Look for 100 Baggers (Stocks up 100x)! February 22, 2021 issue
This Week's Video is Here
Note: The video is 42 minutes long.
1. Recent status of previously introduced stocks
7940 WaveBlock Holdings
Listed on the Tokyo Stock Exchange First Section
Stock Code Company Listing Year
7940 WaveBlock HD 2017
At the time of listing / Market Cap (billion JPY) Now / Market Cap (billion JPY) 2x / Market Cap (billion JPY)
78.2 80.7 156.4
Business Description
A holding company that manufactures and sells plastic-related products. Involved in wallpaper, insect screens, food trays, and metallic-looking decorative films. An equity-method affiliate of interior goods giant SANGETSU
Note: The listing year indicates the date of listing on the Tokyo Stock Exchange First Section, Second Section, Mothers, or JASDAQ
Note: The 100x market cap is calculated from the minimum market cap.
【Key Points】
1. On February 10 (Wed), announced the transfer of the wallpaper business to SANGETSU, via WaveBlock Interior. Although annual sales will decrease by 9 billion yen and operating income by 700 million yen, the company will gain 4.7 billion yen in cash this year, significantly improving its financial position. Since the interior business had little growth potential, the funds obtained from the sale will be used to invest in growth areas.
2. Market interest is that this business transfer indicates that the major shareholder SANGETSU plans to sell the company’s stock. At present, the company has not stated a plan to sell the shares, but by exercising a stock transfer option in the next term or later, the company could obtain an additional 2.7 billion yen in cash, making a buyback of SANGETSU-held shares by the company feasible. It is unlikely that the entire stake will be released into the market.
3. Based on the stock transfer, we recalculated the company’s business value and found it remains undervalued. With a 5-year free cash flow and net asset value at 50%, the company’s market cap could rise to 14.3 billion yen (stock price 1,294 yen). There is still growth potential in the remaining two segments, so once a clear growth story emerges, the stock price should rise.
For the rest, please refer to the PDF file.
