Regular readers will know that I am Andrew Wong, ACA, CFA, an equity analyst in Singapore.

I left my role at a fund earlier this year. After a short break, I just started interviewing.

The equity buy-side industry in Singapore is small. Roles are typically filled through referrals and introductions.

Looking back at my career, I realised the import…

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Last week, you highlighted a potential opportunity in RFMD. What’s your suggestion?

Liquidity?

5 Nov 2026

Share price: SGD 0.84

Market capitalisation: SGD 1,491 mn (USD 1,165 mn)

Enterprise value (EV): SGD 1,261 mn (USD 985 mn)

Average daily volume (ADV): SGD 2 mn (USD 2 mn)

NTM P/E: 24x

What does RFMD do?

RFMD is one of the largest private healthcare providers in Singapore. It holds ~ 22% market share in the private sector.1

2025 revenue of SGD 765 mn (+2% YoY):

• 40% Hospital (+6% YoY)

• 35% Healthcare (e.g. general practitioner clinics) (-4% YoY)

• 24% Insurance (+4% YoY)

• 1% Investments (-5% YoY)

Good business, temporary headwinds

Why is BSL share price falling?

Over the past 3 years, RFMD (or BSL) shares trailed ES3 (Singapore ETF). Revenue growth decelerated as COVID-19 revenue rolled off.

The sell-off accelerated in July 2026. RFMD reported Healthcare revenue declined -16% YoY in H1’26. Profits fell -37% YoY.

The main driver was lower occupancy at transitional care facilities (TCF). A new public hospital, Woodlands Hospital (WH), absorbed patient volume that used to be routed to RFMD’s TCF.

What will stop the share price from falling further?

According to UOBKH, a broker, “management noted that the bed occupancy at its Singapore TCF has already stabilised at a lower (yet still profitable) equilibrium level”2

In my previous email, I commented that if this is true, headline revenue and profits will return to growth soon.

I now have good data that supports this.

As far as I am aware, only one sell-side broker has looked at this data. Even AI failed to find this data for me: Daily Bed Occupancy Rate (BOR).

Read more

As usual, if you want me to dig deeper into an idea, vote for it. Use the poll at the end of this email.

MEITEC Group Holdings Inc. (9744 JP)

About (2 Nov 2026)

Share price: JPY 3,222

Market capitalisation: JPY 246,675 mn (USD 1,173 mn)

Enterprise value (EV): JPY 196,879 mn (USD 993 mn)

Average daily volume (ADV): JPY 1,482 mn (USD 10 mn)

NTM P/E: 18x (excludes non-recurring impairment)

Meitec hires engineers as full-time permanent employees. It then dispatches (‘rents’) them out to work directly inside the R&D labs of blue-chip corporations like Toyota, and Mitsubishi Heavy Industries.

Meitec charges clients a premium hourly rate (~ JPY 5,400 to JPY 5,800 per hour per engineer). After paying the engineer’s salary and corporate overhead, Meitec keeps roughly 27% gross margin and ~15% operating margin (OPM).

Under-recognised growth?

My initial estimate suggests ~ 8% long-term free cash flow yield on enterprise value (FCF yield), ~ 5% premium over Japan’s 10-year government bond. Looks attractive.

At this valuation, the market seems to be pricing Meitec like a cyclical business.

Indeed, the sector is cyclical. Volatility is a feature in the operating profits of global peers like Randstad NV (RAND NA) and Adecco Group AG (ADEN SW):

However, Meitec’s operating profits (orange) are much more stable.

Japan’s shrinking working-age population has created a long-term shortage of engineers, boosting the demand for Meitec’s dispatchable engineers.

This demographic change is a long-term trend. Implication?

Meitec becomes less cyclical and its operating profits will likely continue growing around mid-single digit.

If this is true, then 8% FCF yield looks attractive.

Potential takeover?

Private equity (PE) firms have taken over multiple direct peers.

In May 2026, KKR bought Forum Engineering Inc (7088 JP). Blackstone bought TechnoPro Holdings (6028 JP) in Dec 2025. Finally, Bain Capital acquired Outsourcing Inc. (2427 JP) in Jun 2024.

Meitec is one of the few remaining publicly listed companies in the sector.

I believe probability of a takeover is high. Valuation is undemanding. The business is capital-light and carries no debt.

Factors to focus on

1. Japan’s labour market. Specifically, how sustainable is the shortage of engineers?

BRCK Group plc (BRCK LN)

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Today’s post is a reflection:

• Who is behind this newsletter?

• 5 useful lessons from writing ~ 100 stock pitches

• What’s next?

Who is behind this newsletter?

I am Andrew Wong, ACA, CFA, an equity analyst in Singapore.

I started my career in audit. After three years, I realised public equity investing is far more interesting.

I took the equity analyst roles that came the easiest. I didn’t think much and just wanted to start analysing companies.

When I left my role earlier this year, a few funds asked me to interview. I am grateful, but eventually decided to take a short break and explore Substack.

Regular readers will know that I just started interviewing.

Everything I know today is mostly self-taught. If I can outperform despite limited resources, how much better can I perform in an experienced team with a proven track record?

If you were in a similar situation or simply want to share your advice, I would love to hear from you. You can reply to this email or comment below.

Alright, let’s talk about about the 5 useful lessons.

5 useful lessons from writing ~ 100 stock pitches

1. Focus on change

I used to think along the lines of “Company A holds the largest market share. Buy! Company B will grow 10%. Buy!”

After managing my own portfolio and writing on Substack, I realised change, especially unexpected change, is far more important.

To illustrate this point, I have a very good example.

Nike is the largest sports brand in the world. But its share price has fallen more than -75%. Why?

Despite being the top-selling sports brand, Nike is losing market share:

Source: Reuters (2024)

Change, especially unexpected change, is more important.

Instead of:

• Company A is the market leader with 60% market share

• Over the next 3 years, EPS will grow 10% p.a.

• The business is capital-light

Focus on:

• Although Company B holds only 5% market share today, it is gaining market share

• Because of its new patented products, EPS will likely grow faster than consensus’ expectations

• The business used to be capital-intensive. With the pivot into the new segment, the business is becoming more capital-light

2. Find out what’s important (and what’s not)

Investing is laying out cash today for more cash in the future.

Three key questions:

• How much cash will the business generate?

• What will management do with the cash?

• How much are we paying up today for future cash?

Whatever that can impact cash flow significantly is important. This can differ across sectors.

Retailing is about moving goods that customers want, to where they want it, and at the prices that they want.

Pay attention to days inventory, inventory aging, inventory write-down, same-store-sales, store count, etc. When doing site visits, look at shelf availability, number of discounted goods, warehouse utilisation, etc. Thick layer of dust over key products is a big red flag.

For cyclical industries like semiconductors, pay attention to changes in supply vs demand.

Supply: capex growth and inventory changes (especially finished goods). Demand: capex growth at hyperscalers, PC and smartphone shipment, etc.

If supply grows faster than expected, the industry flips into a glut and prices collapse.

In telecommunication, regulation is among the most important factors.

I’ve seen investors spending a lot of due diligence on customer satisfaction, management quality, etc.

But all that doesn’t matter if the regulator decides to let a new player into the industry.

Investors in StarHub Ltd (CC3; STH SP) found out the hard way in 2016, when the regulator allowed Tuas Limited (TUA AU) to enter:

3. Avoid unintended bets

Know the non-fundamental factors that can impact the business and its shares, and avoid making unintended bets on them.

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Last week, you highlighted a potential opportunity in RSTON. What’s your suggestion?

Liquidity?

29 Oct 2026

Share price: SGD 0.74

Market capitalisation: SGD 1,104 mn (USD 862 mn)

Enterprise value (EV): SGD 922 mn (USD 720 mn)

Average daily volume (ADV): SGD 2 mn (USD 1 mn)

NTM P/E: 15x

What does RSTON do?

RSTON makes gloves.

Healthcare gloves are used by doctors and nurses for medical examinations, etc.

Cleanroom gloves are used in the semiconductor and pharmaceuticals industries, where technical requirements are more stringent. According to management, RSTON holds ~ 40% market share worldwide.1

It allocates roughly 80% of production capacity to healthcare gloves and 20% to cleanroom gloves, but the cleanroom segment contributes around 70% of the group’s gross profit.2

CGS International, a broker, estimates RSTON’s cleanroom gloves yield ~ 46% gross profit margin (GPM), almost 3x the GPM achieved by healthcare gloves.3

In effect, RSTON’s profits are driven more by semiconductor trends rather than healthcare.

Customers open more factories and/or higher utilisation rate => higher demand for RSTON’s cleanroom gloves.

Cyclical inflection

Ansell Limited (ANN AU) is a direct competitor to RSTON’s cleanroom segment while Top Glove Corporation Bhd. (TOPGLOV; TOPG MK) competes against RSTON in its healthcare segment.

ANN reported accelerating revenue growth. In H2’26, its Cleanroom revenue grew +17% YoY, up from +3% YoY in H1’26.4 ANN’s financial year ends in June.

TOPG reported better-than-expected earnings for the quarter ended 31 August 2026.

In early October 2026, TOPG’s management explained:5

Both ANN and TOPG shares started rallying. But not RSTON.

Why? RSTON’s business is not recovering?

Business is recovering.

In H1’26, management reported improvements in gross profit margin (GPM). GPM increased to 33% in H1’26, up from 30% prior year.

Management explained the improvement was mainly driven by higher average selling price (ASP). This suggests oversupply is starting to ease.

Compare management’s commentary to just 6 months ago.

In March 2026, management described cleanroom gloves ASP “remained resilient” while ASP for healthcare gloves “moderated” during 2025.6

We never take management’s words at face value. Do working capital trends support their commentary?

Yes.

Customers stopped delaying payments. In 2026, receivable days have stabilised at 60 days, down slightly from 61 days during the prior year.

This suggests improving demand. Good for future margins.

How about inventory trends?

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As usual, if you want me to dig deeper into an idea, vote for it. Use the poll at the end of this email.

Raffles Medical Group Ltd (BSL; RFMD SP)

About (23 Oct 2026)

Share price: SGD 0.82

Market capitalisation: SGD 1,500 mn (USD 1,173 mn)

Enterprise value (EV): SGD 1,269 mn (USD 993 mn)

Average daily volume (ADV): SGD 2 mn (USD 2 mn)

NTM P/E: 24x

My initial estimate suggests ~ 7% long-term free cash flow yield on enterprise value, ~ 5% premium over the Singapore 10-year government bond. Looks attractive.

RFMD is one of the largest private healthcare providers in Singapore.

2025 revenue of SGD 765 mn:

• 40% Hospital (+6% YoY)

• 35% Healthcare (e.g. general practitioner clinics) (-4% YoY)

• 24% Insurance (+4% YoY)

• 1% Investments (-5% YoY)

Under-recognised growth?

Over the past 3 years, RFMD (or BSL) shares trailed ES3 (Singapore ETF). Revenue growth decelerated as COVID-19 revenue rolled off.

The sell-off accelerated in July 2026.

During that month, RFMD reported Healthcare revenue declined -16% YoY during H1’26. Profits fell -37% YoY.

The main driver was lower occupancy at transitional care facilities (TCF). A new public hospital, Woodlands Hospital, absorbed patient volume that was previously routed to RFMD’s TCF.

However, the decline in Healthcare obscured the growth at the other segments.

Hospital profits grew +11% YoY. The Insurance segment inched closer towards break-even, with operating losses falling -64% YoY.

Management reported that TCF occupancy has stabilised in Q3’26.1 If this is true, headline revenue and profits will return to growth soon.

Capital returns?

RFMD is returning more capital to shareholders.

Dividend yield reached 3.7%, an all-time high. I believe there is room for further increase.

RFMD is able to return more capital because capital expenditure requirements are now lower. The company just completed construction of its hospitals in China.

Starting from 2021, management committed to dividend payout ratio of up to 50% of the average sustainable profit after tax and minority interest (PATMI).

From 2025 onwards, RFMD revised its dividend policy to commit to paying out at least 50% of its sustainable earnings annually.2

In April 2026, RFMD also launched a share buyback program.

Factors to focus on

1. Outlook for Healthcare segment, especially TCF

2. Growth opportunities at Hospital segment

3. Break-even at Insurance segment

4. Potential for higher capital returns

PHC Holdings Corporation (6523 JP)

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Last week, you highlighted a potential opportunity in GOOS. What’s your suggestion?

Liquidity?

21 Oct 2026

Share price: CAD 11.46

Market capitalisation: CAD 1,119 mn (USD 797 mn)

Enterprise value (EV): CAD 1,763 mn (USD 1,255 mn)

Average daily volume (ADV): CAD 3 mn (USD 2 mn)

NTM P/E: 12x

What does GOOS do?

GOOS manufactures and sells luxury performance outerwear. It is famous for its parkas.

It earned CAD 1,528 mn revenue in FY2026 (+13% YoY):

• 76% direct-to-consumer (DTC) (+16% YoY)

• 19% wholesale (+12%)

• 5% Others (-10%)

What’s your first reason for passing GOOS?

Intense Competition from Chinese Rivals

China is GOOS’ largest and fastest-growing market.

In FY2026, it grew +17% YoY to reach 33% of revenue. Investors are understandably excited over GOOS’ growth prospects in China.

However, I believe they are under-estimating the headwinds Western brands face from local competitors.

In China, consumers increasingly prefer Asian, especially local brands over Western brands. This is a pervasive and persistent trend, driven by growing nationalism (国潮) and quality improvements at Chinese brands.

CNA reports:1

Chinese car brands are also taking market share from Western carmakers:2

We talked before about how Chinese brands like Anta, Li Ning and Xtep are taking market share from Western brands.

Last month, The Financial Times reported:3

The rise of Chinese brands is not purely based on nationalism. Better quality at lower costs means they are making inroads to international markets too.

Bloomberg reports:4

The rise of Chinese brands is a pervasive and persistent trend. It’s not a trend to bet against.

Bosideng, GOOS’ main Chinese rival, started pushing into the premium market.

In 2025, ex-Dior designer Kim Jones joined Bosideng, a strategic move that underscores the company’s ambitions to conquer the high-fashion outerwear market.5

Although China is GOOS’ most important and best-performing market so far, I believe there is a higher-than-expected risk of an eventual slowdown.

Your second reason to pass concerns wholesale customers. What about it?

Surging Receivables

Wholesale customers are taking longer and longer to pay their invoices. In FY2026, I estimated receivable days reached 115 days, an all-time high.

Read more

As usual, if you want me to dig deeper into an idea, vote for it. Use the poll at the end of this email.

Riverstone Holdings Limited (AP4; RSTON SP)

About (16 Oct 2026)

Share price: SGD 0.74

Market capitalisation: SGD 1,089 mn (USD 851 mn)

Enterprise value (EV): SGD 907 mn (USD 709 mn)

Average daily volume (ADV): SGD 2 mn (USD 1 mn)

NTM P/E: 15x

My initial estimate suggests ~ 8% long-term free cash flow yield on enterprise value, ~4% premium over the Malaysia 10-year government bond. Looks attractive.

RSTON makes gloves.

It allocates roughly 80% of production capacity to healthcare gloves and 20% to cleanroom gloves, but the cleanroom segment contributes around 70% of the group's gross profit.1

More on this later.

Cyclical inflection?

RSTON’s shares (green) trade in line with peers like Top Glove Corporation Bhd. (TOPGLOV; TOPG MK) (purple).

TOPG shares (purple) started recovering in Sep 2026. Profits came in better than expected. Last week, TOPG reported demand outpaced supply growth.2

During the same period, RSTON’s shares continued falling. I suspect the fall is mainly driven by the sell-off in Singapore equities (grey).

Investors may be overlooking the industry read-through and the fact that, despite being listed in Singapore, RSTON operates from Malaysia.

Under-recognised growth?

Investors view RSTON as a commodity glove producer, vulnerable to competition from China.

However, they are likely overestimating competition and under-estimating RSTON’s growth potential.

70% of its gross profits come from cleanroom gloves. These are used in manufacturing semiconductors and require high levels of customisation.

CEO Wong Teek Son explains:3

As a result, cleanroom gloves are less commodity-like.

CGS International, a broker, estimates RSTON’s cleanroom gloves yield ~ 46% gross profit margin (GPM), almost 3x the GPM achieved by healthcare gloves.4

Semiconductor makers are rushing to open new fabs. When they come online, RSTON’s revenue growth should accelerate.

Capital returns?

8% next twelve months dividend yield looks attractive.

But is it sustainable?

At first glance, likely yes.

Right now, Riverstone plans to continue its approach of paying out approximately 100% of earnings plus a special dividend roughly equal to annual depreciation.

It is a practice that has been consistent for years, aligned with Wong’s intent for capital to flow back to shareholders.5

High net cash balance (~60% of revenue) supports continued high dividend payout ratio.

Factors to focus on

1. Where are we in the glove cycle?

2. Try to quantify the revenue growth when new semiconductor fabs open

Spark New Zealand Limited (SPK NZ)

Read more

Standard interview question. But I left feeling like my answer didn't do the process justice.

Why?

It’s like smashing in badminton. When the shuttlecock is in the perfect spot, I just whip. I don’t consciously think about my grip or my stance.

Beautiful analogy. But it’ll be a terrible answer during an interview.

Today, let me try to put into words how I analyse a new company.

I am going to skip the idea-generation process. Let’s assume I have already found a potential long idea - a company that could generate more cash than expected.

We will use B&M European Value Retail plc (BME LN) for this walkthrough.

Liquidity

If the average daily trading value is too small, I can’t touch it. Skip immediately.

If liquid enough, read a brief description of the business. BME “operates as a European variety discount retailer in the United Kingdom and France.”

Understand The Business

Income Statement

BME grew revenue 2.4x over the past 10 years.

Revenue grew strongly during FY2020 and FY2021. That’s expected. BME was classified as an essential business during COVID-19 lockdowns.

But why did revenue shrink in FY2022? Why has revenue growth decelerated from double digits to single digit now? Throw these questions into Gemini Notebook, Alphasense or Quartr.

Cost of sales is the biggest expense. That’s expected for a retailer. Why did gross profit margins improve nearly 2 percentage points?

Selling, general and administrative expenses increased 2.7x, faster than revenue. Why? This caused operating profit margins to decline nearly 2 percentage points.

Effective interest expense is ~ 6.3%. This is ~ 1 percentage point premium over the UK 10 year gilt. Looks reasonable.

If the premium is very high, I want to know why. Are there any hidden risks? Could they be understating debt?

A high premium doesn’t automatically mean a red flag.

Companies that face seasonality usually use short-term loans to buy inventory and fund receivables. Because these loans are repaid within the year, the interest expense shows up on the income statement but the loan does not get recorded on the balance sheet.

Numbers have to be interpreted in the context of the business. I try to understand the business instead of blindly following hard and fast rules.

BME’s effective tax rate (ETR) ranges between 26% to 28%, close to the UK’s 25% corporate tax rate (CIT). Looks reasonable.

There will always be some minor differences because of deferred tax items.

If the ETR is persistently lower than the CIT, the company is likely enjoying tax incentives. Find out when the tax incentives expire and account for this in the valuation model.

Not applicable for BME.

Balance Sheet

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Last week, you highlighted a potential opportunity in GENS. What’s your suggestion?

Liquidity?

13 Oct 2026

Share price: SGD 0.61

Market capitalisation: SGD 7,299 mn (USD 5,700 mn)

Enterprise value (EV): SGD 4,351 mn (USD 3,398 mn)

Average daily volume (ADV): SGD 17 mn (USD 13 mn)

NTM P/E: 17x

What does GENS do?

GENS operates Resorts World Sentosa (RWS) in Singapore, one of the only two integrated resorts in Singapore. RWS operates on Sentosa, an island off the southern coast of Singapore.

Source: Google Maps (2026)

It earned SGD 2,452 mn revenue in 2025 (-3% YoY):

• 65% Gaming (-6% YoY)

• 9% Hotel rooms (-10%)

• 19% Attractions (+10%)

• 6% Other non-gaming (-3%)

Why do you think GENS’ long-term outlook will be worse-than-expected?

Investors seem to be too focused on quarterly changes in gaming market share. They are likely underestimating the long-term disruptions from The Greater Sentosa Master Plan (GSMP).

What’s the GSMP?

The GSMP is the government’s plan to upgrade Sentosa and link it with Pulau Brani, a nearby island. Right now, it is being used as a port. Pulau Brani will be redeveloped to house new attractions and hotels.

What are the long-term disruptions from the GSMP?

There will be two disruptions flowing from the GSMP.

First, construction reduces footfall. GENS started losing market share around 2022. This coincided with the start of major construction works in Sentosa.

Source: Bloomberg (2026)

The second disruption?

Second, new attractions will introduce more competition.

Although there are no details yet, the government hinted that the new attraction at Brani West will be similar to GENS’ Universal Studios Singapore (USS).1

Source: Straits Times (2026)

What makes you think that the consensus has not fully appreciated the long-term disruptions?

The construction works will continue through 2045. Yet, sell-side consensus expects revenue growth to return to mid-single digits by 2027.

I’ve read reports from at least 4 local brokers. But none of them mentioned the potential long-term disruptions.

When the GSMP is completed in 2045, the islands are projected to attract twice the current number of visitors.2

I doubt GENS can capture many of the new visitors.

Compared to the new attractions, most of GENS’ attractions are old. They opened in 2010.

I visited during the 2010s, and revisited in 2023. Little has changed. I only noticed aging infrastructure.

GENS is trying to fix this by adding newer attractions like Minion Land and Super Nintendo Land.3

There is a risk that GENS needs to invest more money into refreshing its other attractions just to maintain its number of visitors.

In other words, the new competition may force GENS to reinvest at a lower rate of return.

Potential sale

Why not short GENS?

The controlling shareholder, Genting Berhad (GENT MK) may sell GENS.

In July 2022, MGM Resorts International ( US) reportedly approached the GENS’ controlling shareholder, the billionaire Lim family, to express its interest in a deal.

Bloomberg reported: “Other potential suitors have also been in the preliminary stages of studying Genting Singapore”

No deal materialised. It appeared the Lim family did not want to sell.

What makes you think they may sell GENS now?

Genting Malaysia Berhad (GENM MK), GENS’ sister company, won a license to operate a casino in New York. It is spending a lot of money to build the casino. We talked about this before here.

But GENT, the parent company of both GENM and GENS, already has a lot of debt. Last month, Fitch downgraded GENT’s credit rating to ‘BBB-’, its lowest investment grade rating.

On 9 October 2026, GENT announced a rights issue to raise MYR 1.3 bn mainly for debt repayment.4

That GENT resorted to a rights issue when the share price is already depressed suggests difficulty in refinancing maturing debt.

If this is truly the case, GENT will need to find more ways to raise funds to meet debt repayments.

Before the rights issue, the group has total borrowings of approximately MYR 45 bn, which comprises short-term borrowings of MYR 10 bn and long-term borrowings of MYR 35 bn.

A sale of GENS could help deleverage. GENT’s stake in GENS is worth ~ MYR 7 bn.

Coming up next

Next week, I’ll be back with 2 to 3 more interesting ideas.

I’ll then analyse the most voted idea from my last post.

Right now, that’s Canada Goose (GOOS CN). WH Group Limited (288 HK) is the runner-up.

Haven’t voted yet? Check out my last post: 2 Attractive Opportunities

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I have no position in GENS SP, neither long nor short. I may change my views, predictions, or personal portfolio positioning at any time without notice.

As usual, if you want me to dig deeper into an idea, vote for it. Use the poll at the end of this email.

Canada Goose Holdings Inc. (GOOS CN)

About (6 Oct 2026)

Share price: CAD 10.79

Market capitalisation: CAD 1,064 mn (USD 748 mn)

Enterprise value (EV): CAD 1,707 mn (USD 1,201 mn)

Average daily volume (ADV): CAD 3 mn (USD 2 mn)

NTM P/E: 12x

My initial estimate suggests ~ 7% free cash flow yield on enterprise value.

The shares have fallen over the past 5 years on the back of decelerating revenue growth.

GOOS manufactures and sells luxury performance outerwear. It is famous for its parkas.

It earned CAD 1,528 mn revenue in FY2026 (+13% YoY):

• 76% direct-to-consumer (DTC) (+16% YoY)

• 19% wholesale (+12%)

• 5% Others (-10%)

Good business, temporary headwinds?

The business seems to be facing a temporary headwind.

Coming off a period of high demand during 2017-2018, they seem to have overestimated demand and overstocked inventory

However, there appear to be early signs of recovery. Inventory days have started coming down.

By FY2026, inventory days have fallen below median levels, and is much closer to Moncler S.p.A. (MONC IM).

The brand remains intact. Online reviews are generally favourable.1

Return on asset (ROA) should improve significantly as GOOS continues destocking. ROA in FY2026 was also depressed by a one-time arbitration settlement of CAD 44 mn.

Potential sale?

In August 2025, CNBC reported GOOS received takeover offers at ~ CAD 20 per share.2 This is almost twice of today’s share price.

The controlling shareholder, PE firm Bain Capital, has engaged Goldman Sachs to advise and get better offers.

I suspect a sale will likely happen sooner than later. It has been 13 years since Bain Capital first invested in GOOS.

On 9 September 2026, CEO Dani Reiss acquired 100,000 more shares at ~ CAD 10.62. He owns ~ 22% of shares outstanding.3

Factors to focus on

1. What are the short-sellers betting on? Although short interest has fallen off its peak around 2023, it still remains on the high side ~12%.

2. Receivable days started increasing from FY2024. Why?

   1. Headline receivable days ~ 25 days. But this likely understates the true figure because it includes retail sales.

      According to my initial estimates, wholesale receivable days is ~ 115 days in FY2026, up from ~30 days in FY2023. What happened?

3. US tariffs on Canadian goods (GOOS manufactures mainly in Canada)

WH Group Limited (288 HK)

About (7 Oct 2026)

Share price: HKD 6.57

Market capitalisation: HKD 85,770 mn (USD 10,928 mn)

Enterprise value (EV): HKD 107,916 mn (USD 13,750 mn)

Average daily volume (ADV): HKD 311 mn (USD 40 mn)

NTM P/E: 7x

My initial estimate suggests ~ 11% free cash flow yield on enterprise value.

WH is the world’s largest pork processor, with operations in packaged meats, fresh pork, and hog production.

The company derives over 50% of its revenue from packaged meats and about 40% from fresh pork and hog production.

In 2025:

• China contributed 30% to revenue under Henan Shuanghui Investment & Development Co. Ltd. (Shuanghui), with 38% from packaged meat and 44% from fresh pork.

• The U.S. contributed 54% under Smithfield, with 58% from packaged meat and 42% from fresh pork.

• Europe contributed 15%, with 50% from packaged meat and 27% from fresh pork.4

Attractive capital returns

WH has been raising capital returns over the past few years. Today, it trades at ~ 9.3% dividend yield, a 7.6 percentage points premium over China 10y government bond.

Such a high premium suggests investors are doubting whether WH can sustain its dividends.

WH looks very exposed to volatile hog prices. In 2023, unfavourable hog prices caused operating losses at the fresh pork segment in the US. Group operating profits fell -30%.

WH started scaling back on its fresh pork segment, focusing on its packaged meat segment.

This segment is much more stable and resilient. In 2023, operating profits from packaged meat remained stable. Branded retail products carry much stronger pricing power than commoditised fresh pork.

As a result, WH’s cash flows today are much more stable and resilient.

Management is also focusing more on capital returns. It IPO’d its US subsidiary, Smithfield Foods, Inc. ( US) in 2025 and used the proceeds to pay special dividends of HKD 1.08 per share.

Management focusing on capital returns. Huge jump in cash outflow for dividends (USD’M) in 2025, funded by SFD’s IPO

There may be more dividends or share buybacks. Cash today is ~ 13% of revenue, above historical average of mid-single digit. Capex needs are lower. Packaged meat is more capital-light than producing fresh pork.

All these factors together suggest the 9.3% dividend yield is likely much more sustainable than what the market is currently pricing in.

Factors to focus on

1. More evidence that the cash flows today are more resilient and stable to hog prices

2. Impact of US tariffs. Risk seems low because production is mostly done locally

Vote for the best idea

If you want me to dig deeper into an idea, vote for it.

Coming up next

I will look deeper into Genting Singapore (G13; GENS SP) this week. This was the idea you voted as the most interesting in my previous email.

Subscribe to get the analysis when I publish.

In case you missed it

Previously, I highlighted the opportunity I see in Li Ning Company Limited (2331 HK).

3 reasons why buying stocks just because of low P/E can blow up your portfolio.

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I do not hold any positions in GOOS CN or 288 HK, either long or short. I may change my views, predictions, or personal portfolio positioning at any time without notice.

References

At first glance, this reasoning is sound.

P/E tells you how much you are paying for every $1 of earnings the company generates. The lower the P/E, the cheaper.

At least that’s the theory.

In reality, buying stocks simply because their P/E is low can blow up your portfolio.

Here’s 3 reasons why.

1. P/E doesn’t account for debt

Imagine two companies.

Each holds $100 mn of assets.

They are exactly the same. Same assets. Same management. Same earnings.

The only difference: Company A financed $99 mn of its assets with borrowings. Company B does not use debt.

Which company is riskier?

Company A. Obviously.

If A is riskier, then it should follow that A’s earnings should be less valuable. Company A might earn the same as Company B next year. But there’s a good chance Company A enters bankruptcy after next year.

That’s why companies with too much debt naturally trades at low P/E. It doesn’t automatically mean Mr. Market has gone mad and now offers you a bargain!

And that’s why I hesitate when I hear pitches about how Charter Communications, Inc. ( US) is such a bargain at 2x P/E.

It seems to have too much debt, especially with a shrinking broadband subscriber base.

2. P/E doesn’t account for poor quality earnings

Low P/E is meaningless if the earnings are poor quality.

We talked about how a Malaysian technology company was likely inflating its earnings by capitalising intangible assets aggressively.

At the start of the year, the shares were trading at 2x P/E. That isn’t cheap. That’s a warning.

So far, investors have lost -90%. But the drama doesn’t end here.

The government alleged the company owes them a lot of money, and is late in paying.

This wouldn’t come as a surprise to investors that paid attention to its aggressive capitalisation of intangibles.

Before you get excited over low P/E, ask yourself:

• Why are other investors selling their shares at such a cheap price?

• What are they overlooking?

• What do I know that they don’t?

3. P/E doesn’t account for capital intensity

Charlie Munger quipped:1

Imagine two companies. Both will grow their earnings by $100 mn next year.

Company A must reinvest $50 mn into inventory, accounts receivable and PPE. Company B doesn’t need to reinvest its incremental earnings, leaving the full $100 mn for shareholders.

Which company’s earnings are more valuable?

Obviously, Company B.

B can distribute all its incremental $100 mn earnings to shareholders. Company A can only distribute $50 mn - what’s left after reinvesting in inventory, receivables and PPE.

In real life, B is like a software company. Before generative AI, software companies are generally better businesses because they are capital-light. They do not need to invest in inventories. Better still, customers even pay in advance, allowing their cash flow to exceed earnings.

Company A is like an equipment lessor. Very capital intensive. To grow, they need to reinvest a lot of earnings back into inventory, receivables and PPE. Customers can take a long time to pay them.

That’s why, all else equal, Company B deserves a higher P/E.

What determines capital intensity?

Return on incremental invested capital (ROIIC).

For the same amount of growth, if ROIIC is low, the reinvestment rate will be high. The opposite is also true.

That’s why a low ROIIC business trading at 10x P/E is not necessarily ‘cheaper’ than a high ROIIC one at 20x P/E.

Afterword

A better measure may be free cash flow yield (FCFF yield). That’s what I use mainly.

FCFF yield = sustainable free cash flow to firm / enterprise value.

Compare that to the risk-free rate, if the premium is big enough, then the shares may be attractive.

However, there are a lot of traps in estimating sustainable free cash flow.

The traditional formula ignores stock-based compensation, non-cash capex and capitalisation of intangibles, etc. These will inflate FCFF.

But that’s a story for another time.

Coming up next

Next week, I’ll be back with 2 to 3 more interesting ideas.

I’ll then analyse the most voted idea from my last post.

Right now, that’s Genting Singapore Limited (G13; GENS SP). ANTA Sports Products Limited (2020 HK) is the runner-up.

Haven’t voted yet? Check out my last post: 2 Attractive Ideas Again

Thanks for reading! If you found this helpful, hit the “like” button.

If you’re not already a subscriber, sign up for weekly analysis on global SMID equities.

Subscribe now

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I do not hold any positions in the companies mentioned in this article, either long or short. I may change my views, predictions, or personal portfolio positioning at any time without notice.

References

You highlighted a potential opportunity in Li Ning. What’s your suggestion?

Liquidity?

8 Oct 2026

Share price: HKD 12.26

Market capitalisation: HKD 31,935 mn (USD 4,069 mn)

Enterprise value (EV): HKD 16,650 mn (USD 2,121 mn)

Average daily volume (ADV): HKD 303 mn (USD 39 mn)

NTM P/E: 9x

What does Li Ning do?

Li Ning sells sportswear under its own brand, mainly in mainland China.

It earned CNY 30 bn revenue in 2025 (+3% YoY):

• 49% footwear (+2% YoY)

• 42% apparel (+2%)

• 9% equipment and accessories (+13%)

Li Ning sells through these channels:

• 47% wholesale (+6% YoY)

• 30% e-commerce (+5%)

• 22% direct (-3%)

• 1% international (-20%)

How has its market share trended?

Historically, consumers viewed Li Ning as inferior to Western brands like Nike and Adidas.

This changed in 2021.

The Xinjiang controversy caused consumer preference to shift towards local brands.

Li Ning gained significant market share. It held the gains after consumers discovered its products are as good as Western brands.

Source: Angsana Anderson estimates based on Topsports (6110 HK), Pou Sheng (3813 HK), Li Ning (2331 HK) and others

Good business, temporary headwinds

Why do you think the market is likely wrong to price in another long and severe downturn, like the one during 2011 - 2017?

The 2011 – 2017 downturn was caused by management significantly overestimating post-Olympic demand.

When the demand surge unexpectedly cooled off, Li Ning was stuck with too much inventory. Growth plummeted. Margins collapsed as the company cut prices to clear excess inventory.

The current headwind will likely be less severe than expected. Compared to 10 years ago, inventory today is much healthier.

Provision for inventory write-down measures the percentage of inventory whose selling price has fallen below cost. In H1’26, this remained low and stable at 5.9%. 10 years ago, it was 12.9%.

Inventory aging remains healthy in H1’26.

New products make up 77% of inventory, significantly higher than the 56% in 2016.

More importantly, obsolete products remain near all-time low at 5%.

Ok. We’ve discussed these before.

Inventory at Li Ning may be healthy. But how about channel inventory?

Channel inventory also looks healthy.

New products make up 84% of inventory. Only 6% of inventory is obsolete.

Both % remained stable in H1’26.

Finally, turnover in channel inventory also remains healthy and stable at ~ 4 months.

What is the risk of channel stuffing?

Low risk.

If this is happening, channel inventory would deteriorate, customers would take longer to settle invoices and refunds would increase. No indicators of these so far.

Trade receivables aging remains healthy.

Refund liabilities remain low and stable too.

Under-recognised growth

Why are investors overlooking Li Ning’s growth potential?

Investors are distracted by the near-term guidance cut. They are overlooking Li Ning’s long-term growth potential in international markets.

In 2009, the company opened stores in Singapore and Hong Kong, followed by the US in early 2010. By H1’26, international markets account for only 1.2% of total revenue.

However, we have reached an inflection point.

Thanks to pioneers like BYD, Chagee and Luckin, international consumers are now more open to Chinese brands like Li Ning and Anta. We talked about this before.

Li Ning is moving to capture the growth potential.

In October 2024, Li Ning formed a joint venture with HongShan (formerly Sequoia China). The JV’s purpose is to develop Li Ning’s business outside China.

The agreement sets a target of USD 1 bn (CNY 6.7 bn) revenue by 2028. This is equivalent to ~ 22% of last twelve month’s revenue.

In 2025, Li Ning became the official sportswear partner for the Chinese Olympic Committee from 2025 to 2028. In June 2026, Li Ning signed a partnership with Stephen Curry, a popular basketball player in the US.

These partnerships contributed to near-term margin compression and the share sell-off. However, investors are overlooking Li Ning’s potential to earn attractive incremental return on capital overseas.

What can close this valuation gap?

Potential takeover

In March 2024, Reuters reported founder and CEO Li Ning is considering a takeover.1

The shares were trading ~ HKD 22.00 per share and 14x NTM P/E.

If no takeover happened 2 years ago, why now?

2 reasons

(1) Valuation is much more attractive today.

Despite good growth potential, the share price has almost halved to ~ HKD 12.

The company is trading at only 9x NTM P/E.

(2) Cash outlay for a takeover is lower today.

The founder also owns more of the company today: ~20%, up from 10% previously. He is buying shares directly on the market.

The most recent purchase was on 11 Sep 2026, at ~ HKD 12.92 per share.2

Sounds interesting.

How successful can they expand overseas? What do customers think about their products vs. Western brands?

What is the risk of the recovery taking longer than expected?

Please find out more

Coming up next

Next week, I’ll be back with 2 to 3 more interesting ideas.

I’ll then analyse the most voted idea from my last post.

Right now, that’s Genting Singapore Limited (G13; GENS SP). ANTA Sports Products Limited (2020 HK) is the runner-up.

Haven’t voted yet? Check out my last post: 2 Attractive Ideas Again

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I am long 2331 HK. I may change my views, predictions, or personal portfolio positioning at any time without notice.

As usual, if you want me to dig deeper into an idea, vote for it. Use the poll at the end of this email.

Genting Singapore Limited (G13; GENS SP)

About (2 Oct 2026)

Share price: SGD 0.62

Market capitalisation: SGD 7,419 mn (USD 5,799 mn)

Enterprise value (EV): SGD 4,472 mn (USD 3,495 mn)

Average daily volume (ADV): SGD 18 mn (USD 14 mn)

NTM P/E: 17x

The share price rallied in 2023 on optimism over post-COVID re-opening.

Since then, the shares drifted down. Operating profits fell -9% YoY in 2024, -24% YoY in 2025 and -32% YoY in H1’26.

Two factors: (a) declining revenue and (b) high capital expenditure through 2030.

GENS operates Resorts World Sentosa in Singapore, one of the only two integrated resorts in Singapore.

It earned SGD 2,452 mn revenue in 2025 (-3% YoY):

• 65% Gaming (-6% YoY)

• 9% Hotel rooms (-10%)

• 19% Attractions (+10%)

• 6% Other non-gaming (-3%)

Good business, temporary headwinds?

Starting 2024, the shares sold off. Performance in the gaming segment was weaker than expected. Gaming revenue declined -6% YoY in 2025.

The market seems to be extrapolating this weakness into 2026.

However, the trends in receivable aging and contract liabilities suggest gaming revenue may perform better than expected in 2026.

Recovery in % of receivables not past due

VIP customers typically borrow from GENS to gamble. The percentage (%) of receivables not past due indicates gaming demand. If demand is weak, customers take longer to pay.

That’s why % of receivables not past due and YoY % change in gaming revenue are correlated.

The % of receivables not past due recovered in 2025. YoY % change in gaming revenue also recovered in H1’26, and will likely continue its recovery.

Contract liabilities increased

Contract liabilities represent cash received in advance from customers for future gaming and non-gaming services.

When demand is strong, customers buy more chips or deposit more cash into their gaming accounts. These are recorded as contract liabilities, which are converted into revenue when customers spend them.

That’s why contract liabilities is a leading indicator of revenue (except during the distortion created by COVID-19):

In 2025, contract liabilities grew +1% YoY. This suggests gaming revenue has bottomed out.

Potential sale?

In July 2022, MGM Resorts International ( US) reportedly approached the GENS’ controlling shareholder, the billionaire Lim family, to express its interest in a deal.

Bloomberg reported: “Other potential suitors have also been in the preliminary stages of studying Genting Singapore”1

No deal materialised. It appeared the Lim family did not want to sell.

Since 2022, what has changed?

Genting Malaysia Berhad (GENM MK), GENS’ sister company, won a license to operate a casino in New York. It is spending a lot of money to build the casino. We talked about this before here.

But Genting Berhad (GENT MK), the parent company of both GENM and GENS, already has a lot of debt. Last month, Fitch downgraded GENT’s credit rating to ‘BBB-’, its lowest investment grade rating.2

A sale of GENS could help deleverage.

Factors to focus on

1. Remaining committed capex of ~ SGD 4 bn to renovate and upgrade facilities will likely result in negative free cash flow through 2030. GENS has ~ SGD 3 bn cash on hand.

   1. Risk of cost overrun?

   2. Risk of worse-than-expected disruption to operations?

2. Continued loss of market share to Marina Bay Sands?

ANTA Sports Products Limited (2020 HK)

About (4 Oct 2026)

Share price: HKD 73.70

Market capitalisation: HKD 207,372 mn (USD 26,425 mn)

Enterprise value (EV): HKD 200,962 mn (USD 25,609 mn)

Average daily volume (ADV): HKD 525 mn (USD 67 mn)

NTM P/E: 12x

ANTA sells sportswear, mainly in China.

It earned CNY 80,219 revenue in 2025 (+13% YoY):

• 43% ANTA (+4% YoY)

• 35% FILA (+7%YoY)

• 21% Others (+59% YoY)

ANTA focuses on mass-market sportswear. FILA is premium. Other brands focus on specialised and high-performance sportswear like Descente (high-end skiing and golf) and Kolon (trekking and hiking).

Good business, temporary headwinds?

The market sees sportswear as a declining market in China.

The poster child for this is Nike ( US). In Q1’FY27 (June to August 2026), NKE’s sales decline in China reached -26% YoY:

Source: Reuters (2026)

However, NKE is not an accurate representation of the sportswear market in China. Its problems are specific to itself.

Even though consumer demand is weak in China, ANTA still grew its revenue by low-teens over the past few quarters.

Furthermore, ANTA is showing early signs of reaching an inflection point. Inventory days is starting to recover.

Note: Inventory days before 2020 is not comparable because ANTA shifted from wholesale to direct-to-consumer during that year.

Under-recognised growth?

ANTA also sees opportunities outside China.

In June 2025, it had 224 stores overseas, mostly in Southeast Asia. By June 2026, ANTA had doubled overseas store count to more than 500.3 It targets 1,000 overseas stores by 2028.4

Can they do it?

Probably yes. Their product quality seems to be on par with Western brands, and more-value-for-money.

In 2025, CNA reported:5

I tried some ANTA shoes in Singapore.

The most expensive model in the store retails for SGD 199.

Source: Angsana Anderson (2026)

Designed for half-marathons and marathon, it gives a strong ‘bounce’ on every step.

I tried it. The quality is good. A comparable pair at a Western brand would probably cost twice as much, I reckon.

BYD brought affordable EVs to the world. Chagee made drinking tea fashionable again.

ANTA (and Li Ning) are bringing Chinese sportswear to the world. Unlike EVs and tea, competition in sportswear doesn’t seem that cut-throat.

Factors to focus on

1. Timing and sustainability of recovery

2. Opportunities in international markets

Vote for the best idea

If you want me to dig deeper into an idea, vote for it.

Coming up next

I will look deeper into Li Ning Company Limited (2331 HK) this week. This was the idea you voted as the most interesting in my previous email.

Subscribe to get the analysis when I publish.

In case you missed it

Previously, I highlighted the opportunity I see in Mortgage Advice Bureau (Holdings) plc (MAB1 LN).

I first started investing in 2021. Despite outperformance, looking back, I realised how naive I was.

If I could send a post back in time to 2021, what would I tell myself?

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I do not hold any positions in GENS SP or 2020 HK, either long or short. I may change my views, predictions, or personal portfolio positioning at any time without notice.

References

Great return can come from skill or taking on excessive risk and being lucky. It’s only during a bear market that we can tell those two apart.

Happily for me, I did not blow up in 2022 (fingers crossed).

I first started investing in 2021. Despite outperformance, looking back, I realised how naive I was.

If I could send a post back in time to 2021, what would I tell myself?

1. Stocks are businesses

A stock is a partial ownership of a business.

The value of a stock today is the sum of all cash the business throws off from now until the end of time.

That is the fundamental truth.

2. The stock market is a market

Think of the stock market as a fish market.

If the fishermen caught way more mackerel than expected => supply goes up => prices go down.

The same forces of demand and supply decide share prices in the short term.

If someone gets margin-called today, they dump their shares => supply goes up => share price falls.

That’s why, in the short-term, share prices can diverge from their true value.

Does that mean you should ignore short-term movements?

No.

3. Pay attention to the short-term

If the share price falls -10% in a day on huge volume, someone on the market is dumping.

You should find out why they’re selling.

Maybe there’s new information that disproves your thesis. You should get out.

Maybe there’s no fundamental changes. A 24-year old investor got margin-called on his other holdings, and needed to raise cash very fast. You should take advantage and buy more.

In either case, you shouldn’t ignore big short-term movements on huge volume.

It can save you from a disaster, or present you with a huge opportunity.

There’s another reason why long-term investors should pay attention to the short-term.

4. Most people are short-term, but they just haven’t realised it yet

There’s nothing wrong with being short-term. Plenty of short-term investors are rich.

But the problem comes when people think they are long-term, but are actually short-term.

This mismatch usually ends with the tragedy of buying high and selling low.

If you are investing money for other people, and you are not sure whether they are truly long-term, then you must pay attention to the short-term.

You need to weigh the trade-off between minimising short-term volatility and maximising long-term returns.

The corollary lesson is: Know yourself.

If you yourself cannot handle the short-term volatility that comes with long-term investing, don’t try to be Buffett or Greenblatt.

Many envy Greenblatt’s performance: 50% per year.1

But not many knew Greenblatt said:2

5. Variant perception

If you want to outperform other investors, you cannot just buy businesses that are cheap or good quality. Outperformance will be elusive.

To outperform, you need businesses that are cheaper or better quality than expected by other investors.

You need variant perception.

Focus on the under-appreciated changes in the business:

• A new management took over a ‘cash-hoarding’ company. Their tone is changing from ‘hoarding cash’ to ‘efficient capital structure’ (e.g. 3659 JP)

• A ‘cash-sucking’ business passing through the peak of its capex cycle, and poised to raise capital returns (e.g. GRG LN)

• A ‘cyclical’ small-cap with hidden value in its investment property. Management is preparing to sell and unlock the value (e.g. PDS SP).

6. What is your edge?

My 1st edge comes from my positioning. I focus on small to mid cap companies (SMID).

Because of their smaller sizes, they are not worth the time and effort of smarter investors. Thus, there tends to be more mispricing in SMIDs.

But the mispricing cuts both ways.

SMID stocks can be very overpriced or underpriced. Worse yet, because not many sophisticated investors are looking, red flags tend to be more prevalent and go unnoticed.

That’s where my 2nd edge comes in.

Having started my career in a Big 4 audit firm, I am much more sensitive to numbers than the average analyst.

From just the annual report, I can get a good sense of whether the business is deteriorating, whether management is questionable, etc.

I’ve seen so many red flags in SMIDs. The most memorable ones are:

• Rising capitalisation of intangibles

• Surging goodwill from acquisition of real estate companies

• Increasing payable days

My 3rd edge: I dig deeper into what’s important.

For example, investors are dumping Li Ning (2331 HK) over fears of another severe and long downturn. But my analysis strongly suggests the current downturn will be less severe than expected.

I dug into the footnotes. I discovered inventory and receivables are much healthier, reducing the need for the heavy discounts like those in the previous downturn. I will be discussing this in further detail next week.

For my 4th edge, I was tempted to list ‘passion and hard work’. When you are thinking about business and stocks for 12 hours every day, ‘obsession’ might be the better word.

But I decided against it.

Who isn’t obsessed in this game?

Afterword

This post is inspired by Charlie Huggins, a former fund manager in the UK:

The fiercely independent investor

20 lessons from 20 years of investing

I became hooked on investing aged 17, when I bought my first share. I’m now 37 and have been investing continuously since, both personally and professionally…

Read more

6 months ago · 44 likes · 2 comments · Charlie Huggins

Coming up next

Next week, I’ll be back with 2 to 3 more interesting ideas.

I’ll then analyse the most voted idea from my last post.

Right now, that’s Li Ning Company Limited (2331 HK). Dr. Martens plc (DOCS LN) is the runner-up.

Haven’t voted yet? Check out my last post: Yet Another 2 Attractive Ideas

Thanks for reading! If you found this helpful, hit the “like” button.

If you’re not already a subscriber, sign up for weekly analysis on global SMID equities.

Subscribe now

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I do not hold any positions in the companies mentioned in this article, either long or short. I may change my views, predictions, or personal portfolio positioning at any time without notice.

References

You highlighted a potential opportunity in MAB1. What’s your suggestion?

Liquidity?

29 Sep 2026

Share price: GBP 3.61

Market capitalisation: GBP 208 mn (USD 275 mn)

Enterprise value (EV): GBP 211 mn (USD 279 mn)

Average daily volume (ADV): GBP 1.2 mn (USD 1.5 mn)

NTM P/E: 8x

What does MAB1 do?

MAB1 is one of the largest mortgage networks in the UK. It provides regulatory oversight, software, and lender access to mortgage advisers.

Mortgage procuration fee is the largest revenue stream. It accounts for 42% of revenue in 2025.

Here’s how it works.

A homebuyer approaches a mortgage adviser. The adviser uses MAB1’s software to help the homebuyer assess affordability, the best mortgage lender, etc. They then apply for the mortgage via MAB1’s software.

After the lender disburses the mortgage, it pays a commission to MAB1. MAB1 recognises the entire commission as revenue and the adviser’s cut as its cost of sales.

The other two revenue streams are Protection & General Insurance Commission (37% of total revenue, +12% YoY) and Client Fees (19%, +20% YoY).

The former involves cross-selling insurance while the latter refers to fees paid directly by home-buyers for mortgage advice.

In 2025, MAB1 grew total revenue by +20%. This was driven by +6% growth in number of mortgage advisers and +13% growth in revenue per adviser.

Good business, temporary headwinds

What are the headwinds? Why do you think they are temporary?

First, let me explain how investors view the business.

MAB1’s total return highly correlates with Persimmon Plc (PSN LN), one of the UK’s largest homebuilders.

That’s because MAB1’s revenue is driven by number of mortgages approved. When mortgage approvals fall, number of homes sold also falls.

I overlaid MAB1’s total return on the number of mortgage approvals in the UK. Generally, when mortgage approvals are up, share price responds accordingly.

Sorry for the congested chart. This was the best result Gemini could give me.

Source: Bank of England (2026); Tikr

In early Sep 2026, MAB1 cut its profit guidance. Mortgage approvals were lower than expected. Share price collapsed.

Around the same time, PSN’s shares jumped.

Why is there a divergence?

On 26 September 2026, the UK government announced ‘Your First Home’, a scheme to help first-time homebuyers get mortgages on new homes.1

More mortgages => more homes sold.

That’s good for both MAB1 and PSN right?

Yes.

But the muted reaction from MAB1’s investors suggests they have not fully recognised this: MAB1’s headwind is temporary and lifting.

How is this showing up on their valuation?

Here’s the historical NTM P/E chart:

Before 2026, investors had always valued MAB1 (orange) more than PSN (green).

MAB1 is a higher quality business. MAB1 earns 9% return on asset (ROA), superior to PSN’s 5%. It doesn’t need to invest in inventories, receivables and equipment. In fact, it carries negative working capital. Suppliers provide funding.

Nothing much has changed about its business. That’s why I believe MAB1 should continue trading at a higher P/E than PSN.

What can close this valuation gap?

Potential sale

MAB1 fits the profile of a takeover target.

Capital-light and high free cash flow conversion. It is trading at ~ 10% free cash flow yield. Net debt is immaterial, so it has the ability to take on more debt.

The industry is fragmented and looks ripe for consolidation. Despite being the top player, MAB1 holds only ~ 8.4% market share.2

CEO and founder Peter Brodnicki is the largest single shareholder, holding ~18% of shares outstanding.

He is already 64 years old but has no clear successor. At one point, he considered Yaiza Luengo, the then-COO, his successor.3 But she left in May this year without a replacement.

MAB1 hired a new CFO in July 2026: Jo Stent. Although it was many years ago, she has experience in M&A through her role as a M&A Lead Advisor in Deloitte.4

Finally, MAB1’s NTM P/E is at all-time low of 8x. Such attractive valuation will likely attract buyers. With a high enough premium, the CEO/founder may be inclined to sell and enjoy his retirement.

Risks

What is the risk of Meta’s Muse replacing mortgage advisors?

Likely low risk.

First, providing mortgage advice is not simply comparing mortgage rates and recommending the lowest rate. If this is true, mortgage comparison websites would have made mortgage advisors obsolete a long time ago.

Customers use mortgage advisors to handle complexity. Advice is particularly useful for self-employed applicants, contractors, buyers with historic credit issues, etc.

Generative AI, being trained on historical data, often hallucinates when presented with unprecedented complex cases.5

Second, mortgages are not like mobile phone bills and gym memberships. The stakes are much higher.

In Nov 2025, L&G’s survey showed that just 7% of consumers would be comfortable using automated tools to arrange their mortgage, and only 5% would opt for AI chatbots.6

Finally, providing mortgage advice is an activity regulated by the Financial Conduct Authority (FCA).

That’s a key yet under-appreciated difference between MAB1 and other businesses like Expedia Group, Inc. ( US), Booking Holdings Inc. ( US) and Rightmove plc (RMV LN).

Coming up next

Next week, I’ll be back with 2 to 3 more interesting ideas.

I’ll then analyse the most voted idea from my last post.

Right now, that’s Li Ning Company Limited (2331 HK). Dr. Martens plc (DOCS LN) is the runner-up.

Haven’t voted yet? Check out my last post: Yet Another 2 Attractive Ideas

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I am long MAB1 LN. I may change my views, predictions, or personal portfolio positioning at any time without notice.

As usual, if you want me to dig deeper into an idea, vote for it. Use the poll at the end of this email.

Li Ning Company Limited (2331 HK)

About (27 Sep 2026)

Share price: HKD 12.33

Market capitalisation: HKD 31,524 mn (USD 4,019 mn)

Enterprise value (EV): HKD 16,239 mn (USD 2,070 mn)

Average daily volume (ADV): HKD 318 mn (USD 41 mn)

NTM P/E: 9x

Li Ning sells sportswear under its own brand, mainly in mainland China.

It earned CNY 30 bn revenue in 2025 (+3% YoY):

• 49% footwear (+2% YoY)

• 42% apparel (+2%)

• 9% equipment and accessories (+13%)

Li Ning sells through these channels:

• 47% wholesale (+6% YoY)

• 30% e-commerce (+5%)

• 22% direct (-3%)

• 1% international (-20%)

Good business, temporary headwinds?

The current headwind will likely be less severe than expected. Compared to 10 years ago, inventory today is much healthier.

Provision for inventory write-down measures the percentage of inventory whose selling price has fallen below cost.

In H1’26, this remained low and stable at 5.9%. 10 years ago, it was 12.9%.

Inventory aging remains healthy in H1’26.

New products make up 77% of inventory, significantly higher than the 56% in 2016. Obsolete products remain near all-time low at 5%.

Under-recognised growth?

Investors are distracted by the near-term guidance cut. They are overlooking Li Ning’s long-term growth potential in international markets.

In October 2024, Li Ning formed a joint venture with HongShan (formerly Sequoia China).1

The JV’s purpose is to develop Li Ning’s business outside China. The agreement sets a target of USD 1 bn (CNY 6.7 bn) revenue by 2028. This is equivalent to ~ 22% of last twelve months’ revenue.

Potential takeover?

In March 2024, Reuters reported founder and CEO Li Ning was considering a privatisation.2 The shares were trading ~ HKD 22.00 per share and 14x NTM P/E.

Today, Li Ning’s valuation is much more attractive.

The founder is buying shares directly on the market. The most recent purchase was on 11 Sep 2026, at ~ HKD 12.92 per share.3

Factors to focus on

1. Risk of channel stuffing?

2. Further delays in recovery?

Dr. Martens plc (DOCS LN)

About (25 Sep 2026)

Share price: GBP 0.68

Market capitalisation: GBP 649 mn (USD 860 mn)

Enterprise value (EV): GBP 862 mn (USD 1,143 mn)

Average daily volume (ADV): GBP 1 mn (USD 1 mn)

NTM P/E: 14x

DOCS sells footwear under its own brand around the world.

It earned GBP 765 mn revenue in FY2026 (-3% YoY):

• 57% boots (-8% YoY)

• 26% shoes & loafers (+19%)

• 11% sandals (-11%)

• 6% bags and accessories (+1% YoY)

DOCS sells through these channels:

• 37% wholesale (+3%)

• 32% direct-to-consumer (DTC) retail stores (-9% YoY)

• 31% DTC e-commerce (-2%)

Good business, temporary headwinds?

In late 2022, DOCS suffered operational issues at its new Los Angeles warehouse. The company also over-extrapolated demand from COVID-19 reopening. Revenue fell every year since.

However, there are signs that these issues are almost resolved.

Revenue fell -3% YoY in FY2026, an improvement from -10% in FY2025. Full price direct-to-consumer revenue increased +14% and +15% YoY in Americas and APAC (~50% of revenue). Demand is recovering.

DOCS continues to clear excess inventory. Inventory days has now fallen below median levels since 2020.

The stronger full-price sales and healthier inventory suggest the headwinds are temporary and nearly over.

Yet, the market seems to ignore this.

I estimate the shares today are trading at ~10% free cash flow yield on enterprise value. ~5% premium over the UK 10y gilt yield.

Potential sale?

Permira, a private equity (PE) firm, is the single largest shareholder. They hold ~38%. At 10 years old, the PE fund (Permira V) is reaching end of life.

Activists funds are pushing for operational improvements and sale.

Marathon Partners took a stake in April 20244 and Sparta Capital in July 20235. Both are sitting on unrealised losses. Huge incentives to engineer a turnaround and eventual sale.

Factors to focus on

1. Timing and sustainability of recovery.

   1. Recovery in DOCS share price reversed in late August after peer JD Sports Fashion Plc (JD LN) reported disappointing results in North America.6 How applicable is the read-through?

2. US tariffs

Vote for the best idea

If you want me to dig deeper into an idea, vote for it.

Coming up next

I will look deeper into Mortgage Advice Bureau (Holdings) plc (MAB1 LN) this week. This was the idea you voted as the most interesting in my previous email.

Shares in the UK’s largest mortgage network has fallen -50% this year. Is there an opportunity?

Subscribe to get the analysis when I publish.

In case you missed it

Previously, I highlighted the opportunity I see in Siltronic AG (WAF GR).

I also explained why Buffett is wrong.

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I do not hold any positions in DOCS LN, either long or short. I own shares in 2331 HK. I may change my views, predictions, or personal portfolio positioning at any time without notice.

References

Next week, I will take a break. I will return the following week (Mon 28 Sep 2026).

I want to achieve two goals during the break.

First, how can I make this newsletter more useful to you?

If you have any feedback, I will be very happy to hear from you.

Thanks to the readers who wrote in and suggested improvements. Where practical, I have already started implementing the feedback.

Finally, I will also be using the break to prepare for my interviews in Singapore. More on that after the break.

Today’s topic is a very important lesson I learnt during my time in the industry.

Let’s dig in.

You invested in an equity fund. It is down -30% this month. What’s your reaction?

• “This is just volatility. Not risk”

• “What is going on?!?”

Like most investors, you will probably choose the second option. Pick up the phone, summon the portfolio manager (if you can get hold of them). Listen to explanations. Dismiss them as pathetic excuses. Withdraw your money.

When enough investors do this, the fund eventually collapses.

Warren Buffett and Charlie Munger said volatility is not risk. Permanent capital loss is the true risk.

Source: Wikipedia (2026)

For this to be true, I realised you need to fulfill 3 conditions:

1. Permanent capital

2. Proper investment thesis

3. Emotional stability

In the first example, the portfolio managers (PM) has done their research properly. They are emotionally stable. They are willing to hold until the thesis plays out in the long-term.

But the fund still collapses.

Their investors pulled out. They don’t know whether the -30% drawdown is just volatility or permanent capital loss. After all, the investors have not researched the stocks. How can they have conviction that the stocks will eventually recover?

In Buffett’s case, he can ignore volatility. He knows what he is doing, and he doesn’t balk when stock prices fall (at least not publicly). Above all, he has permanent capital. That’s a very very strong competitive advantage.

For the rest of us who have to report monthly results, we will need to find ways to manage volatility.

How to (try to) manage volatility

The easiest and cheapest is diversification. But you’ll still be exposed to market movements (beta). So you short stocks too. That’s long/short equity. But long-only funds cannot short.

Before Buffett had permanent capital, he used ‘work-outs’ to manage volatility:

Our second category consists of “work-outs.”

These are securities whose financial results depend on corporate action rather than supply and demand factors created by buyers and sellers of securities…

Corporate events such as mergers, liquidations, reorganizations, spin-offs, etc., lead to work-outs.1

He goes on to explain the benefits:

This category will produce reasonably stable earnings from year to year, to a large extent irrespective of the course of the Dow. (emphasis mine)

One of Buffett’s common trades is betting on the completion of an announced merger or acquisition. Nowadays, this is called ‘merger arbitrage’.

Here’s how it works.

After a merger is announced, the target’s share price would often rise to near, but not quite exactly the offer price.

A recent example is EQT’s takeover of Intertek Group plc (ITRK LN). The private equity (PE) firm offered GBP 60.00 per share.2 The share price today is GBP 58.40

If you buy ITRK shares today and the deal closes by year-end, you will earn ~3%. This is ~12% annualised.

Best of all, ITRK’s share price becomes more dependent on the deal closing and less correlated with general market movements. In other words, less volatile.

But this is not a free lunch.

If the deal falls through, the share price will collapse. You’re looking at a -35% loss if the price collapses to the pre-deal levels.

It is this asymmetric payoff that makes me hesitate.

Buffett himself admits:

That brings me to the question: How can I be the other fellow that has made the first 95 cents?

My strategy here is:

If I buy undervalued shares, I will be exposed to market volatility. But if I buy undervalued shares with higher-than-expected probability of a takeover, I can generate higher returns with lower volatility.

This strategy seems to be working.

Despite the bear market in 2022, my portfolio returned +7% in 2022, largely due to a takeover.

Here’s a preview of the framework I’ve developed:

Factors that increase the probability of a takeover

• History of takeover attempts (CRW LN, GENM MK, WAF GR)

• Management is reaching retirement age without a clear successor (RFX LN)

• Company owned by a PE fund + PE fund near maturity (CTOS MK)

• Management restructuring the business into independent segments that can be easily sold (PYPL US)

• Management starts cutting costs and ‘long-bets’ to improve profitability (PYPL US)

• Professional and consulting fees increase significantly. This detail can be found in the accounting footnotes

• Divestment of non-core assets (CTOS MK)

• Appointment of new board members or C-suite with PE experience (YOU LN, ACL AU)

• Activist investor pushing for sale (YOU LN)

• Peers in the industry being acquired (RFX LN, PETS LN)

• PE firm raising new funds targeting a specific sector

• Major shareholder steadily buying more shares (NEC AU)

• Competitor announcing intentions to grow via acquisitions

• Target generates stable free cash flow + low debt

Factors that decrease the probability of a takeover

• Controlling family who sees the company as a crucial part of their empire

• Huge overlap between the target and acquirer’s market

• Takeover depends on complex financing

• Acquirer is already highly levered

• Target operates in a politically sensitive industry

Coming up next

After my break, I’ll be back with 2 to 3 more interesting ideas.

I’ll then analyse the most voted idea from my last post.

Right now, that’s Mortgage Advice Bureau (MAB1 LN). Haidilao (6862 HK) is the runner-up.

Haven’t voted yet? Check out my last post: 2 More Attractive Ideas

Thanks for reading! If you found this helpful, hit the “like” button.

If you’re not already a subscriber, sign up for weekly analysis on global SMID equities.

Subscribe now

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I do not hold any positions in the companies mentioned in this article, either long or short. I may change my views, predictions, or personal portfolio positioning at any time without notice.

References

Last week, you highlighted a potential opportunity in Siltronic. What’s your suggestion?

Shortlist WAF.

The market sees it as a lousy business. It’s still loss-making in the midst of a semiconductor boom.

However, my preliminary research suggests WAF is reaching a cyclical inflection.

Liquidity?

15 Sep 2026

Share price: EUR 68.00

Market capitalisation: EUR 2,040 mn (USD 2,354 mn)

Enterprise value (EV): EUR 3,025 mn (USD 3,492 mn)

Average daily volume (ADV): EUR 8 mn (USD 9 mn)

NTM P/E: -13.5x

LTM P/B: 1x

What does WAF do?

WAF is the world’s fourth largest maker of semiconductor wafers.

Source: Angsana Anderson estimates

Top 3 customers contribute 57% of revenue. They include Intel Corporation ( US), Samsung Electronics Co., Ltd. (005930 KS) and Taiwan Semiconductor Manufacturing Company Limited ( US).

~ 66% of revenue is contracted with customers under long-term agreements. Pricing and volume are fixed there.

Why is WAF’s total return lagging SOXX?

Major companies in SOXX like NVDA and MU are more directly exposed to AI (more downstream). The shortage has not reached WAF yet because it makes semiconductor wafers (more upstream).

I believe this is about to change.

Cyclical inflection

2 pieces of evidence point towards a cyclical inflection.

First, inflection in major customers’ raw materials.

Semiconductor wafers are the major raw materials used to make chips. The trend in raw materials at major customers should give us a good picture of WAF’s revenue.

In the charts below, I plotted YoY% change in major customers’ raw materials vs WAF’s revenue growth. The data is quarterly.

INTC’s raw material shows the strongest relationship with WAF’s revenue.

Source: Tikr

There seems to be better-than-expected upside to WAF’s revenue growth. INTC’s raw material growth has only just started to inflect, and it is still at a relatively low level.

How about Samsung Electronics?

Source: Tikr

The relationship with Samsung is weaker.

I suspect Samsung is a smaller customer. Being a Korean company, they probably buy more from WAF’s Asian competitors like SK Siltron (Korea) or SUMCO (Japan).

Nevertheless, the strong growth in Samsung’s raw materials bodes well for WAF’s revenue growth.

TSMC?

TSMC’s raw materials growth shows a very weak relationship with WAF’s revenue. I am still trying to figure out why.

TSMC seems to be managing its raw materials differently from INTC and Samsung Electronics.

Source: Tikr

What’s your second evidence of an inflection point?

Inflection in GlobalWafers’ monthly revenue growth.

Because both GlobalWafers and WAF operate in the same industry, their revenue trend should be similar.

Between April and June 2026, GlobalWafers reported -10%, -3% and -2% YoY revenue growth respectively.

That has changed.

In July 2026, the company reported +20% YoY revenue growth. This was followed up by +8% in August 2026.

You can see the inflection point here:

Source: GlobalWafers (2026)

If GlobalWafers is growing +20% and +8% in Q3’26, WAF’s guidance of low to mid-single digit revenue growth in 2026 may look too modest.

Why hasn’t the market recognised the inflection point yet?

At first glance, Siltronic looks like a lousy business. Revenue declined for 3 consecutive years. Loss-making since 2025.

However, Siltronic’s revenue has actually stabilised.

The YoY revenue declines in 2025 and H1’26 were driven by the depreciation of USD against EUR and the closure of its loss-making small diameter wafers business. Without these two factors, revenue would be flat in 2025 and H1’26.

The losses in 2025 were due to the completion of its latest fab in Singapore.

WAF has to start recording depreciation, even though FabNext is still ramping up production. Once volume ramps up, profits will return.

Catalysts?

Revenue grows faster than expected and WAF returns to profits sooner than expected. This could happen as early as the Q3’26 earnings release, scheduled for 11 November 2026.

Longer-term, there is still a chance that WAF is taken over. The previous offer price was EUR 145 per share. We talked briefly about this last week.

This all sounds reasonable. But I am confused.

I just remembered you said we are close to the end of the semiconductor shortage. If that’s true, why are we looking at a semiconductor company?

To be precise, I was trying to say that we are closer-than-expected to the end of the memory chip shortage.

The shortage is travelling up the semiconductor supply chain. There are emerging signs of an inflection point at more upstream players like WAF, but not many investors are noticing this yet.

That’s essentially my thesis.

Interesting. Let’s shortlist this for further research.

Look into their ability to repay their debt. They took on a lot of debt to build FabNext.

If the recovery is slower than expected, can they repay or refinance their debt? How much headroom do they have?

Coming up next

Buffett is wrong. Volatility is risk.

I’ll explain why, and how I evolved my investment strategy and process to accommodate this.

Subscribe for free to be notified immediately when I publish.

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I am long WAF GR. I may change my views, predictions, or personal portfolio positioning at any time without notice.

As usual, if you want me to dig deeper into an idea, vote for it. Use the poll at the end of this email.

Mortgage Advice Bureau (Holdings) plc (MAB1 LN)

About (11 Sep 2026)

Share price: GBP 3.80

Market capitalisation: GBP 220 mn (USD 298 mn)

Enterprise value (EV): GBP 212 mn (USD 287 mn)

Average daily volume (ADV): GBP 0.9 mn (USD 1.2 mn)

NTM P/E: 8x

MAB1 is one of the largest mortgage networks in the UK. It provides regulatory oversight, software, and lender access to mortgage advisers.

Mortgage procuration fee is the largest revenue stream. It accounts for 42% of revenue in 2025.

Here’s how it works.

A homebuyer approaches a mortgage adviser. The adviser uses MAB1’s software to help the homebuyer assess affordability, the best mortgage lender, etc. They then apply for the mortgage via MAB1’s software.

After the lender disburses the mortgage, it pays a commission to MAB1. MAB1 recognises the entire commission as revenue and the adviser’s cut as its cost of sales.

In 2025, MAB1 grew revenue by +20%. This was driven by +6% growth in number of mortgage advisers and +13% growth in revenue per adviser.

Good business, temporary headwinds?

MAB1 looks interesting now.

The shares dropped -20% after it cut profit guidance on 9 Sep 2026.1 House purchase activity was slower than expected.

As the chart above shows, investors are treating MAB1 like a homebuilder. The shares trade in line with Persimmon Plc (PSN LN), one of the UK’s largest homebuilders.

MAB1 trades at 8x NTM P/E while PSN trades at 11x.

However, I believe MAB1 should trade at a higher valuation than PSN.

It is a better business. Capital-light. No significant investment in working capital.

MAB1 produces ~10% free cash flow yield on enterprise value (FCF yield). PSN’s FCF yield is negative because of significant inventory.

MAB1 earns 9% return on asset (ROA), superior to PSN’s 5%.

What could close this valuation gap? A sale looks likely.

Potential sale?

CEO and founder Peter Brodnicki is the largest single shareholder, holding ~18% of shares outstanding. Peter is already 64 years old but has no clear successor.

Private equity (PE) firms are targeting capital-light companies in the UK.

Overseas acquirers continue to feast on the UK market like hungry customers at an all-you-can-eat buffet,” said Russ Mould, the investment director at AJ Bell.2

Last week, shares in Eleco PLC (ELCO LN) spiked 70% after the construction software company agreed to a takeover by PE firm Accel-KKR.3

MAB1 fits the profile of a target. Capital-light and high free cash flow conversion. The company is holding net cash, so it has the ability to take on more debt.

Factors to focus on

1. When will the UK housing cycle recover? Are we already at the bottom?

2. Why did MAB1 replace its CFO?

   1. Risk looks lower because there is a handover period

3. Is it appropriate for MAB1 to recognise gross revenue?

Haidilao International Holding Ltd. (6862 HK)

About (13 Sep 2026)

Share price: HKD 9.87

Market capitalisation: HKD 56,074 mn (USD 7,150 mn)

Enterprise value (EV): HKD 53,971 mn (USD 6,882 mn)

Average daily volume (ADV): HKD 207 mn (USD 26 mn)

NTM P/E: 11x

Haidilao operates one of the largest hotpot chains in mainland China.

Good business, temporary headwinds?

Intense price war between food delivery platforms in 2025 hurt restaurants like Haidilao:

The latest financial results of major listed restaurants, teahouses and cafes analyzed by Bloomberg News show that aggressive online promotion campaigns took a toll on their businesses in the first half of the year, especially in the three months to June when the price war kicked off.4

Source: Bloomberg (2025)

The price war subsided in early 2026 after the regulator launched investigations.5

Haidilao reported early signs of recovery. In H1’26, table turnover rate improved slightly (3.8x to 3.9x) and average spending per guest declined only slightly (RMB 97.9 to RMB 97.0).6

Yet, Haidilao’s share price just hit an all-time low.

The shares slumped last week after the founding family announced a surprise sale of 4.6% of shares outstanding at ~6% discount.

Although they did not disclose the exact reasons, the sale has been linked to tax reasons. The family held their shares through offshore trusts. In July 2026, China announced it will start taxing offshore trusts within 90 days.7

That’s why I see last week’s sell-off as a technical, temporary issue.

With the easing of the price war, Haidilao’s prospect looks much better. Core business seems to have stabilised. New growth engines (delivery business and new brands) are gaining momentum: revenue more than doubled YoY in H1’26.

Without fundamental deterioration, I will be very surprised if the shares fall significantly from here.

Factors to focus on

1. Growth potential of delivery business and new brands like sushi and food stall hot pot

2. Stabilisation of core business

3. Why did Haidilao perform much better than peers like Jiumaojiu and Xiabu Xiabu?

   1. I suspect economies of scale and vertical integration. Have these been fully priced in?

Vote for the best idea

If you want me to dig deeper into an idea, vote for it.

Coming up next

I will look deeper into Siltronic AG (WAF GR) this week. This was the idea you voted as the most interesting in my previous email.

Is the world’s 4th largest semicon wafer maker reaching an inflection point?

Subscribe to get the analysis when I publish.

In case you missed it

Last week, I highlighted the opportunity I see in Elan Corporation (6099 JP).

I also showed why we should not follow investing rules. They’ll get us into trouble.

Disclaimer

This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.

I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.

I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.

At the time of publication, I do not hold any positions in MAB1 LN or 6862 HK, either long or short. I may change my views, predictions, or personal portfolio positioning at any time without notice.

References