YB new stock pitches (Thu, Oct 31)

* I use Interactive Brokers link to trade international and OTC stocks (if you can’t trade them in your current brokerage)

TVE (6466.T), a Japanese nuclear valve maker, is trading below cash and tangible book value at ¥2,200 per share, with a market cap of ¥5.1bn compared to ¥5.3bn in net cash and ¥1.8bn in investments. The company generates 60% of its revenue from replacement parts, inspection, and maintenance for nuclear plants, with 12 of 33 Japanese plants restarted and more under review. TVE forecasts ¥600m EBIT for 2024, trading at 11x P/E. Multiple catalysts exist for share price appreciation, including improved governance, earnings growth from nuclear plant restarts, and potential takeover interest. Hikari Tsushin owns a 23% stake, while Seika's increased involvement and alignment with Mitsubishi Heavy Industries suggest a possible acquisition. The company's strong balance sheet, recent announcements about focusing on corporate value, and the growing demand for nuclear power due to AI and environmental concerns further support the investment thesis.

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Star Holdings (STHO) is a liquidation play trading at a 60% discount to NAV, formed to manage the assets of iStar mortgage REIT. Key assets include a 13.5 million share stake in Safehold (SAFE), the Magnolia Green housing development in Virginia, and the Asbury Park Waterfront Redevelopment in New Jersey. Despite minimal disclosures, local government records and a site visit reveal meaningful progress in asset development. The company could potentially deliver a 40% IRR if it meets its original 4-year liquidation timeline, though full liquidation may extend beyond Q1 2027. Risks include real estate market fluctuations, community opposition to development, opaque governance, and uncertain liquidation timing. The Magnolia Green project is nearing completion, while Asbury Park has multiple ongoing and planned developments. STHO's NAV could potentially be higher than its carrying value, but realization may take longer than initially projected. The company is managed by Safehold for a declining annual fee, with unclear incentives for maximizing proceeds.

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* I use Interactive Brokers link to trade international and OTC stocks (if you can’t trade them in your current brokerage)

Valeura Energy (VLE.TO) is a Thai oil producer with 20-25k boed production, $27 OpEx, $18 CapEx, and 37.9MMbbl 2P reserves (5.2-year RLI). The company aims to extend reserves to 50MMbbl, reducing depletion costs and improving earnings. Key catalysts include corporate restructuring for tax losses and potential M&A, with a preference for gas assets such as Mubadala's remaining 40% stake in Erawan field or Chevron's Gulf of Thailand assets. The stock is considered undervalued at its current multiple, with the company's cash pile expected to near its market cap by the end of 2024. Valeura's ability to increase both production and reserves while growing its cash reserves challenges the perception of it being a high-cost producer. The company's focus on extending its RLI through reserve increases and potential acquisitions aims to push ARO further into the future, reduce depletion costs, and potentially drive a market re-rating.

Read the full article here. Read time: 3 min