ASX cleantech is all the rage. Here’s how to dip your toes into clean water stocks
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Investment in water seems to be a no-brainer. After all, water is essential for life, and safe drinking-water and sanitation are crucial to human health and well-being.
The numbers are also mind-boggling. According to the World Health Organisation (WHO), by 2025, half of the world’s population will be living in water-stressed areas – those with a lack of water supply, or drinking from water sources contaminated with faeces. Nearly a million people also die each year from drinking unsafe water, mainly in less developed countries.
And as the world’s population grows, the price of clean water is expected to increase given the limited supply available.
In Australia, droughts are a major feature of the environment, and causes water shortages, environmental degradation, and loss of livestock and crops. Solutions to counter these problems are very much in demand.
There are fortunately, ample opportunities to get exposure into the water industry on the ASX.
The two big players in the market are Reece (ASX:REH), and Reliance Worldwide (ASX:RWC). Although the share prices of both companies have surged by 80 per cent and 90 per cent respectively, they are not pure water plays as they conduct other businesses across the whole supply chain.
There are however, small cap cleantech stocks on the ASX that you might consider to get direct exposure to water.
We’ve named five of these water stocks below.
Clean TeQ is a company focusing on water purification and recycling, and has been making news recently. The company undertakes significant research and development into new water treatment technologies, and is pursuing the development of graphene oxide membranes for water purification.
It was recently awarded a contract for a water treatment plant upgrade in Oman, and has just signed a contract with a coal mine in China to install its Bionex water purifier technology.
Although it reported a $10.13 million loss for the half, its share price has risen by more than 100 per cent in the past year.
This is a Singaporean-Australian decentralised water and waste water treatment outfit that designs, owns, and operates modern water treatment systems for the industrial, municipal and residential sectors.
The company says it is serving a US$21 billion market for water treatment systems in the US, and a $300 million market in Australia.
The majority of its Australian revenues comes from its blue chip clients, including Rio Tinto, AGL Energy, and Coca Cola.
The calendar year 2020 has been record-breaking for the cleantech company, with record cash receipts of $16.5 million, and record margins of 31 per cent.
The DEM share price has returned over 200 per cent over the past year.
Duxton owns and manages a portfolio of water rights in Australia, providing the irrigation community with a broad range of water supply solutions.
The company generates revenue by offering irrigators a range of water supply solutions, including long-term entitlement leases, forward allocation contracts and spot allocation sales.
Its portfolio is mainly located along the South Murray Darling Basin, which makes up 80 per cent of water trade in Australia.
The company says there is growing demand for, and constrained supply of water in Australia.
The demand is coming from investments over the last 10 years in agriculture, from domestic and international sources. Water rights leases are also in demand due to the maturity of the Australian water market, leading to the development of more sophisticated water supply products.
On the supply side, the variability of climate and seasonal conditions have affected the supply available to the consumptive pool, according to the company.
The company’s share price has risen by 5 per cent over the past year.
Fluence is involved in the decentralised water, wastewater and reuse treatment markets, with its Smart Products Solutions, including Aspiral, NIROBOX and SUBRE.
The cleantech has seen major progresses in China, Southeast Asia, and the Middle East for its water solutions over the past year.
In 2020, revenues in China grew by 38% despite COVID-19 challenges.
A water treatment project is also underway in the Ivory Coast. With a contract value of EUR 165 million, the project is designed to treat water from Lagune Aghien to help supply the freshwater needs of the country’s largest city.
For FY21, the company is expecting a revenue range of between US$35 million to US$50 million.
The Fluence share price has decreased by over 40 per cent over the past year.
Purifloh is developing its Free Radical Generator (FRG) technology for a range of applications across three segments: water sanitation, indoor air purification, and medical sterilisation.
Last year, the company has been focusing on its FRG aerosol technology to kill airborne viruses to combat the spread of the coronavirus.
However, it also has a substantial water purification business.
For the half-year ended 31 December, the company reported a loss of $1.85 million. Its share price has declined by around 50 per cent over the past year.
Here’s another article on clean tech stocks on the ASX.