Dorel Industries (DII-B.TO), mcap=$155m

DII-B.TO pitch:
– Controlling family has made it clear they want to sell the company altogether or through individual segments.
– A major asset sale was done in 2021 and more are expected to come.
– Dorel designs, manufactures and distributes home and juvenile products.
– Has been facing ST headwinds negatively affecting its margins mainly due to excess inventory and rising input costs.
– Headwinds will subside as inventory gets reduced.
– Expected to be cash flow positive now/very soon and EBITDA positive in 2023.
– Dorel is a family-owned-operated business with a two-decade history of defensible EBITDA and unlevered FCF generation.

DII-B.TO valuation:
– Using normalized EBITDA of $95m and 5.75x EV/EBITDA implies a $13/share price target.
– This is just 0.3x EV/Sales.

Exp. gain: +176%

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