Revisiting Apis Capital's Investment Theses

(MENAFN- ValueWalk) >Below is a brief excerpt from our Q3 2025 issue of Hidden Value Stocks, revisiting Apis Capital's theses on Osaka Titanium (TYO:5726) and E Ink Holdings (TPE:8069). Read the full Hidden Value Stocks Q3 2025 Issue here and see previous Hidden Value Stocks Issues here.

Table of Contents

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• Revisiting Osaka Titanium
  • Background on Osaka Titanium
  • Apis Capital's original thesis
  • Strikes and quality issues at Boeing
  • Apis Capital dumps Osaka Titanium
• Revisiting E Ink Holdings
  • Background on E Ink Holdings
  • The original thesis
  • Apis Capital remains committed to E Ink Holdings

Revisiting Osaka Titanium

Daniel Barker and Eric Almeraz of Apis Capital highlighted Osaka Titanium (TYO:5726) in the Q2 2024 issue of Hidden Value Stocks. The stock has not done well since then, plummeting 44% over the last year. Osaka Titanium stock is down to ¥1,518 a share from ¥2,719 in early October 2024 and ¥2,195 in late March 2025.

Background on Osaka Titanium

The company specializes in titanium sponge, a crucial input for the aerospace and defense industries. Osaka Titanium's business model includes transforming raw titanium ore from rutile and ilmenite into titanium sponge and then selling it to customers that use it for a variety of end uses after melting and alloying. The company is the second-largest producer of aerospace-grade titanium sponge globally, behind Russia's VSMPO. The latest generation of aircraft contains more titanium than previous generations, significantly boosting demand for titanium sponge. Thus, when aircraft manufacturers are increasing their output, Osaka Titanium enjoys a nice boost to its titanium business.

Apis Capital's original thesis

The Apis Capital team was originally drawn to the company because of their interest in industrials and cyclicals, which have always been a major focus of their strategy. The fund was involved in Osaka Titanium during the previous titanium cycle because of underinvestment in capacity for titanium sponge over several years in the early 2000s.

The result of that period was favorable supply-demand dynamics for titanium sponge makers when aerospace demand accelerated around 2004 and 2005. According to the Apis Capital team, Boeing and Airbus deliveries soared 75% over five years.

They added that Osaka Titanium's share price exploded more than 15 times from the trough in that previous cycle, making the potential for the latest cycle just as attractive.

The Apis Capital team's target price was ¥6,500 for Osaka Titanium stock, but unfortunately, problems at Boeing have weighed heavily on the share price.

Strikes and quality issues at Boeing

Osaka Titanium entered a period of turmoil in 2024 amid questions about how strikes at Boeing could weigh on its financial performance. In November, the company revised lower its forecast for its titanium business for the 2024-to-2025 fiscal year by ¥3.5 billion to ¥49 billion from its previous guidance in May 2024.

Union-backed machinists at Boeing halted work on major jet programs for seven weeks - until a new labor contract was approved in early November . Osaka Titanium warned about the potential for additional impacts of the aerospace supply chain as Boeing cautioned about extra time needed to stabilize its operations.

In its May 30, 2025 year-end announcement , Osaka Titanium continued to express concerns about the Boeing strike while reporting that titanium sponge sales for export markets fell 4% year over year. For domestic markets, sponge sales tumbled 17% year over year, although titanium operating profits rose 18% year over year. For the overall titanium segment, net sales fell 4.4% while operating profits were up 1.5%.

Apis Capital dumps Osaka Titanium

Osaka Titanium also said in its year-end announcement for fiscal 2024 that aircraft manufacturers expect to boost production volumes beginning in the second half of 2025. For now, things are up in the air at the company, which led Apis Capital to exit.

“We decided to exit Osaka Titanium due to the frustrating and unpredictable developments with Boeing, the key end customer for titanium,” the Apis Capital team told Hedge Fund Alpha.“It is not uncommon for small cap companies to have significant concentration among a handful of customers. We manage this through diversification knowing that over time the odds play out in our favor.”

Revisiting E Ink Holdings

The Apis Capital team also highlighted E Ink Holdings (TPE:8069) in the Q2 2024 issue of Hidden Value Stocks. The stock initially popped between Q2 2024, climbing from about TW$245 in early April 2024 to peak at around TW$300 in October 2024. Unfortunately, E Ink stock has since taken a turn for the worse, tumbling to around TW$215 as of July 14, 2025. Nonetheless, Apis Capital remains committed.

Background on E Ink Holdings

E Ink has a near-monopoly in ePaper technology, also known as electrophoretic display or EPD. This type of display only uses energy when changing the images on the screen.

Unlike LCD and OLED, ePaper doesn't actually emit light, which makes it power efficient, easy on the eyes, and easy to see in sunlight.

Read the full Hidden Value Stocks Q3 2025 Issue here.

E Ink manufactures and supplies ePaper materials to panel manufacturers and system integrators, which then assemble the display modules and sell them into a variety of end markets, including retail and consumer.

A key concern that has weighed on E Ink's stock price recently is tariffs and the related issue of foreign exchange. However, E Ink Chair Li Cheng-hao downplayed those concerns in April , saying they produce e-paper materials in Taiwan and the U.S. and only make modules in China. While he did admit that increasing tariffs will likely boost e-paper prices in the U.S., he also said they could speed up retail adoption.

E Ink is now investing in new production capacity to provide the larger, more cost-effective e-paper displays retailers prefer. The company has declared this year to be its“year of large-size color electronic paper” as it pushes into the growing market for large-format displays, something Apis Capital mentioned in its updated thesis.

The original thesis

Apis Capital was originally drawn to E Ink after the COVID-19 pandemic, which offered a unique challenge to the retail business. It led to a major labor shortage, resulting in the development of electronic shelf labels. ESLs represent 60% of E Ink's revenue and enable retailers to update prices and product information remotely, resulting in greater efficiency.

The Apis Capital team saw Walmart's announcement that it would roll out ESLs in its U.S. stores as a major catalyst to speed up adoption of the technology in the U.S., where the penetration rate remains under 5%. They said more mature markets like France have a higher rate of over 50%.

Apis Capital estimated that the U.S. Walmart opportunity alone represented half of the global installed base, giving E Ink a sizable growth runway that demonstrated its resilience and adaptability in the face of a global crisis. They saw 50% more upside for the stock at the time of their thesis in Q2 2024.

Apis Capital remains committed to E Ink Holdings

Despite the decline in E Ink's share price, Apis Capital continues to see a bright future amid the push into new offerings.

“E-Ink remains a fund holding and we continue to be excited by the company's prospects,” the Apis Capital team told Hedge Fund Alpha.“Color and large signage are new offerings that are both expected to be big revenue drivers. Both are ramping up at this moment. We expect these catalysts to overshadow any concerns about tariffs or foreign exchange that may be holding the shares down.”

Read the full Hidden Value Stocks Q3 2025 Issue here.

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