YB new stock pitches (Wed, Feb 19)

Millicom International Cellular S.A. (TIGO), a Latin American telecommunications operator, has shown strong performance in 2024, raising its equity Free Cash Flow (FCF) target twice to $650 million, which is attractive compared to its approximate $4 billion market valuation. The company has achieved accelerated deleveraging, reaching its 2025 steady-state leverage target of 2.5x by Q4 2024. Millicom has created value by selling its cell towers at a premium price and entering into a highly accretive merger in Colombia. The company's largest shareholder, Atlas, made a takeover offer at $25.75 per share, which the Board rejected as undervaluing the company. With strong execution, positive FCF inflection, and an attractive price-to-value ratio, Millicom's management is optimistic for 2025.

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Sintana Energy Inc. (SEI.V) is an oil and gas exploration company with a diversified portfolio of assets in Namibia's Orange Basin and Colombia. Its most valuable asset is a 4.9% working interest in PEL-83, which contains the Mopane discovery estimated at 10+ billion barrels of oil equivalent, potentially worth more than Sintana's current $190 million market cap. Other key assets include a 7.3% interest in PEL-87 with significant potential, a 4.9% stake in PEL-90 awaiting future plans after an unsuccessful well, and a 16.7% interest in PEL-79 seeking a farm-out deal. The company also holds interests in PEL-82 and PEL-103 in Namibia, as well as the WMM-37 block in Colombia, which is currently in arbitration with ExxonMobil. Sintana's strategy involves acquiring exploration assets, farming them out to larger companies, and maintaining carried interests to minimize costs. With $14.6 million in cash and no debt, Sintana is well-positioned to benefit from ongoing exploration activities and potential discoveries without immediate capital needs. Key catalysts include upcoming drilling results, farm-out deals, and resolution of the Colombian asset situation.

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BFF Bank S.p.A. (BFF.MI) is a unique Italian bank specializing in public sector factoring, with a 17% 7-year CAGR and 25-40% ROE, trading at 8-9x P/E. The company purchases receivables from suppliers to public entities, benefiting from near-zero credit risk and EU laws favoring late payment penalties. BFF's business is countercyclical, with a €1 trillion market potential and a tiny current market share. The company's competitive advantages include specialized focus, decades of payment data, and economies of scale. A recent regulatory review by the Bank of Italy has caused uncertainty and a pause in dividend payments, creating an investment opportunity. The stock trades at a similar multiple to other Italian banks despite superior ROE, growth, and risk profile. With potential catalysts including the conclusion of the regulatory review and dividend resumption, BFF offers a 20%+ annual return potential. Management owns 6% of the company, and a recent acquisition of DEPObank provides stable funding for the factoring business.

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