Carbonxt Limited Sanlam Research September 2024.pdf
Attached is the research from Sanlam on CG1. Target price of 39 cents.
Key highlights include:Overall, the report is optimistic about CG1’s ability to capitalize on market opportunities and achieve significant revenue growth in the near term
- Revenue Growth: Significant revenue growth is anticipated, particularly in FY2025, driven by increasing customer demand and new market opportunities.
- 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.
- 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.
- 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.
- 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.
- 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.
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