An environmental solutions company that rocketed over 900% in one year

Australia has a relatively good environmental health; however, the country is still facing environmental challenges which have only risen over time, especially due to air pollution. According to Environmental Health Australia, which is the premier environmental health organisation in the country, approximately 3,000 Aussies die each year due to air pollution.

Other challenges such as contaminated water, hazardous waste, etc., have also become a concern. Although there are many companies that are doing their bit to protect the environment in the form of corporate social responsibility (CSR) activities, some corporates are specifically committed to saving the environment with their commercialised solutions and offerings. One such company, which has become one of investors’ favourites in the recent times is The Environmental Group Limited (ASX:EGL).

Stock performance

The EGL share price has proven to be one of the best performing shares on the Australian bourse in the last one year. EGL shares have rallied by a whopping 980.65% in the last one-year period, last closing at AU$0.035 on 6 January 2022.

1-year price change (%) of EGL shares (Yellow) and ASX 200 (Purple)

Image Source Refinitiv

The strong rally of EGL shares has put the benchmark ASX 200 return to shame, as the latter has delivered a return of 10.12% in the same period.

So, what does the company do?

Based in Australia, The Environmental Group Limited is actively engaged in designing and manufacturing equipment to enhance air quality, minimise water pollution, reduce carbon emissions and upgrade the process of bio waste to energy production.

The company operates through five business units, each focusing on a different environmental issue:

  1. Total Air Pollution Control (TPAC) – It offers a range of technologies to minimise dust, harmful gases and general odour from the surrounding environment.
  2. Baltec IES – This unit specalises in the manufacturing of exhaust systems for gas turbines used in the solar and wind energy production.
  3. Tomlinson Energy Service – This division is all about building a sustainable platform to convert bio waste to energy in a more efficient and cost-effective manner.
  4. EGL Water – It continues to develop its patented technologies for water treatment in partnership with Victoria University.
  5. EGL Waste Services – It is the sales and services division, set up for the exclusive Turmec Agency Agreement in Australia. Turmec are specialists in recycling solutions for the global waste industry.

Financial snapshot

EGL has not been immune to disruptions caused by the pandemic. The uncertainty caused by ongoing lockdowns impacted the company’s FY21 numbers, particularly in the first half of the financial year, despite which the company beat investors’ expectations. EGL notched up better results in the second half of the financial year as conditions improved.

The company’s revenue increased to AU$46.5 million in FY21, which is an improvement of over AU$9 million compared to the previous year’s results, while EBITDA for the group was reported at just over AU$3 million. The company’s profit after tax stood at AU$1.7 million in FY21, which is a massive increase of 230% over the last year.

The company’s Baltec IES unit performed well during this period. Sales remained strong at around AU$19.16 million and EBIT was reported at AU$1.09 million, compared to a negative EBIT of AU$326,111 in FY20. Baltec IES also continued to develop new strategic plans to efficiently deliver its products to global markets during the COVID-19 pandemic.

TAPC also completed a very strong year with a rise in EBIT to AU$857,560, a 196% increase over FY20, despite clocking a reduced revenue of AU$4.55 million. Throughout the year, TAPC was focused on building a broad client base, enabling it to execute higher levels of spare parts, sales and services in order to generate a more stable and consistent earnings base.

Ownership Summary

Sydney-based investment manager, Capital H Management Pty Limited is the largest shareholder of the company, having 10.42% stake, accounting for approximately AU$5.58 million worth of shares. Denise Richardson and Former Managing Director Elis Richardson share the tag of the second-biggest owners of the company, with both holding 8.59% stake or about 26.5 million shares each.

Top 14 shareholders of EGL as per the latest filings 

Image Source Refinitiv

Ace Property holdings comes at the third spot for the biggest shareholders of the company, holding 5.53% or 17.06 million shares, accounting for a total value of AU$1.37 million.

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