CSX - CleanSpace Holdings

[System]

CleanSpace is an Australian company based in Sydney which designs, manufactures and sells workplace respiratory protection equipment (RPE) for healthcare and industrial end markets.

CleanSpace was founded in 2009 by a team of biomedical engineers and following a successful testing and regulatory approval process launched its first respirator for use in industry in 2010. In 2013, CleanSpace entered the European market, followed by the US market in 2017. In 2018, CleanSpace launched its first healthcare respirator to a global market. In 2019, CleanSpace began business development for South East Asia.

CleanSpace develops and owns its proprietary technology. In the last 10 years, the Company has continued to invest in research and development programs resulting in differentiated design and approved products that provide compelling employer and user benefits, namely higher protection with improved compliance and productivity. CleanSpace technology incorporates miniaturisation (size and weight), smart pressure driven algorithms, intuitive function and unique neck mounted design, to achieve the highest level of protection

It is anticipated that CSX will list on the ASX during October 2020.

CleanSpace Technology - Award-Winning Respirators

CleanSpace Respiratory Protective Masks are breath-responsive, air-purifying respirators that provide respiratory protection. Learn more here.

cleanspacetechnology.com

 

[Dona Ferentes]

and another one hitting the boards today. And holding on its significant entry.

Mask manufacturer CleanSpace Holdings has surged on debut after raising $131.4 million at $4.41 a share. The company says the prevalence of second waves continued to drive demand for respiratory protection technology through the first quarter of the 2021 financial year.

CleanSpace says its sales mix continues to be in line with previous months with the majority taken up by healthcare in main markets of North America, Europe and Asia. North America has moved to become our largest market for the first time since it entered the market three years ago. The business has entered the India and Middle East healthcare markets, which are growth regions for PPE.
With the finalisation of the quarter ended to 30 September 2020, CleanSpace says it is confident it will achieve its forecast revenue of $31.8 million and earnings before interest, tax, depreciation and amortisation of $11.6m to 31 December 20202, subject to market conditions and ongoing risks from COVID-19.

 

[Huskar]

A wave of healthcare companies is now working its way onto the ASX, after years of a tiny number of companies - just look at the full ASX list of companies and there was 88 in Health Care Equipment & Services vs 670 in Materials GICS Industry Groups. That reflects size of relative industries by EBITDA from a quick check of ABS: https://www.abs.gov.au/statistics/industry/industry-overview/australian-industry/latest-release.

But completely at odds with most other developed countries and COVID is the gamechanger here. How best to invest tho?...

I note that ACQ has this company as its largest holding.

 

[Dona Ferentes]

holding up well ... trading around $6.50 for the last few days ... but has really only moved sideways since the update from a month ago (could it be Covid fatigue?)

Business performance remains strong across key geographies since listing and CleanSpace continues to see demand in healthcare and industrial sectors. The product sales mix is 77% healthcare and 23% industrial with geographical sales split evenly between North America, Europe and Asia Pacific:
• The USA healthcare market continues to deliver growth for the business with continued growth in VA, Sutter, and Parkview hospital groups; and new deployments to Community Health Services and a large dental group. The business operates its direct sales model in the US healthcare market.
• Europe is now experiencing a second wave of COVID19 and lockdowns in UK, Germany, France and Spain are driving PPE shortages and interest in our healthcare offering. CleanSpace has built a strong growing industrial base in Europe which has continued to expand. The European healthcare markets offer attractive growth opportunities.
• Asia Pacific: Australia and Singapore have seen demand stabilise with more considered purchasing for protection long term, and new health sectors open up such as aged care and community care who were hit hard by the recent outbreak. Strong sales demand continues in other markets such as Japan, Philippines and Indonesia.

OPERATIONAL UPDATE AND NEW PRODUCTION FACILITY
The business has successfully set up production teams at the new facility and remains on track to ramp up operations to deliver capacity capabilities to over $100m per annum by end of this calendar year. The Company’s operations are performing well. With no adverse impact to supply chains or outbound logistics the Company is well positioned with respect to stock levels and delivery times to respond to global demand.

CleanSpace has also progressed several strategic initiatives with new hires expanding regional sales presence and progressing new product developments to build out the healthcare range.

TRADING UPDATE AND UPGRADE TO PROSPECTUS FORECASTS
Business performance has been strong and is tracking ahead of expectations. Trading to the end of October 2020 has seen continued demand in healthcare and industrial sectors. The business expects to now achieve the FY21H1 prospectus revenue forecast in November. Revenue is now forecast to be in the range of $34m - $36m for the full six months (ending 31 Dec 2020). Gross profit margins and EBITDA margins are tracking above the prospectus forecast and EBITDA is expected to be in the range $14m - $16m for the full six months (ending 31 Dec 2020). Consumable sales are currently 45% of total sales and broadly in line with previous year and the forecast.

 

[The Triangle]

IPO'd at the right time maybe? But has been hovering around $2 for a while now after earnings withdrawal. Not a good look for an IPO only a few months old.

Roughly 1st half costs were $12 million before COGS. They've flagged increased sales staff and marketing - So maybe safe to say costs will be higher than $12 million in H2.

There was $7 million in sales in Q3, and assuming an improved $10 million in Q4, and a 30% COGS - I could see a gross profit of around $12 million - Which is either breakeven or a small profit/loss. Cash conversion looks ok, nothing strange there, EV/EBITDA looks fair if not a little high. If they don't increase sales in Q4 - Then this will be pretty ugly.

 

[The Triangle]

Initial FY results out. One word comes to mind here: RUN!

Only 10 million revenue reported for the entire 2nd half (which looks like 4Q sales continued to deteriorate badly). There is negative EBITDA, obviously cash balance decreased. Costs dropped to 10 million - but sales hemorrhaged.

As far as I am concerned these guys should be trading at a discount to cash backing. Maybe 30 cents or so. Certainly not 1.50. Do not like taking short positions, but it is looking very likely I will. If covid can't grow their sales of facemasks to hospitals then nothing will.

 

[Country Lad]

Only 10 million revenue reported for the entire 2nd half (which looks like 4Q sales continued to deteriorate badly). There is negative EBITDA, obviously cash balance decreased. Costs dropped to 10 million - but sales hemorrhaged.

I don't know much about the business but in light of it opening down 26% on yesterday’s close and now being up 20% on the opening price, I thought I would have a quick look.

2 standouts from the half yearly.

1. Income second half is a 74% reduction from the first half
2. Then in the commentary, "In 2H, the Company has added the following number of new hospitals: US (50+); Europe (20+) and Asia (200+); and added eight US mining customers in a new sector for the business."

When there is such conflicting and illogical stuff in a report I look no further.

 

[galumay]

When there is such conflicting and illogical stuff in a report I look no further.

Indeed, and the worsening is accelerating! If you break out the 4th quarter numbers they only did ~$3revenue.

For me its a reminder of why I never touch IPO's, with no history of operations or finance I have no idea what sort of a business it is, until its too late!

I just feel sorry for anyone who has capital caught up in it.

 

[galumay]

If they don't increase sales in Q4 - Then this will be pretty ugly.

Just read back thru this thread and picked this gem up. That crystal ball is perfectly tuned, @The Triangle !

 

[Dona Ferentes]

From the AFR

Bell Potter says the departure of two healthcare analysts before Christmas will not lead to a watering down of its research business as one of Australia’s largest stockbrokers and financial advisers.
The firm that boasts $55 billion in funds under advice has suspended coverage of Atomo Diagnostics, Genetic Signatures, Immutep, Medical Developments, Opthea, Neuren, Starpharma, Pharmaxis and Pacific Smiles following the departure of veteran analyst Tanushree Jain in December for a research role at Petra Capital.
In October last year, another healthcare analyst, Elyse Shapiro, left for rival broker Canaccord Genuity. The companies Ms Shapiro covered, including Alcidion, PolyNovo, and Next Science, remain suspended from coverage.
Bell Potter’s head of research Chris Savage said it had hired Anubhav Saxena and Tara Speranza to replace the departed analysts. Bell Potter analyst John Hester remains with the business.
“It is Bell Potter policy to suspend coverage on a stock after an analyst leaves and for coverage to recommence once a new or different analyst publishes a transfer of coverage note,” a Bell Potter spokeswoman said. “Coverage on most or all of the stocks suspended will be recommenced by the three healthcare analysts over the next several months.”
As of Wednesday, Mr Hester is the only healthcare analyst listed on the firm’s research.

Under focus​

Bell Potter’s role, earning fees for capital market services from companies it recommends to its large retail client base, has come under the spotlight after a couple of disastrous pandemic-era initial public offers.
It acted as lead manager on the $340 million float of protective equipment business CleanSpace in October 2020, which raised $131 million from investors at $4.41 a share.
However, a series of disappointing operating updates from CleanSpace have caused a 70 per cent plunge in shares, to $1.32 on Thursday.
According to a research note from February last year, Bell Potter had a $7.65 share price target and “buy” recommendation on Cleanspace. Coverage of CleanSpace is currently suspended.

 

[The Triangle]

And it keeps going lower and lower. With the pandemic panic easing I don't see much light at the end of the tunnel.

Burnt through 7 million in operating cashflows this half alone with losses around 5 million. Gross margin is still very high - so they need to slash the prices of their goods and hope to skyrocket sales to cover the fixed costs (which looks to be most of their costs)

This is going to be a slow and painful burn with about $30 million in cash, no debt. Can't see any reason for this company to be valued at a premium to it's current cash holdings when it keeps burning cash each day and shows no path to profitability.

 

[The Triangle]

Well, being up around 50% today thought I'd check in with these dogs. Up to a few days ago they were probably trading slightly below net assets but today they are worth more that that at about ~$45 million market cap at about $0.58 SP. They put out an announcement today which says they have signed supplier deals with some XYZ American based companies... Hilariously there are no $$$ or sales figured given. What a f-ing s-show joke

“Although it is too early to determine what revenue might be generated from these relationships, the agreements represent an important step forward for CleanSpace’s strategic growth initiatives in the US healthcare market” stated Bruce Rathie, Chair of CleanSpace

No official H1 results yet, but the put their update out a few weeks ago. Revenue still falling, cash still falling, still have massive negative EBITDA (relative to sales). Anyways, I think i wrote before the best hope is to just sell out to someone like 3M.

Great chart...

 

[Prepper Pete]

Looks to me like another pandemic is about to explode across the globe with a spike in a Mysterious pneumonia outbreak in China, which has now spread across to Europe and the USA. Lets see how CleanSpace CSX share price reacts to this. Masks sales across the world are now increasing as fear grips the world. Hopefully this time around the CleanSpace Halo respirator sales improve.

 

[Prepper Pete]

This is the CleanSpace Halo respirator used in the medical industry to keep medical workers safe from pathogens and airborne viruses. CSX share price has been almost flat for the past 2 years, now lets see what happen as the world wakes up to the next pandemic.


And here is a link to a recent media article....the next pandemic is likely already taking off globally.
white lung pneumonia

 

[Prepper Pete]

CleanSpace (CSX) also works within the mining / industrial and manufacturing sectors, producing respirators to protect a wide range of workers. The bulk of their revenue is coming from selling into these global respirator markets. It appears that CleanSpace are about to become a profitable business again with rising revenue streams from industrial and healthcare markets. Financially the company is about to breakeven very soon, so we might just see them place guidance back onto the stock, might be one to watch into 2024.
Here is there industrial mask in action.

 

[Prepper Pete]

Current Stats for CSX:
77.3 million shares
$23.2 Million Market Cap
$12 Million Cash in Bank
No Debt
No need to raise capital
Nearing breakeven to profit
Heavily Oversold stock
High $7.69, Low 15.5 cents, Current 30.0 cents
Globally selling medical / industrial respirator masks (PAPR) powered air-purifying respirator

Put CSX on your radar for a stellar recovery into 2024
CleanSpace Website: CleanSpace

3 Year Chart for CSX

 

[Prepper Pete]

As the year closes out surely this long flat period of over a year with very little price action or movement on CSX erupts into an explosive move upwards. This cannot last forever, surely not

 

[Country Lad]

As the year closes out surely this long flat period of over a year with very little price action or movement on CSX erupts into an explosive move upwards. This cannot last forever, surely not

It will last until it changes. It will change when there is a reason for it to change. It will not change unless there is a significant reason for it to change - business as usual does not count.

The real question you need to ask yourself is why and what are the reasons you are still in this one.

 

[Prepper Pete]

It will last until it changes. It will change when there is a reason for it to change. It will not change unless there is a significant reason for it to change - business as usual does not count.

The real question you need to ask yourself is why and what are the reasons you are still in this one.

Half yearly financials will be out shortly, so I guess we will see how close CSX is to breaking even, fingers crossed for a bumper profit

 

[Prepper Pete]

Covid cases rising rapidly right across the world, Australia included...Time for CleanSpace to pump as we are all well aware of the CleanSpace Halo Respirator Masks that protect healthcare workers around the world, by eliminating 99.97% of all pathogens and virus'.