With higher interest rates and weakening consumer demand, finding ASX-listed businesses with strong and sustainable growth profiles can be challenging.
However, the increasing awareness and actions being taken on environmental, social, and governance (ESG) issues at a government, board, and the consumer level are providing attractive tailwinds for those companies that can help solve specific ESG-related issues.
At DMX, we like to invest in well run, under-the-radar companies that are enjoying strong tailwinds, and that are adding real value to their customers through their products and services. We also like it if these companies are contributing positively to society more broadly.
Our team is seeing many interesting ASX-listed micro-cap companies that have unique ESG-related offerings which are supportive of strong long-term growth. The innovative intellectual property developed by these companies mean they can provide tangible and intangible benefits to their customers and other stakeholders.
Below we’ve listed four of our portfolio holdings we believe have unique ESG-related offerings, and are supported by strong investment fundamentals.
Aeeris Ltd (ASX: AER)
Aeeris Ltd (ASX: AER), a provider of weather forecasts, alerts and climate risk reporting, helps businesses manage and report on their climate risks. For example, insurance companies use Aeeris data to understand the risks of providing house insurance to properties subject to cyclone threats, or alert affected customers before a hailstorm hits.
Aeeris’s new Climatic Product will allow businesses to understand their climate risks across their assets. Aeeris has been achieving double-digit revenue growth and operates at a cash-flow break even position.
Energy One Ltd (ASX: EOL)
Energy One Ltd (ASX: EOL) provides energy trading software and services to energy generators and traders across Europe and Australia.
While Energy One has a successful operating business today, the blue-sky opportunity for the years ahead comes from assisting new wind/solar/battery energy providers that are entering the industry.
These smaller generators will look to outsource their energy trading management as it is not economic to manage it themselves. Energy One recently reported its FY23 results with revenue of $45 million and EBITDA of $12 million.
LaserBond Limited (ASX: LBL)
LaserBond Limited (ASX: LBL) provides surface engineering services and products to increase the life of mining and industrial equipment.
Laserbond’s proprietary technology extends the life of products, reduces downtime, and lowers the overall cost for its customers by reclaiming items rather than scrapping, substantially reducing a company’s carbon footprint.
Laserbond has a long track record of profitable growth and paying dividends and is targeting $60 million in revenue by FY26.
Advanced Braking Technology Ltd (ASX: ABV)
Advanced Braking Technology Ltd (ASX: ABV) provides aftermarket braking solutions predominantly to underground mining vehicles.
Mining customers use its braking solution because it is safer in the harsh underground environment. Additionally, because the brake is fully enclosed, there is no toxic brake dust emitted, which is otherwise a significant source of vehicle emissions.
Increasingly, we expect miners with an ESG focus to look to ABV to protect their staff and the environment. ABV is profitable and growing revenues north of 20%.
We think ABV is an undiscovered opportunity with a strong long-term outlook and valuable intellectual property developed over many years.
