CleanSpace Holdings Ltd (ASX:CSX) is a designer and manufacturer of respiratory protection equipment and consumables for powered air purifying respirators (PAPRs). CSX has released its FY25 results delivering an impressive set of numbers including revenue growth of 26%, a 250bps increase in gross margin to 74.8%, flat costs on the pcp despite some one-offs, a H2 FY25 EBITDA profit and positive operating cash flow. Inventories relative to sales declined 700bps to 11%, helping to boost cash reserves to $10.5m. Looking into FY26, we forecast revenue growth of 24% (management guidance >20%), stable gross margins, 8.5% operating cost growth (after adjusting for one-offs in the FY25 base), and continued improvement in inventory/sales metrics. As a result, our EBITDA assumptions are relatively unchanged between FY26 and FY28, but we increase our DCF valuation from $1.10/share to $1.15/share on the back of lower inventory/working capital assumptions. CSX has a small (~1%) market share in the industrial PAPR market with a compelling product and remains in the early days of expansion into the US, parts of Asia and parts of Europe (outside France and the UK).
