- Deep Value Signals
- Posts
- Signals #10 — Engines, Earnings & Endurance
Signals #10 — Engines, Earnings & Endurance
From Volvo and Assa Abloy to Cerillion and Watches of Switzerland — evidence that quiet execution beats noise.
This week’s Signals lineup showcases companies defined by endurance — firms that compound quietly through cycles by executing with discipline.
From European industrial stalwarts and Nordic compounders to overlooked software and royalty plays, these businesses share a common thread: cash-backed earnings power, consistent margins, and managements that know when to accelerate and when to coast.
They aren’t chasing momentum — they’re engineering it.
Overview:
Ajisen (China) operates a 608-store fast-casual ramen chain across mainland China and Hong Kong. The company trades below net cash despite improving profitability and structural tailwinds from industry consolidation.
Financial Metrics (Oct 2025):
• Market Cap: HKD 1.0B • EV/EBITDA: 0.12 • P/E: 108.0 • EV/Sales: 0.02 • Dividend: 6.34%
Highlights:
• Holds RMB 1.6B net cash versus HKD 1.1B market cap.
• Earns RMB 40M annual rental income from owned properties.
• H1 2025 operating profit rose 700% YoY to RMB 40M on RMB 849M sales.
• CEO Daisy Poon owns 44% and has paid RMB 2.1B in dividends since 2007.
• Flexibility with short-term leases and 6.8% dividend yield.
Risks:
• Competition from newer, VC-backed noodle chains.
• Low trading liquidity and limited broker coverage.
Conclusion:
Ajisen trades at a steep discount to its net cash and real-estate holdings. Strong cash returns and operational recovery make the valuation disconnect difficult to justify if current profitability continues.
Sources: Ennismore Global Equity Fund, “Portfolio Holding: Ajisen (China) Holdings Ltd,” pitch date 2025-09-05.
Overview
Azelis Group NV distributes specialty chemicals and food ingredients across 65 countries, serving over 63 000 customers with a network of 70 + labs.
Despite a prolonged downturn in chemical demand, the company has maintained strong profitability through capital-light operations and disciplined M&A execution.
Financial Metrics (Oct 2025)
Market Cap: €2.6 B
EV/EBITDA: 8.8
P/E: 15.7
Dividend Yield: 2.1 %
EV/Sales: 1.0
Highlights
Maintains EBITA margins around 11 %, comparable to peer IMCD.
Converts ~44 % of gross profit into EBITA, proving operational strength.
Completed 50 + bolt-on acquisitions since IPO worth €1.5 B.
Global market remains fragmented — top 4 distributors control < 10 % share.
Risks
Demand recovery slower than expected post-Covid destocking.
Private-equity overhang (EQT / PSP own ~ 30 %).
Thin liquidity on Brussels exchange (≈ €5 M daily volume).
Conclusion
Azelis combines resilience, capital efficiency, and consolidation upside. Normalized growth of ~ 11 – 12 % per year could drive meaningful multiple expansion once investor fatigue fades.
Source: Value Investors Club (samba834), Sept 3 2025
Overview
Cerillion Plc provides telecom and utility software for billing, charging, and CRM through a recurring SaaS model. Its modular platform supports large-scale digital-transformation projects across Europe, the Americas, and Asia-Pacific.
Financial Metrics (Oct 2025)
Market Cap: £418.9 M
EV/EBITDA: 21.1
P/E: 29.5
Dividend Yield: 1.0 %
EV/Sales: 9.3
Highlights
Strong recurring revenue from multi-year SaaS and support contracts.
Unified modular platform enables rapid deployment and scalability.
Consistent R&D investment sustaining high margins and customer stickiness.
Expanding into utilities and digital-service verticals.
Risks
High valuation leaves limited margin of safety.
Project-execution delays could affect short-term cash flows.
Conclusion
Cerillion is a high-quality UK software compounder whose recurring economics justify premium multiples. Long-term visibility and disciplined execution underpin its compounding flywheel.
Source: FluentInQuality, Oct 19 2025
Overview
Spun out from Liberty Broadband in July 2025, GCI Liberty dominates Alaskan telecommunications. It now benefits from a substantial tax basis step-up and long-term tax shelter.
Financial Metrics (Oct 2025)
Market Cap: $1.0 B
EV/EBITDA: 5.3
P/E: 10.5
Dividend Yield: N/A
EV/Sales: 2.0
Highlights
Expected $200 M annual FCF with minimal cash tax liabilities.
$1 B step-up basis from taxable spinoff plus OBBBA depreciation benefits.
John Malone (7 % owner) plans accretive acquisitions using tax capacity.
Risks
Small-cap liquidity and limited analyst coverage.
Dependence on Alaskan market growth.
Conclusion
With durable cash flows, deep tax assets, and Malone’s capital allocation track record, GCI offers asymmetric value potential as a compounder in disguise.
Source: Plural Partners Fund, Oct 21 2025
Overview
Jet2 operates the UK’s most disciplined leisure-travel business, combining an airline and tour operator under one brand.
Financial Metrics (Oct 2025)
Market Cap: £2.6 B
EV/EBITDA: 0.85
P/E: 6.4
Dividend Yield: 1.3 %
EV/Sales: 0.09
Highlights
£610 M net cash — 23 % of market cap.
20 % of shares repurchased in past 12 months.
Consistent double-digit earnings growth despite UK macro softness.
Risks
Exposure to fuel prices and travel demand volatility.
Cyclicality in UK consumer spending.
Conclusion
Jet2’s balance-sheet strength and buyback discipline make it a rare value compounder in air travel — cheap, cash-rich, and well run.
Source: Plural Partners Fund, Oct 21 2025
Overview
Red Hill Minerals is a royalty company earning steady cash flows from the Onslow Iron Ore Project in Western Australia and several gold royalties.
Financial Metrics (Oct 2025)
Market Cap: A$248 M
EV/EBITDA: 13.7
P/E: 27.2
Dividend Yield: 2.5 %
EV/Sales: 11.6
Highlights
0.75 % FOB royalty on Onslow Iron Ore (35 Mt/yr, 20 + yr reserve life).
Added 2 % royalty on Brightstar Gold and 1.5 % NSR on Rio Tinto JV.
Pays out ~ 50 % of earnings as dividends.
Risks
Commodity-price volatility.
Early-stage gold projects carry execution risk.
Conclusion
A hybrid of yield and exploration optionality, Red Hill trades at 6–7× EV/Sales vs peer multiples of 9–26×. Further gold exposure could drive multiple expansion.
Source: Toni’s Substack, Oct 21 2025
Overview
Volvo builds trucks, buses, construction equipment, and marine engines worldwide. Its diversification is helping buffer a cyclical truck slowdown.
Financial Metrics (Oct 2025)
Market Cap: SEK 520.3 B
EV/EBITDA: 12.0
P/E: 14.6
Dividend Yield: 7.2 %
EV/Sales: 1.45
Highlights
Maintains > 10 % operating margins through the cycle.
Diversified exposure to infrastructure and public sector demand.
Investing heavily in electric and hydrogen drivetrains.
Risks
Order softness in Europe and LatAm.
Currency headwinds from strong krona.
Conclusion
Volvo remains a benchmark in industrial discipline — a cyclical business that acts like a compounder through balance-sheet strength and product diversity.
Source: Lux Opes Research, Oct 21 2025
Overview
Watches of Switzerland retails luxury timepieces and jewelry across the UK, Europe, and the US, partnering closely with Rolex and Patek Philippe.
Financial Metrics (Oct 2025)
Market Cap: £878 M
EV/EBITDA: 5.4
P/E: 16.3
Dividend Yield: N/A
EV/Sales: 0.86
Highlights
Half of revenues now generated in the US.
Tariff uncertainty (20 – 25 %) pressuring valuation.
Double-digit organic growth potential with new store rollouts.
Risks
Prolonged tariff negotiations could affect import margins.
High exposure to luxury sentiment.
Conclusion
Despite volatility, WOSG remains a cash-generative retailer with a decade-long US growth runway and deep brand moats.
Source: Plural Partners Fund, Oct 21 2025
Overview
ARYZTA AG provides in-store bakery solutions across Europe and internationally. After years of restructuring, it’s refocusing on profitability and cash generation.
Financial Metrics (Oct 2025)
Market Cap: CHF 1.4 B
EV/EBITDA: 7.6
P/E: 13.7
Dividend Yield: N/A
EV/Sales: 0.97
Highlights
EBITDA > €300 M and FCF ≈ €100 M.
Inflation pressures easing; cost savings flow through.
Portfolio now focused on profitable branded bakery products.
Risks
Input-cost volatility and labor inflation.
Reputation hangover from past failures.
Conclusion
A leaner ARYZTA is emerging as a cash generator again. Execution consistency could restore its standing among European consumer turnarounds.
Source: Lux Opes Research, Oct 21 2025
Overview
ASSA ABLOY is the world leader in door access and security solutions, serving institutional and commercial clients globally.
Financial Metrics (Oct 2025)
Market Cap: SEK 381 B
EV/EBITDA: 15.1
P/E: 26.0
Dividend Yield: 1.7 %
EV/Sales: 2.9
Highlights
Electronic and software-enabled locks growing double digits.
Americas segment stable while Europe shows early rebound.
Strong aftermarket and recurring service revenue mix.
Risks
Construction softness in residential markets.
Integration risk from ongoing acquisitions.
Conclusion
ASSA ABLOY embodies industrial resilience — steady organic growth, mix upgrade toward recurring revenue, and margin discipline through all cycles.
Source: Lux Opes Research, Oct 21 2025
End Note
Markets often reward noise, but the companies that last are those that build patiently — margin by margin, quarter by quarter.
This batch reminds us that endurance, not excitement, drives compounding.
Disclaimer:
All content in Deep Value Signals is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. The information provided reflects the opinions of the original authors and sources cited and is not a recommendation to buy or sell any security. Readers should conduct their own due diligence or consult with a licensed financial advisor before making any investment decisions. The publisher of Deep Value Signals does not guarantee the accuracy or completeness of any information presented and is not responsible for any investment outcomes resulting from the use of this content. Past performance is not indicative of future results.