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Phoslock’s Beijing dirty water project just got bigger – but some revenue flows into next year
Health & Biotech
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China-focused water decontaminator Phoslock has upgraded the value of a Beijing Wetlands project by 50 per cent to $15 million.
Phoslock — one of a group of ten or so ASX stocks that operate in the water treatment sector — says the scope of the project is “huge”.
Phoslock (ASX:PHK) will move more than 135,000 tonnes of its materials in the wetlands construction project — first by a 500km rail trip and then 4500 truck trips.
Limitations on truck loads mean 40 per cent of the work is expected to be done this financial year – equal to $6-7 million in sales revenue.
Separately, frost in Beijing during the March quarter has slowed its Canal project – which will also push revenue out to next year.
“While China sales have increased substantially and continue to expand, the size of the increase has resulted in extensions to completion,” it told the market.
“Logistics will determine what will be completed in the current financial year and what will be completed in H1 18/19.”
The delays have tempered the company’s previous guidance to sales of $15-17 million compared to previous revenue projections of $21-23 million.
It maintained both projects – and the full $20 million of revenue – will be complete and recorded before the calendar year is out.
Chair Laurence Freedman told the market the increase was proof of the need for the company’s tech.
“It gives an idea of the scale of the problem as well as the opportunities for Phoslock Water Solutions. While it means a slight delay to cash flow timing, which happens across the end of the current financial year, we are pleased to be commencing the new financial year with a very full, profitable and growing order book.”
The shares were trading up 5 per cent at 31c in morning trade – not far from 33c highs earlier this year after it reported its maiden profits.
Phoslock — developed in Australia by the CSIRO — is designed to treat blue-green algae blooms in natural water bodies by safely removing phosphate.
The company specialises in returning large bodies of polluted water to health, be they lakes, rivers or in Beijing’s case, canals.
It has a large multi-purpose factory in Changxing, Zhejiang province, China, 150km inland from Shanghai, which manufactures its patented technology along with nutrient binding materials (zeolites) and biological solutions (such as nutrient consuming bacteria).
