Giles Capital Weekly - Week 39

Welcome to another edition of Giles Capital Weekly. China's economic stimulation efforts are ramping up, with the recent politburo meeting chaired by Xi himself signalling a coordinated push to boost growth. Meanwhile, the spectre of supply chain disruptions looms large, with potential port strikes threatening to unleash chaos reminiscent of the 2021-2022 shipping crisis.

Interestingly, we're seeing a resurgence of interest in the coal sector. Idea Hive's Part 2 deep dive (continuing from last week's featured analysis), alongside two other in-depth resources, suggests there may be hidden gems for investors willing to look beyond the ESG hype. On the tech front, Meta's unveiling of its Orion AR glasses has set tongues wagging - could this be the product we all thought Apple would deliver with its Vision Pro? From old-economy stalwarts to cutting-edge tech, we've got a lot to unpack this week.

Americas

• Waterboy's Substack on SiriusXM(🇺🇸SIRI US - US$8.5 billion) SiriusXM presents a compelling opportunity with a 14% free cash flow yield and aggressive share buybacks. The company's unique position in the audio entertainment market and consistent subscriber growth make it an attractive value play.

• Undervalued and undercovered on Warrior Met Coal(🇺🇸HCC US - US$2.9 billion) Warrior Met Coal offers exposure to the metallurgical coal market with potential for significant upside. The company's Blue Creek mine expansion could boost production capacity by 60%, presenting an attractive investment opportunity in the coal sector.

• Value Don't Lie on Lions Gate(🇺🇸LGF.A US - US$2.3 billion) Lions Gate presents an interesting spin/stub situation with its recent transaction separating the studio business. The standalone studio business is trading at <13x OIBDA, while the stub valuation for the STARZ media business is at <4x OIBDA.

• Stock Picker's Corner on Corning(🇺🇸GLW US - US$38 billion) Corning is positioning itself as a stealth AI play with its "Project Springboard" initiative. Trading at 20x 2025E earnings, the company aims to add $3 billion in annualized sales by 2026 and achieve a 20% operating margin.
  

Europe, Middle East & Africa

• Sweet Stocks on Borregaard(🇳🇴BRG.OL - US$1.8 billion) Borregaard, a specialty chemicals company, offers an attractive valuation at 20x 2025E P/E. The company's unique position in lignin products and specialty cellulose, combined with consistent reinvestment, presents a compelling long-term growth story.

• One-Foot Bars on VW AG (VOW3) and Porsche SE (PAH3)(🇩🇪VOW3 GR - US$47 billion, PAH3 GR - US$25 billion) Volkswagen AG and Porsche SE present significant dislocations between price and value, trading at steep discounts to their sum-of-the-parts valuations. VW's 10% dividend yield and portfolio of premium brands, coupled with Porsche SE's holding structure, offer attractive opportunities for patient investors.

• Quality Stocks on Dassault Systemes(🇫🇷DSY FP - US$63 billion) Dassault Systemes emerges as a winner in the PLM (Product Lifecycle Management) industry comparison. With higher profitability, a strong net cash position, and less shareholder dilution, it presents a compelling investment case in the industrial software sector.
  

Asia-Pacific

• Eloy Fernández Deep Research on Takeuchi MFG(🇯🇵6432 JP - US$1.8 billion) Takeuchi, a pioneer in the mini excavator market, offers strong growth potential with a 14% CAGR in revenues from 2018-2023. Trading at 20x 2025E earnings, the company's focus on specialty products and global expansion presents an attractive investment opportunity.

• Investing in China on Kuaishou(🇭🇰1024 HK - US$44 billion) Kuaishou, a leading short-video platform, is trading at an attractive EV/FCF of 4.6x. With operating profit growth of over 150% and significant AI developments, the company presents a compelling investment case in the Chinese tech sector.

• Modern Value Investing on OUE REIT(🇸🇬TS0U SG - $1.4 billion) OUE REIT offers a compelling opportunity with its portfolio of prime Singapore assets trading at a 45% discount to NAV. With a conservative 38% LTV and 6% dividend yield, the REIT presents significant upside potential as Singapore's economy continues to outperform.

• The Mikro Kap on Credit Bureau Asia(🇸🇬TCU SI - $154 million) Credit Bureau Asia dominates the credit reporting market in Singapore with a 99.9% market share. Trading at 18x earnings with a 7.5% organic revenue CAGR and 118% FCF payout ratio, the company offers an attractive combination of growth and income.

• Healthy Stock Picks on AngelAlign(🇭🇰6699 HK - $1.3 billion) AngelAlign, the second-largest clear aligner brand globally, has surpassed Invisalign with a 42% market share in China. With a 25% revenue CAGR over the past five years and significant international expansion underway, AngelAlign presents a unique growth opportunity in the dental space.
  

• Hundred Year Lens - Meta's Orion is what we really wanted from Apple instead of the Vision Pro A fascinating look at Meta's latest AR technology and its potential to disrupt the market. Essential reading for tech investors and anyone interested in the future of computing. (7 min read)

• Idea Hive - Exploring The Met Coal Industry: Part 2 A continuation of last week's deep dive into the metallurgical coal industry, offering insights into market dynamics, pricing trends, and potential investment opportunities. (15 min read)

• Undervalued and undercovered - The Forgotten Commodity: Coal's Quiet Resilience in a Changing World Another contrarian take on the coal industry, highlighting potential opportunities in a sector many have written off. Whether you agree or not, it's a thought-provoking read on the complexities of energy transitions. (12 min read)

• Noahpinion - America's supply chains are a disaster waiting to happen and Strategies to secure America's supply chains A two-part series on the vulnerabilities of global supply chains and their potential impact on the US economy. Part 1 focuses on identifying the risks, while Part 2 explores potential solutions and strategies for strengthening supply networks. Essential reading for understanding the complexities of modern commerce and the challenges ahead. (30 min read total)

• Leonid's Substack - Look out, the Bazooka was in fact a M202 Rocket Launcher An insightful analysis of China's recent economic stimulus measures and their potential impact on global markets. A must-read for anyone interested in the interplay between Chinese policy and international finance. (10 min read)

• Deep Fundamental Research - Deep Dive: Optical Module Market An exhaustive analysis of the optical module market and its key players. This piece offers valuable insights into a crucial component of the AI and data centre boom. (25 min read)

• Investment Ideas by Antonio - Palantir Today is Microsoft in 1993 A provocative comparison between Palantir's current position and Microsoft's in the early 90s. While speculative, it offers an intriguing perspective on the potential of data analytics and AI in reshaping enterprise software. (8 min read)

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Disclaimer: This newsletter is for informational purposes only and does not constitute investment advice. All opinions expressed are those of the quoted authors and do not necessarily reflect the views of the newsletter creator. Always do your own research before making investment decisions.