Originally published in Capital Employed Newsletter on 4th March 2025Welcome to another issue of ROE The Boat.
For this issue I would like to once again highlight a selection of four ‘under-the-radar’ companies that could be worthy of further investigation.
Please note: this article should act as an introduction the companies featured and is not a complete deep dive. Make sure you do your own research before investing in any company mentioned in this newsletter.
Table of contents:
1) Conrad Industries
2) Huationg Global
3) Ricegrowers Ltd
4) MTI Wireless Edge LtdConrad Industries 🇺🇸
Listed on the US OTC market with a market cap of $62 million USD, Conrad Industries is a family-run business that has been operating since 1948, specializing in building and repairing barges and other vessels for both commercial and government clients.
The company operates in two segments:
New construction – contributing 85% of total revenue
Repair and conversion – making up the remaining 15%
With five strategically located shipyards in the Gulf Coast and Texas, Conrad is one of the few remaining U.S. barge builders, and its facilities are irreplaceable.
The shipbuilding industry is highly cyclical, and Conrad reported losses in 2022 and 2023. However, the downturn appears to be receding, with the company holding a backlog of work worth $282 million as of September 2024.
Conrad’s management team has a track record of exceptional capital allocation, generating strong returns in good times while maintaining a solid balance sheet to weather downturns. CEO Johnny Conrad owns 19.8% of the company, ensuring strong insider alignment.
Conrad remains off investors' radar, likely due to previous losses, low liquidity, and its OTC listing. However, its book value of $17.90 per share far exceeds the current share price of $12.45, offering a compelling margin of safety. Conrad Industries looks like a worthy candidate for deeper analysis.
Huationg Global 🇸🇬
Founded in 1983 and listed in 2014, Huationg Global is an illiquid microcap listed on the Singapore Stock Exchange with a market cap of 49.37 million SGD.
Huationg provides civil engineering services for infrastructure projects, alongside ancillary inland logistics support. The company operates through four key segments:
Civil Engineering Contract Works – Specializing in earthworks, infrastructure, excavation, drainage, road diversion, and demolition projects.
Inland Logistics Support – Leasing construction equipment, such as tipper trucks, compactors, and excavators.
Sales of Construction Materials – Supplying liquefied soil stabilizer and construction-related equipment.
Dormitory Operations – Developing and operating worker accommodations, including the Changi East Worker Dormitory Village (10,400 beds, completed in 2021).
Customers include:
Housing and Development Board
Land Transport Authority of Singapore
JTC Corporation
Defence Science & Technology Agency
Changi Airport Group
Hyundai Engineering & Construction
Samsung C&T Corporation
Following Covid-related disruptions in 2020, the company experienced a strong revenue and profit recovery, as industry players resumed backlogged projects.
According to management there still seems to be plenty of work available. This is supported by public sector spending on new public housing projects, construction of water treatment plants, educational buildings and community clubs. As well as other infrastructure projects such as Cross Island MRT line construction, Changi Airport Terminal 5, and Tuas Port developments.
Private sector construction demand is projected to be between S$14 billion and S$17 billion in 2024, 18.5% higher compared to 2023. Both residential and industrial building construction demand are expected to grow, underpinned by the development of new condominiums and high-specification industrial buildings.
Management holds over 70% of shares, with just 6% free float, making this almost a privately owned business in a publicly listed wrapper.
Management seem very capable with decades of experience. Both operating margins and ROCE continue to improve.
The balance sheet looks healthy with no net debt. As at 31 December 2023, the group had cash and cash equivalents of S$70.7 million (FY2022: S$23.1 million). The group’s total assets increased by approximately S$64.5 million to S$282.1 million as at 31 December 2023, compared to S$217.6 million as at 31 December 2022.
Covid caused many companies to have a boom in revenue followed by a bust. Others had a bust followed by a boom. HG is certainly in the latter camp.
That being said, if management are correct in there being lots more work in the pipeline then the company seems incredibly cheap. The stock currently trades on a PE of 2.4, PB of 0.47, with a 3.5% dividend yield.
Ricegrowers Ltd 🇦🇺
Humans began harvesting rice over 10,000 years ago, with evidence of early rice cultivation dating back to around 9,000–10,000 BCE in China.
In present times rice is a staple food for more than half of the world's population, meaning over 4 billion people regularly consume it as a primary part of their diet. I can’t see this changing anytime soon. Hence why Ricegrowers piqued my interest.
Ricegrowers Limited, doing business as The SunRice Group, is a rice food brand company listed on the Australian Securities Exchange with a current market cap of 655 million AUD.
With roots in Australia’s food bowl, the SunRice Group was formed in 1950 when a group of rice growers pooled their resources in the Riverina region of New South Wales to build a single rice mill. Fast forward to today, and The SunRice Group is a global food business and one of Australia’s leading branded food exporters.
SunRice employs over 2,000 people worldwide and offers more than 700 products, ranging from table rice and rice flour to snacks and ready-to-eat meals.
Headquartered in Leeton, New South Wales, SunRice operates across multiple continents, including significant markets in the United States, the Pacific, the Middle East, Asia, and Europe. The company manages rice mills in Leeton, Deniliquin, and Coleambally, and operates stockfeed plants in Leeton, Tongala, and Cobden.
The company's diversified operations are segmented into Rice Pool, International Rice, Rice Food, Riviana Foods, CopRice, and Corporate.
CopRice - Specializes in manufacturing and distributing animal feed and pet food products.
Riviana Foods - Focuses on importing, manufacturing, and distributing gourmet and specialty food products.
Trukai Industries - Operates in Papua New Guinea, packaging and distributing rice products.
SolRice - Based in the Solomon Islands, responsible for distributing and marketing rice products.
SunFoods - Located in the United States, manages rice milling, distribution, and marketing, notably under the Hinode brand.
In the 2024 financial year, SunRice reported total revenue of approximately A$1.88 billion, reflecting a 14.74% increase from the previous year. Net profit for the same period was A$64.42 million, marking a 20.13% improvement.
Since 2020 net profit has over doubled, representing a CAGR of 15%. Not bad for a rice focused consumer business. Operating margins hover around 5%, and returns on capital employed average around 15%.
The company carries net debt of 202 million AUD, but with a projected 2025 net profit of 68 million AUD, the debt remains manageable.
In July 2024, the company made an intriguing acquisition acquiring SavourLife, who specialize in premium dog food and treats, for 20.3 million AUD. The market reacted positively to this news.
Strategic acquisitions alongside steady organic growth could position Ricegrowers Ltd as a strong long-term compounder. With a P/E ratio of 9.6 and a 5.52% dividend yield, the company appears attractively valued for a business of its caliber.
MTI Wireless Edge Ltd 🇬🇧
MTI Wireless Edge Ltd is a family business founded in 1972 by Zvi and Aya Borovitz. The company trades on the London Stock Exchange under the ticker symbol MWE and has a current market cap of 46.55 million GBP.
MTI is a global provider of comprehensive radio frequency communication solutions. Headquartered in Israel, the company operates through three primary divisions:
Antenna Division: Specializes in the development, design, manufacture, and marketing of antennas for both military and civilian sectors. Their products range from broadband and tactical communications antennas to specialized solutions for various applications.
Water Solutions Division: Operates under the Mottech brand, providing remote control solutions for water and irrigation applications. These systems enable efficient water management for agricultural and municipal use.
Distribution & Professional Consulting Services Division: Offers consulting, representation, and marketing services to foreign companies in the RF and microwave sectors, including engineering services related to aerostat systems and system engineering.
As you can imagine with the growth of 5g and more government defense spending the company is winning many new and repeat contracts.
MTI recently received a substantial repeat order in the Antennas division from a system house in Israel for the manufacture of military antennas. The order is worth $4m and is expected to be delivered in June 2026.
This is one of the largest orders MWE has received to date. The order entails the supply of state-of-the-art antennas and is integral to an application that is considered one of the most advanced systems globally, that requires unmatched accuracy and robust communication.
The order highlights MTI's advanced antenna production technology and its strong reputation for delivering innovative solutions across the global defense and commercial sectors.
As noted in its Q3 results released in November, the Antennas division is experiencing solid demand, driven by rising global defense spending and growing sales of its 5G backhaul antenna solutions in India. With a substantial order backlog and multiple tenders pending responses, the company is well-positioned for continued growth.
MTI has a solid balance sheet with no net debt. Operating margins hover around 10%, and return on capital employed is around 15%.
The company has paid a growing dividend every year since it was listed in 2006, and continuously buys back shares when management feels the stock is undervalued.
The Borovitz family owns just over 31% of the business. The Beer family of Belgium owns 11.9%.
At time of writing the shares have increased by 21.5% so far in 2025. The business is currently valued on PE of 14, and has a dividend yield of 4.9%. Not as cheap as other companies mentioned so far but not too demanding either when compared to industry peers.
Thanks for reading.
Please note the information in this report is for informational purposes only and should not be seen as investment advice. Please do your own due diligence before investing in any company mentioned in this article.