Last week, we discussed Jollibee’s growth surge from 2011 to 2018, and how it lifted the stock’s return to almost three times that of the index over this seven-year period. Today, we spotlight a business that we think has the potential to replicate this outperformance in share price. We’ve spoken about it a lot over the last six months, so this message will be short. Of course, we’re talking about IMI.

The S-curve. We just came across this article titled “Why electric vehicles will take over sooner than you think,” which can be found at The basic reasons are compelling, but the story’s core is that all new successful technologies do not take a straight route to dominance. Instead, growth is often explosive and disruptive, as shown by an S-curve (chart above).

This S-curve was followed by the development of numerous technologies such as the internet, cellphones, solar panels, and even internal combustion engines. Adoption is first opposed, and development is sluggish. However, an inflection point will be reached at which time growth will be exponential. We agree with the author of the article that electric cars are now at or approaching this tipping point. This is particularly true given that the G-7 countries have stated that they would seek measures to accelerate the adoption of EVs, including a possible ban on gasoline and diesel-powered passenger vehicles as early as 2030.

Long-term game. We’ve long stated that forecasting profits or most other things beyond 1-2 years is tough. This is why relative valuation techniques are preferred over a 10-year DCF. However, IMI already has a solid track record in the automotive sector and has benefited from the increasing automation and complexity of vehicle needs in recent years. EVs, in particular, require a greater number of components provided by semiconductor manufacturers such as IMI. Furthermore, VIA Optronics, the company’s 50 percent-owned subsidiary, has already attracted a large number of EV businesses as customers. Management has mentioned Tesla, as well as at least two Chinese companies. So the seeds are there, but investors must obviously take the long view. Patience will be required since there will most likely be many ups and downs. However, we think that, like JFC, IMI has the potential to quadruple or more by the end of the decade as it rides the EV wave.


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