AFT 0.00% 0.1¢ afg 2023-1 trust in respect of series 2023-1

aft corporation microgenics

  1. 4,327 Posts.
    Hi Folks

    For those that may be interested, Huntleys in their latest Smaller companies Guide gave this some coverage......

    Air purification Spec Buy
    No shares: 300m Avg Monthly t/o: 11m
    Mkt Cap: $21.4m Last Review: 30/04/03 (SCG 313)
    Rolling Year High: $0.097 Low: $0.022

    Sales Momentum Mounting

    It is almost 6 months since we looked at Voicenet which has subsequently been renamed AFT ltd. The old Voicenet shell was a substantial stockmarket negative as many investors were part of the major losses generated when many 10's of millions of dollars rapidly found their way to money heaven. The cost structure was far too high which was an ongoing issue but the new managing director Jeff Dalco has manfully attacked all the problem areas, pulled the cost structure into line, rationalised subsidiaries and set the group on a new growth path.

    Now Well Funded

    Also since our last review AFT has placed 53.6 million shares at 5 cents each to raise a gross $2.68m which has been further augmented by conversion of 5.36 million options to raise $134,000. That eliminates the concern from many shareholders that the company was running out of money. In fact, both shortly before and after the capital raising, AFT has become a darling of the day traders with a number of days showing volumes of more than 50 million shares turnover. It is also a reason why we are confident of a further strong move between now and Christmas given the probable announcements we would expect.

    China - The Key

    In early July, AFT announced that the Chinese government had requested fast track testing of the SARs virus by the UK government's testing facilities on the Microgenics air purification system which theoretically should handle elimination of the SARs virus. Subsequently it was announced that China itself is planning to test the Microgenics air purification system for SARs although a specific testing date has not yet been announced. Most people have forgotten about SARS as last years issue but there are fears in China of a recurrence at some time in the future and the Government hopes to be prepared if a recurrence emerges.
    A Master Licence for the manufacture and distribution of the system in China is subject to a heads of agreement with a company within the Tsinghua University Enterprise Group. This group is substantial with assets of $US2.11billion and annual revenue of $US1.39 billion last year. The group is also politically well positioned with many of the Communist leaders coming from the university ranks. We are looking for further developments on the SARs front with regard to testing and potential roll-out of the product between now and Christmas to give AFT its next shareprice impetus.

    Sales Momentum Developing

    While it is still early days, there is concrete evidence of momentum developing in sales from a number of centres. In Russia, for example, five units have been installed in the European Medical Centre which is at the forefront of Russian medical services. This is undoubtedly just a trial quantity of purchases ahead of a more substantial rollout when the product proves itself. Initial claims of the capture and elimination of most contaminants in the first pass of air through the Microgenics filter in tests conducted by groups such as the British Defence Authority at Porton Downs has attracted considerable attention and a number of trials are underway to prove that the technology is not too good to be true. The Russian hospitals are one part of this process as is the installation in the University Hospital in Southern Ireland which is a test hospital for a chain of over 200 hospitals.
    In other areas initial installations in high value home unit buildings are expected to lead to more significant sales elsewhere. We have heard of potential interest out of South East Asia in protecting similar buildings to the London unit development which has been announced to the market by AFT.
    Increasing concerns over air purification could lead to tougher legislation in a number of areas. For example, legislation has been released in the UK requiring hospitals to install air filtering systems to treat exhaust gases from all isolation wards. The Microgenics system looks like being able to cater for or eliminate all such potential contaminants, giving it an advantage over most other systems.
    The real appeal of Microgenics is its ability to not just capture but eliminate pathogens or contaminants. Most filtration systems collect live germs which simply change their place of domicile to the filter. That produces problems in filter disposal and handling. The Microgenics advantage is obvious as the material inside the filter is inert and can be disposed of in land fill rather than as contaminated waste.

    Deals In The Offing

    We are anticipating further deals in relation to protection of warships where current air purification systems are unwieldy and costly. We expect further deals on protection of higher value apartment buildings and the first deals for stand alone room units to protect either homes or small offices. Concrete progress is expected over the next two months in terms of sales. At this stage it is worth revisiting the AFT business model. In addition to the margin the group makes on sales of the Microgenix units which we estimate around 30%, there is an ongoing royalty type income from sales of the Biogreen 3000 material which lines each filter. As with any air filtration or purification system regular maintenance of the filtration mechanism is required which in this case will quickly build a recurring revenue stream at attractive margins.


    AFT is approaching an exciting development phase in China. Should the impending SARs testing prove successful, we expect a strong share price response. In other areas, obvious sales momentum is approaching and even though the company is probably 6 months short of cash flow break even, the potential is likely to be recognised by the market. AFT is in the unique position of having a relatively low cost product with a unique market advantage, at least in the short term. The company is likely to be regarded as the standard in air purification in a number of countries which will under pin the sales momentum. Spec buy for a move well above 10 cents.
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