USA UPDATE provided by company on 5/6 and Market update on 3/7 clearly demonstrated management skill at delivering big deals, potentially massive deals in pipeline and out performance in terms of FY20 with $14.4Mn revenue.
Economic moat: Unique products (long lasting Covid-19, corrosion and mould protection) approved/ tested and certified by top agencies/ EU. Only FDA EPA pending which we are confident of receiving it.
For me, this fits into Peter Lynch’s “Boring industry” classification and operates predominantly in a B2B space. Their B2C May contribute meaningful revenues in the future.
Distribution: Tied up with Daikin/ Goodman and Chinese partner in place. More than 20 US government and big businesses under evaluation and news is imminent. Costco toe hold received with aim to rollout to Costco globally across 787 stores! This spells only deals.
Macro environment: Covid-19 has given a perfect storm to promote our products and sign deals. Mgmt and BOD have been on the front foot and executing brilliantly and provide pleasant positive news to SH regularly.
No debt! And profitable!
While the company may continue to do R&D to come up with more products, right now we should have very little R&D spend on existing products.
Raised $12Mn for US expansion and ramp up production in anticipation of demand increase.
Market cap: 168Mn
Float: 242 Mn shares with significant holding by management. So there is a tight register.
There is no doubt in my mind that this should go 5X ($3.5 SP) in ST (1 year?) and 10X ($7 SP) in next 3-5 years. At 10X we are only 1.68 Bn market cap which is quite reasonable given global growth opportunities.
For a company that had a revenue of $6.9Mn in 2019 to $14.4Mn for 2020. That is a 100% increase!!!
Expect a NPAT and EPS to show up in the annual report!
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AEI vs ZNO:
- I think they are operating slightly different markets. Zoono is focussed on surface disinfection including skin, and animal health (spraying farms). Aeris is focussed on air disinfection (while we do have surface disinfection as well). So if subway trains are using Zoono to fog their trains and stations for one month (vs one week/ 200 touches for AEI), the air circulated through the a/c’s on the trains and stations can be purified by Aeris.
- ZNO has other products and opportunities beyond the sanitiser which have taken a back seat due to covid.
- When covid magically disappears or the risks recede, ZNO may suffer a significant price drop as people are blindly viewing it as a hand sanitizer stock. However it will recover and go higher as the focus turns to non-sanitizer uses but including animal health.
- AEI is a non-covid company but covid happens to be one of the pathogens that AEI destroys along with corrosion and mould! So this by default is a long term story. Our distribution deals with Daikin/ Goodman and Chinese partner are evidence of it.
- ZNO is probably close to fully valued from current perspective but has higher to go as profits and applications increase.
- AEI is IMO severely undervalued for a debt free company with a revolutionary product(s), 242Mn share (vs a billion shares for most micro/ small caps), highly regarded board with significant skin in the game, quality of management (same as NAN which is almost $2Bn company), tight register, 100% revenue increase from FY19 to $14.4Mn,....
So, in conclusion, I think we are where Zoono was at least Dec 2019 in terms of recognition and price. We should shoot the lights out when we are fully valued once the annual report comes out.
Note that Zoono may have $50-60 Mn revenues with already $500Mn market cap but we are $14.4Mn revenue on $167Mn market cap. So we may have 3X difference in terms of revenue and MC which may lead one to argue that we may be valued on par with Zoono. My argument would be that Zoono SP may be pricing in future opportunities and higher revenues (which may slightly disappoint) compared to Aeris as it is relatively unknown.
Disclaimer: I hold both AEI & ZNO. 10X!
————-
AEI vs ZNO:
- I think they are operating slightly different markets. Zoono is focussed on surface disinfection including skin, and animal health (spraying farms). Aeris is focussed on air disinfection (while we do have surface disinfection as well). So if subway trains are using Zoono to fog their trains and stations for one month (vs one week/ 200 touches for AEI), the air circulated through the a/c’s on the trains and stations can be purified by Aeris.
- ZNO has other products and opportunities beyond the sanitiser which have taken a back seat due to covid.
- When covid magically disappears or the risks recede, ZNO may suffer a significant price drop as people are blindly viewing it as a hand sanitizer stock. However it will recover and go higher as the focus turns to non-sanitizer uses but including animal health.
- AEI is a non-covid company but covid happens to be one of the pathogens that AEI destroys along with corrosion and mould! So this by default is a long term story. Our distribution deals with Daikin/ Goodman and Chinese partner are evidence of it.
- ZNO is probably close to fully valued from current perspective but has higher to go as profits and applications increase.
- AEI is IMO severely undervalued for a debt free company with a revolutionary product(s), 242Mn share (vs a billion shares for most micro/ small caps), highly regarded board with significant skin in the game, quality of management (same as NAN which is almost $2Bn company), tight register, 100% revenue increase from FY19 to $14.4Mn,....
So, in conclusion, I think we are where Zoono was at least Dec 2019 in terms of recognition and price. We should shoot the lights out when we are fully valued once the annual report comes out.
Note that Zoono may have $50-60 Mn revenues with already $500Mn market cap but we are $14.4Mn revenue on $167Mn market cap. So we may have 3X difference in terms of revenue and MC which may lead one to argue that we may be valued on par with Zoono. My argument would be that Zoono SP may be pricing in future opportunities and higher revenues (which may slightly disappoint) compared to Aeris as it is relatively unknown.
Disclaimer: I hold both AEI & ZNO.
