CG1 research - target price 39 cents

Carbonxt Limited Sanlam Research September 2024.pdf

Attached is the research from Sanlam on CG1. Target price of 39 cents.

Key highlights include:

1. Revenue Growth: Significant revenue growth is anticipated, particularly in FY2025, driven by increasing customer demand and new market opportunities.
2. Market Opportunities: The company is well-positioned in the U.S. activated carbon market, which is growing due to government regulations, especially for water treatment to remove toxic PFAS chemicals. The EPA’s new regulations on PFAS create a vast opportunity for CG1 to capture market share.
3. Production Facilities: CG1 operates two underutilized plants in Georgia and Minnesota, with production expected to ramp up. A new facility in Kentucky is nearing commissioning and is expected to substantially boost revenue.
4. Technological Advantage: CG1 differentiates itself with non-bromine activated carbon products, which prevent corrosion in industrial plants. Its R&D team is seen as a competitive advantage.
5. Financial Health: CG1 is emerging from a challenging period and is expected to turn EBITDA positive soon, particularly with the new contracts and plant expansions.
6. Growth Drivers: Contracts such as a $24 million deal with Reworld and the increased demand for activated carbon, especially for water treatment, are expected to drive share price growth.

Overall, the report is optimistic about CG1’s ability to capitalize on market opportunities and achieve significant revenue growth in the near term