RS Technologies (3445): Less cyclical semi-stock with solid sales performance (Sales 10x in 10 years). But PE at 12.6x and many initiatives to correct them.  

 

RS Technologies (RST or the company),  founded based on the wafer recycle business of Rasa Industries (4022) in 2010, is a global leader in wafer reclaiming with a 33% market share.  It expanded into prime (new) wafer manufacturing in 2018 and then entered the new battery business  (solar/wind energy storage) by acquiring LE system in 10/23. The company enjoyed a high operating margin of 23% for FY12/23.

 

RST’s reclaimed wafer business is less cyclical compared to prime wafers, as its low-cost reclaimed wafers allow semiconductor manufacturers to continue investing even during industry downturns. The company has now expanded into the alternative energy battery sector, which is poised for significant growth. The company is still small with a market cap of ¥92 billion which explains some of the discount. However, with a P/E ratio of 12.6x and a P/B ratio of 1.7x, after year-to-date gains of 22%, the discount is evident. The company aims to implement initiatives to address the valuation gap relative to its earnings potential.

 

I will discuss, in my report which is available for purchase, the company’s growth potential and its efforts to increase its valuation to get close to its fair value.  If you are interested, please DM me.