This has been true in European serial acquirers, especially in the Uk.

For example: SDI PLC:

Judges Scientific:

(note that these P/E ratios are incorrect and the stocks are much cheaper than these).

Another stock that I wrote up a few years ago is Newprinces SPA, formerly Newlat, a serial acquirer from Italy with operations in food and now distribution.

A few years ago, the stock drifted towards 8 times free cash flow because there was no exciting news, so some investors thought that dumping a good company at 8 times free cash flow was a good idea (Except for tax reasons).

Recenlty, the stock crashed from 20 to 15 Euros in a few days.

A serial acquirer, or a growth company cannot grow in linear fashion with great announcements every three months. Sometimes, things take longer. Sometimes, some quarters or even years will be intermediary transformation years where short term results disappoint.

Newprinces SPA is a food company with Italian roots that has expanded to the UK with the Princes acquisition.

The miscommunication around Carrefour

Newprinces decided this summer to pursue a vertical integration from a food manufacturer to a food manufacturer and retailer, with the Carrefour Italy acquisition with over 1000 stores mostly in the rich north of Italy.

I wrote at the time that Newprinces added 115 million of EBITDA, probably only half of it translates to profit or 60 millions. This was communicated by Newprinces at the time: 115 million of EBIDTA.

The whole group was announced to do over 400 million of EBITDA as of December 2025

They also repeated it in December 2025 in another press release:

Acquisitions of Carrefour Italia and Plasmon are expected to contribute to an increase in EBITDA of more than €200 million in 2026, further strengthening the Group’s cash generation and financial position

But the problem is that Newprinces revised these estimates sharply downwards with the earnings release for Q4 2025 published at the end of March.

Therefore, after an initial price boost, we saw some selling and the stock crashing to 15 Euros a share.

Newprinces SPA earnings update:

While Newprinces published earnings that were satisfactory and initially pleased the market, hidden in the earnings release was a slide showing EBITDA for retail only reaching 140 million and breakeaven in 2028, while 2026 is expected at around 70 millions.

This was four months after announcing 150 million of EBITDA for the retail business. A drastic change.

Which is strange since in Retail had 28.9 million of EBITDA in December 2025 alone.

In one month of operation, Retail did 28.9 million of EBITDA, but is expected to do 70 only in 2026? Something does not square. Maybe it was really good because it was December and Carrefour Italy sells also gifts, toys, and large items for Christmas.

How do I view the company and what is the real earnings power of the new combined business. This is what I cover in the rest of this weekly article.

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For this macro economic event, I decided not to change anything. If oil goes in a shortage, we will be screwed in our portfolios, unless we have a permabear type portfolio. If a solution, a truce or a peace is found, we can compound again.

I have timed effectively the top of the memory trade, but I did not go short, I went long with my 2% purchase right at the top. When a value investor buys an AI stock you know it’s the top! Nevertheless it remains my positioning and my conviction.

Italy

In the past weeks I had been looking if there are interesting companies in Italy. I found some deep value names and some interesting growth names. I am more focused on Emerging markets but the lack of names around electrification and defence made me look a bit outside of my main geographic focus.

Rest assured, I have started a new analysis on an emerging market company.

These Italian companies are for the enterprising investor because the businesses are not defensive names. They are growth companies or cyclicals on an upswing. High risk - high reward, and potential multibaggers.

It is possible to make good returns and have doubles or more on such set ups. It is possible to lose money. After these initial ideas I recommend to do further due diligence because I did not do a full analysis on these companies.

Let’s start with the list below.

1-Cable company at 5 times forward earnings with new factories coming online : IRCE SPA

cable equipment company.

RCE S.p.A. engages in manufacturing and selling of winding wires and electrical cables in Italy, rest of European Union, and internationally. The company offers winding wires for use in electric motors, generators, transformers, compressors, inductors, relays, solenoid valves, etc. It also provides low and medium voltage building and industrial cables, data cables, and power cords with plugs for the construction of electricity plants in residential and industrial buildings, as well as for the wiring and cabling of electrical appliances. The company was founded in 1947 and is based in Imola, Italy. IRCE S.p.A. is a subsidiary of Aequafin S.p.A.

It should not be seen as an electricity only focused company. The wires are often used in thermal vehicles. Electric vehicles use more copper cable than thermal vehicles.

It was not a great business historically:

IRCE trades at 5 times forward earnings and 0.4 times to book. It is set to open new factories in the Czech republic and China going forward, which will benefit the group with more revenues and profits.

However, IRCE carries a high leverage due to the investments buildup.

The company is exposed to copper prices despite hedging.

https://www.irce.it/eng/investor-relations-dettaglio.php?id_cat=8

2-Luxury goods serial acquirer at 5 times forward earnings but with debt: Dexelance S.P.A

It is a serial acquirer of Luxury brands in furniture. This is a cyclical segment.

Luxury furniture has been hit by a downturn in 2025. Therefore, sales are down (excluding the Mohd acquisition).

Mohd was acquired in 2025.

Dexelance trades at 0.8 EV/Sales and 5 times earnings, but like IRCE carries a lot of debt about 190 millions Euros, for a cycle EBITDA this year of maybe 30 millions, or 35 millions, we will see with full year earnings. This makes it 5 to 6 times leverage.

This has a lot of debt, but it is interesting to watch.

3-Electric component manufacturer at 5 times forward earnings

4-Green energy company at 6.5 times forward earnings - expected to nearly double.

5-Engineering group serial acquirer growing profits at 30-40% at 10 times earnings - but many red flags, or am I too suspicious?

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(A note on the Newsletter universe: I observe that dozens of writers were bullish or long PayPal, and only 2 or 3 recognised the recent disaster with a post earnings article: This tells you who you can trust or not in terms of transparency and performance, and its the same for disasters like that were often called generational opportunities. Authenticity is key here in Emerging Value).

It is interesting to have companies that are growing aggressively and launching new products for the optionality, but it can backfire.

It is good to also have boring companies with steady growth. My portfolio cannot be 100% emerging markets and today we will cover the results from French holdings.

1-Eurofins Scientific:

This is a quality company in the food and healthcare testing.

It boomed during covid due to covid testing, then logically showed negative growth in the next years due to high comparative previous years.

I owned it before covid, sold during covid (too early), and found that it would be interesting to come back to this compounder after covid.

Eurofins delivers FY 2025 objectives with a 24% EPS growth, accelerating organic revenue growth, margin expansion, and higher free cash flow and confirms its 2027 objectives

But these headlines are misguiding investors. The adjusted EPS is only up 10%.

The Free cash flow to the firm excludes leases and interest payments.

When I deduct this, and also do not include the investments in real estate, the company is at 720 million of Free cash flow, a multiple of 17.

The adjusted net profit by the company is 725 million Euros, which is close, and it is up 6%, then 10% for the EPS with buybacks.

This is a decent result.

But Biopharma and genomics are still reporting very low growth and can return to faster growth in the future. Organic revenue growth was 4.1%, on top of a 2.2% Fx headwind. Therefore it was more like 2% Vs 6% and this changes the game. The company is still facing strong headwinds.

Eurofins is a founder led company still investing for the future. They have been front loading real estate investments, a loss making M&A in Spain, tech and new labs investments not managing for short term margins.

We can see that adjusted and reported margins are trending up, if we exclude the covid bump.

The goals for 2027 show higher organic growth and higher Adjusted EBITDA margins:

One concern is that the pace of small acquisitions is not scaling up and it will now rely more on organic growth and efficiency.

When every speculative AI or software company goes up 50% in a year, it feels stupid to own quality compounders that only grow 10-15% regularly. But when things fall apart like now, this reminds us that regularity of profits mater and that having safety is good.

What follows is reviews of annual results of two defensive french smalls at 8 and 5 times profits (already covered before). They are executing well and continuing their growth plans, and two companies that I bought after selling PayPal.

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This was a costly mistake and I am out at a loss on my recent buys between 50 and 60.

I had also called PayPal a quality company based on margins and FCF generation profile. I ignored the deceleration in the core business.

The last results were ok, with good EPS growth, but branded checkout (The PayPal button) was only growing 1%.

Venmo is growing well but from a 1.7 B$ revenue low base.

PSP (Braintree) is a decent business, that could have value on it’s own.

The PayPal button has competitive pressure but is still ok.

All and all the results were ok, not great.

Nevertheless, the market and I was shocked by the guidance: lower EPS guided for next year, and the axing of the CEO, to replace the company with a new CEO coming from HP. HP, a stagnating company!

The new CEO will focus on “winning merchants” and invest in the future.

What they call “invest in the future” is actually giving lower fees or even paying out merchants to upgrade to the latest checkout. For me, this is not investing in the future but begging for relevance.

PayPal and I always said, should have focused on getting the buyers engaged. Dan Schulman tried this, Alex Chris a bit. If you get the buyers, you get the sellers, you make money. The problem is that PayPal was managed for the next year, or quarter, not for the long term.

I wanted PayPal to build a super app, a marketplace, to get buyers engaged and to make profits outside of transactions dollars.

But they did not want to make efforts in building enough features. Now maybe they will sell the parts of the business or do spin offs. No ambition.

Here is the message I posted on X.

$PYPL I was wrong.

Sits on a data treasure but the focus is on increasing checkout by giving big merchant incentives next year.

CEO change, guidance weak for 2026. I don't like the new CEO, what PayPal needed was more ambition to have the best buyer experience and services, not cost cutting and giving money to merchants.

No focus on driving customer engagement and extra services. 10 years sitting on the failing customer opportunity to be a customer centric app.

Agentic is interesting but who owns agentic will be the AI layer.

Ads was my idea to monetise data but it's a side project for the company and not a focus.

I was wrong to be arrogant against $PYPL bears and needed more humility

Sad to see the company I worked for, where we were ambitious but ignored by bureaucracy, being controlled for 10 years by yes men and excel template champions, not visionaries.

I should focus more on non battle stocks, EMs, small caps, places with less competition.

I sold

With a CEO from HP and no mention of strategy apart from merchant incentives, even if it is really cheap, I cannot see a good future for the company. Maybe there will be some value in a Braintree standalone business.

So I own my mistakes, this one was pretty bad, and with this newsletter you get no selection tricks, like only selecting winners and talking about them.

I had stocks down and picks wrong like PayPal or Intrum. I had notably more problems in large caps or mid caps in the western markets.

Conclusions

-I will continue to focus more on ex-US, small caps, emerging markets, less competitive markets and hidden companies.

-I will keep a certain level of diversification, based on valuation first. Everyone said to concentrate, but at 2.7% it was a manageable error.

-If the management has no skin in the game and there is no insider buying it is really a negative point.

-If the board has no ambition and the management has no ambition, it is a yellow flag unless it is deep deep value. Alex Chris had ambition, but the board was made of just corporate people and not founders. Especially in Tech, you need constant paranoia.

Onto the next one!

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This is a Japanese holding company in the field of dentistry. It is a fast growing company in terms of revenue, but in terms of profits, the profits crashed down.

A company growing revenue is healthy. But a company growing revenues with profits decreasing is not healthy, unless the losses are temporary.

They have a very varied business model:

• Media business is operating web portals regrouping dentist practitioners for customers to find them easily.

• Medical institution Dental support business (marketing, SEO, website building, procurement and other physical support).

• Dental information site and network

• Cloud integration business in Thailand (NEW)

Coming back to profits and growth.

Revenue continued to grow fast, but profits decreased to almost zero for two reasons:

1-Heavy front end investment in launching new businesses and human resource heavy new business launches.

2-Disease Prevention business acquisition

In 2024-2025, they ran a disease prevention business but it was cut off after it was heavily loss making. The plan was for this business to make large profits and sales growth but it did not happen.

What comes out of Medical net is a management that is highly innovative and entrepreneurial, but this comes at a cost: not all the initiatives work.

Last results:

The last results published in January, saw sales continuing to grow and for the first time in several quarters, profit increase.

The company continued to increase in personal costs but reduced marketing, advertising and other expenses.

Concerns: The media platform business saw sales decrease by 11%, and profit decrease by 15%: this is the cash cow of the company with 67% of the profits and this is the key going forward.

Medical net is undergoing large investments to revamp the media business.

The company has old websites that have been pushed lower in the Google and Yahoo Japan rankings.

As I use modern technology in research, especially for languages I don’t understand, I asked gemini to explain what happened to this business and what is new versus old media, and to explain the struggles with search results.

I also looked at all earnings releases and transcript but the information about a turnaround of the media business is absent.

A famous legacy website, TripAdvisor, is living similar decline:

The cloud business is doing fine, but the development of a software for the Thai dental industry has been paused due to lack of customer interest.

On the good side, the disease prevention business that was loss making was cut off.

Medical net also has an active M&A Strategy.

Risks:

this company operates websites: the risk is AI. Websites have always been an excellent business, but some now see traffic going down since AI steals the information from the websites to provide it to you, or search engines make AI overviews and hide results lower down the page.

Summary

Here we can see the sales and results per business for H1 (before corporate costs).

• The fast growing Institution support business is low profit margin due to front end investments and maybe also that it is a low margin business.

• The media platform, is very high margins but is challenged at the moment, and even in positive assumptions is not excepted to grow much.

• We trade at maybe 12 times expected earnings. Not expensive, but not very cheap.

• I will monitor the improvement in Media platform sales, potential good M&A, and margin in the Institution support business, and I placed the company on a watchlist.

• If the Institution support business can regain 10% margins, this would be incremental to the bottom line and the earnings would grow a lot.

Medical net is a low risk company with potential high reward and also potential to remain a value trap.

As for now, I exited the small position in Medical net. I focus now on owning much stronger companies with better competitive positions and shareholder returns. This is especially needed in technology where small isn’t better, and large technology companies increase their moats over time. I also focus on not investing in Japan, where local knowledge provides better returns.

But Medical net could be an excellent company going forward! let’s see. I just go for more clearer opportunities in this early 2026.

Therefore stay tuned for a portfolio update next week with a better focus on long term compounding, exceptional companies or exceptional prices, because I found more of these companies. I re-bought for example a great company that I had sold in 2019, and I bought one that I missed but I will now hold hopefully forever.

• Emerging market deep value

• Emerging market quality compounders

• Europe micro caps and serial acquirers

• And some Western quality stocks, everything is available in the premium version.

A complete map of EM opportunities, beyond the obvious popular stocks.

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I never wrote a full article on Terravest since it had been written up online already and I did not have time as it moved up fairly quickly, but I presented it in the monthly or quarterly portfolio reviews since Q1 2023.

This decision was helped by doing the exercise of rating all my companies as HOLD, BUY or STRONG BUY. (My previous article). Not every company has the business quality for the full coffee can approach, especially as we find cheap alternatives. By selling in January, I defer capital gain taxes until next June.

I have added to several positions that were rated strong buys, as well as entered a new one (more on that Tuesday). I significantly added to the position discussed today:

In a January dry of relevant news, a company released annual results.

This Amazon-like business is expanding in the nordics and is now planning to enter the UK, to become a true European champion in it’s niche.

While I had presented the business already as an amazon-like business, I was pleased to see that it executes flawlessly and It gave me the confidence to add to my position, but at a discount through another vehicle.

• GMV growth over 15%

• Net income growth over 10% (Year of investment and launching a new brand)

• P/E ratio of around 20.

• Pays a dividend while growing (High ROE).

The chart below shows the business revenue and normalised profit growth, with a boost during covid time followed by a bust.

Ok, an Amazon like business at 20 times earnings, that would get most substack writers excited. As for me, it is not enough. Luckily, there two points that excite me more:

In this quick update, we will see:

• How to buy it at a >50% discount

• Why is the profitability engine understated

• Links to past articles mentioning it

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• Partnerships: Agentic commerce and PayPal world

• KPIs analysis

• Quarterly dividend

For my free content on PayPal, please view here:

And here:

Payments Strategy and Investing

Can PayPal come back?

First thanks to the new subscribers who joined. Welcome to the Payments Investing newsletter, where two payments industry veterans cover companies in the space to talk about strategy and development. Then, a conclusion with my point of view from an investing experience is provided…

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7 months ago · 44 likes · 3 comments · Emerging Value

Payments Strategy and Investing

Can PayPal come back? Part 2

After our part 1 article with the bullish arguments for PayPal stock, we review the negatives and the conclusion…

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6 months ago · 19 likes · 2 comments · Emerging Value

This review is more directly related to earnings and my portfolio, so it continues below for premium subscribers.

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It is a debt collection business out of Sweden and the leader in Europe.

Intrum makes revenue through servicing (Collections for third parties), and investing (Collections where it buys portfolios of debt from financial institutions and companies: their own book).

The split in EBIT is about 50-50 between servicing and investing. Intrum has been a mistake in my investing journey so far, but a great way to learn about a new industry.

In the past, they grew their own debt that was used to fuel acquisitions of the “investing” book, and this debt started to cost them more in terms of interest rates.

Due to higher rates in 2023, the new management wanted to reduce leverage. They decided to stop this profitable investing growth to turn capital light and it was ill timed.

In order to become capital light, they sold some of their book at a discount to what they could have been recovering through collections.

In 2024, it entered the Cerberus partnership where Cerberus and Intrum are investing together, in order for intrum to limit the capital needs of its business. Intrum also collects some servicing revenue from the partnership.

With the investing business, as the debt is collected, the future revenue is expiring, similar to an oil well that is depleting reserves. So if you sell your book at a discount ,you are killing future profits like a oil company selling their reserves at a discount, and you are not deleveraging if the discount is higher than the value of future profits.

They wanted to replace Investing, with Servicing. It has not worked out fully as external servicing revenues are around 12.2 SEK bn.

A slight recapitalisation later, and with debts pushed back 2 to 3 years out, Intrum is now at the crossroads. The leverage is still very high, but the valuation is very low at 0.3 times sales, if they can de-lever and become capital light.

This is a proper turnaround with risks and rewards. The rewards, a future AI based tech company. The risks, stagnation with little profits, or decline until oblivion.

What am I looking forward to see in the Q3 Earnings release at the end of the month?

Here are my thoughts:

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I don’t intend to either sell these hidden champions, or buy more French companies as I will focus my portfolio more on Emerging Markets or Payments.

France is in the news because the French debt is rising and no-one wants to make the cuts. Let’s be clear. France is ungovernable and will not be reformed until the lenders pull all the money away. In a normal country, the currency would be attacked and the government would make cuts, but here, the rest of Europe is bailing out the drunk spender France.

French stand up comedy “badineur” Haroun has a set of jokes about the ungovernables.

When Julius Caesar won the final battle of the Gaul war, the defeated Gaul leader Vercingetorix went to surrender to him. He did not say “I lost”, like it was reported in the books. What he said in reality is “Good luck”.

Investing is still possible because of the high level of private wealth in France, if you are not in dangerous cyclical sectors that are only domestic market oriented.

This article will cover one large cap, Eurofins, and three illiquid nano caps that are in my opinion of good quality.

4-Eurofins Scientific

The stock performed well in the past six months because it was very undervalued.

The healthcare and food testing company is recovering from a covid cyclical high.

Before that, it produced a 40000% return and more.

This was an incredible growth company with acquisitions and organic growth.

ROIC is a bit on the low side at 8% last year, but this is because of recent investment in Real estate and accounting treatments. Eurofins wants to own more and more laboratories real estate, which is an upfront investment, but is key to increase returns over the long terms as no rent will be due. The company prefers free cash flow before investment in real estate.

I caught the rebound on this company by buying at the low prices. Eurofins has continued to buying back shares heavily in the last 12 months, with shares outstanding down.

We are at a forward P/E of 16.3 and expected adjusted EPS growth of 13% a year for the future, it is a good opportunity in my opinion.

The H1 results were published and the company continues to execute like clockwork, despite slow revenue growth in my mind.

The best indicator, “Eurofins’ Free Cash Flow to the Firm¹⁰ (FCFF), before discretionary investment in owned sites¹⁶, was €354m, 8% higher than the €341m achieved in H1 2024.”

Eurofins was targeted by short sellers for paying rent to third parties, and this has been progressively reduced, and is now going to end with the following actions. This will cost 443 Million Euros and avoid 36 Million Euros of rent, and will be financed mostly by debt. I view positively short term pain for long term gains, in the form of operating leverage in the future.

Organic growth of 6.5% per annum is the long term goal, we are only at 3.9% in H1 2025, so there is ample room to improve. Notably, Biopharma is in a depression when it is the most exciting area in the world. For me, it is more exciting than general AI, and it will use AI to fight disease and aging.

Further increases in FCFF, cash conversion and ROCE are expected as Eurofins completes its 5-year (2023-2027) investment programme.

Eurofins targets 2.4 billion EUR in EBITDA and 1.5 billion EUR in adjusted free cash flow to the firm by 2027. The current market capitalisation is 11.4 billion EUR.

The following are updates on my three French hidden champions illiquid nano caps trading each for way under 10 times earnings. These are not new companies for the blog, let it be clear. I don’t find this kind of deal monthly. I just hold them and add as long as they are undervalued. They are not popular, because they don’t grow 40% a year with a clear catalyst. But they have very long duration due to very defensive businesses.

I have updated the recent developments below.

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I will no longer focus on new companies in Japan, but I will keep updating the readers on my holdings. This is because honestly, I am not the best in Japan!

This newsletter will focus on new Emerging market opportunities, with a bit of unique European hidden champions as I do that well too.

Let’s start.

5-Alpha Purchase — 7115

Alpha purchase is an idea from that I bought. I cannot claim the “credit”, but it has been a good performer for me with a near 3X return.

This company is a online b2b distributor of parts (MRO) and maintenance services. It allows companies to efficiently source parts and services, saving time and money in the process, through a centralised account and simplified research for articles.

This is a good growth company, but it is now at 20 times operating profit.

However the medium term plan is positive, with large growth projected as they onboard customers and get operating leverage.

The current P/E is about 29 for 2025. It is no longer a best buy, but a hold for me.

In 5 years it could have an EBIT of Y3.5Bn versus a market cap of 35Bn yen.

I like to buy things cheaply, but I do not mind holding expensive stocks as a way to reduce friction, taxes and let companies compound: As an online distributor with a small margin, margin expansion will happen.

4-Sojitz Corporation - 2768

Sojitz is a diversified trading company.

Good dividend yield, 4.8%. P/E 7. Some debt. good buybacks. Very diversified business with energy, retail, infrastructure, mining, everything, and very global. 75% of the business is non resources.

They have plans for net profit of 200B in 2030 - Now market cap is 788B. Active on the M&A front.

And we have a buyback.

They invest a lot overseas, notably Australia and Vietnam. They are very diversified in all business segments, and even the cyclical automotive segment is mostly focused on distribution, retail and wholesale.

The most important thing here is the agressive capital allocation, wether in overseas businesses, buybacks and dividends. The money in Sojitz does not sleep. They always invest overseas and acquire.

The sort of low Cash ROIC return on the investments done is compensated by Buybacks at 0.9 times book value.

Sojitz is very focused on ROIC, but they cannot make miracles in the car, energy or coal business.

For this reason, as well as focusing more on my key geographic areas, I recently exited Sojitz with a negligible positive return, to focus on higher quality businesses. (portfolio movements updates at the bottom).

Nevertheless, it remains cheap.

So, what companies make the cut? Small caps. For the next companies, I went much more in detail, because I am more interested.

3-A car dealership serial acquirer at 6.5 times P/E

2-A unique services serial acquirer at 15 times P/E

1-A Tech healthcare serial acquirer turning back to profit (No P/E but P/S 0.5). It is at least a 5x on ten times operating income, if the company meets It’s medium term management plan for 2028. I have some doubts on this, but it *could* happen and has optionality.

My approach: Buy and hold, and see which work. Underpromise, over deliver! This newsletter has already provided major winners. Subscribe to access the optionality and the complete coverage of emerging quality value stocks.

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So: here, and

Here

And also here we can see the BUT and Darty Store on Reunion Island.

And here in Europe:

In my past article ($) I did a history + introduction to the group publicly, then a full analysis. 2 years later, the stock did not move.

in 2024, there were Riots and some destroyed shops.

Not surprisingly to me, earnings were good. E-commerce remains strong, and overseas retail is resilient and well protected from competition.

Amazon does not deliver in the Amazon.

Why is it an opportunity? This company retail operation is resilient, and the E-commerce runs the Amazon Playbook.

And valuation also..is..Very french small caps.

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Bastide le confort

BLC.PA

The healthcare service company, is up 5% today on news that it is selling it’s uk operations and leading to a strong deleveraging of the extended balance sheet.

Analyst notes and recommendations should come in the next days and weeks and could push the stock higher. In French micro…

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Ticker: KTN (Austria)

Price: 23.5

Market Cap: 1.45 Billion Euros.

Since then it is up about 50%.

I don’t always get my buys right, but if you want to follow these opportunities on time, you need to upgrade here:

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In September, when I highlighted the purchase, it was at about 9 times forward earnings, and now it is at about 12 times forward earnings.

It’s easy to buy at 9 times earnings. Now comes the hardest part. the question is, how is the value proposition of Kontron today? This is why I needed to do the review in more details to know what I will do with the share.

Kontron is an engineering and service company whose value proposition is about Internet of things. Internet of things, or IOT, is basically connecting devices remotely to the internet, making them exchange information, commands, talk to each other. It is essential in robotics, in transportation, energy, or industry automation.

What is key to understand are the long term perspectives of such a company and the cycle rather than solely financial metrics that don’t capture the future value creation.

1.History

Kontron is an Austrian company. Originally founded in 1959 in Zurich Switzerland, that grew slowly until the a new Kontron company was set up in 2017 with the merger with S&T, changing dimension. S&T was a near 1 billion Euro revenue company.

In August 2017, Kontron was merged into Austrian-based S&T,^[7] and was renamed Kontron Group on 1 June 2022, with its corporate headquarters in Linz.^[8][9]

S&T was the biggest company, and Kontron was an embedded computer company. S&T was founded in 1993, and expanded as an IT distributor and later consulting company in various countries in Central Europe. S&T was growing with acquisitions.

From then, the new group was born.

In 2022, Kontron announced the sale of its IT services business to Vinci SA in order to concentrate on its realignment as a provider of products and solutions for Internet of Things.^[10]

This marked a focus on IOT, selling lower margin and more cyclical IT service business.

In 2024, Kontron bought Katek, a renewable energy company that makes electronics and products for energy and e-mobility., and this brought the share price down with concerns about the acquisition. This segment was named “Greentec”.

That was a 750 million Euros revenue business. Kontron at the time was 1.2 Billion Euros revenue business, so it was substantial. It paid 129 million for 60% of the business making 31 million Euros of net profit expected the next year, or a 15% earnings yield, all funded by loans. Solar and Katek was already in a downturn, so it was a well timed acquisition in my opinion.

There were also small acquisitions along the way of companies adding key technologies to the group.

We can see that the company did a realignment of business in a financial but mostly strategic manner in order to focus on these fast growing IOT segments, with the aim of building expert products and services to customers, and to become a reference in the domain.

We can expect this to continue, with a technology first focus.

2.Business overview

First let’s go to Ownership:

-Ennocon corporation, a Taiwan company, part of Foxconn, owns 27.5% of Kontron AG.

-The free float is 60%.

-Amiral Gestion SA, a good growth/value fund out of France, owns about 3%.

Kontron aims to be a specialist of the Internet of Things. The internet of things consists of connecting objects, usually moving objects, to the internet and making them exchange information and speak to each other. This is a growing market with robotics and AI. While you need an AI brain to operate a robot, you also need a connectivity module and a computer to safely connect the robot to the internet, localise it, exchange information and instructions. It does not need to be a robot. It could be something as simple as a solar panel to be oriented towards the sun based on the time and day and share output, or a train to exchange information in real time with the rail network for safety reasons.

Here is an overview of the business:

We can see here that Software + Solutions has a higher Ebitda margin than the rest at 17% and is already the majority of EBITDA.

Now before we get further, know that the reporting divisions are not very logical, as well as the products which are confusing, so I do my best to decipher it and simplify it.

You have Europe and Global, two geographic zones, and Software+Solutions, an industrial segment. And you also have hardware inside of the software+solutions segments because, why not… .

And you also have services inside the Europe segment.

But to simplify, it makes embedded computers and software to manage them remotely.

Further below, we will see how is the opportunity now, after focusing on products, management, strategy, market perspectives, and capital allocation.

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Quality and nano cap don’t mix? This company boost 13% net margins in a depressed environment and pays dividends.

In 2022 I profiled a nano cap. ($)

This did not work out as the share was pretty much flat including dividends. Not everything I buy turns to gold!

Buying at a value price protected the downside, but it was not a good investment due to inflation, the war and losing the Russian market, and a slowdown in sales.

However, it remained profitable with good margins, paid dividends, and it’s set for a new round of expansion, with the entry into the US market and into perfumes. It is a quality nano cap after all.

We are now at PER 12, and more like 10 if you discount the net cash, and less than 10 if you discount inventory which is durable. We have 31% earnings growth in 2024 and further recovery expected for 2025.

But not all earnings growth are equals.

I could say “QUALITY COMPANY WITH 31% EARNINGS GROWTH SELLING FOR 10 TIMES PROFIT”, but this is a recovery and 30% earnings growth or even 100% means nothing about a company’s growth profile if it is a recovery. I don’t think it’s honest to talk about earnings growth when it’s just recovering past margins.

Future growth is probable, but not guaranteed. Downside is limited. And this is how we aim to perform well.

I still like the idea.

**Warning Illiquid nano cap** Really, it’s only for the most patient investor. There is a huge spread, and news once a year or two maximum. And no English reporting.

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PayPal ($PYPL) Q1 earnings release is very complex and gave mixed feelings to many investors at first.

But first, the PayPal opportunity in one slide: Offline, and Ads+Credit.

I doubt that they can dominate or make significant money offline, but why not, if they try enough.

The main issue for Q1 2025 is that revenue grew only 1%. This is really disappointing for a company like PayPal.

• Payment transactions decreased 7% to 6.0 billion.

• But, Excluding payment service provider4 (“PSP”), payment transactions increased 6%.

• Active accounts increased 2% to 436 million. We will see why it doesn’t matter.

• GAAP operating income increased 31% to $1.5 billion

• GAAP operating margin expanded 447 basis points to 19.6%

Here is an payment volume growth and proportion summary:

• Here we can see that TPV or Total Payment Volume is up 6% for Branded checkout, which is the highest margin segment.

• Venmo is up 10%.

• Payment service provided is only up 2%, because PayPal has been cutting unprofitable and low profit margin undifferentiated processing on Braintree.

From Payments volumes we go to Transaction margin. This is up a good 7%. This is like Gross margin.

Value-added services revenue grew 17% to $775 million, driven primarily by healthy performance in consumer and merchant credits.

This would include Ads, but they are in infancy, but mostly Credit to buyers and sellers.

This flows down to Operating income and EPS, showing operating leverage with efficiency and EPS growth with buybacks.

• For Q2, they expect “non-GAAP EPS in the range of $1.29 to $1.31, or 9% growth at the midpoint.”

• This is much lower than the 23% for Q1.

• For 2025, the guidance is conservative at 6 to 10% EPS growth, due to macro economic and tariffs uncertainty.

• During the call, it is clear that they sandbagged the guidance. They made it very conservative and they could beat it.

I have reviewed the Operating income details, and it appears to me that they have reduced overheads in Customer support and administrative. For the full year the short term improvement effect will be reduced.

Adding to this, there are 6 billion USD of buybacks planned and PayPal has shown good share reduction.

It is disappointing to grow EPS only 8% when you are buying back about 7% of your market cap in a year. It means literally no growth. But I am expecting PayPal to earn more than the guidance as they are conservative. This is also caused by an increase in tax rates to 25%.

The company shows some core business growth initiatives below but I am skeptical that they can move the needle significantly as they represent small uplifts in revenue, at least in the short term.

Transition to a commerce platform

PayPal is transitioning from a pure payment platform to a commerce platform. Beyond the Jargon, it means that the payment is one form of monetisation, but extra services will monetise the users more, protected from the commoditisation of payments.

Lower take rates are caused by competition in payments. And only processing payments is a business of volume little differentiation - at least to the user.

PayPal can monetise the users by offering them more services. And it’s not just making them pay for things they don’t need. Currently, they use their Data to provide short term credit to buyers and merchants (PayPal working capital).

Visa and Mastercard don’t have this optionality.

As I noted in the past, PayPal needs to grow a Marketplace and omni commerce App. This is now underway for the omni commerce, but the Marketplace has not yet been established, probably because the company is afraid to compete with their own partners, or because they prefer to go with in app AI recommendations. But they should let people search within the apps at least.

The more product they upsell to merchants, the more transaction margin or gross margin PayPal makes.

Increasing monetisation of the user base is #1 key to PayPal, rather than having a few more million users who just do a payment here and there. The goal is to get users to start using PayPal for savings, for ads, for credit and for new future services.

However, I see the results coming in 2026 more than in 2025.

Review of the Growth initiatives:

On Ads, PayPal knows the users very well and can promote ads within their apps and emails as well as outside on third party websites. They can really help a merchant target a specific set of customers.

Then it can push an ad after checkout, in the payment receipt, in the app or even on third party websites.

AI and Agentic commerce

Agentic commerce is also in its infancy, where an AI helps you make payments. The partnership with perplexity AI is an important sign that PayPal helps to automate payments. For this, a waller is better than a simple card. Apple Pay and Amazon Pay will also have this capacity in the future. However, it could also be negative for PayPal if competition does it equally well.

This is the closest thing from a marketplace. PayPal could automate your recurring payments that are not really recurring, and giving you suggestions, by acting as a shopping assistant.

App installs.

A key for PayPal is to increase active users on the App as well.

They have many active users on the Venmo app: This is an incredible opportunity to monetize them more via local business marketing, and this has not started yet.

Fastlane

Fastlane is a faster easier guest checkout option. I expect this to increase growth by a 1 or 2 points maximum.

B2B Payments.

PayPal is experimenting with implementing B2B payments. They could also increase services for merchants, and why not a merchant service marketplace as the B2B payments provide data on what services and products they exchange.

Perspectives

The perspectives for the long term are aiming for increased EPS growth to the 20% range. I am not fully convinced. But operating leverage and single digit payment volume growth does a lot to the equation.

Let’s be cautious and assume only 12% range. At current price levels, this would rerate the company to a multiple at least 20, and also increase EPS (6.4$ earnings Estimates X 20 = 128$ versus 73$ today) for 2027.

This seems realistic to me.

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But that is not all.

PayPal, like some other companies (Some hidden gems I have in portfolio that are developing digital assets on top of their physical businesses), as the optionality upside. The hidden data asset is enormous if they can become a to-go app for commerce, just like Amazon or Alibaba is. Or the traffic could come with AI like perplexity. Automation requires a e-wallet, and I am expecting to see Wallets take over simply inserting card numbers in the future. If they manage to get the customer to open the app and use the AI agent to shop, they could become one of the entry points for shopping online and offline.

It is possible and is the pie in the sky scenario. In that case the profits could go up many times.

More info into the ads opportunity - from User Kross Roads on X who is a good PayPal source of Info

DLOCAL: Why I would avoid Dlocal

I reviewed Dlocal. Dlocal is a company for international payments in EMs. It is controversial with short reports.

There are strange things like growing Other Latam a lot, and a take rate of 2.6%.

A take rate of 2.6% is too high. It could be legitimate, but it could be a sign of Fraud, like inflated sales reporting. It seems that the take rate is going down but its very high in some small countries.

A growing other Latam segment with a stagnating Mexico and Brazil is a concern.

My biggest concern with Dlocal is that they don’t own the customer relationship and cannot monetise the customer relationship just like PayPal does, so they are stuck in being a middle man squeezed on price.

Dlocal could still do well, it’s just my risk management, and PayPal could underperform Dlocal.

Edit Sept 2025: Dlocal earnings were more positive with growth in the main Latin American countries so my fears were probably overgrown.

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But another newsletter discovered the company in May, and I guess enough people discovered the stock, so it went up. This, along with good results. It really shows the hype cycle in some small caps. But it could be due to Portuguese retail buyers, I don’t really know.

This is the kind of value you can find in my premium portfolio.

If you do the work to:

1. look at more stock markets

2. more countries

3. more companies,

   You do find sometimes some crazy value. Not all with the same results, but some. Glintt joins the baggers list.

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Glintt pitch was a IT service and software company in the healthcare sector.

The valuation was attractive. The sector is more defensive than the rest of the industry.

1. P/S 0.35

2. P/FCF 5

3. EV/EBITDA (4.5)

it was a no-brainer.

The problem: What should I do when there is a high and fast price rise? Hold or fold? Historically I have been keeping some outperformers like Terravest (+467%) because..something good may happen with good management. And also taxes. Taxes are a big reason.

I also Kept Newlat (+250%) due to still low valuation. But often, the next place for new capital is new undervalued ideas.

But not all companies deserve this special treatment.

Here is the unlocked article below.

Before you click, in the intro I mentioned:

While it has not worked in the past two years, buying higher shareholder yields than the market yield is historically proven to outperform, so I keep repeating the process like an idiot.

This was more of a market anomaly due to inflation and sentiment than anything. Value always comes back, and I am expecting more to come back. Even without mentioning my paid subscription, I would encourage you to have a look at my public company thesis because there are still some with similar potential.

So Glintt is a IT service and healthcare service company from Portugal. It also does some pharmacy design in Portugal as it is a subsidiary of Farminveste, owned by the association of pharmacies in Portugal.

What I really want to see after this rerating is how recurring is the business? The company made 122 million euros revenue in 2024. Of which:

• 6.6 are sale of software licences

• 20.9 are sales of goods (Equipment and automation, physical design)

• 49.7 are services of implementation: it would mean new projects

• 32.2 are manutenção: It would mean maintenance.

• Then we have 12.8 million of pharmacy remodelling.

Compared to 2023, it is almost exactly the same sector ventilation.

We can see that most of the sales are “Mercado Interno” or Portugal. There is a big opportunity in Spain, as Spain has 4 times the Portuguese population.

Services are also broken down between healthcare (61 million), and others (27 million). Within healthcare, its very diverse also, with Support services, Healthcare solutions, Equipment and automation, Physical design, Farmatools).

Ultimately we do not learn too much about the recurring and growth nature of the company, and there is very little information online.

The 2024 results

• The profit is 5 million of Euros - 25% up.

• But the sales were quasi flat at 122 million.

• What improved the bottom line is a lower tax rate, exceptionally high in 2023 at 40%.

The 2025 Q1 results:

We saw a good increase in revenue with an increase in national sales of 9.3%, but also international sales of 22.6%, where there is more potential. It was mostly due to Spain where the growth was in all areas.

The next profit increased 23% to 1.8 million Euros.

• They conducted a small acquisition: Prologica, a company focused on healthcare and data. However, the revenue is only 0.6 million Euros. But: The acquisitions are used to cross sell competencies, not just to add revenue.

• In 2025 they have integrated CS&M inside of Glintt life, which is not an acquisition but an integration of a previously acquired technology. It will allow to create the biggest pharmacy software distributor in Spain and offer better services.

• Glintt is heavily innovating in R&D with several projects.

Valuation

• In terms of 2024 Free cash flow we are now at 10 times free cash flow as I have calculated 7 to 8 million in Free cash flow versus a 80 million Euros market cap.

• In terms of Price to sales it is 0.65

Main risks listed by the company

• Competition with new products.

• No adoption of the new service platform for hospitals. I actually view that as a positive as it shows that the products have new features constantly, meaning a need to upgrade for clients.

• A quite saturated portugese market, as they mention, with limited growth. Spain will be key for future growth.

• Delayed decision making by clients on ordering.

Market and Perspectives

We know that the healthcare IT spending in Portugal and Spain is large (However it’s difficult to find information about it online, as the articles mix up different non related products under Healthcare IT). There are big opportunities in Spain (four times the population of Portugal) and a focus on Latin America where they “are convinced that our technology can help them”:

AI implementation would also be a tailwind.

The will be increased strain on services caused by the aging of the population in Spain and Portugal.

For 2025 - Glintt expects to increase sales, EBITDA and net profit. They are looking at acquisitions (mostly Spain) due to their good debt ratios.

By my own calculations, their net debt to EBITDA is 2.5, which is not that good. I would prefer that to go lower as not all their business is recurring.

Glintt announced an increased dividend to 0,04 Euros, or a 5.4% yield now or a more than 12% yield on cost for me.

Conclusion

I would not call the company a buy now. I would hold and stay attentive to new acquisitions, or a higher valuation. I think that the company needs better reporting with more details as well.

For buys, there are better options out there, I go for either deeper value or higher quality. For this, I refer to my past articles and portfolio reviews. (the 6 month portfolio review coming soon).

Meanwhile, I will keep looking for deep value or cheap growth.

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While I don’t do macro predictions about rates and debt, I like exposure to currencies that show big deviations from the average (or the median as shown in the chart).

In my opinion, It is not logical that people from France come back from Japan saying that everything is super cheap. Japan is an industrialised nation with worldwide leaders in products and services, and should be on par with other industrialised nations on prices.

It is reasonable to bet a part of the portfolios on a return towards the mean. So what could you do?

You could buy any Japanese company with domestic revenue

»This could give you a potential 20-60% currency gain.

• But what if you could buy a company that has suffered from the weak yen?

• A company that would see earnings jump with a stronger yen?

• A company experiencing their worst market conditions in ten years..

• but still profitable today and under 9 times profit?

• A consolidator in the industry?

• A 4.5% dividend

• A stock price flat since 2017.

• A management that is communicating in English and detailing the business plan in great details.

• Zero write ups online, one now offline by Marc in Spanish in 2021 (Thanks Marc - You’re a legend)

This idea is not without risks and I did not bet the farm, but I bough it. It is a micro cap distributor in Japan - a cyclical company, with low margins, and illiquid. But they welcome the downturn to buy competitors, showing their long term view.

But sometimes, it’s worth buying illiquid micro caps because they can double.

It’s a company I will probably keep adding to depending on how the results develop.

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Eurofins Scientific SE

• Price 55 EUR

• Stock exchange Paris

• Market cap 10 Billion Eur

Today we will review a quality company. Quality-value is also something that I do for a part of the portfolio.

Eurofins scientific has been a 100 bagger, but without me. I discovered Eurofins as it was already a 100 bagger. I bought and sold some with profit in 2021-2022, during the covid boom. During that time, covid testing services provided by Eurofins ensured a rapid and large rise in sales, followed by a collapse two years later.

Eurofins stock price never recovered from that collapse. The business however is performing well at the moment and the team is executing solidly.

I re-entered Eurofins Scientific after it disappointed investors last year.

Eurofins had incredible returns, but these were the biggest for people who bought Eurofins as a micro cap. Can this continue or will it slow down?

First, let’s go back to the beginnings.

History

Eurofins Scientific was founded in 1987 by Gilles Martin as a way to commercialise a new patented test for food and beverages.

From there, the company expanded the types of tests offered.

in 1997- the company entered the Paris stock exchange, and focused on expanding the technology portfolio (Expanding the Technology Portfolio (1997 - 2001)

Then we had Establishing the Base Infrastructure for Europe (2002 - 2004): with larger sites developed.

As a serial acquirer, Eurofins does not really mention acquisitions in their history page until Breaking into New Markets and Becoming a Global Reference (2005 - 2008) mentions it.

Eurofins carried out significant investment to establish market-leading positions in its historic countries and optimise its global network of standardised state-of-the-art laboratories, through consolidation, modernisation and construction of laboratories to the highest standards as well as integration of recently acquired companies.

Through the whole period of 1997-2008, technology, new tests and science remains at the core of the historical developments mentioned. This enabled good organic growth.

Talking about organic growth, it continued despite the great financial crisis.

Defying the Global Financial Crisis with Continued Organic Growth (2009 – 2011)

During the recession, effective regulation and the requirement for safe food and water, effective pharmaceutical products and a safe environment did not cease, and Eurofins continued to meet these global needs.

Following this, there was more expansion with a lot of M&A. For example,

2017 - 2018 was a period of exceptional M&A activity. Eurofins completed c. 60 acquisitions in 2017 and c. 50 acquisitions in 2018.

During the Pandemic, the company saw increased revenues for covid 19 Testing, causing the stock to rise, followed by a decrease in demand post covid that caused the stock to fall. This market reaction in both directions was exagerated to be honest.

Eurofins released an article: 25 years of value creation, to explain how it managed to provide outsized returns.

Unfortunately the document is more descriptive of the share price annual returns. When we want to find the reasons for the outsized returns, we find some, but not a lot:

-Hub and spoke model, Eurofins adds more and more tests and automation done in the large “Hub” laboratories which have fixed costs, in order to improve profitability and efficiency. They also have “Spokes” local laboratories closer to the customers for fast turn around and local customer support. This is also attractive to customers as they benefit from the efficiencies in terms of speed, price and quality.

-Growth in EBITDA margins

-Major acquisitions.

The document does not really measure what caused the major growth in EBITDA. I think that a mix of acquisitions, more tests, and efficiency is the key.

Business overview

So what does Eurofins do?

The Eurofins Group is a leading provider of testing and analytical services with:

• an international network of more than 950 laboratories in over 1,000 companies and 60 countries

• ca. 63,000 staff

• a portfolio of over 200,000 analytical methods

• more than 450 million tests performed each year

The revenue is very diversified from a geographical and segmental point of view.

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After two old ideas in Emerging markets updated, we are back in Europe.

Supreme PLC may not be totally unknown to you, but I will start with a presentation followed by the current state of the business

• UK Defensive industry company

• Serial acquirer

• EV/EBTIDA of 4,8

• FW PE of 7.2

• Half year results up 22% in 2024

• Regulatory risks

Supreme PLC is a leading manufacturer, supplier and brand owner of fast moving consumable goods. It sells to supermarkets and high streets discount retailers. I had the original idea from insider ideas in 2022 and it’s fair that I credit the author.

Insider Ideas

Supreme Group PLC (#SUP on AIM) - MCap £120m @ 103p per share. Main driver is vaping business (new acquisitions announced today 9 August). Plus a mix of manufacturing and distribution within FMCG.

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4 years ago · 2 likes · 6 comments · Insider Ideas

I had 52% return on the name ex dividends, so thank you insider Ideas. I will review and present the company as of 2025 with a fat pitch value, where I focus on the essentials.

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Today this is a Japan potential opportunity.

After last week analysis of Jardine Matheson completing, I will I think focus more on quick pitch of my ideas in portfolio.

One reason for getting interested in Japan is that the currency is undervalued because of a carry trade.

The higher rates of the US dollar make some people believe that it offers more value.

However interest rates are not the main reason for a currency relative valuation to another, otherwise the Turkish Lira and the Brazilian Real would be the most expensive currencies. It depends on many factors.

This highly technological and industrialized nation should have a GDP per capita on par with the US and Germany. I recently saw a video about a French expat saying a decent salary to live in Tokyo is 1300 EUR. This is totally insane. Even in Southern Europe you need salaries around 2000 EUR in the large cities.

So my opinion is that if you buy a domestic Japanese company at a 10 times P/E ratio, it is in reality a 5 or 7 P/E ratio. But it’s just my opinion.

• The company;

This idea is a Japanese Software company micro cap.

The earnings have slowed down after a good software demand led covid boom, and may grow slower than in the past. This is where we us value investors appear in the picture.

• The company is a hidden SAAS nano cap that is profitable and founder led.

• This trades at 10 times operating income, has 28% of the market cap in cash

• EV/ EBITDA of 6.7

• The PE ratio is 12.5 based on the forecast for the fiscal year ending March 2025.

• It compounded earnings at 16.6% since data is available in 2018.

I will be clear: This is an early view of this tracking position. I will keep following and get more knowledge of the company over time, and provide better updates. So I am not promising anything in the short term here.

I think it’s a decent long term bet and that a group of decent bets should do ok, where you do not pay for growth. This is the value approach.

For this approach, you are in the right place, because I present the whole diversified value portfolio in the premium section.

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