I recently published an investment thesis exclusive to the investment platform, Seeking Alpha, where I will be covering recent and forthcoming initial public offerings (IPOs). The article is on OMS Energy Technologies Inc. (OMSE). From the executive summary of the article is the following:

• OMS Energy is undervalued post-IPO, with strong capital cycle dynamics and profitable growth supporting a ‘strong buy’ rating.
• The company benefits from industry consolidation, a capital-light business model, and alignment between management and shareholders.
• OMS Energy’s geographic strength and single-source supplier status enhance pricing power, but heavy reliance on Saudi Aramco is a key risk.
• Market pessimism and lack of analyst coverage have created a compelling entry point, with significant upside potential as fundamentals are recognized.

The rest of the article is available here.

I recently published an investment thesis exclusive to the investment platform, Seeking Alpha, where I cover recent and forthcoming initial public offerings (IPOs). The article is on Belgian manufacturer and supplier of heavy building materials, Titan America SA (TTAM). From the executive summary of the article is the following:

• Titan America operates in a growing industry, but rising supply and capex across the sector raise concerns about future returns and overinvestment.
• The company’s focus on supplementary cementitious materials and its regional presence provide growth opportunities and potential margin stability.
• Ownership by Titan Cement offers strategic alignment and long-term focus, but also limits minority shareholder influence and adds governance risk.
• Despite profitability and growth, scenario analysis suggests the current share price may be too high without further margin or revenue expansion—warranting a Hold rating.

The rest of the article is available here.

“Fish big enough to swallow a boat are not found in ditches.”

Yang Zhu

At a time of record-high U.S. equity preference, evidence of some diversification away from the U.S., and dollar weakness, Lion Finance Group PLC (LON:BGEO, ₤73.90/share) is a very attractive investment opportunity that joins my model portfolio.

Favourable Supply Dynamics

Lion Finance’s most important business segment is Georgian Financial Services (GFS), which represents 72% of the group’s total assets, while Armenian Financial Services (AFS) accounts for 25%, with the residual encompassing JSC Belarusky Narodny Bank (BNB), serving retail and small to medium-sized enterprises (SME) clients in Belarus, and JSC Digital Area, a digital ecosystem in Georgia including e-commerce marketplace, ticketing marketplace, and inventory management Software-as-a-Service (SaaS) solution for merchants.

Georgia’s gross fixed capital formation to GDP, at 24% in 2024, is down from the last decade’s 28% average; while Armenia’s gross fixed capital formation to GDP, at 22% in 2024, is slightly up from the last decade’s 21.2% average. Both numbers are in line with Eurozone and OECD averages. Data from the World Bank shows that Georgia’s domestic bank credit to the private sector as a share of gross domestic product (GDP) is 68.9%, while Armenia’s is 64.8%, compared to around 77.8% for the Eurozone and 149.4% for the OECD. Greece’s non-performing loans (NPL) ratio is 1.47%, while that of Armenia is 1.25%, with both countries experiencing a sharp decline in the NPL ratio in recent years, with Armenia and Georgia reaching a record low in 2024. Both countries have some of the lowest NPL ratios in the world. These factors suggest ample room for profitable credit expansion before oversupply of capital becomes a concern. This is especially attractive given that Georgia is the world’s sixth fastest growing economy in terms of real GDP growth, while Armenia is the world’s 42nd, with strong growth likely to continue in 2025 going forward.

Despite this, Akaki Liqokeli, the bank’s macro economist, indicated in the Q1 2025 earnings call that,

Downside risks remain elevated for the whole region. However, Georgia and Armenia maintain their leading positions according to the latest IMF forecast for the next five year growth, as you can see on the right hand side chart. So external sector inflows have been historically one of the main drivers of growth and currency values in Georgia and Armenia.

External sector inflows, traditionally a key driver of both growth and currency stability, have begun to normalise. In Georgia, inflows such as export proceeds, tourism revenues, and remittances remained resilient, showing a modest year-on-year increase in Q1 2025. In contrast, Armenia experienced a larger adjustment, mainly due to an unusually high base effect from the prior year. That said, both countries are now benefiting from the emergence of non-traditional, service-based inflows, particularly from IT and transportation services, which are proving more durable. These sectors have become significant contributors to hard currency earnings and productivity gains. Importantly, these inflows are helping to support the value of local currencies. The Georgian lari (GEL) and Armenian dram (AMD) both appreciated against the U.S. dollar in early 2025, aided by broader USD weakness. However, looking over a longer time horizon, this strength is also attributable to sound macroeconomic policies and sustained current account support. As a result, both currencies are expected to remain stable over the medium term. A macroeconomic environment of strong and diversifying inflows, sound policy frameworks, and low NPL ratios further supports Lion Finance’s opportunity to profitably expand credit in its core Georgian and Armenian markets.

A Banking Oligopoly

The Georgian and Armenian markets are highly concentrated. The Georgian market is dominated by a duopoly of TBC Bank (LON:TBCG), and JSC Bank of Georgia, a branch of GFS that enjoys 37.3% of the market by total loans; while the newly acquired Ameriabank CJSC, a branch of AFS that enjoys 20.3% of the Armenian market by total loans. A survey by IPM Georgia found that JSC Bank of Georgia is the most trusted universal bank in the country, while a survey by Invia found that Ameriabank is the leading and the top-of-mind universal bank in Armenia.

The World’s Best Digital Bank

In 2024, Global Finance named the JSC Bank of Georgia the world’s best digital bank, breaking Citigroup (C) multi-year stranglehold on that title. The bank was also named the Best Consumer Digital Bank. These awards recognise the bank’s customer-centric machine learning and AI-driven solutions, such as its retail financial super app and its business mobile apps. The bank’s mobile app is the dominant distribution channel, with 85% of loans and 74% of deposits now sold digitally. Its financial super app ecosystem includes daily banking, instant money transfers, card issuance, low-cost brokerage, bill payments, embedded insurance, loyalty programs, and even open banking integrations—all accessible from a single interface.

The platform’s growth is staggering: in Georgia alone, digital monthly active users (MAU) rose 17.1% year-over-year (YoY) to 1.65 million. User satisfaction remains industry-leading, with a Customer Satisfaction (CSAT) score of 91% and app ratings of 4.9/5 (iOS) and 5.0/5 (Android). Importantly, this growth is not confined to retail: digital adoption among SMEs is also rising, aided by end-to-end onboarding, digital underwriting, and merchant tools like POS analytics, inventory management, and business financing.

In Armenia, through Ameriabank, the group is replicating its digital success. Digital MAUs there jumped 53.1% YoY, reinforcing Lion Finance’s regional edge. Across both markets, the bank’s payments infrastructure is robust and fast-growing, with acquiring volumes rising 31.9% and monthly active card users approaching 1.5 million.

Lion Finance’s integrated, AI-enhanced, mobile-first model positions it as a technology company with a banking license, and arguably the most advanced digital banking platform in any frontier or emerging market globally.

Earning Attractive Profits

Lion Finance has a remarkable history of earning and growing attractive profits. Since 2020, the bank has compounded operating revenue by 25.63% a year, compared to a global mean and median 5-year revenue CAGR of 6.9% and 5.2% respectively. In each of the last five years, the bank has expanded its net operating profit after tax ((NOPAT)), with NOPAT compounding by 40.58% a year.

The rise in NOPAT was powered by an increase in NOPAT margin from 17.65% in 2020 to 30.98% in the last twelve months (LTM). In that time, the company’s invested capital turns, a measure of balance sheet efficiency, remained at 0.88. The combination of these two factors drove a rebounding of return on invested capital (ROIC) from a 2020 low of 15.48% to 27.16%. 

Lion Finance’s ability to earn attractive profits allows it to earn significant free cash flow (FCF), with the firm generating a cumulative GEL2.14 billion since 2020, equal to around 19% of its current market cap. The firm’s GEL1.5 billion in FCF over the LTM equates to a 12.71% FCF yield. As Liqokeli explained, the bank expects interest rates in Georgia and Armenia to remain level throughout the rest of 2025. With the era of low and falling interest rates at a pause –in the longue durée, interest rates are falling-, growth alone will not be enough to attract capital. Firms that generate meaningful FCF will be rewarded and Lion Finance’s FCF generating business is a source of stability and safety.

A Fortress Balance Sheet

Lion Finance maintains a fortress balance sheet, underpinned by strong capital ratios, prudent asset quality, and ample liquidity. As of Q1 2025, the group’s Common Equity Tier 1 (CET1) ratio stood at 16.4% in Georgia and 14.7% in Armenia, both well above regulatory minimums. The total capital adequacy ratio (CAR) was 21.2%, and the liquidity coverage ratio (LCR) exceeded 133% in Georgia and a remarkable 230% in Armenia, reflecting conservative liquidity management even amid macro and political uncertainty. Notably, client deposits fund 63% of total liabilities, giving the group a high-quality, sticky funding base.

Asset quality is equally strong. As aforementioned, the group NPL ratio is just 2.0%, with adjusted coverage at 117.1% and a cost of risk of only 0.2%, far below the group’s long-term guidance of around 1%. Credit growth has been rapid, with loan book up 23.6% YoY, with underwriting remaining disciplined, high collateralisation levels and digital scoring models reinforcing risk controls. Conservative management is further highlighted by a loan-to-deposit ratio of 96.89%.

Built-In Structural Resilience

The bank is structurally resilient to financial and macroeconomic shocks, with internal stress-testing frameworks that model severe currency devaluation and liquidity disruptions. According to its Q1 2025 disclosures, the bank maintains sufficient capital buffers to withstand a 10% depreciation of the Georgian lari and Armenian dram, while keeping CET1 ratios above regulatory minimums in both jurisdictions. Liquidity is proactively managed at the subsidiary level, preventing contagion between jurisdictions. Each entity, the JSC Bank of Georgia and Ameriabank, operates with independent regulatory oversight, ensuring local compliance with Basel III liquidity and solvency standards.

Although the bank is not subject to European Central Bank (ECB) or Federal Reserve-style stress tests, management conducts internal scenario analyses that align with international best practices, incorporating macroeconomic, geopolitical, and idiosyncratic risks. Importantly, the group is not reliant on contingent capital instruments or central bank facilities, and its conservative loan-to-deposit ratio around 96.89% limits refinancing risk. With an exceptionally low cost of risk in a high-growth environment, and provisioning coverage exceeding 100%, earnings resilience in a downturn is highly probable. With its strong capital, liquidity, and risk governance, Lion Finance ranks among the most robust banks in the emerging market banking universe.

Priced for a 62% Decline in NOPAT

At the current price, Lion Finance has a price-to-economic book value (PEBV) of 0.38, implying that the market expects its NOPAT to permanently fall by 62% from current levels. Given the bank’s history, this is clearly a catastrophic scenario and the geopolitical risks entailed in ownership are likely responsible. The market has priced in disaster. Remarkably, this is the highest PEBV the bank has had in my analysis period. The bank’s current EBV, or no-growth value, is GEL699.45, equivalent to £192.65, an upside of 161.75% from the current price.

Using my reverse discounted cash flow (DCF) model, I tested a variety of scenarios to unearth the cash flow expectations baked into Lion Finance’s current stock price. Afterwards, I analyzed the implied value of the stock based on different and conservative assumptions to predict the bank’s future growth in cash flows.

In the first scenario, I used recent projections for revenue declines, and historical margins, to model the catastrophist scenario implied by Lion Finance’s current stock price. In this scenario, I assume:

• Revenue grows by an average of 34.95% a year, in line with the Financial Times’ consensus estimates, and,
• NOPAT margin falls to 9.36%, its lowest level in my analysis period. 

In that scenario, the company’s market-implied competitive advantage period (MICAP) is less than a year, at which point its shareholder value per share equals the current price. 

In the second scenario,

• Revenue grows by 25.63%, its 5-year CAGR, and,
• NOPAT margin remains at its LTM level, 30.98%.

In this scenario, the stock is worth GEL840.35 or ₤231.70, an upside of 231.53% from the current price. 

In the final scenario, 

• Revenue grows by 13.67%, its 3-year CAGR, and,
• NOPAT margin falls to 32.74%, its 3-year average.

In this scenario, the stock is worth GEL806.22, or ₤222.24, an upside of 200.73% from the current price.

In a period of regime uncertainty, JPMorgan Chase & Co. (JPM: $288.19/share) is not only a paradigmatic bank, with a history of profitability stretching back decades,and a “fortress balance sheet”, it is also an attractive investment opportunity.

Banking in a Fuzzy Zone

Since the Great Recession, termed, “largely unprecedented and virtually inconceivable“  by JP Morgan Chase & Co Jamie Dimon, banking has undergone profound changes, with a wave of bankruptcies, government bailouts and nationalisations, and restructuring and industry consolidation in terms of branch deposits, and increasing competition in terms of lending. Regulators, in the United States, the Federal Reserve, along with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), have intensified bank regulations, with more stringent capital requirements, greatly curtailed trading operations, and, in Europe, caps on bonuses. The ongoing “Basel III Endgame” proposal, opposed by the American Bankers Association (ABA), seeks to further increase capital requirements, particularly for larger banks. Although the initial proposal for a 16-19% increase has been revised downwards to around 9% for the largest banks, this still represents a substantial increase in the “capital buffer.” 

Since 2018, U.S. banks have benefited from the country’s stellar economic growth, attendant burgeoning loan demand, and a decline in bad debts, that has allowed them to outstrip their pre-crisis profit levels, compared to a Europe that Dimon recently warned is “losing”. Events in 2024, an unfolding of regime uncertainty, has benefitted European bank valuations, even if European fundamentals have not meaningfully improved compared to the United States. Banking is in a fuzzy zone between boom and bust, in which regulatory constraints have served to discipline the market. Although the collapse of the Silicon Valley Bank, Signature Bank, and First Republic Bank and the emergence of banks-as-synthetic-hedge-funds, has exposed the profitability challenges of small and regional banks; although the non performing loans ratio has increased modestly; although the prospect of interest rate cuts threatens net interest margins (NIM), on the rise since Q1 2024, given the relationship between the two; although loan demand is weakening; the Federal Reserve has concluded that, “large banks are well positioned to weather a severe recession, while staying above minimum capital requirements and continuing to lend to households and businesses”.

Profiting Across Cycles

JPMorgan Chase has been a beneficiary of the tailwinds of the post-Great Recession world, while prudently managing the risks of that period. A consequence of this success is that, since 2019, the bank’s operating revenue has swelled from $142.42 billion to $281.51 billion in the last twelve months (LTM), compounding at a rate of 12.03% a year. The bank’s 5-year sales CAGR, at 16.8%, compares very favourably to a 6.9% mean and 5.2% median for the world’s 1,000 largest firms. In that time, the bank’s net operating profit after tax (NOPAT) has ballooned from $34.18 billion to $60.06 billion, compounding at a rate of 9.85%.

With rising profitability has come copious amounts of free cash flow (FCF), with the firm generating $$171.17 billion in FCF since 2021, equivalent to 21.37% of its current market cap. With $50.35 billion in FCF in the LTM grants it an attractive 6.17% FCF yield.

Prepared for Severe Adversity

The bank’s “fortress balance sheet” has continually been reinforced under Dimon’s stewardship. As of the end of Q1 2025, the bank’s Common Equity Tier 1 (CET1) was $280 billion, with a Standardized CET1 capital ratio of 15.4%, compared to 15% in Q1 2024, and 15.7% at the end of 2024.

JPMorgan Chase’s recently disclosed results from its 2025 Annual Dodd-Frank Act Stress Test projected financial resilience under the Federal Reserve’s Supervisory Severely Adverse Scenario, which hypothesises a severe global recession accompanied by substantial stress in commercial and residential property markets and corporate debt markets over a nine-quarter period from 1Q 2025 to 1Q 2027. Under this extraordinarily challenging scenario, characterised by a 7.8% decline in U.S. GDP, unemployment reaching 10%, a 50% stock market decline, and 33% fall in house prices, the bank’s Common Equity Tier 1 capital ratio would decline from 15.7% to a minimum of 13.7%, whilst still maintaining comfortable margins above regulatory minima. The stress test projects cumulative pre-provision net revenue of $93.8 billion offset by $79.3 billion in credit loss provisions and $12.4 billion in trading and counterparty losses, resulting in a modest net loss before taxes of $3.2 billion over the entire nine-quarter period. Notably, the bank’s capital position would remain robust throughout the hypothetical crisis, with all key capital ratios, including the Supplementary Leverage Ratio maintaining a minimum of 5.6%, demonstrating the bank’s fundamental strength and capacity to continue serving clients even under severely adverse economic conditions.

Moreover, the bank’s catastrophic loss-absorbing capacity is impressive, with JPMorgan Chase boasting a Total Loss-Absorbing Capacity (TLAC) (see page 106 of the 2024 annual report for a detailed explanation) of $558.3 billion as of Q1 2025, 30.8% of risk-weighted assets (RWA), compared to a regulatory requirement of 23%, indicating a $140.8 billion surplus. TLAC is 11.3% of total leverage exposure, compared to a 9.5% regulatory requirement, indicating an $87.7 billion surplus. 

Upside Remains

At the current price, $288.19 at time of writing, JPMorgan Chase trades at a price-to-economic book value (PEBV) of 1.25, its highest ever level in my analysis window. This implies that the market expects the bank to grow its NOPAT by 25% from current levels. Using my reverse discounted cash flow (DCF) model, I unearthed the cash flow expectations implied by the current price. 

In the first scenario, I determined the conditions under which the firm’s share price is justified, wherein,

• Revenue grows by 7.1% in 2025, 2.6% in 2026, and 3.9% in 2027, in line with consensus estimates, and by 16.8% thereafter, and,
• NOPAT margin remains at 21.33%

In this scenario, NOPAT compounds by an average of 4.11% a year, and the firm has an attractive market-implied competitive advantage period (MICAP) of four years in which the shareholder value per share equals the current stock price. 

If, on the other hand,

• Revenue grows by 16.8% a year, and,
• NOPAT margin remains at 21.33%.

Then the stock is worth $404.75, an upside of 40.45% from the current price. 

If, 

• Revenue grows by 12.71% a year, the 3-year CAGR, and,
• NOPAT margin remains at 21.33%.

Then the stock is worth $337.31, an upside of 17.04% from the current price.

I recently published an investment thesis exclusive to the investment platform, Seeking Alpha, where I will be covering recent and forthcoming initial public offerings (IPOs). The article is on Mexican hard discount retailer, BBB Foods Inc. (TBBB). From the executive summary of the article is the following:

• BBB Foods shows exceptional revenue and NOPAT growth, driven by scale economies and a disciplined cost structure.
• Despite growth, the firm’s ROIC remains below WACC, leading to sustained economic losses.
• Persistent negative free cash flow and heavy reinvestment raise concerns about long-term capital efficiency.
• Euphoric pricing implies unrealistic growth expectations, making downside risk greater than potential upside, earning the company a Sell rating.

The rest of the article is available here.

I recently published an investment thesis exclusive to the investment platform, Seeking Alpha, where I will be covering recent and forthcoming initial public offerings (IPOs). The article is on global IT distributor, Ingram Micro Holding Corporation (INGM). From the executive summary of the article is the following:

• Ingram Micro operates in a massive, growing IT market but has failed to translate this into revenue or margin growth, despite strategic investments.
• The company’s transition to a platform model is hampered by its capital-intensive physical logistics, limiting profitability and scale economies.
• Current valuation assumes optimistic growth, but reverse DCF analysis shows significant downside risk if recent trends persist.
• Given persistent thin margins, lack of differentiation, and unattractive returns, I recommend a ‘Sell’ rating on INGM stock.

The rest of the article is available here.

I recently published an investment thesis exclusive to the investment platform, Seeking Alpha, where I will be covering recent and forthcoming initial public offerings (IPOs). The article is on the Commercial Metals Company, whom I have previously covered. From the executive summary of the article is the following:

• I rate Commercial Metals Company as a Hold, given a balanced risk/reward profile and current valuation reflecting only modest growth expectations.
• Strong industry tailwinds exist from infrastructure spending, reshoring, and green construction, but regime uncertainty and tariff risks temper demand visibility.
• CMC’s 100% EAF production, vertical integration, and management alignment support long-term value, yet recent financial performance has deteriorated since 2022.
• With ROIC and NOPAT declining, I recommend current shareholders hold, while prospective investors should await clearer signs of a capital cycle bottom.

The rest of the article is available here.

I recently published an investment thesis exclusive to the investment platform, Seeking Alpha, where I will be covering recent and forthcoming initial public offerings (IPOs). The article is on the steel company, Steel Dynamics, Inc. (STLD), whom I have previously covered. From the executive summary of the article is the following:

• I assign Steel Dynamics a Strong Sell rating due to deteriorating economic fundamentals and an unfavorable risk/reward profile.
• ROIC and free cash flow have declined sharply since 2022, signaling worsening profitability and a poor entry point in the capital cycle.
• Tariffs may provide short-term margin expansion, but long-term effects are likely to constrain growth and competitiveness for Steel Dynamics.
• The valuation is unattractive, with downside risk far outweighing upside potential based on realistic cash flow and margin scenarios.

The rest of the article is available here.

I recently published an investment thesis exclusive to the investment platform, Seeking Alpha, where I will be covering recent and forthcoming initial public offerings (IPOs). The article is on the American investment advisor, Diamond Hill Investment Group, Inc. (DHIL), whom I have previously covered. From the executive summary of the article is the following:

• Diamond Hill faces secular headwinds from passive investing, fee compression, and industry competition, leading to declining profits and revenue over the past five years.
• Despite these challenges, Diamond Hill’s disciplined, value-oriented approach and strong alignment between management and shareholders offer some resilience and capacity discipline.
• The market appears overly pessimistic, pricing in a 14% NOPAT decline; modest upside exists if declines are less severe, with potential 7-20% returns.
• I rate Diamond Hill a Buy for short-term benchmark-beating potential, but caution that long-term prospects remain challenged by structural industry shifts.

The rest of the article is available here.

I recently published an investment thesis exclusive to the investment platform, Seeking Alpha, where I will be covering recent and forthcoming initial public offerings (IPOs). The article is on the American security products company, CompX International Inc. (CIX). From the executive summary of the article is the following:

• CompX International is rated a sell due to declining financial performance since 2022, despite a seemingly reasonable valuation and alignment of shareholder-management interests.
• The business is simple and resilient to tariffs, with a significant portion of its revenue from U.S.-manufactured security products and marine components.
• Despite tariff resilience, CompX’s financials show a concerning decline in revenue and NOPAT, suggesting it may not meet market expectations.
• Valuation analysis indicates significant downside risk if revenue and NOPAT margins do not improve, making CompX a potential value trap.

The rest of the article is available here.