u/Creme-Waste

I recently started a new hobby: scraping AI-related conference exhibitor lists, such as the 2026 OFC roster, to search for undiscovered companies with deep value. More often than not, it doesn’t work. With the rising popularity of AI-augmented market searches, the cost of monitoring for hidden gems has decreased dramatically for everyone.

But this time, it worked. I came across a short, unassuming news item that prompted me to investigate further and eventually take a position in Japan Pure Chemicals (TYO: 4973).

The news was that at the upcoming 2026 JPCA Show this summer, Japan Pure Chemical Co., Ltd. will "present new surface treatment chemicals designed to dramatically reduce high-frequency transmission loss" in advanced electronics (think printed wiring boards and semiconductor packages used in 5G, high-speed data, and RF applications).

But what does this mean exactly? Traditional plating processes rely on a nickel-phosphorus underlayer (primarily as a diffusion barrier), leading to signal degradation. To avoid this, JPC and its competitors have developed nickel-free gold-plating technologies (such as DIG and EPIG) to eliminate the nickel layer.

This made me dig deeper. So, who is Japan Pure Chemicals?

Japan Pure Chemicals Key Metrics

Japan Pure Chemicals is a specialised manufacturer of high-purity precious-metal plating chemicals (primarily gold, with ~50% market share, as well as palladium- and silver-based solutions). These chemicals are used in advanced semiconductor packaging, PCBs, optical transceivers, connectors, and other electronic components. The company sells to chemical manufacturers, plating suppliers, and electronics manufacturers. One of its primary customers is Ibiden (which accounts for 27-30% of revenue), a major ¥28B IC substrate giant.

This makes JPC’s products ideally positioned for the high-growth AI infrastructure and photonics markets, powering high-density, high-reliability interconnects in AI server substrates and optical transceivers.

Beyond strong market fit, the company is also deeply undervalued. JPC’s cash plus investment securities cover ≈55% of its current market cap:

• Cash & cash equivalents: ¥6.95 billion
• Investment securities (listed stocks): ¥10.74 billion
• Total liquid assets: ¥17.69 billion
• Market cap: ¥33.55 billion

The stock is up +84% since my initial post in November, but it still trades at roughly half the valuation of other Ni-Free plating players in the space. JPC has recently launched new Ni-Free plating solutions (DIG and EPIG) relevant for 400G/800G/1.6T+ optical modules, while its newly launched Sn-Cu intermetallic compound (IMC) plating technology expands its reach into power semiconductors.*

The company is debt-free and has a forward P/S (based on FY2027 revenue guidance of ¥24.0B) of ~1.32x. It delivered +43% revenue growth in FY2026 and is guiding for +33% growth in FY2027.

Moreover, in January, JPC CEO Tomotaka Kojima stated that the company is doubling its production capacity for plating chemicals used in AI substrates and optical transceivers to meet surging demand from the rapid pace of AI build-out. It is also in the final stages of an M&A transaction in this space.

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*While not my main interest, JPC is also relevant in other semiconductor vectors. For example, on April 30, it was reported that the company is introducing a new line of plating chemicals that enable the formation of Sn-Cu intermetallic compounds for high-reliability bonding in power semiconductors (especially advanced devices using SiC and GaN). The product is based on patented submicron-scale IMC materials and is noble-metal-free.

We have seen that the pace of the AI build-out has led to rearating of stocks (sometimes dramatic) in the reliability-testing niche. AEHR is probably the best example but the whole sector is benefiting, including small and mid-sized player.

I am now looking at a Japanese company, ESPEC (TYO: 6859), which supplies physical chambers (temperature, humidity, thermal shock/cycling) for reliability testing. The sit slightly upstream. Their primary customers are qualification labs for semiconductor makers, server OEMs, and testing service providers.

The company has shown consistent revenue growth driven by demand in high-tech sectors, although guidance for this year is flat, due to longer lead times on large-scale and bulk orders. Net sales are up 1.7% YoY, but orders received are at record highs, up 8.5% YoY (especially in NA and Southeast Asia).

Which means orders/demand are high, but because the production and delivery of the test chamber can take a longer time, the revenue is pushed into future quarters/years while the backlog builds.

In December 2025, ESPEC launched new walk-in temperature & humidity chambers specifically engineered for high heat-generation loads in AI servers (30 kW and 60 kW models, simulating real AI server operation and compliant with ASHRAE standards for server reliability). Which could help boost revenue.

https://espec.co.jp/english/news/products/2026/detail260204.html

ESPEC’s chambers are the industry-standard equipment used by test houses worldwide, with an estimated 19.6–26.7%* global market share in this niche (>60% in Japan).

*The company self-estimates 30% worldwide share based on the 2024 annual report.

ESPEC: Key Financial Metrics

• Market Cap ~470M USD
• Net Cash Position: ~87M USD
• P/S (TTM) 1.08x
• P/B (mrq) 1.20x
• Rev Growth (recent) +6.0%   
• Op. Margin 10.0%
• Gross Margin 34.8%
• Profit Margin 8.1%

Disclosure: I hold a starter position in ESPEC (200 shares).

Updating my KESM thesis. Expecting a solid revenue growth in 2026. The company has invested in retooling and is introducing wafer-level and system testing and burn-in, which should reflect in revenue.

Expansion into wafer-level and system testing and burn-in was announced in the FY2025 annual report. Recent periods (including H1 2026) have seen continued investment in new burn-in equipment and maintenance.

KESM Annual Report 2025

Despite this, among the Asian burn-in players, there is one laggard. Compare TRT, S71, and AWX. That is, even though KESM (a Sunright-associated company) is actually keeping up with the group in terms of revenue.

Stock performance comparison

Revenue and other metrics comparison

Additionally, I think KESM might be testing for Intel. Proximity analysis shows KESM is testing right at/near the INTC semiconductor campus in Bayan Lepas, Penang, Malaysia. While this is only speculation, the proximity of test houses to semiconductor manufacturing labs is a good indication of a potential supply chain relationship.

Why? The simple reason for this is that test houses and burn-in service providers deliberately locate their facilities near major customer sites to optimise the supply chain (cost, clustering, speed).

KESM facility neighbouring Intel Campus in Penang

I would like to get a second opinion on $HTRO. It reported softer Q1 earnings last week, which led to a sharp sell-off, but the stock has since bounced as the market digested the news and is trading higher.

The company is positioned downstream as a pure passive fibre infrastructure play: cables, microducts, connectors, closures, cabinets, racks + high-density data centre assemblies & structured cabling. Harsh-environment rugged connectivity, too. Data centres and harsh environments are their more profitable segments as the old-school fibre is in decline.

And bc of this, HTRO has also been declining since the peak in 2021, as the largest part of its revenue mix had been telecom/FTTH (still the largest but declining). But in the recent quarter, it reported that the data centre segment is now its #1 profit driver, +20% organic YoY growth (~25–30% of sales and 46% of group EBITA, growing fast in the US).

Very strong AI passive tailwind. Strong exposure via US-based acquisitions. Serves large-scale data centre operators, including hyperscale and colocation providers.

The company has made six acquisitions in the US over the last 10 years and is expanding rapidly, particularly in the data centre segment.

Prominent acquisitions:
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- Communication Zone (acquired Chicago, late 2025): Explicitly stated to have “several hyperscale and colocation customers” in low-voltage/data-cabling projects.
- Data Centre Systems (DCS) (acquired 2021, Dallas): Focuses on structured cabling for US data centres serving telecom, financial services, cloud, and technology companies.
- USNet (acquired 2023, Texas): Installation, decommissioning, and relocation services for “large-scale data centre customers” and “numerous Fortune 500 companies.”

Key metrics:
Mcap SEK 7.84B (USD 780M)
P/S (TTM) 1.07x
P/B (mrq) 2.18x
EV/Revenue 1.36x
Cash Balance 60m USD
Leverage 2.2x adj. EBITDA
1.67B debt ÷ 760M SEK= 2.2x

At HUBN multiples, which is a close comparison in terms of product mix in Europe, the stock would be 2-3x higher. Not an immediate candidate for rerating, but IMO a steady compounder.

KESM Industries rose 12.33% on strong volume at the market close today, but it remains heavily discounted relative to its net cash position. The market cap is currently $45m against $44.6m net cash.

KESM in numbers: update 28/4/2026

- P/B up to 0.52x, still heavily discounted
- P/S up to 0.81x, same

If KESM were to trade at book value, the stock price would be ~7.93 MYR.

I have done some more DD and realised that the company also has large insider ownership, with over 48% of the shares held by Sunright Ltd, an associated company, with directors and other insiders owning additional 22% of shares, for a total of approx 70%. This means that the free public float is extremely thin at apprx 29%.

KESM ownership breakdown

When it comes to CapEx spending, I was interested to see what the company does with the cash on its hands, but it seems most spending (as well as dividends) is covered by operating cash flow. Which might change, however, once it starts ramping up like in the last cycle. So far in H1 2026, KESM spent the most in a while, primarily on new burn-in equipment as well as maintenance.

KESM CaPex spend

I have been looking more closely at burn-in players in Asia (besides Trio-Tech), and I think I have found a compelling undervalued pick: KESM Industries Bhd.

KESM is a niche specialist focused on semiconductor burn-in (high-temperature stress testing) plus related test and assembly services, primarily for automotive, computing, and consumer chips. As a burn-in service provider, it is dominant in Malaysia and has global customer relationships via the Sunright network (Sunright is a major shareholder in KESM, owning approximately 48.41% of KESM’s shares).

KESM - A Member of Sunright

Because of this close relationship, Sunright ($S71+230% YTD) and KESM (+24.75% YTD) have historically moved in sync, but recently their price action has stopped tracking. It is possible that this is because the market values manufacturing more than services, or that the disparity is only temporary.

KESM Industries
Market cap: RM 154.42 million / 38.95 million USD
Cash / Debt: RM207M / RM30.7M
Debt/Equity: 9.0%
P/S (ttm): 0.72x
P/B: 0.45x

The company currently trades at a negative enterprise value, with a P/B ≈ 0.45x, ~55% below book (backed by real assets and a large net cash position).

KESM is in cyclical recovery mode tied to semiconductor demand. The last quarter shows a +7.6% revenue uptick and a return to profitability, indicating a potential turnaround, despite full-year figures declining in 2025. https://theedgemalaysia.com/node/795728

Sunright and KESM comparison

KESM in numbers

Hi, I need a second opinion on a potential AMD burn-in supplier I discovered.

Micro-cap, sub-100 m, US-based but primarily operating in Malaysia, where AMD expanded recently in August of last year, and TRT's revenue began picking up in sync (see IMG 2 below).

Clean balance sheet, increasing revenue, almost no information discovery abt the company.

In March, it received two orders for burn-in, one smaller in automotive for approximately 2.5m (initial manufacturing order) and the second two weeks later for qualification and reliability testing in a "next-generation artificial intelligence (AI) graphics processing unit (GPU) platform designed for advanced computing and AI infrastructure applications."

Shipments for the latter order are due in 2026.

The relationship with AMD is unconfirmed, but there are not many companies in Malaysia that are working on next-generation AI GPUs, and TRT has a historical relationship with AMD from the early 2000s (contemporary SEC filings also show they had a strong relationship with Catalyst Semis, which was acquired in 2008 by ON Semi).

This looks to me like a hidden burn-in specialist in the AMD supply chain. But would love a second opinion.

BiB order from an undisclosed next-gen AI GPU player

Revenue spike matching AMD expansion in Malaysia in August of last year.

Prior AMD-TRT link from early 2000s