PWR Holdings (ASX:PWH)

PWR produces advanced cooling systems to the motorsports, aerospace/defence sector. Also derives part of its revenue from OEM and automotive aftermarket segments. Basically - super niche, high tech/IP company run by founder/MD Kees Wheel.

Financials

• 77% gross margin, >25% operating margin and 21% net margin
• $19.8m in cash, no debt
• Consistent share count since listing
• ROA >15%, ROIC > 20% and ROE > 20% over last 5 years

Insider Holdings

• Kees Wheel Founder/MD 20.3m shares (20% of company)
• Matthew Bryson CTO 3.3m shares

Summary

• Valuation seems a little stretched at the moment - Sitting on TTM PE of 52x, and P/FCF of 94x
• However - if we take a closer look at the business, wow. Ticks many boxes for me:

1. Founder led with huge amount of skin in the game. So far management have been very transparent and fair to shareholders
2. 20%+ net margins, rock solid balance sheet
3. Optionality - Some mentions in the AGM to branch into the aerospace/space segment.
4. Their clients are largely those with deep pockets, willing to pay a premium to get the best product for their cars etc. Largely unaffected by Covid.

• Been a happy shareholder for the last 18 months, will be very happy if the market gives me a discount to pick up more shares in the future.