital
Thesis on CNH Industrial - $CNH - Jan 21, 2025 by Greenlight Capital
Thesis on Centene - $CNC - Jan 21, 2025 by Greenlight Capital
Thesis on Magnera Corporation - $MAGN - Jan 21, 2025 by Kingdom Capital Advisors
Remember Thesis on British American Tobacco - $BATS.l - $BTI - Dec 02, 2023 by Bireme Capital
Thesis on QinetiQ - QQ.l - Jan 15, 2025
It is a global defense company that offers engineering, testing, technology, and experimentation services for military and governmental clients.
Global defense company with a focus on experimentation, testing, engineering, and technology.
Main clients: governments in the AUKUS region (Australia, United Kingdom 66%, and the U.S.).
Benefited by the increase in defense spending and military modernization in Europe and the United Kingdom.
Solid financial model:
Conservative balance sheet (net debt of 0.5x EBITDA).
Track record of disciplined acquisitions.
Active share buyback program.
Risks: dependence on government budgets, especially in the UK, integration of acquisitions, and cyberattacks.
Valuation:
Trades at 7.5x EBITDA, at the lower end of its historical average range (7.0x–9.0x).
40% discount compared to global defense peers.
SOURCES:
Upslope Capital Management
https://www.upslopecapital.com/
https://twitter.com/UpslopeCapital
Jan 15, 2025
Q4 2024
Thesis on Titan Cement International SA - $TITC - Jan 24, 2025
It is a global Greek company that produces and distributes cement, concrete, and building materials.
Global producer with diversified operations in Europe, the U.S., Turkey, Egypt, and Brazil.
More than 50% of revenues and profits come from the U.S., benefiting from infrastructure investments and a long period of underinvestment in domestic cement production capacity.
IPO of Titan America SA in 2025 to close the valuation gap with U.S. producers.
The market underestimates its profitable international operations.
Valuation
Target price: €60 per share (current: €44); potential revaluation of 36.36%.
Valuation of Titan America: Expected between 8-9x EBITDA after the IPO in 2025.
Hidden value: International operations almost unvalued by the market.
Undervaluation: Trades at multiples (5-7x EBITDA) lower than its U.S. peers (9-12x EBITDA).
SOURCES:
Alluvial Capital Management
https://alluvialcapital.com/
https://twitter.com/alluvialcapital
Jan 24, 2025
Q4 2024
Thesis on CBL & Associates Properties, Inc. - $CBL - Jan 24, 2025
is an operator of traditional malls, outlet malls, open-air shopping centers, and lifestyle properties in the United States.
Owner of 87 commercial properties in the U.S. and manager of 4 additional ones.
Recovery strategy following bankruptcy in 2021: debt reduction and reinvestment in key assets.
Sale of weaker properties and consolidation of interests in strategic joint ventures.
Generation of stable cash flow with unencumbered properties.
Catalysts: higher occupancy, stable income, debt reduction, share buybacks, and solid dividends.
Additional opportunity: Properties with non-recourse debt could add value in case of improvement or restructuring.
Low financial risk thanks to available cash and unencumbered assets.
Valuation
Target price: $40-45/share (compared to $28 currently; 43-60% discount).
Base value (low downside risk): $24/share.
Cash: $9/share.
Unencumbered properties: $66M annual cash flow ($15/share).
SOURCES:
Alluvial Capital Management
https://alluvialcapital.com/
https://twitter.com/alluvialcapital
Jan 24, 2025
Q4 2024
Thesis on Net Lease Office Properties $NLOP - Jan 24, 2025
Company in the process of liquidation with high efficiency in property sales and debt reduction.
Went from 47 properties and $215M in debt to 39 properties and $61M in debt in 6 months.
It is expected to completely liquidate its debt shortly and distribute income to shareholders.
They continue to sell their properties at an 8-12% cash flow yield, with prices still heavily discounted compared to book value.
Possibility of distributions significantly higher than the current stock price.
Valuation
Estimated value per share: $45 (realistic scenario); minimum in the $30 range in adverse scenarios.
SOURCES:
Alluvial Capital Management
https://alluvialcapital.com/
https://twitter.com/alluvialcapital
Jan 24, 2025
Q4 2024
Thesis on McBride Plc - $MCB.l - Jan 24, 2025
A British manufacturer of private-label cleaning and detergent products.
Overcame challenges due to high costs after the pandemic through efficiency and new contracts.
Benefits from consumers shifting towards more affordable brands in weakened economies.
Solid recovery: Volume growth and margin improvement.
Net debt: £117.6 million. New low.
Dividends: They expect to resume them in the next fiscal year.
Valuation
Multiples: Trades at 3.6x EBITDA and 5x future earnings.
McBride's shares are considered a bargain below GBp 200.
SOURCES:
Alluvial Capital Management
https://alluvialcapital.com/
https://twitter.com/alluvialcapital
Jan 24, 2025
Q4 2024
Thesis on Zegona Communications Plc - $ZEG.l - Jan 24, 2025
London-listed investment company acquired Vodafone Spain through a leveraged buyout.
Operational Improvements: Stabilizing revenues, improving cash flow, and simplifying operations.
Plans to sell Vodafone Spain’s fiber-optic assets to streamline business, to significantly reduce acquisition debt. Expected H1 2025.
Turnaround Progress: Early-stage recovery with multiple catalysts for future growth.
Valuation
Trades at less than half its fair value estimate.
Likely to declare substantial distributions post-debt repayment.
SOURCES:
Alluvial Capital Management
https://alluvialcapital.com/
https://twitter.com/alluvialcapital
Jan 24, 2025
Q4 2024
Thesis on Garrett Motion - $GTX - Jan 24, 2025
Core turbocharger business decline is slower than expected.
Focused on adapting to the EV market through significant R&D investments.
Strategic shareholder returns include a 12% reduction in share count over the past year.
The exit of major shareholders is pressuring share prices.
Capital allocation prioritizes dividends and share buybacks.
Valuation
Shares trade between mid-$8s and $9s.
Commitment to returning 75% of annual free cash flow to shareholders.
Share repurchases occur at high teen free cash flow yields.
Significant revaluation potential once selling pressure abates.
SOURCES:
Alluvial Capital Management
https://alluvialcapital.com/
https://twitter.com/alluvialcapital
Jan 24, 2025
Q4 2024
Thesis on Crawford United Corporation - $CRAWA - Jan 24, 2025
Consistently achieves ~20% annual ROE. Doubling book value every four years.
Acquisition of Rahn Industries ($13M) strengthens the Air Handling segment and market position.
Aligns intrinsic value growth with sustainable earnings despite illiquidity.
Valuation
Trades at an undervalued P/E multiple of 9-10.
SOURCES:
Alluvial Capital Management
https://alluvialcapital.com/
https://twitter.com/alluvialcapital
Jan 24, 2025
Q4 2024
Thesis on Natural Resource Partners - $NRP - Jan 20, 2025
Is a royalty company that owns mineral rights on 13 million acres, generating cash flow by leasing properties to coal miners and benefiting from soda ash and carbon capture opportunities.
Royalty-based generating 90% free cash flow margins with no operational costs.
70% from metallurgical coal (steel production) and 30% from thermal coal (electricity). Global demand remains strong despite U.S. thermal coal decline.
49% stake in Sisecam Wyoming (soda ash producer) adds long-term growth potential.
30% insider ownership; aggressive debt reduction since 2016. Post-debt, all free cash flow will go to unitholder distributions.
NRP is undervalued due to its affiliation with the politically challenged coal industry, the perceived tax complexities of its MLP structure and some historical mishaps
Coal prices are highly unpredictable, but dwindling supply, limited investment, and high production costs may support pricing despite declining thermal coal demand.
Upsides: Potential for royalties from carbon capture projects and continued soda ash contributions.
Valuation
Free Cash Flow Yield: Trading at 4–6x normalized FCF; $14–18/share FCF expected annually (15–20% yield).
Historical Free Cash Flow: $20/share average over 10–20 years (22% yield).
Debt Paydown Impact: Remaining debt to be cleared in 1–1.5 years, enabling distributions to potentially return the full market cap in 5–7 years.
Optional Upsides:
Sisecam Wyoming stake valued at ~$500M (35% of market cap).
Carbon capture royalties could generate $20–40M annually long term.
Yields likely calculated when the stock was trading at $90.
SOURCES:
Greystone Capital
https://www.greystonevalue.com/
https://www.greystonevalue.com/_files/ugd/47fd79_a54ed5fe7f17447083511063bba629d1.pdf
Jan 20, 2025
q4 2024
Thesis on Sylogist - $SYZLF - Jan 20, 2025
Provides essential ERP and CRM software to public sector clients, with nearly 70% recurring revenue.
15%+ annual revenue growth, 60% gross margins (75% for software), and 25% EBITDA margins.
Revenue growing 17% annually since 2021; recurring subscription revenue improved to mid-teens growth.
Expanded government and education segments generating ~$30M in high-margin revenue.
Insider stock purchases and share repurchases reflect belief in long-term value.
Valuation
Current Valuation: Trades at a high single-digit cash flow multiple.
100%+ potential revaluation.
Catalysts: Accelerated growth, operating leverage improvements, and shareholder-friendly capital allocation strategies.
SOURCES:
Greystone Capital
https://www.greystonevalue.com/
https://www.greystonevalue.com/_files/ugd/47fd79_a54ed5fe7f17447083511063bba629d1.pdf
Jan 20, 2025
q4 2024
Thesis on Bel Fuse - $BELFB - - Jan 20, 2025
Bel Fuse’s turnaround was driven by CFO Farouq Tuweiq, enhancing pricing, cost structure, and capital allocation.
The company remains undervalued compared to peers, despite improved earnings power.
Acquired 80% of Enercon Technologies for $320 million, strengthening its presence in aerospace/defense and R&D.
Acquisition financed without equity dilution; provides immediate top-line growth and strategic benefits.
Plans to resume share buybacks as leverage decreases, emphasizing long-term shareholder value.
Valuation:
Bel Fuse’s pro forma EBITDA expected to exceed $140 million in 2025, nearing $150 million in 2026.
Enterprise value currently under $1.2 billion, trading at half of peer valuation multiples.
Substantial upside potential as valuation normalizes; share repurchases to enhance returns.
SOURCES:
Greystone Capital
https://www.greystonevalue.com/
https://www.greystonevalue.com/_files/ugd/47fd79_a54ed5fe7f17447083511063bba629d1.pdf
Jan 20, 2025
q4 2024
Thesis on CNH Industrial - $CNH - Jan 21, 2025
CNH Industrial manufactures agricultural equipment like tractors and combines.
Industry downturn due to weak commodity prices, but CNH is expected to generate trough earnings of ~$1 per share.
Management proactively reduced supply chain and inventory challenges, likely shortening the downturn compared to a decade ago.
CNH aims to align production with demand, supporting sales recovery even with weak farmer spending.
Shareholder returns supported through dividends and buybacks.
Valuation
Acquired at an average price of $10.53 per share, trading at <11x bottom-of-cycle earnings.
Dividend yield: 3%.
Share buyback commitment: 5-6% annually.
SOURCES:
Greenlight Capital
https://www.greenlightcapital.com/
https://seekingalpha.com/article/4751383-greenlight-capital-q4-2024-letter
Jan 21, 2025
Q4 2024
Thesis on Centene - $CNC - Jan 21, 2025
Is the largest Managed Medicaid company.
Shares are undervalued due to concerns over Medicaid uncertainties and potential non-extension of ACA exchange subsidies.
Core Medicaid business repricing over two years could counteract headwinds.
Management has shown confidence with increased share repurchases and personal stock purchases.
Valuation
Shares acquired at an average price of $60.54, trading at ~9x current earnings.
SOURCES:
Greenlight Capital
https://www.greenlightcapital.com/
https://seekingalpha.com/article/4751383-greenlight-capital-q4-2024-letter
Jan 21, 2025
Q4 2024
Thesis on Magnera Corporation - $MAGN - Jan 21, 2025
Formed from the merger of Glatfelter and Berry’s HH&S businesses; began trading independently in November.
Operates in non-wovens (e.g., wipes, diapers); impacted by prior cheap imports but may benefit from stricter tariff regimes.
Management focuses on rapid deleveraging supported by an $800M notes offering and operational efficiencies.
Historical EBITDA performance (> $500M annually) supports potential growth through synergies and volume recovery.
$1.8B of net debt after the spin
Valuation
Initial EBITDA of ~$400M, expected to grow to $475–500M within three years.
Trading at a 6x EBITDA multiple; current share price: $18.
Target price: $40/share (~120% upside, 30% IRR).
Projected annual free cash flow: > $100M over the next three years, aiding debt reduction and financial stability.
SOURCES:
Kingdom Capital Advisors
https://www.kingdomcapitaladvisors.com/
https://www.kingdomcapitaladvisors.com/fund-letters/q4-2024
https://twitter.com/kingdomcapadv
Jan 21, 2025
Q4 2024
Remember Thesis on British American Tobacco - $BATS.l - $BTI - Dec 02, 2023
is a global tobacco company specializing in traditional cigarettes and rapidly growing reduced-risk products like vaping, heated tobacco, and oral nicotine.
BAT is a global leader in traditional tobacco and reduced-risk products (RRPs), including Vuse (vaping), Glo (heated tobacco), and Velo (oral nicotine).
RRPs are projected to grow from £2.9 billion in 2022 to £12 billion by 2030, offsetting a 2% annual decline in traditional tobacco revenues.
BAT benefits from barriers to entry like regulatory hurdles, distribution expertise, and brand loyalty.
Despite ESG-driven biases and regulatory risks, BAT is well-positioned for growth and market revaluation as its RRP portfolio expands.
An estimate 50% drop in US menthol brand sales in 2026 driven by US ban
Valuation:
Current Valuation: Trades at 8x Free Cash Flow (FCF), considered highly undervalued.
IRR Projections:
Base case: 16.3% IRR by 2030 with operating profits at £11.9 billion.
Upside case: 24.1% IRR, 4x return over 7.5 years, operating profits at £16 billion.
Revenue Projections:
Traditional tobacco: Declines 2% annually.
RRPs: Grow to £12 billion (base case) or £13 billion (upside case) by 2030.
Terminal Valuation: Base case at 11x P/E; upside case at 15x P/E by 2030.
Dividends: Offers strong, growing dividend yield.
Hidden Value: 30% stake in ITC adds undervalued potential not reflected in BAT's stock price.
SOURCES:
https://www.biremecapital.com/cio-corner/british-american-tobacco
https://twitter.com/evantindell
Bireme Capital
Dec 02, 2023