Infinity Dev (ZBA.SI): Growth + Yield + Value — A rare combination

Infinity Development (HKEX: 640 | SGX: ZBA) is dual-listed on the Hong Kong and Singapore stock exchanges. The group operates in a specialized segment of the chemicals industry — supplying high-performance adhesives, primers and related products primarily to the global footwear manufacturing sector.

Unlike broad-based commodity chemical producers, Infinity focuses on technically demanding, service-intensive applications. This niche positioning supports structurally higher margins and deeper customer relationships.

Business Model & Competitive Positioning

Infinity serves approximately 200 footwear manufacturers, including suppliers to major global brands such as Nike, Adidas, and Puma. Its products are embedded in customers’ production processes, which creates operational stickiness and high switching costs.

Several customer relationships have spanned more than 30 years — a testament to product reliability, technical support, and consistent performance.

Importantly, Infinity Dev is investing in next-generation, water-based and low-VOC adhesive solutions. As global footwear brands emphasize sustainability and ESG compliance, environmentally friendly adhesives are becoming increasingly critical. This strategic R&D focus positions the company to capture higher-value demand over time. 

Solid Financial Metrics

Based on the last traded price of S$0.42 (13 February 2026):

• TTM P/E: 5.83x
• FY2025 ROE: 20.17%
• Gross Margin: 37.94%
• Net Margin: 14.63%
• Dividend Yield: 7.40%
• Payout Ratio: ~50%

For a specialty industrial business, a 20% ROE combined with high-30% gross margins signals strong pricing power and operational discipline.

Revenue grew 13.4% year-on-year, while EPS surged 143%. Such divergence suggests meaningful margin expansion and/or normalization of prior cost pressures — an encouraging indicator of operating leverage.

At under 6x earnings, the valuation appears undemanding relative to profitability and return metrics. 

Balance Sheet Strength

Infinity maintains a conservative capital structure:

• Current ratio above 3
• Very low debt levels
• Positive operating and free cash flow
• Substantial net cash position

This financial flexibility allows the company to fund expansion, capex, and strategic growth initiatives without heavy leverage or equity dilution risk. 

Industry Tailwinds

Asia remains the global hub for footwear manufacturing and exports. As production scales in emerging markets, demand for specialized adhesives rises in tandem.

Additionally, ESG-driven procurement standards favor higher-value, environmentally compliant adhesives — precisely the segment Infinity is developing.

These structural trends provide medium-term demand visibility. 

Recent Developments

Infinity recently completed a dual primary listing on both Hong Kong Stock Exchange and Singapore Exchange, raising approximately S$13.7 million via placement.

This move broadens its investor base, improves trading liquidity, and provides capital to support regional expansion.

Management is expanding manufacturing capacity and strengthening its presence in Indonesia and India. Establishing local production reduces logistics friction and positions the company closer to high-growth footwear clusters.

Sales contribution from India has historically been small, but this is expected to scale meaningfully as new facilities come online. 

Investment Thesis

Infinity combines:

• Undemanding valuation (sub-6x P/E)
• Strong ROE and margin profile
• Healthy balance sheet and cash flow
• Attractive 7%+ dividend yield
• Structural niche positioning with customer stickiness
• ESG-aligned product roadmap
• Regional expansion optionality

Given its earnings momentum and expansion plans, a re-rating toward a more normalized multiple appears plausible.

At my target price of S$0.84, the stock offers approximately 100% upside potential within 12 months, supported by both earnings growth and multiple expansion.

Prescientsuper
https://superphang.blogspot.com