By Alessio D. Cirino for Que Capital
Origin Materials ORGN is the leading player in the carbon negative materials market, offering an innovative solution to today’s emissions challenge.
The company produces sustainable materials from wood residues, such as bio-based plastics, fibers and chemicals. As many companies continue to lag in complying with net zero emissions targets, Origin Materials’ technology has the potential to not only help them achieve these goals, but also to create a lasting environmental impact on the materials industry.
Based in West Sacramento, CA, Origin provides carbon negative services in the global materials market — a market valued at $1.2 trillion in 2022 and forecasted to grow to $1.8 trillion by 2030, highlighting a 4.0% CAGR. In the midst of an already established market, Origin Materials is well-positioned to capitalize on this continued growth, with relatively few competitors in its subcategory.
Operating as a vertically integrated industry leader, Origin Materials’ cutting-edge technology is based on a process — thermochemical decomposition — which applies heat and pressure to break down wood residues into their constituent molecules, which are then used to produce a variety of sustainable materials.
Origin’s financials are compelling. Currently trading at around $4.00 – $5.00 per share, it enjoys a low debt-to-equity ratio(2.6%), Return on Equity of 20.7%, and an earnings growth rate of 19.9% YoY. The median analyst forecast of $12.00 seems credible and achievable.
In a market that has the potential to attract more startups, Origin Materials’ technology has many advantages over would-be competitors:
- Scalability – Origin Materials’ technology can be used to produce large quantities of sustainable materials at relatively low costs and high efficiency.
- Cost-effectiveness – Origin Materials’ technology produces sustainable materials at a competitive price, leaving room for prospective collaborators to participate in the upside.
- Environmental impact – Origin Materials’ technology has a negative carbon footprint, meaning that it actually removes carbon dioxide from the atmosphere, thus ticking off many ESG requirements for partners and customers.
At the same time, the company will benefit from increasing demand for sustainable materials and growth of the bioeconomy.
All in all, Origin Materials is a well-positioned company with a track record of growth. Its market opportunity is tough to understate and — if past trends are precedent — it will be the major player in the emerging carbon negative ecosystem.