YB new stock pitches (Tue, Dec 17)

Sphere Entertainment Co. (SPHR) is breaking records despite operating at only 40% occupancy, with potential to reach 70%+ occupancy in the next 1-2 years. The company's financials are often misunderstood by analysts due to several factors obfuscating its true value: a $125m/year Sphere studios expense, $800m of non-recourse debt, unsold naming rights worth $20-$50m annually, and future franchise/expansion revenues. Additionally, artists are still adapting to the new business model and scheduling, though demand is present due to attractive compensation. The stock is considered a hidden gem, with significant upside potential as occupancy increases and financial understanding improves. It currently represents the largest position at approximately 20% of NAV in the investor's portfolio.

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Cuscal (CCL.AX) is a leading B2B payment processor with a strong moat, trading at 12.5x PE and 7x EV/EBITDA. The company generates 65% of revenue from issuing, 17% from payments, and 11% from acquiring. Tailwinds include increasing card use, fintech growth, and NPP adoption. With 92 clients and low churn, Cuscal holds dominant market share outside the big four banks. The company forecasts FY25 NPAT of $36.6M, up 16% from FY24. Cuscal benefits from a competitive pricing advantage, high barriers to entry due to regulatory capital requirements, and a history of innovation in payments. An emerging data business offers potential upside, while risks include potential client losses due to M&A. The company's $460M market cap puts it in contention for ASX300 inclusion. Compared to peers like Fiserv and Jack Henry trading at 20-32x PE, Cuscal's valuation appears attractive given its quality and growth prospects.

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Lesaka Technologies (LSAK), a South African fintech company, reported Q1 FY25 revenue of $145.5M (+6.9% YoY) and adjusted EBITDA of $9.4M (+17.5% YoY). The company is acquiring Recharger for $28.4M at 6x EBITDA, expanding into the utilities vertical. Lesaka's 10% stake in MobiKwik, which recently had a successful IPO, could yield $36.5M-$51M after-tax proceeds. With pro forma FY25 EV/EBITDA of 8-8.8x compared to peer Network International's 11.8x, LSAK has a price target of $7-$8 (+37-56%). The company benefits from digital payment growth in Africa, but faces risks including acquisition execution and South African political uncertainty. Management anticipates FY25 revenue of $559.4M-$615.3M and adjusted EBITDA of $50.3M-$55.9M, with potential upside from recent acquisitions and market re-rating potentially driving LSAK above $10 per share in the future.

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