Amar Pandya of PenderFund Capital Management presented his thesis on 5N Plus (Canada: VNP) at Best Ideas 2026.
Thesis summary:
5N Plus is a Montreal-based producer of advanced specialty semiconductors and performance materials, with eight plants and four R&D centers on three continents. Amar notes it has completed a multi-year transformation: the 2016 5N21 plan aimed to cut earnings volatility by 50%, and in 2022 it exited low-margin, commoditized metals businesses. Buying degraded resources and smelter waste streams and refining them into high-purity inputs gives it an upstream moat that feeds its downstream engineered materials.
Performance Materials, about 25% of revenue at 53% gross margins, is led by bismuth (85% of segment sales), including APIs for Pepto-Bismol. Specialty Semiconductors, about 75% of revenue at 31% gross margins, serves renewable energy and space. First Solar, 23% of total revenue, extended its contracts in August 2025 to raise cadmium telluride deliveries by 33%. AZUR, a satellite solar cell maker bought in 2021 for €75m, has doubled sales and tripled EBITDA, with capacity nearly sold through 2029.
Amar sees 5N Plus as a prime beneficiary of geopolitical tension and the push for Western supply chains. As one of few large-scale suppliers outside China, it faces limited direct competition, protected by high capital requirements and multi-year qualification periods; the US Department of Defense granted $14m for a germanium substrate plant in Utah. Unpriced “moonshots” include photon-counting CT detectors, Raygen’s solar storage, a stake in Microbion’s antimicrobial drugs, and GaN-on-Si patent royalties.
Incoming CEO Richard Perron, CFO since 2014, succeeds Gervais Jacques, who becomes Executive Chairman; insiders own about 5%. Management favors accretive M&A of proprietary products that are a small share of customer cost. Thin-film material is only 5% of First Solar’s panel cost, supporting expected price increases of 10-30%. Net debt is 0.8x EBITDA. Amar expects 80% EBITDA growth from 2024 to 2027, backed by a record backlog as less profitable legacy contracts roll off.
The shares traded near C$18 at the end of 2025, a market capitalization and EV of about C$1.6bn each. Amar finds under 13x 2025 EV/EBITDA attractive given the growth and optionality. His base case of C$30 per share assumes 16% revenue growth, a 24% EBITDA margin and 15x EBITDA; weighted with C$40 bull and C$12 bear cases, it yields a 2027 target near C$29, about 65% upside. The base case excludes an estimated C$1.6 per share of hidden assets. Tariffs are the key risk.
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