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.

• Online casino games (slots, live-dealer, table games) – its largest revenue stream.

• Sportsbook – pre-match and in-play betting on global sports.

• Smaller verticals like poker and bingo.

The company targets regulated or soon-to-regulate markets in Europe, Central & Eastern Europe, and, increasingly, Latin America (Brazil, Colombia, Peru). It also licenses its platform to third-party operators on a B2B basis.

Let me just say, I think the drop post-earnings was unwarranted. Results were good.

This is a capital light business, high cash conversion, with a product that is more addictive that fentanyl (I have no proof to substantiate this claim). It is also growing!

YoY Revenue grew at 12%.

What the market didn’t like

• Operating cash flow came in much lower than before, due to non-structural issues- working capital outflow, and higher receivables.

• Nordic revenue fell 28% YoY + Fines = Nordic bear case.

• Flat customer growth.

• Brazil hiked CCR tax from 12% to 18%

Why I think the market is wrong

• The company now trades at a forward EV/EBITDA of ~6 in an industry where similar comps trade at EV/EBITDA of 15. So Betsson is undervalued on peer and standalone basis.

• Extremely well run, CEO/Founder is an absolute champion if you look at how he allocates capital and positions for growth. They also have a tech platform they rent out.

• Cash flow conversion was a temporary working capital flux.

• LATAM is growing fast and is their 2nd biggest revenue by Geography.

  

  ---

  Nibble more on the way down

  Betsson is already one of my biggest position, I will continue to nibble if it goes lower, I think now is a fine entry point to start building a position.

Obviously this is not financial advice, do your own DD.

The one line that irked me was from an earnings call in February, from the CFO, where he stated that they would buy back stock at a PB<0.3. Which to me was the signal that the company is not as serious as I thought about unlocking value.

That being said, if I receive a positive response from management, about what they intend to do with the Bandai Plot proceeds (when they sell it). I will have enough information to put on a position.

As it stands now, this is a value trap.

There is not an intense amount of detail that one needs to go into to understand this company, so I will lay out the short of it here:

1. Core operating franchise (6 × EBITDA, net working debt) … ¥3,400 (¥1,310/sh)

2. Investment securities at ¥5,668. (¥2,190/sh) (Cross-holdings)

3. Monetizable Land at ~¥7,000-¥11,000. (ultra conservative value, last appraised in 2002). (¥2,700-4,100/sh)

A total intrinsic value of more than ¥20,050 equity.

or ~¥7,430 per share

Currently trading at ¥1,773 per share.

Its your typical Dirt Cheap Stock.

Why this opportunity exists:

1- Its tiny and very illiquid. Its sub $50 market cap. This, in my opinion, is the MAIN reason the stock trades at such a bargain price it is the reason many (even readers here) will scoff at the opportunity- and hence, why the opportunity exists for patient investors.

2- Management has a Capital Allocation problem. Which seems to be getting better slowly…but not quite there.

Rinko Corporation (9355.T)

Monetizable Land and Management Plan

1. The easiest thing to monetize is their share portfolio and management has stated that they will reduce their investment portfolio every year by ¥0.3bn (They have not said exactly where the proceeds will go). The whole thing is monetizable because its a bunch of cross-holdings.

2. The next ‘most likely’ asset is their Bandai plot. And this is CRUCIAL to my thesis. Management said they will sign a letter of intent to sell it or conduct a JV. I hope they sell it. They could raise 2-3bn.

Bandai plot

Bandai-Yamanoshita CBD plot, 19 000 m²

2025 MLIT 公示地価 for Niigata-shi Chūō-ku, Bandai shows (¥341 k)

So 19 000 m² × ¥220k (after tax profits) = ¥4.2 bn. Cut it down after tax or a joint venture to be more conservative and we get ¥2.3-3.0bn

Other monetizable assets I have tabulated below but the investment portfolio, and Bandai plot will be the first things to watch before the others.

If they gain traction monetizing the Bandai plot, it increases probability of them monetizing the others sooner. But what they do with the proceeds is the crux- on their slides, which are all in Japanese, they have stated that they want to put 10% of their operating cash flow into shareholder returns (dividends and buybacks) while reinvesting the rest to increase ROE.

The Bandai Plot sale is not an operating cash flow, so I want to hear what management plans with that.

They have a lot of other land they can monetize too…what will happen to the proceeds?

Operating Business

Rinko’s port & logistics does ¥9bn annually. - read about it here

Hotel operations do ¥2.3bn annually.

While the operating business is not very relevant to my thesis (the thesis depends majorly on monetizing investment securities and land), they are profitable.

There was a tweet on Rinko that said that company was not profitable, this is false.

The company has been cash flow positive and profitable for a long time, and the loss it made in 2021 was a non-cash impairment write-down of its Hotel. (pandemic). It was cash flow positive (after capex) in 2021 too.

So the brief analysis that you may see on X is incorrect.

They run some small ancillary businesses but they are too small to effect my thesis. Like this new “dangerous goods warehouse”, and a bunch of other small operations.

Initially it looked like management was going to play ball.

They had the plan to monetize old land. Selling of cross-holdings which all looked like a positive to unlocking shareholder value.

But when I read between the lines, I figure management are more likely just conducting a ‘box-ticking exercise’ to stay off the real name and shame TSE list.

They still deserve shame because they have said nothing about trying to get their P/B to 1, which was a TSE guideline.

Let’s see what management says on the Bandai Plot, or what they plan to do with the proceeds. I’ll let you know.

Option-like payoff

This stock looks like a call option, where the cost is opportunity cost of the nominal value of your position.

-If management indicate anything about unlocking shareholder capital- the stock will rocket.

-If not, it keeps treading water until they get shamed enough to make a change.

CorMedix (CRMD) +20%

CRMD is up around 20% since my post, but I still expect a volatile ride.

On this news where management stated a LDO (large dialysis organization) customer began ordering and will target 50% more patients than previously communicated. Great news. If the customer is Fresenius (which it probably is) then the revenue ramp will be big. There are still many moving parts to this thesis. Take a look at CorMedix Part 2 to understand it better. You must be comfortable with these risks if you want to be able to hold this stock.

Something worrying me about CRMD now is just the fact that its rated as “Bullish” by blogger sentiment on Tipranks. Just means expectations are getting high, and creates a vacuum gap for any negative news to the downside. Biotech is volatile.

LifeMD (LFMD) +122%

LFMD has earned an incredible 122% since my post. In a very short space of time. I have taken off 75%, so booked a healthy profit and just letting the rest ride where it may.

Revenue has been beating estimates. Active subscribers (main metric to watch) growing fast. Eventually they might sell WorkSimpli and then this becomes a real takeover candidate. I still think HIMS should take them out to compete with Amazon, LFMD has built a great telehealth platform.

They’ve expanded Medicare acceptance, and they’ve got NovoCare and LillyDirect partnerships. Quite bullish now that HIMS and Novo are at war.

When LFMD achieve scale, with its 80%+ gross margin, it will be extremely profitable.

I’m also just a bit nervous that sentiment is so bullish on them now. Always nice to invest when the stock is out of favor instead, hence why I took some off.

Taste Gourmet (HK:8371) +20%

I am very happy with Taste Gourmet results. Revenue growing fast, net profit compressed as I expected given that they are opening so many new stores. (New stores take on average 6 months to breakeven and then 2 years to reach max profitability).

If store openings decline, net profit will expand and the dividend will increase.

If store openings increase, revenue will expand, and net profit will catch up eventually.

Happy holding on a 10% dividend yield. And expect dividend to increase end of year.

Betsson (BETS‑B) +35%

Betsson is an incredible compounder with an incredible operator. In an very undercover “theming” sector. iGaming is growing fast, and Betsson is poised to capture this growth through their own games and their technology platform- which I think is an undiscounted advantage they hold.

Latest earnings tick all my boxes. My job is to just leave this stock alone and let it do its thing.

They have a very good acquisition strategy, and I believe their technology platform is part of it.

They are growing fast in South America. They have a new office in Buenos Aires, Argentina, and have got their license and launched operations in Brazil. I am excited to see what they manage. Brazil is growing fast. Latam America accounts for 25% of Betsson’s revenue.

Happy to hold this as it steadily rises.

Reitman’s operates with a dual-class share structure. The Reitman family controls the majority of the voting shares and the company. I feel that this dynamic might be coming to an end. Pressure from shareholders as well as the Reitman family passing the management reins to an outsider for the first time in the company’s history signal a turn.

Update: In the recent September (2024) conference call, an analyst asked what the situation was on changing the dual-class share structure. The management stated that the controlling shareholder did not want to change the dual-class share structure because he’s a greedy asshole that wants to remain in control of the company in order to satisfy his ego at the expense of him being 3X as rich.

Thesis:

• Super undervalued company is buying back shares.

• New management, new investor relations team (advisor) will act as a catalyst for the share price.

• Semi-Activist shareholder Donevillekent (DKAM) is pushing the management and board to unlock value.

• Company had its first earnings call! Analysts brought up up-listing and share buybacks.

1. $124M CAD Cash on hand vs $129M CAD market cap.

2. No debt. (yes they have lease liabilities).

3. Owned Real-Estate easily worth more than $200M CAD.

This puts Reitman’s book value at a very conservative $400M CAD (a hell of a margin of safety)

I have my owners earnings at $15M CAD annually.

I think this could increase as the company is investing $14M into increasing its distribution efficiency. I would rather see the company buy back more shares but they’re thinking like operators and not investors, for now…

I was wrong about there never being a buyback (which is great). The company stopped buybacks because during COVID they entered the Canadian equivalent of Chapter 11 bankruptcy, after which they made a ton of cash thanks to help from the government and their landlords.

Information Supporting Thesis:

The company has also never before been run by a member outside the family, until now. Stephen Reitman, now 72 years old, has finally passed the reins to Andrea Limbardi who seems like a digital native from her past work experience. This is great for many reasons. Foremost it signals a major step in the direction of the family possibly eliminating the dual class share structure.

They have also received approval to buyback 10% worth of the shares.

In late 2023, DonVilleKent shared a shareholder proposal:

You can read the full letter (scroll down to the end of the document) here.

An analyst mentioned the uplisting on the earnings call and Andrea (CEO) Limbardi said that the board was “continuing to evaluate”:

If they can uplist and show intent to end the dual-listed share-class structure I believe the share price will rocket.

Price (valuation). Management. Company.

Price:

With $124M CAD of cash on the balance sheet and no debt and the company trading at $129M CAD you are basically getting earnings of $15M CAD annually for free.

If you model the company through COVID you will get quite misled on the shape of their current business. During COVID the company received a lot of help from their landlords through rent concessions, they also received help from the Canadian government, and their online e-commerce channel (higher margin) took off. The company made a ton of cash and their earnings were artificially high compared to today and the foreseeable future.

The best financials to look at to gain a more accurate understanding of the company’s current position are 2023’s statements and this year (2024’s) recent statements. No more help from landlords, or governments.

Management:

Management was the reason I didn’t hold my initial investment after the share price rocketed. But they have done a 180 and it seems like their decisions are way more shareholder friendly.

New CEO seems quite digitally savvy. hopefully she can increase the high-margin e-commerce channel.

If she starts using the $124M cash on hand for some dumb adventure or acquisition its time to get out. The only thing Reitman should be acquiring right now is its own shares.

Investment Relations Advisor:

The company has engaged MBC Capital Markets Advisors as their “investor relations” advisor. Paying the company $10,000 per month, which is absolutely ridiculous if you ask me, but still a step in the right direction.

Good Company/Competitive Advantage

Its retail. Nobody likes retail.

Target & Weight:

If the management and board are serious about getting shareholder friendly and taking DMAK’s proposal to heart the share has an upside of easily 300%+

Property worth $200M + (could be unlocked in a lease buyback)

Cash $124M. They could easily pay a special dividend or preferably just buyback 50% of the outstanding shares.

Book value of $400M CAD and a business I would give a P/E of 5 should put this business at a market value of $475. Say $300 conservatively and you still have an upside of more than 100%.

Monitor:

Everything is dependent on the share class structure/uplisting/buybacks so watch for this news.

The company piqued my interest because their business model and platform actually seem like REAL value adds with a big market to disrupt!

Why I am not investing? Too expensive for me…

What these guys do:

This small-cap Italian company has a rather interesting business model.

• They supply their clients’ technicians (Field Service Management) with the T-Linq Platform which allows the technicians to order spare parts, return parts, and facilitate waste removal through an app. The app is interconnected to the clients entire organization.

• The parts are delivered directly to the technicians vehicle, which can be onsite. This is part of what makes their business model unique, and is fundamental to the value they add their clients.

A major part of the value add comes from reducing wasted time the clients would normally experience when their technicians are repairing, or conducting maintenance on machines. The Night Delivery and Collection Service delivers spare parts to the technicians directly over night, so when the technicians arrive on site in the morning, they can immediately begin work. Compare this to your normal logistics company, where deliveries are done during normal working hours and drivers are not specifically designated to the company. There would be a lot of time wasted.

The Lindbergh T-Linq Platform saves time, and time is money for their clients.

Revenue Drivers:

3 Business Units currently operating in Italy and France:

1. Network Management (Through the T-Linq Platform) 85% Total Revenue

2. Waste Management (synergistic with Network Management) 11% Total Revenue

3. Warehouse Management. 4% Total Revenue

Revenue’s seem quite sticky too with half the number of clients being clients for more than 10 years (this is old data and they’ve had a lot of contract renewals (big ones) from clients since):

Revenue Generators:

Lindbergh has recently done a string of small strategic acquisitions into the Field Management Services (maintenance and repairs) as well as acquiring a few HVAC installation companies.

I believe this is part of a strategy to increase their geographic footprint and also provide installation and maintenance services, essentially to become more vertically integrated. This market in Europe is fragmented. They have an advantage with their logistics system, so they will probably outcompete in terms of service delivery, but I have yet to see the results from this implementation.

I am quite optimistic about future revenue generation, because it seems like the platform and the business model adds a lot of value. The rollout in France seems to be struggling but it is still early days:

“In France, for the moment, we have not yet been able to assure stable profitability and therefore generate a cash flow. So we cannot say we are satisfied, after a good first six months and the first positive results in terms of margins, we recorded a negative second half of the year, which effectively cancelled out all that we produced in the first part of the year. The reasons are clear to us, starting from the incorrect choice of General Director (people make all the difference), up to the failure to adjust the price lists with all main clients in the past two years (hindered by the multiannual contracts signed in late 2021). As in Italy, the authorisations for offering and selling waste services are proceeding slower than expected. I could continue to list all the reasons, but I think it would be quite pointless here.” -Source (Michele Corradi - (CEO and co-founder of Lindbergh S.p.a.)

He seems quite blunt, and I like that.

The acquisitions into the HVAC market have mostly been done at EV/EBITDA multiples of around ~4

Price. Management. Company.

Price:

Current market cap at 32.30M EUR

EBITDA 2023: 3.4M

EV: 30M

EV/EBITDA: 10X

Management:

From the shareholder letters, I quite like the way the CEO talks: “We have a large shareholder called market, that leaves us to work and judges us, and is the only one we are accountable to. And the market is every one of you, and we will be accountable to every one of you.”

Good Company/Competitive Advantage

The company has quite a competitive edge with its T-Linq platform. Adds real value to technicians, will be interesting to see how their entry into France goes…

Target & Weight:

None.

Monitor:

I’ll take another look if EV/EBITDA gets to 5X or if revenue growth starts to really pick up from France and HVAC Consolidation strategy in Italy.