– Specialty materials business formed as a result of the 2022 merger with significant synergies.
– Good business with cyclically depressed EBITDA.
– Should be a ~mid-single-digit revenue grower and approaching high-teen EBITDA margins with low capex intensity (~3% of revenue).
– Extremely cheap trading 6.6x management’s EBITDA target.
– Good FCF generator with a 14% 2023 levered FCF yield.
– Management is expected to divest certain businesses to crystallize value.
– Insiders purchased nearly $6mm in stock in the past year at an average price of $23.5.
– Currently trading at 6.6x management’s $450mm EBITDA target.
– On SOTP basis, with 10-12x EBITDA on ATS segment and 5-6x on the FBS segment, price target of $32-43/share.
Exp. gain: 43%-95% upside.
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