Things That You Need To Know About Water Stocks – An Attractive Points For Investors

  • Nov 21, 2018 AEDT
  • Team Kalkine
Things That You Need To Know About Water Stocks – An Attractive Points For Investors

The water industry in Australia witnessed a boom in the past few years where awareness about clean drinking water is being increased. As per the Australia Industry Standard report, the Water industry in Australia has an estimated annual revenue of $22.71 billion on the back of growing demand for water. Overall, there are 31,000 people who are employed across its sub-sectors such as water supply, sewerage, drainage services, and pipeline transport. Most of the companies are approaching the state-of-the-art technology to improve the quality and services of the operations which ensure to deliver shareholder value in the long run. 

There are many companies in the industry that have seen their stock prices consistently mount up in the past one year. Some of these are PuriflOh Limited (ASX: PO3), Phoslock Environmental Technologies Limited (ASX: PET), Duxton Water Limited (ASX: D2O).

PuriflOh Limited (ASX: PO3) is in the business of operating desalination plants that convert seawater to household water. Recently, the company has achieved a key milestone in executing its license agreement with Somnio Global Holdings LLC where PuriflOh becomes the exclusive global licensee for Somnio’s Free Radical Generator (FRG) technology for specific markets with strong growth profiles, including Air Purification, Water Treatment, and Facility Sterilization. This is a significant development for the company which triggers growth path ahead to the company. The company posted total revenue of $56,119 at the end FY18 that includes interest income and debt forgiven. At the end of FY18, the company had cash and cash equivalent of $133,803 with no debt. Further, the company expects first sales from ordinary activities in 1HFY19 and anticipate announcing a deal with Air Purifier OEMs late this year. Importantly, the stock price has risen about 1460.0% in the past one year and up by 73.33% in the past one week on the back of positive developments in the business. PO3’s shares trade at $3.290 with the market capitalization of circa $97.91 Mn as on November 21, 2018.

Besides this, Phoslock Environmental Technologies Limited (ASX: PET) posted robust numbers for FY18 with 385% increase in the Topline at $16.2 Mn compared to $4.2 Mn in FY2017. It is in the business of using a phosphate-based water treatment to clean large bodies of water. Phoslock is expecting its FY 2019 revenue to increase by 80% over FY18 to $27 Mn- $30 Mn and it is expecting 170 percent growth in its NPBT. In the past one year, Phoslock’s share prices increased by 113.16 Percent.

Another company Duxton Water Limited (ASX: D2O) which offers water supply licenses has witnessed an increase of 27% percent in its stock prices over last one year. Unlike Phoslock and Duxton, there are few other water resource companies whose performances are not that great. For example, Clean TeQ Holdings Limited (ASX: CLQ) is a company that provides industrial water treatment services in Australia, and it has witnessed a decrease of 70 percent in its stock prices over last one year. It represents that the company is yet to turn the demand for water in their favour and capitalize upon the prevailing opportunity. In the current marketplace, the water sector is playing at a decent zone and could provide an opportunity to the investors in the longer run. By looking at the long-term scenario, foreign investors are showing more interest on ASX water stocks than domestic investors. However, it is yet to watch the other water stock performance in years to come which provide a clear view and ensure long-term return visibility.


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