CLG Analysis

My CLG analysis that led me to buy

Please note that these are my thought and my numbers. The companies and yours may differ as I add and subtract things based on what has worked over a long period of time for me.

Shares on Issue: 519.7m

Stock Price: 0.365

Market Cap: 187.09m

Stock Owned by Management or Insiders 27% and by former business vendors 8.6%

Moat: Fairly weak, OEM relationships, first mover advantage and wide collection network

	Strengths	Weaknesses
1	Industry outlook	Acquisition risk
2	Management & their ownership levels	Customer concentration risk
3	Huge array of possible acquisitions	Operates mainly in the packaging industry
4	Margins look strong	Packaging ind has many underperforming cos
5	Economies of scale will aid leverage	Commodity price exposure

Long term strategic Industry outlook: Increasing environmental awareness will provide a long runaway for this industry

Financials:

		2021	2022	2023	2024e
1	Revenue	26.8m	70.1m	136	200
2	NOI	6	7.5	14.72	43m+
3	Net Profit	4.25	4.6	12.2	26.23+
4	Cashflow	6.2	-3.1m	22.7	40

Debt: 2023 Long & Short Term 87m

Financial Ratios:

		Earnings P/S	P/E	Debt Ratio	ROIC	ROA	FCF Yield	PEG
1	2021	0.0082					3.27
2	2022	0.0088	41.47	45.4	13.15	14
3	2023	0.0235	15.87	110.76	7.5	4.04	12
4	2024e	0.05	7.3	88	12	7	21

Management:

CEO: Joe Foster has long experience within the paper and packaging industry and remains a large shareholder, both of these are substantial positives, however is this transferable to the wider electronics recovery industry.

Other Notable Management: The US team is obviously now extremely important to the company because that’s where the greatest opportunity lies, Tom Ogonek seems to be a highly experienced executive. One things to note is they don’t mention who any of the US management previously worked for and this is something I always liked to know.

Valuation & Final Comments

Fast growing business in a great industry. Strong aligned management. But expanding into different geographic areas mainly by acquisition in horizontal adjacencies. This combined with high debtwill cause most investors to wait to see strong execution before investing.