Analyzing Bargain Stocks

  Nisso Pronity (‘company’) is a relatively small Japanese operator engaged in the businesses of metal processing (69% of revenues), rubber processing (20%), and construction (11%).   Its metal processing segment is primarily used to manufacture solar cell array support mounts for fireproof panels – thereby benefiting from increasing demand for renewable energy – specifically, the increase in construction of distribution warehouses (which mount solar panels) arising from the expansion of the e-commerce market for merchandise sales.   Sales in this segment fell significantly in the last twelve months due to lack of growth in sales of fireproof panels and decrease in large scale projects. Nevertheless, the orders received and backlog were higher than last year.   Further, the company has increased its ownership of a construction company (now a subsidiary) in the building hardware and metals fitting business as part of management plans to diversify in re...

Stalprodukt (‘company’) is based in Poland and is one of the leading European manufacturers of processed steel products. It sells electrical sheets (23% of revenues), steel profiles (19%), and extracts zinc-lead ores for the production of zinc and lead (50%) along with related activities. About half its revenues are generated in Poland and half is exported (mostly within the EU). It is at a competitive disadvantage to non-EU manufacturers who don’t have to pay as much for CO2 emissions and have lower energy costs. Energy is a substantial component of the cost structure – and currently rising costs will negatively impact operations. Management’s report on the latest quarter almost reads like a plea to the EU to impose anti-dumping duties on foreign manufacturers whilst extolling the importance of the industry. An offsetting factor is currently high (and volatile) prices of its finished goods. The most recent quarter saw large price spikes in all segments though volumes were stable...

Tsaker (‘company’) is engaged in the manufacturing of 1) dye and agricultural intermediates (70% of revenues), 2) pigment intermediates (21%), and 3) battery materials (9%). It also has a small environmental technology consultancy unit, which it intends to spin off soon. It has a prominent position in the first two segments, which contributes all of its profits. Though most of its revenues are generated in China (68% of revenues) and India (9%), it has an established sales network across the world with sales to Indonesia, Brazil, Germany, US, Japan, Taiwan, and Spain among others. The relatively new battery materials segment earned gross profits only in 2021 as the production line achieved sufficient volume. Management intends to almost double capacity in this segment by the end of 2022. The company is a steady and reasonably efficient performer reporting 2021 sales of 1.78b (FY20: 1.28b), ebitda of 438m (FY20: 318m), and net profits of 227m (FY20: 145m). 2021 results included ...