CleanSpace Holdings Ltd (ASX:CSX) is a designer and manufacturer of powered air purifying respirators (PAPRs). Management has provided a trading update, now forecasting low-single-digit revenue growth for FY26 and a small EBITDA loss (our previous estimates were +15% and +$1.3m respectively). This implies a H2 FY26 revenue decline of 1% (assuming 4% FY26 revenue growth). This is not a complete surprise given the slowdown in growth over H1 FY26, the geopolitical environment, continued regulatory delays related to a key new product release and adverse currency movements. The revenue miss combined with inventory build for the new product has seen working capital increase and net cash reduce to $9.8m in April 2026 ($0.125/share). We downgrade revenue assumptions between 9% and 11% over the forecast period (essentially pushing out numbers by 12 months) and as a result our DCF falls from $1.05/share to $0.90/share. We remind investors that due to industry high gross margins (~75%), CSX is highly leveraged to revenue growth. We maintain the view CSX has a genuinely differentiated product relative to peers and continued product development and innovation is set to maintain and/or increase this differentiation over time.
