Reporting my latest purchase to this thread with a slight delay. Last Tuesday, I bought 3,000 shares at a price of 15 NOK in a new company for my portfolio from the Norwegian stock exchange, which I have been following for quite some time. The company is Cambi ASA, which operates in waste management and whose business is mainly based on thermal hydrolysis (Thermal Hydrolysis Process, or THP). Its customers are wastewater treatment plants around the world. With the equipment provided by Cambi, biogas and fertilizers can be produced from the sludge generated in the wastewater treatment process. The process is explained in more detail in the video below.
Introduction to Cambi’s value chain
The company operates in a growing market, driven largely by regulation as well as the desire of wastewater treatment plants to make their processes more efficient, productive, and environmentally friendly. In the EU, there is an ongoing initiative for a directive that would mandate carbon neutrality for all wastewater treatment plants by 2040. Here, Cambi’s THP helps in achieving this goal by increasing biogas production.
The company is a market leader in its field, and its order backlog is currently at a record high of 1.8 billion (NOK). Revenue between Q1 and Q3 was 682 million (growth of 140% compared to the previous year). The market cap is 2.6 billion (NOK), and if this year’s Q4 is in line with previous quarters, the P/E ratio calculated from this year’s earnings would be around 11-14. Cambi’s results do fluctuate due to the nature of the project business, but the strong order backlog bodes well for the coming years. The service business (equipment maintenance, upkeep, etc.) is, in turn, more stable and predictable. The service business accounts for about 25% of total revenue and naturally grows as more equipment is delivered. The balance sheet is also in strong shape, and leverage is moderate.
Overall, I find it a very interesting company operating in an industry supported by the green transition and regulation. A weakening economic cycle and inflation are dampening prospects for the next few years, but I’m looking at this company for the long term, as there will certainly be plenty of demand for Cambi’s solutions in the future.
I definitely recommend checking out Cambi. At the moment, the company seems to be somewhat under the radar, and there don’t seem to be many owners or people following the company on this forum yet. Below is a recent presentation from the Capital Markets Day this September. In my opinion, it’s a very comprehensive presentation of what the company does.