20 May, 2022
The Insider: Meet the Fund Manager sessions are a great way to hear directly from leading fund managers. They share their approach to investing, favourite companies and their market view for the year ahead.
As an activated carbon product producer, Carbonxt Group Ltd (ASX: CG1) considers it has an important role to play in the decarbonisation of Earth. The company develops and markets products that are able to capture the contaminants from industrial processes that would normally emit substantial amounts of harmful pollutants.
Altor Capital Co-founder and CIO Benjamin Harrison believes that a durable environmental thematic, being driven by “governments and corporates continuing to invest in the sector”, puts Carbonxt in an advantageous position to profit from a decarbonising planet.
Carbonxt has long been playing on this theme, and achieved record revenue in FY22 of $18.4 million, up 49% from FY21. Despite this revenue growth, the company managed to reduce operating costs from $6.017 million to $5.088 million in the same period. It also got very close to achieving EBITDA breakeven, finishing the financial year at -$49,000.
On Carbonxt’s new ‘HydRestor’ technology, Mr Harrison said “one of the new products they’ve developed in phosphate removal is quite an exciting development”. The prospective invention was selected as an innovative technology to be used in an extensive research program funded by the US state of Florida, to treat around 36 million litres of water over a four-month period.
The ‘cleantech’ company also has products able to reduce the impact of coal-fired power operations on the environment. Its non-halogenated, oxidising powdered activated carbon (PAC) is able to remove mercury from industrial gases. PAC is also being used for the same purpose in boilers and incinerators.
With a newly established renewable energy supply for its PAC production plant, which reduced costs, the facility has transitioned to working 24-hour shifts in order to keep up with demand. In January, Carbonxt signed a deal with an industrial company to supply it with 3000 tons per year.
While the company has not put out FY23 forecasts, Mr Harrison believes it has a “significant sales pipeline” that will further boost revenue. Carbonxt managed to boost its gross margin to 34% this financial year, up from 28% in FY21.
Carbonxt recently completed a $7 million Placement to finance the establishment of a new, state-of-the-art activated carbon production facility in Kentucky, US. This should boost Carbonxt’s annual production capacity to 24,000 tons, up from 16,000 tons. More importantly, it allows the company to break into the US$500 million granular activated carbon market.
The project is a joint venture between Carbonxt (40%) and Kentucky Coal Processors (60%). Carbonxt has the option to purchase an extra 10% for US$2.2 million before 30th September 2023, or one month after operations begin – whichever is earlier.
Carbonxt Group is the only activated carbon industrial pellet developer and supplier in the US.
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Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets’ position. Any advice contained within this presentation is general advice and does not consider your personal circumstances, you should consider whether it is appropriate for you.
The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.
Past performance is not a reliable indicator of future performance.
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Past performance is not a reliable indicator of future performance.
The CEOs of all the companies chosen as Fund Manager favourite stocks are invited to present at our Meet the CEO series. Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.
Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.
The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.