It is a mission-critical, SaaS-like business embedded deep inside the day-to-day operations of more than 110,000 merchants in China (the merchants who sell on Taobao, Tmall, JD, Pinduoduo, Douyin, and other apps).

Once installed, it becomes difficult to replace, because a large part of the growth is increasingly coming from existing customers expanding their usage of the platform, rather than simply from constantly acquiring new customers.

The company reported 115% net revenue retention in 2024.

Its higher-value “synergy” products grew revenue by roughly 65% last year, while the total SaaS customer base still expanded by almost 28% to around 113,000 customers.

So you have both -more customers entering the ecosystem and existing customers spending more once they are using the platform.

You can buy the company for roughly 13x my estimate of 2026 adjusted earnings. But even that substantially understates how cheap the underlying business may be. More than half of the company’s market value is represented by cash. Strip out a reasonable portion of that cash, and you may effectively be paying somewhere around 6x forward earnings for the operating business.

But wait! There’s more! The business is also at an inflection point- financially.

Revenue increased 25.6% last year.

and adjusted profit increased by 380%

Gross margins have expanded from approximately 50% in 2021 to almost 74% today.

And the operating leverage is only now beginning to become visible.

The latest guidance suggests adjusted profit to increase again.

That is because this is fundamentally a highly scalable business.

The software has already been built.

Customers largely pay in advance. There is very little physical capital required to support growth. And as more revenue passes through the existing infrastructure, a larger proportion of every incremental renminbi can fall through to profit. This is the point in a SaaS business where the economics can begin to change very quickly.

But wait! There is even MORE!

This company is already the largest player in its niche in China, and still the market itself remains fragmented and relatively underpenetrated.

The company also has no debt, and tons of cash.

And importantly, management has already begun returning some of it! Sharebuybacks- representing just over 3% of the company, during 2026.

The board is also considering an interim dividend.

So the thesis is not dependent purely on multiple expansion, or the market finally noticing the business, or investors finally starting to appreciate that there may be value on the Hong Kong Stock Exchange.

You have a mission-critical software business.

You have recurring, subscription-like revenue.

You have existing customers expanding their spend.

You have new customers still joining the platform at a rapid rate.

You have gross margins approaching 75%.

You have significant operating leverage.

You have a dominant competitive position.

You have billions in cash.

You have almost no financial debt.

And you may be paying only 5-7x forward earnings for the operating business after adjusting for that cash.

There are risks, of course, there always are, but I believe the market has presented us with an opportunity here, and I have certainly acted on that opportunity…

If you want to become a paid subscriber- do so on the Desktop Website- otherwise you pay 30% extra for Apple’s Walled-Garden tax.

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It is a wonderful restaurant Chain in China (my personal favourite), growing rapidly, highly profitable, and still opening stores at a remarkable pace.

And you can buy it for roughly 6x forward earnings.

Revenue grew more than 20% last year, while adjusted profit grew around 40%.

The company has no meaningful financial debt and carries a substantial cash position.

Management is still expanding the store base aggressively, giving the business a long runway if unit economics hold.

Yet the stock trades at a valuation more appropriate for a business in structural decline.

And you are being paid handsomely while you wait.

Management has formally committed to distributing at least 50% of annual earnings to shareholders.

At today’s price, that implies an ordinary dividend yield of roughly 7-8%, before any special dividends.

Here’s the simple math.

If you buy a growing business on a 15-16% earnings yield, receive 7-8% of your purchase price back each year in dividends, and earnings continue compounding at even a fraction of their recent rate, the return potential becomes difficult to ignore.

But if the company can prove that its new stores remain economically attractive, and that mature-store performance is stabilising, I struggle to see why this should remain a 6x earnings business.

It is profitable.

It is growing.

It has a large runway for expansion.

It has lots of cash. No bank borrowings.

It returns capital.

And it may be trading at less than half the multiple investors would ordinarily pay for those characteristics.

My favourite part about this restaurant is that it’s my personal favourite in China. I have been to multiple branches- conducted on the ground due-diligence, and will always return.

The company I am pitching today is…

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Earnings:

Prime wafers.

Clear thesis confirmation.

Revenue increased 19% QoQ, from ¥6.35bn to ¥7.55bn, while operating profit rose 44%, from ¥1.33bn to ¥1.91bn.

Eight-inch monthly production capacity increased from 250,000 to 270,000 wafers, while shipment volumes reached record levels.

Reclaimed wafers.

Demand is healthy but with temp…

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What followed, was akin to the market’s secondary function “weighing”- as many of these companies posted stellar earnings, only to be met with a tanking share price, from what I like to attribute to investors taking profits on companies trading at valuations that no amount of stellar performance could make sense of.

Investing is simple, but not easy. When you see screenshots of X accounts up 3541% YTD, you start to wonder if your strategy might need an update. When you dive a bit deeper to discover those accounts are essentially the lucky few who took a 1 factor bet on a few hype names it reminds you to stick to your strategy- you’re in this for the long run.

For every X account up a thousand percent year to date, there are plenty who wiped out their accounts. You don’t see them posting, because they’re busy nursing real wounds.

The bull-case for AI is not over, far from it, but it does not mean an AI exposed company trading at 30X sales is a good investment. Good business? Sure. A good investment needs to have a valuation that makes sense.

Soitec (156%)

Earnings:

The earnings picture was stellar. The thesis played out beautifully and quickly, and the market re-rated the company to what I believe is a fair value for now.

The market is keenly focused on the photonics story. The company is delivering: “Photonics-SOI sales doubling year-on-year.”

What I struggle to understand is whether or not Soitec will benefit from true bottleneck-like economics: if they are able to increase prices to take advantage of excess demand. It is possible, but I cannot get a good read on it, it’s beyond my pay-grade, and with every single analyst watching Soitec like a hawk now, the edge of it being “undercover” is lost.

How The News Effects the Thesis:

No matter which way I model it, even under my bullish assumptions, it still looks fairly valued to expensive at 122EUR per share which puts FY27 EV/EBITDA of 20X.

That being said- the real ramp up for photonics is still set for 2027, onwards, but as I said before, I cannot get comfortable modelling that.

I do personally believe that the stock will continue performing well into 2027, 2028, and 2029. I would just like a better entry price after locking in a 100%+ gain.

I was greedily eyeing Soitec as it fell from its high of 192 EUR. I wanted to buy in the 70s, but alas the company reported earnings and the stock flew again.

I believe Soitec will continue to do well into the future, I also believe that management will continue to sandbag earnings because photonics will continue to surprise both them, and the market.

My Position:

I hold no position now.

I cannot buy Soitec at current prices because I cannot properly model the TAM to a degree where I feel comfortable with its current valuation. When I originally pitched Soitec it traded at 51 EUR. It now sits at 120 EUR. I sold out most of my Soitec around 110 EUR before it went to 192 EUR.

Argosy Research (-14%)

Earnings:

Revenue down, the earnings didn’t collapse with it, but the growth I have been expecting has not arrived yet.

A brief reminder of the original thesis: I expected LONG-DIMM, Type-C, and Micro-stamping which all accounted for 30% of the revenue to grow much faster than the lower margin legacy SO-DIMM.

Management explicitly guided for shipments of LONG-DIMM to double, with demand coming from Meta and Google. It did not happen- LONG-DIMM actually fell by 1%.

However, in the May investor call they mentioned that this growth is expected to be concentrated in the second half of the year, and this is why I think it is too soon to say whether or not the thesis has played out.

Instead we had Metal Bar growing 13% QoQ - this is also higher margin business, and growing 47% YoY now at 12% of total revenue.

Inside “Others” we have CAMM2- LPDDR5, and CABB connectors for AI PCs and workstations. “Others” is growing extremely fast, and if we get qualification in CAMM2 and CABB might become its own revenue segment line.

M2 remained stable. SO-DIMM, as expected in our thesis, dropped significantly, but net profit remained stable for the company.

I am still waiting for the Q&A transcript to be published online. Especially interested to see what management says regarding the “double shipments” from LONG-DIMM- whether that’s expected to all be in H2.

How The News Affects the Thesis:

Mixed play on the thesis.

1- The revenue mix is changing towards higher margin, higher quality products. Confirms part of the thesis

2- Long-DIMM growth? Possibly weighted towards H2. This will be validated or invalidated either in the Q&A that I am still waiting for, or from next results.

I will update this writeup as well as the Substack chat regarding the Q&A when it arrives.

My position:

Holding the position for now. It was a full position on entry. No changes made. I want to see the Q&A on Long-DIMM. Would be nice if its just weighted towards H2.

Dividend yield at ~6%.

EV/EBITDA at ~8X with lots of growth optionality in its new products keeps me interested.

GnCenergy (+38%)

How many times do I need to learn this lesson?

News Update:

GnCenergy up 42% since my pitch- but it was not one for weak hands (me) because it first dipped 45% before going on a massive tear.

I obviously don’t have a problem finding winners, I have a temperament problem. I should stop looking at my portfolio. I sold because I got scared, took a small loss.

The six recent deals they got total KRW245.36bn. That equals approximately 93.4% of GnCenergy’s entire 2025 revenue of KRW262.63bn.

- KT / SGC AI Infra Gunsan: KRW75.51bn, through December 2027.

- LG Uplus Paju Center Phase 2: KRW38.16bn, through March 2028.

- National AI Computing Center / Samsung C&T: KRW35.96bn, through October 2028.

- Yongin Deokseong AI data centre / Samsung C&T: KRW33.18bn, through March 2028.

- KINX Siheung gas-turbine generators: KRW32.81bn, through March 2029.

- Samsung SDS Gumi AI data centre: KRW29.75bn, through May 2029.

How The News Effects the Thesis:

GnCenergy is experiencing exactly the kind of demand I was expecting from the datacenter buildout in Korea. What is left to be determined regarding my original thesis, is whether or not these projects convert into higher margin revenue vs previous projects.

My Position:

I chickened out of this position for a small loss.

In future I will be putting price targets on all my pitches- these targets will be based on where I believe the company is fairly valued, and should act as decent targets for where positions should be sold. (Not advice, but my personal targets of fair value).

JCU Corporation (+31.1%)

Earnings:

Recent earnings support the base thesis, not the bull case (AI Ramp).

- Revenue: ¥7.49bn, up 6.5%.

- Operating profit: ¥2.74bn, down 2.3%.

- Net profit: ¥2.08bn, up 2.5%.

- Chemicals: Revenue rose 18.2%, driven by via-filling chemicals (+21.5%) and etching chemicals (+40.1%). (YoY growth)

What bothers me about JCU’s results is that we have not seen a further substantial increase in Via Filling, but at the same time we saw their closest peer, C. Uyemura, eak out a QoQ gain in their chemicals segment.

This latest quarter is historically seasonal, so the Q4- Q1 decline is not new to the business, but Taiwan chemical sales fell ~11% QoQ.

We already know that the majority of JCUs via filling revenue comes from high-end smartphone PCBs, hence the high margin.

The AI-Ramp bull-case thesis assumes that datacenter PCBs become a bigger part of revenue. We are not seeing this with current results, while we are seeing it play out with C. Uyemura.

The apparent margin deterioration was substantially caused by Kumamoto depreciation: D&A rose from ¥223m to ¥572m, so the margin detoriation is not structural in my opinion.

How The Earnings Affects the Thesis:

The core of the bull thesis for JCU was that they would experience a ramp-up in high margin revene by selling more CU-BRITE. This would in turn shift their revenue from majority high-end Smartphone PCBs to high-end PCBs used in AI Chips.

We had confirmation of this when I first pitched the company- Via Fill revenue from Taiwan was increasing substantially.

This could mean a few things:

1. Capacity still qualifying (with my original estimates that we see the ramp in 2027).

2. New generation substrates haven’t entered JCU’s numbers yet.

3. JCU is not selling more chemicals to AI-related customers.

4. Competitors are taking the share.

Peers in the chemical space have all been growing QoQ, MKS, Element Solutions, Qnity. This is uncomfortable because where is JCU’s growth?

I am willing to wait until November results because JCU’s overseas subsidaries report to JCU with a revenue lag. This most recent results from Taiwan is what happened from January to March 2026, not from April to June.

C. Uyemura also reported a slight revenue increase- and they too have a similar accounting lag for overseas subsidiaries.

So if we look at the other competitors, we might be comparing the wrong financials.

My Position:

In my last positions update I mentioned closing most of my position in JCU, the reason was two-fold:

1. JCU had become and uncomfortably big position relative to the rest of my portfolio. The stock hit a high of 8000Yen, 100% up from my pitch, it blew past my target.

2. The market has been shooting first and asking questions later- by buying up any name that had an AI-Exposure label attached. The thesis wasn’t validated yet, but the market had decided to re-rate JCU to my fair value. When the market re-rates a company to your fair value, before your thesis is validated, you want to take profit.

My leftover position has now been reduced to ~5% in the sell off. I intend to hold this until the next results. At that point, if JCUs Chemical business (mainly Taiwan) has not grown in-line with other chemical names, the thesis would look invalidated.

The AI-bull case would be invalidated. But the company currently trading at around ~8X EV/EBITDA is not demanding at all. My base case still has JCU trading at around 6,600yen.

Nippon Chemical (-7%)

Earnings:

Earnings were fine, management is guiding for a 50% increase in Profit, but this is largely due to offloading of cross-holdings rather than a material increase in profitability of the operating business.

The company continues to offload cross-holdings. Using the proceeds to increase capacity for High-Purity Red Phosphorus which are scheduled for production in fiscal 2027- which is 2026- this year, they have a weird fiscal year.

Electronic materials results were muddied again with an automotive decline. The company mentioned that the “Level of demand, particularly related to AI servers, is exceeding expectations.” they are also possibly expanding Barium Titanate Capacity.

How The Earnings Affects the Thesis:

As with JCU Corp, and many other pitches, like Worldex, Shin Etsu, we will only really see the AI-bull case thesis play out from 2027 onwards, as the demand ramps up from their customers who are increasing capacity.

This earnings update has been fruitful because I have realized that my portfolio is far too overweight into different companies that reflect one-factor bet- a bet that demand appears later, in 2027 onwards, for mostly cyclicals.

But do I really need so much exposure to different variants of the same thing? From a portfolio standpoint, the answer is no. I should be more diversified.

While these earnings do not validate or invalidate my thesis, I need to re-assess my entire portfolio, and decide just how much exposure I want to these single factors.

My Position:

I am probably going to sell off my Nippon Chemicals position in its entireity. Not because the stock is expensive, or because I am unhappy with the results, but because I am too concentrated in chemicals, and need to decide what to keep and how much to keep, whether its JCU, Shin Etsu, or other cyclicals.

I do still want exposure to the capacity expansion bet, but it cannot make up such a large portion of my portfolio.

I will continue following Nippon, because I want to catch any signs of when the capacity thesis takes root, so I will keep you updated.

On this note- I will also be making the spreadsheet so that you can follow my changes live. With price targets, and cost-basis.

Update on:

Shin Etsu (+12.6%)

RS Technologies (+84.5%)

Worldex (+4%)

To come out in Earnings Update Part 2.

This lovely screenshot came from my chat with , the guy who found Sivers before anyone else I know found it. Appreciate discussing ideas with you, Moody!

If you need to understand what Worldex does I’ve written about it here.

For those subscribers who have been following the Worldex story, we just got our thesis confirmed. The controlling shareholder revised the value-up plan to substantially satisfy activist demands.

I am already too overweight, at 30%, but if I wasn’t I would add here. The KOSPI is getting murdered, and Worldex is holding up even though the market is trying to drag everything down.

Price discovery will happen next as the market starts to understand the governance story. The company will do its first buyback in 18 years, with a shareholder-return policy. There are some caveats, which I will discuss later.

This was more bullish than the most bullish path I foresaw. The market reacted, but somewhat muted still because KOSPI is liquidating all the degen leveraged retail traders.

Massive opportunity in Worldex at the current price.

For a quick recap, the situation has played out as follows:

June 18th, I outline how deeply undervalued Worldex is. Governance was a major problem BUT activists are involved and I expected something to happen before the March 2027 AGM. The direction was positive.

(One piece of pre-history matters here. At the March 26 AGM, shareholders had already rejected Worldex’s director-remuneration proposal, with 69.2% opposed or abstaining. Under the Supreme Court’s Namyang precedent, Bae could not vote his own shares on a proposal governing his compensation. The defeat left Worldex without an approved 2026 remuneration framework for its registered directors, which is why the company called the June EGM and tried to pass the proposals again.)

June 29th, controlling shareholder Bae pulls out all the dirty tricks, holds an in-person vote in Gumi and tries to increase exec pay to egregious levels. Disables e-voting to make it harder for outside shareholders to participate. VIP Asset Management, the activists, rally the troops and reject ALL THREE of the controlling shareholder’s proposals. On the two items covering Bae’s own pay, where his votes were legally restricted, the rejection ran ~94% against. On item 2-1 — the sons’ pay limit, the one item where Bae could vote his full 34.8% bloc — the item still failed, 51.7% against, because 94.7% of general shareholders (everyone except Bae) voted no.

July 13th, I expected a "gift" from Bae, the CEO, to his son before the value-up plan. But Bae capitulates to the activists' economic demands, for reasons I will explain below. This is more bullish than I expected, but there are caveats!

And the capitulation came with something interesting: a written apology from the founder himself. The company's press release said the revision reflects management's "solemn recognition of the fatigue and disappointment shareholders felt" from delayed shareholder returns. Bae personally called the EGM result "a stern warning letter sent by shareholders and the market, which management accepts heavily and actively" — and added: "I sincerely apologize for failing to fully console shareholders' deep hurt and disappointment."

I think the market needs to re-rate this, probably around 30-50% just on the current value-up plan.

More could happen prior to the 2027 AGM. This is overall bullish, but the fun ain’t over yet…

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The market is pricing this company as if there isn’t a memory capacity expansion and as if the cash on the books will never be seen by shareholders. For good reason too — governance, which I believe is changing.

The asymmetry involved is striking.

The company is already valued as if cash will be trapped forever. The pessimism is fully baked in, and even in my bear case, the company is worth more than it is here. There is a reason for this too: the founder needs to keep the price low for tax reasons, but only for now.

There is a clear signal that will indicate to the market when that time is up.

Valuation snapshot (at the ₩28,700 close, July 3, 2026):

• Market cap: 16.51m shares × ₩28,700 = ~₩474bn

• Less net cash: ~₩220bn (₩230bn cash & financial instruments, minimal debt)

• Enterprise value: ~₩254bn

• EV/EBIT ≈ 4.3x trailing (FY2025 EBIT ₩58.6bn)

• EV/EBITDA ≈ 3.3x trailing (EBITDA ~₩78bn)

• On my FY2026 estimates that falls to ~3.3x EBIT / ~2.6x EBITDA, and on FY2027 to ~2.7x / ~2.3x — the market is paying less for this business every year the capacity build compounds.

While competitors trade at EV/EBIT of 10x+.

If you want to catch up on the business, I analysed it in the post below. This article will focus solely on the governance. And our pathway to alpha.

This situation is COMPLICATED, but it is damn well worth understanding. I think there is money to be made here.

On the 29th of June, shareholders rejected ALL of Bae’s (CEO, Founder, Controller) ordinary resolutions.

These 3 resolutions were all trying to vote on similar things — exec pay. Egregious amounts of it.

The 2-1 ordinary resolution is important to understand (red boxes above). It was a vote on execs’ compensation excluding Bae’s pay — and this means that Bae himself and his full 35% ownership could vote — which is why the vote was so close at 51.7%. This is crucial because even when you include Bae’s full 35% vote, the other shareholders came together and politely told management to go and “F*%$ themselves”, and rejected the vote.

This was his last desperate attempt in my opinion.

In ordinary resolutions 1 and 2-2, Bae’s full 35% was excluded because of a rule where controllers cannot vote on their own pay. Which is why we see it lost by such a large margin.

This is insanely bullish because prior to the meeting, Bae pulled out all the stops for this meeting to try and raise his pay:

• He disabled e-voting.

• He forced a stamp process to introduce friction for proxies.

• He forced an in-person meeting in Gumi.

And he got voted down.

The outcome of this vote is insanely bullish for Worldex minority shareholders. (not because they won anything, but because it means they can win).

It is far more bullish than I expected it would be.

I did not expect the minority shareholders, against the disabled e-voting, against the frictions, to be able to vote Bae down when his full 35% share vote counted.

The share price did a nice 10% pop on the news, but the next day it didn’t go anywhere. I think the market is completely asleep on this name — while Hana Materials trades at a 3x higher valuation on a P/E basis. Especially when I regard Worldex as the better financial operator vs Hana.

I really do believe this is only the beginning for Worldex shareholders.

Worldex is exposed to the biggest HBM capacity buildout in history — which will be a tailwind for more than 5 years (most likely). Memory prices aren’t what matter to them — it’s the capacity buildout.

At a price to earnings of ~10, with nearly half the market cap sitting in cash, and an activist that just beat the founder’s full 35% stake in an open vote — this changes the game completely.

But here’s the part almost nobody understands, and it’s the exact reason the stock is still this cheap:

The man with the most information in this situation is deliberately keeping the share price down. Legally. Methodically. And on a deadline.

Worldex is priced the way it’s always been priced — a company trapped inside a family. Succession, the Korean edition. Except Logan Roy is 75, cornered, and running out of calendar. The suppression that created this price has an expiry date — and it’s written in statute.

Better still: there is a single public filing that starts the clock. It will look like nothing — a routine disclosure most investors have never read and wouldn’t recognize if it printed in front of them. But the day it drops, everything after it is already choreographed: a quiet window I can time almost to the week, then the concession that unlocks ₩230bn of trapped cash, then a March 2027 meeting where the founder must win four separate votes from a register that has already beaten him at full strength.

The market will reprice when the results hit the headlines. The money is made by knowing what to watch before they do.

Behind the paywall:

• The signal — the exact filing, who files it, and why it means the rest of the script is already running. My scraper watches DART for it every day; the moment it prints, subscribers hear it from me first — chat and email.

• The tax mechanic that dictates the entire sequence — once you see it, the founder’s every move for the past 18 months snaps into focus.

• The statutory deadline — why his whole strategy dies on one specific date in March 2027, no matter what he wants.

• My base, bear and bull targets — including why my bear case is roughly the price on your screen right now.

Subscribe now

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This article is for informational and educational purposes only and does not constitute investment, legal, tax, or financial advice, or a recommendation to buy or sell any security. The author may hold a position in Worldex (KOSDAQ: 101160) and could transact at any time without notice. The analysis reflects personal opinion and includes forward-looking estimates and assumptions that may prove wrong; figures are drawn from sources believed reliable but not independently guaranteed, and some (including legal interpretations and probability weights) are the author's own judgment. Korean securities, tax, and corporate law are complex and fact-specific. Do your own research and consult a licensed professional before investing. You alone are responsible for your investment decisions.

Disclosure: I own this stock.

Also* The stock has been moving while I have been writing this up- so some prices/valuations are stale- but still not close to my bull case- the “catalyst” has still not activated.

I think I have found the Korean version of Succession, except instead of a media empire, the family drama is sitting on top of a deeply undervalued Korean semiconductor consumables company exposed to one of the biggest memory capacity expansions in history.

This company, on a comparable basis, should trade at around 3X its current valuation. Easily.

But first we need to understand the fun stuff.

The company is Worldex and the CEO and founder is Bae Jong-sik- he’s our Korean version of Logan Roy. A Tycoon and a real turd to be honest. (Sorry Bae- but you are).

He was born in 1951, so he is 75, and he has still not properly implemented succession to either of his sons. The two sons currently own 0% of the shares, which is the entire game. The founder needs to gift his shares to his son, and he wants to gift them at the lowest possible price. A low price means a lower gift-tax bill, which could save the family billions of won. But time is running out.

After the succession happens, the incentives flip discretely to align with minority shareholders- and this is, along with a recent passive shareholder now flipped activist, is why the governance situation is so interesting, and so ugly, and so ripe with opportunity once you understand the outcomes.

(I will go into depth into these governance events, and how I am going to play it later in the article).

The tactics used by Bae Jong-sik are dirty, but he is fighting what I believe to be a losing battle- against activists, and against the new Korean pro-minority shareholder policies.

The company previously tried to push through a golden-parachute style clause that could have allowed special severance payments of up to 20X the three-year-average salary, on top of the ordinary retirement allowance, if directors were dismissed before the end of their term due to hostile M&A. That clause was removed after shareholder opposition, including opposition from VIP Asset Management- which is our Knight in shining armor.

In Succession terms, VIP Asset Management would represent the largest activist shareholders who see massive value in the company, but need to fight Logan Roy to get it. And last week, on the 9th of June, they went even more activist- VIP filed to change its holding purpose from “simple investment” to “general investment”, increased/confirmed its stake at 15.64%, and formally pushed for buybacks, cancellation, higher shareholder returns, and TSR-linked executive pay.

This followed the 26 March 2026 AGM in Gumi, where VIP’s CEO reportedly attended in person, opposed Worldex’s director-compensation proposal, and, with the controller’s votes restricted, helped minority shareholders defeat it with 69.2% voting against.

There is a caveat: Important voting wrinkle: the family’s ~35% stake did not have normal voting power here. Because this was a director-compensation proposal, the founder/controller was treated as a specially interested party and his votes were restricted. So, for once, the minorities actually mattered — and they voted it down.

This is the new South Korea, baby. The age of tycoons is over. How are you going to make money with this?

Let’s first understand the juicy undervalued gem that is Worldex. Then I will get into how this situation likely plays out.

Worldex

The company is called Worldex and they make Silicon parts mostly (73% revenue), quartz parts, and fine ceramics.

Their closest competitor is Hana Materials and trades at around 3X the valuation- except that Worldex has better financial operating metrics- Worldex will benefit from the demand draw created by SK Hynix and Samsung Electronics the memory makers expand capacity. The most recent financials for Worldex showed that 45% of their revenue came from SK Hynix and Samsung Electronics.

This is the valuation sorted by closest peer. The valuation is rather striking.

Silicon Parts are used in semiconductor process tools (machines) that make wafers. Plasma or etch chambers that could be running DRAM etch, HBM, 3D NAND etch, logic or foundry etch, other processes.

Worldex is an “after-market” supplier of silicon parts, quartz parts, and fine ceramics and other, whereas Hana Materials is a “before-market” supplier.

What does this mean? It means that when the memory makers like SK Hynix, Samsung Electronics, expand capacity, players like Lam Research, Applied materials, (and a few others) who make the machines you see below order directly from Hana Materials for the silicon parts- the silicon focus rings, silicon electrodes, etc, that go into the machines. They order from Hana first.

This is why Hana Materials is called a ‘before-market’ supplier. Their Silicon products are used to fit the machines first.

Worldex is mostly used after the products depreciate, and need replacement.

Worldex stated that 45% of Q3 revenue came from Samsung Electronics and SK Hynix. Worldex was registered as an SK Hynix supplier in 2001 and Samsung semiconductor supplier in 2002, they have been qualified a long time.

Don’t get me wrong now, there should exist some kind of a discount, which I will explain later, but in the face of one of the biggest memory capacity expansions in history, Worldex trading at a P/E ~10 and EV/EBITDA of 3.8, is far too cheap.

The reason for the massive discount, is governance, and which we delve into deeply later. The story is changing very quickly.

Worldex at a EV/EBITDA of 3.8 has a massive margin of safety due to its current valuation and a surprisingly clear path to future revenue growth- SK Hynix said to double memory capacity in 5 years and I wouldn’t be surprised if we hear the other memory makers following suite.

This tweet by Jukan is also favorable in the general direction for Worldex, not because it means Worldex will absolutely get price increases, but it points to the actual demand benefiting the entire chain.

Where things get even weirder- valuation-wise.

Hana Materials is considered Worldex’s most direct peer or competitor, BUT

Worldex does more revenue, more operating profit, and more net profit

YET Hana trades at a market valuation of 1.34T KRW.

Worldex trades at a market valuation of 424.33B KRW.

Hana Materials trades at a P/E of 27.

Worldex trades at a P/E of ~9.

Today the company released a “value plan” which was bearish, in my opinion, but the bottom seems to be in for this company, so the market took it as bullish, and the stock rose +10%

The reason for this massive discount, is governance. But that’s about to change, you just need to understand how to play it.

But there’s more- if the price rises before a “gift” is done- the bull case may only materialize much much later. It’s complicated.

The point of this article is not to convince anyone to rush and buy the stock, I believe there is opportunity here, but within bounds, and the situation needs to be understood completely to extract that opportunity.

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This research is not complete, I will be editing this document as I discover more, but wanted to get this out because the market is onto these two.

I think Nippon Chemical is a superior play. I just started analyzing Sakai first so that’s why it reads in this order.

Sakai Chemical (4078.T)

2027 numbers are based on management’s estimates which I believe might be far too conservative given the growth in AI server MLCC.

The TL;DR is that:

1- 30% of Sakai Chemical Operating income, (Electronic Materials segment) is exposed to high-end MLCC most of which through its hydrothermal Barium titanate. (Not all of this 30% is AI-Server!)

2- The AI server MLCC market is expected to grow at 80%+ CAGR (, and the general server MLCC market will also accelerate due to agentic AI increasing CPU demand (around 30%-40% CAGR).

3- The company is cheap ahead of the biggest expansion in MLCC we have ever seen.

From the Zephyr tweet below:

“The AI server MLCC market is growing at 80%+ CAGR, and the general server MLCC market will also accelerate due to agentic AI increasing CPU demand (around 30%-40% CAGR)

MLCCs for servers were a $1.3B market in 2025 ($600m for AI servers, $700m for general servers.

We will see negative growth in the smartphone/mobile MLCC market for at least 2026-27.

Humanoids are another future high-growth market for MLCCs
Book-to-bill ratio for most MLCC suppliers is over 1 now

“MLCCs for servers were a $1.3B market in 2025 ($600m for AI servers, $700m for general servers.” -Zephyr

What is important to note here is that the MLCC market is around $15Bn. Sakai and Nippon both sell into automotive, and electronic consumables- it’s not all AI-Server. But demand is very likely to increase across the board.

Sakai uses hydrothermal and Nippon uses Oxalate- these processes both produce BaTiO3 of extremely high quality- which is most likely the ones used in AI-Servers.

These are the materials that Sakai Chemical makes that goes into making an MLCC (multi-layer ceramic conductor)

Or a clearer diagram for you:

The dielectric layers:

1. Barium titanate. BaTiO₃. The flagship. This is the core MLCC product.

2. Other perovskite-type dielectric compounds.

Dielectric raw materials & composition tuning:

3. High-purity barium carbonate. BaCO₃.

4. Barium and strontium salts.

5. High-purity titanium oxide

Electrode-related:

6. Electrode materials.

It’s probably 99% MLCC at this point.

I am very certain they are sand-bagging their 2027 estimate for electronic materials revenue because the demand for the AI server MLCC market is growing too fast.

How exposed is the company to MLCC? Operating profit for 2027- according to management estimated, they are about 40% exposed to mostly high-end MLCC.

Why do I say high-end? Because there are three ways to make BaTiO3.

1- Hydrothermal. Sakai’s focus. Grows BaTiO₃ particles in a hot, pressurised liquid reaction. Produces very fine, highly uniform particles, ideal for thinner, higher-end MLCC layers.

2- Oxalate. Uses a chemical precursor that is precipitated and then heat-treated into BaTiO₃. Very uniform composition and can compete in high-performance MLCC applications.

3- Solid-state. Mixes solid powders such as BaCO₃ and TiO₂, then fires them to form BaTiO₃. Cheaper and good for scale, but particles are generally less fine and uniform.

Hydrothermal is 13.5% of the market.

Oxalate is 21.4% of the market share.

Solid state/ or phase is 61.8%.

Given that “the AI server MLCC market is growing at 80%+ CAGR, and the general server MLCC market will also accelerate due to agentic AI increasing CPU demand (around 30%-40% CAGR)”-Zephyr

The demand will most likely be skewed towards Hydrothermal and Oxalate because AI servers increase demand for high-capacitance, high-reliability MLCCs.

That should benefit multiple premium BaTiO₃ routes, like Sakai.

Nippon Chemical (4092.T)

Nippon Chemical is an even cheaper play to Sakai.

And it also likely has even more exposure to AI-server MLCC material through its own Electronic Materials segment. Which is at 25% of total revenue.

But operating profit for this segment dropped even amidst a 23.4% rise in sales for Electronic Ceramic Materials (Mostly MLCC). Caused by problems: mainly battery materials, temporary prior-year inventory benefits reversing, and restructuring, consolidation costs.

If we assume that Nippon’s Electronic Ceramic Materials segment can do the same 20% operating margin as Sakai’s, then at a 12,000(mYen) 2027 segment revenue (my own estimate) we get a contribution of a 2400 to operating profit.

This contains a lot of assumptions though, because it means the problems they had in battery materials, temporary inventory, restructuring etc, get cleaned up.

But that would push them from a EV/EBITDA 8x to EV/EBITDA of 4x in 2027. (unless share price re-rates and all else equal which is a big ask).

This 2400 is significant. The companies operating profit in its entirety was 2400 (mYen) for 2026.

They could very quickly re-rate 100%, or become far too cheap.

Nippon Chemical also has capacity to produce high-purity red phosphorous, used for optics, but the amount is not quantifiable from the statements.

I personally, have made some major mistakes. Not just this year, but I have become very aware that if I just held the stocks I pitched longer (since I started writing) I would have done drastically better. If I held one of the first stocks I ever pitched- $HRTG, I probably would have been retired 2 years after. (But I would never stop looking at stocks).

I have always sold too early, and I think this comes from an inherent risk-aversion. For the majority of my investing career I also held 50% of my portfolio in cash, waiting for a crash that never came.

Initially my rationale for holding so much cash was a good one, I was painfully aware of the Dunning-Kruger effect.

I also knew that getting to the point where you have looked at enough stocks to pick the good ones takes years of practice, extending the ‘peak of Mt. Stupid’ further out.

Investing is not like a tennis game where you hit 1300 balls a game and your neurons adapt after each hit.

It takes much longer because you need to wait months and possibly years to verify your initial thesis as new information is slow to come out. The price of a company shooting up or down short-term, is not a verification of a thesis, it is the market voting on the outcome.

I have been looking at stocks daily for almost 13 years now. And I do feel I am out of the valley of despair. Finally. That doesn’t mean the lessons are over, though.

Lesson I need to apply: I need to hold my winners.

My new strategy will be to sell 25-50% and sometimes 75% of my winners after massive runs (70-100%+). But to always hold some and let the market do its thing.

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JCU Corp (+70%)

We will start with the pitch that began it all- JCU Corp.

JCU Corp was never meant to be a 10 bagger. I saw it as an extremely positive reward to risk play and I mentioned that in the pitch. The market has re-rated the company since then. I positioned myself extremely heavily in JCU because I thought the downside was minimal, and the upside had 50-100% in it. I have taken off most of the massive position since but now still hold a full position in the stock.

Recent earnings show increasing profitability, and most importantly- the increased memory prices have had a negligible effect on their via filling (80% of their operating profit) growth. I had assumed the softness in the smartphone market would lead to a decline in their biggest segment. It had minimal to no effect. Chemicals for high-end PCBs (mostly smartphones) have surprisingly been on the rise.

What about AI-Datacenter exposure? Our proxy for this is Taiwan, Japan, and Korea. Taiwan more specifically. I think it is lagging and we will eventually see out-sized growth from Taiwan because it takes a long time to qualify the chemicals in the packaging facilities. They have yet to come online.

Ibiden, Unimicron, are expanding capacity. They make the package substrates that are then filled by chemicals like CU-BRITE. They have to build the facilities and then they have to qualify the chemicals in the facilities. It all times a lot of time, and the bulk of the facilities will come online later. When these facilities are qualified, that is when I believe we may see a big ramp-up in the chemicals used to via fill PCBs.

Then there is the TIPHARES, JCU’s line of surface-treatment chemical solutions and the Kumamoto facility near the TSMC Gigafab in Japan.

This is very important to the company, its the first thing they mention in their update.

JCU presents us with a lot of optionality too, as most of their current capex is to increase their exposure to the highest end semiconductor package substrates- as mentioned in the image above.

This all makes JCU look like a long-term hold. They are quietly positioned to do very well as capacity increases.

Current EV/EBITDA at 11.46x is a fair to bargain multiple to pay for a business that will probably see outsized growth into the future. I still don’t see much torque for the stock, the business is not like that, but I do see a steady compounder.

Position update: sold most of my super overweight position, now holding a full position of 7%.

RS Technologies (+80%)

When I pitched RS Technologies it looked like quite an obvious and safe long. The company has surprised me. It re-rated quickly as the market realized it shouldn’t be lumped in at the same multiples as other prime-wafer businesses.

Reclaimed wafers are a different game, and the company does in fact have a qualification-like-moat at competitive price points.

My favourite thing about RS Technologies was the reward to risk profile. It was the kind of company I love to pitch because at the valuation (at the time) it had minimal downside (and 50% cash as a % of market cap). It’s hard to lose on companies like this.

For Q1, the overall outlook is positive.

The company saw an increase in revenue and margin in its reclaimed wafer business YoY and a 31% YoY increase in its prime wafer segment. It puts the company at a P/E of 18. Still relatively cheap due to the amount of cash it has on the books, but it does not have the same appeal now as when I pitched it initially.

Position update: I have sold 75% of my position.

Shin Etsu (+23%)

Shin Etsu’s electronic’s segment, now its biggest segment and highest operating margin segment, is exposed to almost everything chip-related. They make products for:

• Front end wafer fab: Silicon wafers, SOI wafers, photoresists, hardmasks, photomask blanks, synthetic quartz mask substrates, pellicles

• Back-end packaging, thermal protection: Encapsulants, liquid encapsulants, die attach, thermal interface materials, silicone coatings, low-dielectric materials

• Adjacent electronics, infrastructure: Rare-earth magnets, HDD VCM magnets, optical-fiber preforms/coatings, LT wafers, PBN, compound semiconductors, QST/GaN.

Shin Etsu is a bet on longer term AI and datacenter demand.

The company is also a photonics play. They have the largest SOI capacity worldwide (according to Citrini) and we are likely to see them start mentioning this market soon as the photonics buildout ramps up. They license Soitec’s smartcut technology and we have seen Soitec run up 245%! I believe Shin Etsu’s time is yet to come.

This from Citrini’s “Let there be light” article.

I think Shin Etsu will experience a similar dynamic to JCU Corp- where most of the growth lies ahead of it.

We are also watching the company slowly shift to a higher margin business as its “Electronic Materials” segment sees gains from the datacenter buildout and its infrastructure drags.

Position update: no change, holding a full position.

Soitec (+245%)

I found Soitec from reading when he will still criminally underfollowed. I have no qualms pitching stocks from others when I believe in them— as long as I give credit where it is due!

I did this for Wasion Holdings, ChongQing Electric Machinery, and Thakral Holdings from . Wasion Holdings and ChongQing both did 80%+ and I have since sold both, although ChongQing might warrant another look.

Thakral Holdings has an extreme margin of safety and is only up 16% since the pitch. Deep value.

With the amount of Substacks and X accounts pitching stocks soon every stock on the market will have a pitch, and it will be our job again, to filter noise.

I have always wanted to build my own Substack around one goal- to make you money with limited downside while not posting noise. I will continue to pitch other people’s theses if I think it will make you money.

Thank you Jason for finding Soitec. I hope my subscribers made some money on it and didn’t sell early like me!

Soitec is currently up 245% since I pitched it. I learned a very expensive mistake on Soitec. I started weighting it more and more and ultimately paper-hands half of my position on a dip, and then proceeded to watch the stock double from there- then sold my entire position and watched it double again!!!!

(This is a major part of the reason I tend not to announce trades I do personally unless I get 100% out of a position or the thesis changes- because my analysis shows that just buying and holding the stocks I pitch perform better than I do myself!!! Lesson learned.)

I will admit that Soitec now has a much steeper valuation than when I first pitched it.

But things have fundamentally changed too- the photonics demand TAM expectations have increased drastically.

It is for this reason I wish I held. The optics buildout is truly gargantuan. Beating all previous expectations.

The Goldman-style thesis says AI networking shifts from “some pluggable optics at the network edge” toward massive numbers of optical links inside scale-out and scale-up AI fabrics. That creates demand for silicon photonics PICs, and those PICs are commonly built on Photonics-SOI wafers. Soitec is one of the key suppliers of those engineered substrates. They also benefit through the licenses they license out- to Shin Etsu, for instance.

Position Update: Sold out of all, but I wish I didn’t.

Argosy Research (+20%)

Argosy gives me a similar feeling to RS Technologies in its setup. It’s largest segment has bottomed out (SO-DIMM) and Server (R-DIMM) is growing at 30% annually.

I think the market hasn’t woken up to the fact that R-DIMM benefits from the CPU bottleneck- adjacently.

Agentic AI makes CPUs more important. More CPUs and CPU servers mean more DDR5 server memory. In conventional x86, that memory is usually RDIMM / MRDIMM.

It benefits because agentic AI likely increases:

1. CPU server count

2. CPU:GPU ratio

3. memory per CPU socket

4. DDR5 speed requirements

5. high-capacity RDIMM, MRDIMM adoption

6. RCD/PMIC/SPD hub content per module

As we see M2 become a bigger portion of Argosy’s revenue (it’s also higher margin with a bigger moat vs SO-DIMM and their M.2) we will see the company re-rate and probably do what RS Technologies did- a double.

GnCenergy (-20%)

Would’ve been nice to buy this dip but immediately after posting Korea, and a lot of Japan entered into a brief correction.

They also released earnings which I reported on here:

Think this one needs a bit more time to play out as their backlog comes into their income statement at much higher margins (my thesis).

Position Update: still holding a full position

Please leave me feedback on what markets you would prefer I focus on, and what kind of value you get out of this Substack.

It’s a small-cap.

Holds 70%+ market share in its niche.

It’s vastly undervalued at EV/EBIT 10 on a single name basis and vs peers which trade at 20-30X EV/EBIT. The name could double and still be valued at less than peers.

It’s customers are the big, expanding, capex heavy names in South Korea.

I believe it’s undervalued because it’s small and the market has yet to “discover” it properly as it has been doing daily with other names in the space.

I believe the business has 100%+ upside given its strong historic growth, and strong position in one of the biggest bottlenecks we’ve ever seen.

The name of the company is…

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The market is treating it as if future growth is unclear, but its not because the business is sitting in a tailwind created by the expansion of capacity of RAM memory by SK Hynix, Samsung, and Micron.

-Second-order beneficiary of the RAM shortage.

-Growing topline revenue at double digits.

-Two segments growing at 30%+ annually with customers like Meta, and now recently Google. A subsegment expected to double shipments this year.

-6% dividend yield.

-It trades at low multiples. PE 12~ (Below its historical average).

-Its biggest revenue segment is currently supressed, partly due to a slowdown in the sale of laptops- because of the rise of memory prices, not an actual demand destruction of laptops.

-The business itself is also evolving to one with more of a qualification moat.

As the other segments experience 30% and double digit growth you get a more diversified company- and when their biggest segment bounces back eventually you will most likely have growth from every product.

This is not a moonshot. And its Moat is not impenetrable, but it’s an undervalued company based on three factors:

1- Future Growth in memory will clearly benefit them.

2- Growth is deviating towards higher-margin segments.

3- Valuation is below historical mean, and this doesn’t take into account point 1 and 2.

Read more

Here we try to understand:

1. Sive Semiconductors

2. Applied Optoelectronics

3. Soitec- I am long

We can try our best to wrap our heads around the valuations.

Sivers Semiconductors AB

The most hyped of the bunch.

They are basically fabless. They make lasers.

These lasers are individual parts that are used to make up a photonics ‘module’. The lasers are just one part of the module. And everyone wants to use Siver’s lasers in their own product.

Their photonics lasers:

• InP DFB lasers

• laser-array specialist for SiPh, optical I/O, CPO,

• lasers for pluggables

Closest peers are Coherent and Lumentum who offer a much broaded range of optics. Coherent and Lumetum make the lasers AND the modules.

Sivers photonics are very focused on the three mentioned above.

Sivers is similar to NVIDIA in that they hold the IP and get TSMC to make the chips.

Lets briefly try and undestand what all these partnerships mean for Siver’s Semiconductors.

-Ayar Labs partnership to use Siver’s lasers in their own products.

-Win Semiconductors, basically the TSMC for Siver’s, add real capacity to scale of production (of the lasers).

-O-Net is there to use Sive lasers and make modules (External Laser Small Form Factor (ELSFP) optical modules.)

-Poet Technologies also using Siver’s lasers to make a full module product (eg Pluggable transceivers)

-Enablence also using the lasers to make a full product.

How you should think of all these partnerships is that Siver’s lasers work well and now they are partnering with companies so they can make a full product using their lasers.

They are essentially preparing themselves for the launch of light. This is what the market is pricing in.

They are busy sampling their product, qualifying their product for manufacturing. The revenue has not arrived yet, but it will.

The quantity? That’s hard to tell.

From Marvell

“CW is like a lightbulb…It just shines a constant light. It is easier to make and is available from multiple sources and it’s inexpensive,” Nguyen said. “All of the high speed magic for modulating data happens in the silicon photonics.”

Valuation

You cannot value this company looking in the rear view mirror.

The best thing we can do is provide a wide band of what it should obviously not be worth- too expensive, or too cheap.

Price to sales and EV/EBITDA do not tell you anything now.

ALL the company’s real revenue will start next year, in 2027.

The market is trying to figure out what quantity that could be.

So what could it be?

Currently market cap sits at ~$400m (USD) EDIT*- now changed to $270m within like a day of me writing. yikes.

So how do you value it?

You need to try your best to quantify the 2027-2030 and beyond revenue opportunity. Siver’s gives us their DFB array TAM below.

2027E - $564M to $1.1Bn

2028E - $1.2B - $2.5Bn

BUT then they tampered these expectations down- $2bn in 2028?

If they don’t know their TAM, how are we supposed to?

Below is from their capital markets day presentations:

But its the oldest, November 19, 2023. We have an anchor of $10bn for Sivers as whole (not just lasers).

Lets try make some sense of this

The market currently is trying to price in their photonics opportunity.

If we use their LATEST Tam projection of $2bn + in 2028. And they get, like, 10% of that?

$200m revenue.

Latest results- Q4 2025, they did $8.4m. Annualized for 2026, lets say ~40M revenue. This is before they ramp up right?

That’s not bad, then you have a company trading at 2028 P/S of 1.

It’s okay.

The company right now, with all this information is not worth $1Bn today.

$500m is expensive and pure speculation.

$200m is ‘meh’ given the information is so sparse, the TAM got LOWER according to management.

$100m is where I would start looking to get in, to me personally, as an investment, or at least thinking hard about it.

Why the wide wide range? Because the information is so unclear.

It is worth noting that they have NOT started ramping yet, so we cannot look at current revenue. We are looking at their TAM and what they think they can acheive.

AAOI

Similar to SIVE, AAOI depends on some insane projections. But looks better.

Zephyr is saying that in the most aggressive optical transceiver rollout, the market is expected to do 100m - 120m units by 2030. Remember, Zephyr and Citrini were both bearish on AAOI in their recent photonics post here on Substack.

This bearish position is in stark contrast to the bullish projections AAOI management has given.

They say that they can do $378m by Q2 2027.

That’s a revenue of $1.5bn on a market cap (currently) of ~$7bn.

Let’s go with what they say, and assume they can do 40% in 2028, with a growing revenue.

By 2028 they could be doing a $2bn revenue and 40% margins. close to $1bn EBITDA.

Add the cash they made in 2027 from their bullish projections = ~500m

If market cap is constant, cash increases then by the beginning of 2028 you have a company trading at EV = $6.5Bn

Forward EV/EBITDA = ~6.5x

Not bad if you must believe the management.

These numbers are not super accurate, and it doesn’t matter in this enviroment because these numbers are going to change drastically.

It gives us a general feel. It feels a lot more ‘investment’ vs SIVE.

Soitec

Soitec is probably the most undervalued even at current metrics when you incorporate its:

1- Moat

2- TAM

3- Current and future multiples.

It’s probably the most undervalued photonics play.

With the best risk to reward profile.

Trading at EV/EBITDA ~7x is insanity for a company like Soitec. I am long. It is my biggest and only position in the photonics space for now.

Soitec

Soitec caught my eye after reading Jason’s article.

This strapping young lad (Jason) is doing some great research, I suggest you read his article before you continue with mine.

Jason's Chips

The Soitec Series | Part (1/7): Introduction to the French Photonics Substrate Monopoly

Opinions are my own and do not represent past, present, and/or future employers. All content is based on public information and independent research. This newsletter is not financial advice, and readers should always do their own research before investing in any security. I am invested in the semiconductor industry. As of the date of this publication, I…

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6 months ago · 47 likes · 8 comments · Jason's Chips

As a generalist, I want to understand Soitec’s operating leverage, bottleneck potential, moat, and valuation.

I do not have a specialist know-how, but I have relied on my fundamental knowledge of companies to make money.

Before we can even get to valuation, we need to understand a few things, quite briefly:

1- What Soitec actually makes?

2- Is there a moat, is it hard to make?

3- Is there operating leverage? If there is enough demand, can they pump them out and capatilize on that with economies of scale?

4- Roughly, what will the demand for SOI wafers be in future

Once we know this we can get to

5. Valuation- and how that relates to how fast the company will grow.

Fortuantely, Jason already answers most of our questions in his article.

I finished reading his article and thought- “I need to understand the nitty gritties of the valuation, how many of these SOI wafers the market will demand (roughly) and whether that leads to a blast off in operating leverage”.

I look forward to reading his parts 2-7, but I’m too impatient and I want to undrestand this business more thoroughly, right now.

Jason's Chips

The Soitec Series | Part (1/7): Introduction to the French Photonics Substrate Monopoly

Opinions are my own and do not represent past, present, and/or future employers. All content is based on public information and independent research. This newsletter is not financial advice, and readers should always do their own research before investing in any security. I am invested in the semiconductor industry. As of the date of this publication, I…

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6 months ago · 47 likes · 8 comments · Jason's Chips

I’m going to recap a bit, because as a generalist I still needed to wrap my head around what this company actually does.

1- What Soitec actually makes?

We’ve got a Soitec SOI wafer on the left, and normal wafer on the right.

Companies we’ve spoken about- like Shin Etsu, and RS Technologies, (and there are tons of others), make wafers. RS Technologies makes the wafers on the right. Shin Etsu makes both. Soitec makes the ones on the left.

The big risk to our ‘normal’ silicon wafer companies is that everyone now knows how to make them. China is increasing capacity a lot.

When it comes to SOI wafers, Soitec has a special process- its Smart Cut Technology. It actually licenses this out to Shin-Etsu Handotai (owned by Shin Etsu). So great! Shin Etsu also makes photonics wafers! We are positioned well! (But probably a small % of revenue…for now…).

Back to Soitec- they ALSO manufacture these SOI wafers themselves.

2- Is there a moat, is it hard to make?

Jason has described the moat quite nicely.

Smart Cut™ - This is the foundational enabling technology for engineered SOI substrates and Soitec says it underpins nearly all SOI wafers sold globally.

The moat exists.

3- Is there operating leverage?

There is. Via its own manufacturing capacity for SOI wafers and also via its royalty stream.

And what is even better is that the licenses are royalty based- so Soitec will benefit from any increase in demand for SOI wafers. This means if there is a ramp up (which is coming next year and beyond), Soitec will get close to pure profits from Shin Etsu, and other companies that hold Soitec Smart Cut licenses.

That is pure operating leverage if you ask me.

The company also has operating leverage in the form of its own manufacturing capacity.

The company has publicly disclosed their capacity too, on their site.

It’s very likely that Soitec can rellocate their mix within the SOI lines, I’m just assuming this because BERNIN 2 for instance says that they can produce multiple SOI types.

But the royalty revenue will impact the bottom-line (net profit) directly, and that is pure operating leverage without the risk of expanding capacity.

Pure profit play.

Which means any potential bottleneck that leads to a price hike would also be captured via the royalty stream.

From Soitec’s filings: in FY2024-2025, Soitec reported €891 million of consolidated revenue, and its customer mix table shows “Other customers/royalties” = 13% of revenue.

We don’t know how much of “Other” is purely royalties. But 13% isn’t small, especially when it comes with almost 0 cost. Also, most of the end markets where these SOI wafers are used in, are only actually coming to market in 2027. So this is very early.

4- Roughly, what will the demand for SOI wafers be in future

These SOI wafers are used to make Photonic Integrated Circuits (PICs) which are used in things like Transceivers (think AAOIs recent management call about the insane demand for transceivers for 1.6T) as well as is CPO (Co-packaged Optics).

We have already had real world proof from AAOI incoming orders and management commentary that this space will be insanely massive.

Companies like Coherent, Lumentum, AAOI, make products that use PICs (photonic integrated circuits). The insane demand we’ve seen in this space will certaintly lead to a massive increase in SOI wafer production.

The fact that most SOI wafers produced use Smart-Cut technology mean that Soitec will certainly benefit.

Let’s try and quantify it, roughly.

The evolution of PICs used in Datacenters:

I will publish my full demand/supply model for the wafers in the next post (free). It will require more work because their are different kinds of SOI wafers to account for, which have different end uses.

The setup is compelling and demand appears to be building rapidly, and Soitec looks unusually well placed to capture that upside. At roughly 6.5x EV/EBITDA, the stock still does not strike me as priced for that possibility, which made it easy for me to add to the position.

I am long.

My conviction really strengthened once I built out the valuation, which is where I think the numbers start to get interesting.

5- Valuation- and how that relates to how fast the company will grow.

This is how I have modelled the business based Soitec’s own SOI wafer capacity. I have also used bullish assumptions.

Read more

I am quite chuffed with JCU Corporation, up 47% since my post in December. It hasn’t blasted off like other bottleneck plays- but it was always the most compelling Risk to Reward play for me, and I had this sitting at a 40% position initially.

I have reduced exposure because my portfolio suddenly became a one-trick pony, and I’d rather not have all my eggs in one basket.

JCU Corporation (4975.T) Update

• Increased operating profit by +16.4% YoY with the chemicals segment up +9.5% YoY.

• One question I have been trying to answer relentlessy is the bottleneck potential for names like JCU Corporation and C. Uyemura.

• JCU Corporation has more optionality towards hybrid bonding in HBM with its TIPHARES brands - so it might see more upside late 2027, 2028.

• C. Uyemura has more direct exposure to the current AI buildout in its chemicals segment “Wafers & PKG”.

But could the chemicals used hit a bottleneck?

The graph below is for C. Uyemura specifically, BUT, and huge BUT, this information relies heavily on my understanding of their processes.

A bottleneck would occur for chemicals because qualification takes long, there could be a point at which engineers are waiting for new capacity to be qualified but chemicals production capacity hit a bottleneck. But- huge disclaimer- I need to confirm this. If I can, JCU and C. Uyemura could be an early bottleneck play.

I am looking for any expert in this field to please reach out to me regarding the bottleneck potential here.

The other AI adjacent plays I profiled: Wasion Holdings and ChongQing Machinery & Electric Co LTD have both done even better. - Sometimes just recognizing the value others are putting out on Substack and X is all you need to beat the benchmark twice over.

Ever grateful to for ChongQing for Wasion Holdings. If you want some alpha- follow these guys. with only 456 subs on Substack? Undervalued.

Wasion Holdings (3393.HK) Update

Wasion Holdings doubling in share price since the mention. And I took some profits yesterday. But I am also still holding a position as Wayon Energy gets spun-off.

Wayon Energy has three business segments:

1- Smart Distribution Network: Smart Switchgear, high-efficiency transformers, and “Smart Distribution” solutions.

2- Data Center: Power infrastructure projects for power distribution modules, IT containers, HVDC power supply systems. There will be massive growth for this many years out.

3- Energy storage. Energy storage systems and PV + storage microgrids.

• The big story is value-unlocking. Wasion is proposing to spin-off Wayon Energy.

• I believe the share price has increased in part due to the value-unlock and most-part due to the fact that the market realizes its an AI buildout beneficiary.

ChongQing Machinery & Electric Co LTD (2722.HK)

2722.HK doing a solid 40% but still looking fairly priced and still largerly exposed to the AI buildout in China, which seems to lag behind the U.S.

So what’s next? What do I do with my big bag of profits?

Well I have two new picks. One is quite under-followed, the other has very recently started making the rounds on X.com

I believe both are worthy investments.

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For my non-paying subscribers, the paywall initiates just before the meat of the content- Table of contents item 5- Meeting with management. They have provided us with some valuable information that updates our thesis, and gives us relevant information as to where we need to pose our next questions for when we meet with them again.

Table of contents

• Executive summary

• TAM map: advanced copper interconnect chemistry (2025–2030)

  • PCB: HDI microvia fill + fine-line (mSAP/SLP)

  • Packaging (PKG): RDL, Cu pillars, TSV

  • Semiconductor: hybrid bonding + TGV (early-stage)

• Management update (paywalled)

  • What changes vs. the original thesis

  • What was reinforced about business quality

• What it means for the thesis

• Disclosure & disclaimer

• Appendix: sources used for TAM charts

Thank you

I am grateful to my paying subscribers, who enable me to do this work. Quick note before we start: I’m trying to keep this Substack high-signal. I’d rather publish less often and only when there’s genuinely new, decision-useful research to share. If you have preferences on format or frequency after reading this post, message me, this is funded by you, and I’ll adapt.

Executive Summary

Advanced copper interconnect chemistry is a small, high-ASP (average selling price), oligopolistic niche. Each layer of the stack, PCB, PKG, and Semiconductor, has a different growth and moat profile.

However, most of the money (medium-term) will be made in high-end PCBs where HDI Microvia Fill, and Fine-Line Pattern (mSAP), the chemical processes which are used in tandem, lead the growth.

The electronic consumer industry is at the forefront of this demand, with smartphones and their high-end PCBs, at the helm.

Guess who dominates that market? You guessed it… yours truly- The Chosen Stock.

An overview of the TAM for advanced copper interconnect chemistry (via-fill + fine-line + packaging interconnects).

Advanced copper interconnect chemistry is a niche, high-ASP consumables market spanning PCB microvia fill + fine-line patterning, plus advanced packaging interconnects (RDL, Cu pillars, TSV, and eventually hybrid bonding / TGV). Suppliers exist in an oligopoly and tend to be concentrated in the highest-spec processes, and growth is driven by tighter interconnect requirements across smartphones, AI infrastructure, and advanced packaging.

To make it simple, we are looking at three layers of the stack.

1. PCB (Printed circuit board)- The big green slab.

2. PKG- The middle green slab.

3. Semiconductor- The top grey slab.

• PCB (Printed Circuit Board): Think of this as the foundation. It is the sturdy baseboard that physically holds the entire system together and connects the memory (RAM), USBs(ports), power, storage (SSD).

• PKG (Package Substrate): Think of this as the Brain Stem / Translator. The Chip speaks a language of "nanometers" (microscopic), while the PCB speaks "millimeters" (visible to the eye). You cannot connect them directly; it would be like trying to plug a lightning cable into a wall outlet without an adapter. The PKG translates the Chip’s microscopic, fragile signals into a larger, tougher format that the clumsy PCB can actually grab onto.

• Semiconductor (The Chip/Die): Resting on the very top, this is the brain. It is the actual silicon slice where all the computing happens, but it is too fragile and intricate to touch the main circuit board directly without the PKG bridge beneath it.

Within the stack, you can see the copper interconnects.

We’re going to focus on the copper plating consumables market, starting at the PCB layer (microvia fill + fine-line).

PCB (Printed circuit board)- The big green slab.

The image below is my best attempt to conduct a market analysis on the TAM for the chemistry that goes into PCB, and PKG - the TWO green slabs, specifically.

Use the chart as a map: the PCB profit pool is dominated by two things — (1) vertical connectivity (HDI microvia fill) and (2) horizontal wiring density (fine-line patterning via mSAP, often inside SLP boards). Everything else is smaller today, even if some categories are growing fast.

Most modern smartphones use HDI (laser-drilled microvias + build-up layers). The highest-end smartphones use SLP, which is still HDI, but with much finer wiring and is typically enabled by mSAP (Modified Semi-Additive Process- it is a manufacturing technique).

1. HDI (High Density Interconnect)

• What it is: The standard for modern smartphones and laptops for the last decade.

• The Tech: Unlike old-school green circuit boards, HDI uses “Microvias” (tiny laser-drilled holes) to connect different layers of the board. This allows components to be packed tighter together.

• The Process: Circuit formation is often subtractive, but real boards can mix approaches by layer depending on cost/yield/design targets.

2. SLP (Substrate-like Board). (Fine-Line Pattern mSAP).

• SLP is best described as an ultra-high-density form of HDI that moves PCB manufacturing toward package-substrate-like feature sizes and process control.

• What it is: The “Ferrari” of motherboards (or main logic board for you technical guys). It is the next evolution after HDI, used in flagship devices, like the latest iPhones, Samsungs.

• Why “Substrate-like”? It is still technically a motherboard (PBC), but it is built using techniques borrowed from semiconductor packaging (IC Substrates). It bridges the gap between a chip and a board.

• The Tech: It allows for materially finer line width/line spacing (often enabled by mSAP). This shrinks the board size dramatically, leaving more room inside the phone for a bigger battery.

Following the money, HDI Microvia fill and Fine-Line Pattern mSAP (SLP) are where we should keep our focus on. SLP sits on the advanced end of the HDI continuum.

The chemicals for HDI/SLP’s biggest market is mainly smartphone PCBs, but growth is also spurting out in nascent industries that, over time, will add a considerable amount of TAM to this market:

1. Self-Driving cars.

2. VR Headsets.

3. Data centers (this is specifically regarding PCB boards, not PKG substrates)

This is an industry that is positioned to grow however which way you look. I didn’t add smartphones here because it would dwarf the categories below and make the chart look a bit silly (as shown after).

Smartphones currently dominate this market.

The takeaway here is that via filling for high-end (PCBs) for smartphones lead the nominal growth in the advanced copper interconnect chemistry market, but other industries, like automotive ADAS modules and VR/AR, are growing at such a rapid clip (30-50% CAGR) that they are bound to eventually contribute meaningfully to via filling too. There are other nascent industries like advanced robotics, which will, over the long-term, significantly contribute too.

PKG- The middle green slab

The PKG Substrate is where things get more advanced. I do not know different ASP (average selling prices) yet.

The largest advanced packaging interconnect chemistry pools today include RDL and Cu pillar plating; TSV (Through Silicon Via) is the main ‘via’ analogue at the package level.

The PKG substrate is where interconnect chemistry gets more specialized. Here, the big consumables pools are less “via filling” and more advanced interconnect plating, especially RDL (fan-out / redistribution wiring) and Cu pillars (bump replacement for performance packages). TSV is the closest analogue to true via-fill at this layer.

Note* this is a different chart, it is the analysis of the chemistry market for the PKG-Semi layer

*Note: for TGV and hybrid bonding, CAGR is shown as “0%.” (not meaningful) because the markets are too early-stage for clean growth math off a small/zero baseline.

RDL (Redistribution Layer):

• TAM (~$150M, CAGR 19% est 2025- 2030)

  • Status: Common Practice.

  • Context: This is widely used in “Fan-Out” packaging (used in smartphones and processors). While the technology is established, the industry is pushing for “finer” RDL (smaller lines), which keeps the chemical requirements high.

Pillars (Cu Pillar):

• TAM (~$250M, CAGR 13% est 2025- 2030)

  • Status: Standard.

  • Context: These have largely replaced older “solder bumps” (C4 bumps) for performance chips. They are the workhorse connection for the last decade of processors.

Semiconductor Level

Hybrid Bonding:

• TAM - Yet to be seen. Average selling prices will probably be high, but undetermined as of now.

  • Status: New / Ramping Up.

  • Context: This is the “next big leap.” It abandons solder bumps entirely to fuse chips directly (copper-to-copper). It is currently used in high-end 3D stacking (like AMD’s 3D V-Cache) and is the future for “stacking” logic and memory. In the “Advanced Packaging Interconnect Chemistry Market Model” Below TAM is very low- but only because there is very little information out right now- its too new commercially.

Through-Glass Via (TGV):

• TAM - Yet to be seen. Average selling prices will probably be high, but undetermined as of now.

  • Status: Emerging / In Development.

  • Context: This is the most “futuristic” item on the chart. Glass substrates are being developed to replace current resin/organic substrates because they are stiffer and handle heat/signals better. Intel, and others are targeting this for ~2026–2030. It is largely pre-commercial for mass logic production.

Putting it together: the medium-term profit pool for advanced chemistries is concentrated in advanced PCB workflows (HDI to SLP/mSAP), while the packaging and semiconductor layer adds longer-dated optionality (RDL, pillars, TSV, and eventually TGV/hybrid bonding).

With that context, the key question is simple: how much of the “cash engine” does The Chosen One control today, and what does management’s latest commentary change in our original thesis?

I think you will be pleasantly surprised. Let’s dive in.

5. Meeting with management

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In my state of FOMO, I started to dabble deeper and deeper into the supply chain. I was looking for something that was positioned to grow from these tailwinds, but not priced at a nosebleed multiple. I scoured far and wide.

And then I found it.

At first glance, I thought I found a good company. But as I stopped glancing and started really digging, I realized I had found something much rarer.

I found a company flying under the radar, sitting at a most crucial part of the semiconductor stack, but far enough removed that it has zero mentions on X.

• The Moat: It is an Oligopoly, commanding insane margins.

• The Valuation: It is trading at a single-digit EV/EBIT while poised to take advantage of the growth in semiconductors.

• I do NOT need to forecast aggressive growth because the company is perfectly positioned to ride the wave of AI, robotics, and everything chip-related. And it’s AI-exposed segment has been growing very fast.

• Excellent governance.

It’s got a moat that would make Buffett drool but unfortunately he wouldn’t buy because it’s too small (which is another reason it’s undiscovered). It has management that have a firm grasp of governance and capital allocation who have performed extremely well and have earned a exceptional ROIC. And who are investing a lot of money to be close to TSMC.

The company stands to benefit from not just the AI tailwinds, but from robotics, and everything chip related, which in the future- is essentially everything from self-driving cars, unitree’s acrobatic robots, to your AI-infused refrigerator that will soon also be your therapist.

It is, by far, the best company I have written about thus far. (in my career of 10+ years)

Yes, this beats Heritage Insurance (which was a 20-bagger), simply because the risk profile here is superior and the visibility into its future growth is clear. It’s high margin, AI-exposed segment is growing fast, but that growth is currently masked by headwinds in another segment—the perfect confluence of events to create one hell of a bargain.

It stands to benefit from NVIDIA, from TSMC, and supplies names that have already skyrocketed into the stratosphere.

Deep-dive research of this caliber takes weeks to produce and it takes months (years) of rock-turning to find a stock like this. For that reason, the full thesis and the ticker are reserved for paid subscribers.

It is this kind of opportunity I have been waiting for, this kind of quality opportunity that I want my paid subscription to represent. I’m sure you will find it more than worth it.

It’s not just me that thinks this. I reached out to some well-regarded experts to make sure I wasn’t alone in my thinking.

I then sent it to another investor I admire and received this response:

but then after reading-

Last opportunity for my subscribers

Because this is my first ever paid post,

I am pricing my annual subscription at $239 per year.

That’s equivalent to $19.90 per month. For the price of a burger, you get access to institutional grade research that aims to compound your wealth significantly.

If you subscribe at this price, you lock that price in- forever after I will be priced somewhere between $300 and $400.

After that, the price goes up. No exceptions.

Subscribe now. This is the stock that is worth it.

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A quick note for everyone who previously pledged at a lower price: when I switched this Substack from “pledges” to full paid, Substack did not automatically turn those pledges into subscriptions. It treated my new $239 plan as a different thing entirely, removed the old pledge list- there was a setting I should have enabled but I missed it on this first attempt. My apologies.

I can only see who left a note for the pledge. I will honor that note with 6 free months. You should see this email still, but now you need to ‘convert’ again. If you pledged at a lower price, please forward me your ‘pledged’ email and I’ll give you the comp.

I greatly appreciate your support.

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Closed Out Positions:

$LFMD

I took off most of my $LFMD for a 95% gain. (I did post about this on twitter).

I do realize that this sort of ‘trading’ needs to be better publicised. I expect to do a similar thing with my recently initiated position $QFIN- if we get a short-term pop, I would rather lock in the gain, especially something like 100% within a few months. I generally leave on a small tracer position, because there have been too many times where I see something blast off further.

The rest I got out basically at break-even but it was a nice ride. Market was not discounting the growth, since then, the thesis has changed quite a bit and I will not be re-instating a position.

Earnings Updates:

$CCSI

Still holding full position.

has completely round-tripped, from up 60% after posting to only up 5%. However, I think after the post-earnings plunge it offers an even better entry point. It has also been sold off further in this whole “small-caps mini-sell-off”, which I think offers a good opportunity for everyone. The situation with is far better than when I first posted it. I’m VERY bullish on CCSI at this price.

TL;DR - Corporate segment is growing, net retention rate is at 102% (perfect), management has almost hit debt-paydown goal and has indicated it will use cash flow on more equity buybacks. This looks better than when I originally wrote it up (even with the price appreciation factored in).

Price Action post earnings surprised me. I like the results. Management is being risk-averse using most of the excess cash flow to pay down debt (not a bad thing).

SOHO is down, naturally. Eventually SOHO’s decline will taper, but that is not core to our thesis- management is investing marketing dollars into growing the corporate segment.

Free cash flow of $44.4m in one quarter on a stock with a market cap of $474m. This is absurdly cheap, and generating tons of cash. Hoping next quarter we see a bunch used for share repurchases- given the history of capital allocation, its highly likely.

Share based compensation (SBC):

SBC runs at around 18% of Free Cash Flow. It is quite generous. Digging further, we see that the price at where the PSUs vest are around $30. And then a mega amount at like $60.

Management has incentive to keep get the price to $60, because that’s actually where they make bank. The market will probably use this zone to sell, or it might be a point of resistance.

That being said, the price is cheap at these levels, and management is incentivized to increase the share price. My target to get out is around $50-55, before the real PSU’s vest.

Most importantly, the shares outstanding is decreasing, so the SBC is not disrupting the mechanics of buyback engine too much. Technically speaking, the reduction in shares outstanding leads to constant upward pressure on the share price.

$BETS-B

Still holding full position.

Bettsons total shareholder return (Dividend% + Sharebuyback%) is around 8%. I’m very happy to have this while Bettson continues to grow.

We have now completely round-tripped on Betsson AB since I posted. I am still holding my full position and I think the market is drastically undervaluing the company. I believe the pressure on the share price is from general iGaming market pressures- none of which I believe are that fundamental to Bettson given the growth in Brazil, and the rest of the South American market. The company, and the industry, are still growing fast there and its a big market.

Betsson is trading at an EV/EBITDA multuple of ~5-6X, compared to 15X+ which is the industry norm (especially for an established player like Betsson).

This reminds me a lot of my Super Group call which has done 200% since I posted. I believe Betsson is extremely well run, and in a similar position- I think its undervalued because of where its listed. They reported earnings a while ago (all good stuff)- here was my update.

$8371.HK Taste Gourmet Group Ltd

Still holding full position.

Taste Gourmet is doing as expected. Its up 25% since posting and that’s excluding its dividend, which is now running at a forward rate of around 10%.

It’s doing FAR better than the other restaurant groups I spoke about in the writeup. And I believe this is because management is balanced in their expansion strategy.

The market looks too pessimistic given what Taste Gourmet has been able to achieve over the last year.

Cash flow is extremely strong. Remember we have to account for lease payments which show up in the financing section of the cash flow statement. But dividends are up, and EBIT is up, and I am happy with the results. Not too much to say about this business but there are a few points to note:

1. Average spend decreased slightly, so we will have to monitor this.

2. New stores opened are still getting to max profitability, so there will be a constant drag on margins until this company stops opening new stores- at which point market will get a very clear indication of what steady state earnings will be, and multiple expansion should increase.

QFIN Qfin Holdings Inc

Still holding half a position. Not increasing.

QFIN is still extremely cheap. Like, extremely. And they are plunging their cash flow into buybacks and dividends. What’s not to like?

The reason I am not adding here is because the business got slightly weaker, but not weak enough to justify a complete change in the fundamentals, or the thesis. If I see the thesis changes fundamentally, I will cut this completely. Right now, its a wait-and-see.

There’s isn’t too much to add. What to watch:

1. Composition of their business- capital heavy vs capital light. (They have essentially two business segments- one where they lend money to consumers and they themselves bare the risk, and the other where their platform facilitates other lenders to make loans (the super high margin great business). It moved slightly to their more capital heavy business.

2. Delinquency rates increased. But within range of what they have seen historically. This is the MAIN thing to watch. If delinquency rates increase too much, then it signals there is a fundamental change in the structure of the market where they operate. We have seen this in China before, in China the market changes fast because the government is constantly tinkering with policy.

The short report Grizzly reported was basically (I think) just fear and doom and allowed grizzly to put a short position on and take it off immediately after they posted. It was lazy research. Their main “short-points” were:

1- SARM numbers not being the same as the SEC financials. QFIN has come out and publicly stated the numbers Grizzly used are wrong. I have not seen the documents, I tried to access them but cannot gain access even with my connections in China.

2. The governance is shady. Their main point was that the former controlling shareholder is a fraud. He doesn’t control the group anymore, though. The two points Grizzly makes are contradicting, if the company doesn’t make any money, then how have they such a large quantity on dividends and buybacks? If you have been following Grizzly Research for some time, you will know that they have been called out for having done lazy research. My honest opinion is that they run a short-fun where they post a ‘doom-report’ to benefit off of a short-term sell-off then cover their position immediately. Basically market manipulation, but in the gray area where they cannot properly get in trouble legally, even though they face a few lawsuits.

OMSE Energy Technologies Inc

Still holding full position.

What a crazy market it has been for $OMSE. In the two weeks after I posted, the stock surged some 60-70%, only to completely round-trip back to where I bought it!

Its an interesting investing-psychology experiment, as it was zooming up many were messaging me asking if its still undervalued, is it still worth getting into at the current, elevated price? I wonder how many people now will want to get in now that the price has dropped. If you felt more confident as the price was rising- congratulations because you fell victim to ‘herd-mentality bias’. If you can start noticing what that feels like, becoming more aware of it, you can make real money in the stock market. You will always ‘feel’ that, its built into your primal psychic architecture. But notice it, be aware, and then go against it- when the fundamentals tell you to.

The earnings were fine. Management stated that current earnings were depressed from the norm due to abnormally large orders from their Saudi customer in the first half.

Welcome to small caps.

If we go on what the CEO says, the business is fine. Just fluctuating orders. He says demand is still great. Backlog is strong.

More importantly were his comments on capital allocation, which was essentially a non-answer given he said they would use the proceeds for everything- organic growth, joint ventures, acquisitions. He is just leaving the door open for any opportunity. If they can keep growing organically we can be happy. This company is dirt cheap.

Q3 update

CorMedix’s Q3 looks great for the original thesis!

They reported $104.3m in net revenue, of which $88.8m was Defencath and about $15.5m came from one month of Melinta. Adjusted EBITDA was $72m.

On the thesis:

• We are getting validated on our “Defencath launches well, throws off real cash, and gives them bargaining power for post-TDAPA”. LDO(Large Dialysis Organization) uptake is running ahead of expectation, and we’re already seeing strong EBITDA.

  

• The part that says “long-term value depends on what happens after TDAPA and the add-on periods” is still unresolved. Q3 doesn’t answer what net price or what patient retention you get once Defencath is fully inside the bundle, it only shows they’re going into that phase with much more firepower.

On valuation,

1. EV now:
   With the stock around $11.4, roughly 86m diluted shares out, $150m of converts and about $56m of cash and short-term investments, you’re looking at an enterprise value in the ballpark of $1bn

2. Current EBITDA:
   Q3 adjusted EBITDA was about $72m. Real Operating income around $50m. If you do nothing fancy and just annualise that single quarter (4 × 72), you get roughly $288m of “run-rate” EBITDA. Bear in mind- EBITDA should be growing like crazy until it gets fuzzy at H2 2026.

3. Forward EV/EBITDA using that 72m:
   Take an EV of about $1.0bn and divide by a $288m run-rate and you land at a forward 3.5× “Q3-run-rate” EV/EBITDA. Again- this is using a low EBITDA. EBITDA will most likely grow until H2 2026.

So unless the share price starts going up fast, this is going to hit a lot of screens as investors start seeing a company growing at double digits, with an EV/EBITDA below 5.

Below, the light-blue is my really meager assumptions. H2, 2026- we don’t really know what will happen with the prices of the vials, or the amount of patients on Defencath.

But at this price, with the economic value of this drug, this is a bet I want to take. Increasing my position.

From a health expert who works in the healthcare space in the U.S:

The opportunity has substantially de-risked since I first published on it. I'm using this as an opportunity to increase my position. This is not financial advice.

2. The acquisitions and what they do to the thesis

The Melinta deal is what really changes the story.

CorMedix closed Melinta on 29 August, paying with cash plus $150m of converts and some equity. In Q3 you saw just one month of Melinta revenue (about $15.5m, of which $12.8m were portfolio sales) flow into CorMedix’s P&L. Management now talks about $400m of pro forma revenue and $230m of fully-synergised adjusted EBITDA for 2025, implying a much larger, more diversified business but still with a core cash generator which is Defencath.

For our thesis it’s a positive. It means the company is more diversified. More avenues to make cash, and the acquisition happened at a decent multiple.

3. Some tidbits from the call that I enjoyed.

This might be confusing, but Medicare Fee-for-Service is different from Medicare Advantage. What Todisco is really saying is that Defencath today is used mostly in FFS patients, while Medicare Advantage is now the largest dialysis cohort that they’ve barely penetrated. That’s great because MA plans aren’t bound by the post-TDAPA add-on and can contract separately if the real-world data show Defencath truly cuts infections and hospitalisations.

or $3660.HK

Here is my TL;DR thesis:

The China Fintech lending sector has currently been oversold. The best of the bunch (undervalued + great business model) is QFIN. The market is waaay too pessimistic, and the business fundamentals are fine. I expect this to re-rate 100%+.

I believe the sector-wide sell-off in Chinese fintech was caused by consumer-finance reforms, and investors being skittish on China in general. Yes- I have watched the China-Hustle. I am well aware of the reverse-merger scams that were run. I do not believe QFIN is a scam, but I do believe that many investors believe China to be completely ‘un-investable’ and I thank them, because its for that reason we can make money, reliably, investing in China.

• Cheap & High Margin, capital light, Cash generator: EV/EBIT ≈ 2–3× and ~3-4× P/E. Net cash and active cash returns (dividend + buybacks).

• Upside: On mid-cycle EV/EBIT 5–6× (still conservative), equity is ~2–3× from here without needing growth to accelerate, just prove underwriting and keep ≥50% capital-light mix.

• Why it’s mispriced: sentiment shock after cautious Q3 guide, data-policy headlines, slight QoQ dip in capital-light share, and convert-arb overhang. None of those break the cash engine.

• What the risks are: PRC policy/VIE/HFCAA framework, mix drift back to credit-heavy, related-party ecosystem (360), credit cycle, and partner concentration.

An opportunity for my subscribers

There are only 2 spots left to subscribe to an annual pledge at the bargain price $239/year. That’s $19/month, basically the price of a burger.

After that, the price goes up. No exceptions.

These 10 pledges will lock in the one of lowest prices this research will ever be offered at.

Pledge now. Don’t blink, or someone else will take your slot.

What does QFIN do?

A credit-tech platform. They connect financial institutions with consumers who need credit. One of their business segments provides the credit but they also generate revenue from service fees. QFIN provides the plumbing, scoring, and servicing and earns fees.

The loans are small, on average ~9000RMB or $1,200. To individuals and small to medium enterprises (SMEs). Exact portion is not disclosed.

They have two main segments:

1- Credit-Driven Services: On balance sheet lending

2- Platform & Referral Services: Off balance sheet loan facilitation

1- Credit-Driven Services: On balance sheet lending

Not much to explain here- they loan to their own customers (small loans)

2- Platform & Referral Services: Off balance sheet loan facilitation

(capital light): Acquires borrowers through its app. Scores them using AI and credit data. Matches them with partner banks (who provide the funding). QFin charges the banks (or lenders) service fees.

This segment is high margin.

My thesis doesn’t rely on the company growing revenue. It relies on stabilization (which we see fundamentally in the numbers already), and a nice growing mix towards more Platform (higher margin, more SaaS-like).

Price to earnings graph for QFIN now at ~3.

Dividends and Buybacks

The dividend yield sits at ~6% but I think the real value will come from a re-rate back to a P/E of ~6 or ~10.

Buybacks, though, could force a re-rate faster, or at least force share upwards even if the multiple stays the same.

Normally when you find a company like this its a value trap because management don’t pay shareholders. Here, they are paying shareholders.

This is a risk I want to take. I’m betting against you, Mr. Market. They have capacity to repurchase up to mid-teens percent of the float at current prices, which would be disgustingly accretive.

Risks

The main risks I see here are some policy-driven factors. Regulators could tighten the noose- historically we have seen this. China has a problem with shadow lenders, which Beijing has been reforming.

ADR wrapper / US-listing risk can be avoided by buying directly on the HKEX. The VIE and PRC policy risks are the same either way; I think the market is overpricing them.

• Cheap: EV/EBIT ≈ 1–2× (EV ≈ $75m vs. FY25 EBIT ≈ $60m) and ~3× P/E; cash-rich, no debt.

• Real Cash Flow: FY25 revenue ≈ $204m, ~29% EBIT margin, solid operating cash flow.

• Upside: On mid-cycle EBIT $40–45m, a modest 5–6× EV/EBIT implies a 2–3× equity upside from here.

• Why it’s mispriced: small float/low liquidity + governance overhang + fear that FY25 was a one-customer spike.

• What the risks are: backlog and contract quality, customer concentration.

An opportunity for my subscribers

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What does OMSE do?

OMS Energy Technologies makes the metal “plumbing” for oil and gas wells.
Their core products are high-strength connectors and pipes that screw together to prevent leaks.

They also build the surface wellhead assemblies whcih are the valves and controls at the top of a well, and do premium threading and related services.
They don’t produce oil themselves, they sell equipment and services mainly to operators in Asia and the Middle East.

Saudi Aramco is and was their biggest customer for financial year end 2025, contributing 67% of their total revenue. At the current valuation, and given where the oil price is, I am more than happy to invest. Investing in the Oil & Gas industry is as simple as buying low and selling high, don’t overcomplicate it. And right now, its low.

I am not overly concerned about the concentration risk. They have a 10-year supply agreement with Saudi Aramco that they signed in 2024. See an excerpt from the news release below.

The $120-$200 million is management guidance, nothing contractual.

Where I think the market is wrong

I think this stock sold off along with the oil market. It’s a recent IPO, its tiny, not many people are on this- yet.

I have made money in the oil market before, and I don’t overcomplicate it. I buy a small-cap that's undervalued when oil is low and its a strategy that hasn’t failed me. Well- we are at that point again.

The IPO

The company IPO’d at $9. So shares have dropped in half since then. The proceeds are for “R&D, marketing & sales, compliance/governance, working capital” - so essentially just growth money raised to support execution and their Aramco contract.

The big risks

• Aramco doesn’t order as much stuff as the company guided.

• The majority holder (founder) isn’t friendly to minority shareholders. (wait and see). Founder is locked up for 180 days from the final prospectus (so lock-up expiry is around early Nov 2025). Watch for post-lock-up selling plans or 10b5-1 programs.