Find 100 Baggers (100x stocks)! February 1, 2021 issue
【This Week's Video Here】
Note: The video is 32 minutes long.
1. 100% Bagger (2x stock) Candidate Stocks
9514 EFON
Listed on the First Section of the Tokyo Stock Exchange
Stock Code Stock Name Listing Year
9514 EFON 2005
Current market cap (billion yen) Target market cap (billion yen) 2x market cap (billion yen)
229 593 458
Business Model
Mainly engaged in biomass power generation using wood chips as feedstock, with energy-saving support services as well. Retail electricity business resumed in August 2020.
Note: The listing year shows the listing date on the Tokyo Stock Exchange First Section, Second Section, Mothers, or JASDAQ.
Note: The 2x market cap is calculated from the current market cap.
2. Key Points
1. As efforts toward a low-carbon society accelerate worldwide, there is strong tailwinds for a company that uses domestic wood biomass for power generation near forests. The company builds power plants near forests and uses domestically sourced wood as fuel. The business model of generating power from domestically sourced fuels positions it as a central ESG investment theme for the 2020s.
2. The company has devised a system to deliver electricity with environmental value, enabling sales of power labeled with non-fossil certificates (non-fossil energy). In the future, there is a growing likelihood that large corporations will be charged a fee for CO2 emissions, creating a necessity to procure carbon-neutral electricity.
3. Revenue has been rising since 2018, with profits hovering around 3 billion yen since 2018. A power plant is scheduled to commence operation in 2022, and after operation, an annual revenue uplift of about 2–3 billion yen is expected. As carbon neutrality becomes a global trend, fundraising for plant construction and buyers for post-generation electricity are abundant, indicating a clearly favorable business environment.
4. The company's main risk is the need for ongoing capital expenditure and a development period before plants become operational, which makes rapid short-term sales growth difficult. While it is highly likely to become a long-term theme stock, there is little room for shareholder returns due to continuous investment needs. On the other hand, as demand for low-environmental-impact energy grows, increasing the construction pace of plants could more readily improve earnings.
5. The company’s enterprise value (market capitalization) could rise to about 59.3 billion yen within three years (share price 2,744 yen). In January 2021, LNG prices surged, causing spot electricity market volatility. The company’s value—being clean and not weather-dependent like solar or wind—can be expected to improve over the next several years.
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