De.Mem forecasts record full year revenues after another strong quarter

De.Mem has just reported they’re headed for another solid quarter after a record breaking last quarter.

Water tech company De.mem (ASX:DEM) has released its trading guidance, saying that it is on track for significant growth over the next quarter.

The company is expecting a growth range of 32-47 per cent in cash receipts for the June quarter, compared to the previous corresponding period (pcp).

The cash receipts are expected to come in at $4.5–5m, compared to $3.4m in pcp.

The strong momentum in the first half of the quarter resulted in approximately $2.4m from just the April 1 to May 15 period, and excludes receipts from its new subsidiary in Perth, De.mem-Capic.

On track for record stand‐alone results

According to the company, the solid quarter means that it is on track to deliver record first half and full year results.

Its standalone results (without subsidiaries) are set to deliver first-half growth in cash receipts of between 19‐27% vs pcp to $8‐8.5m.

Historically, the  full‐year De.mem standalone cash receipts are weighted approximately 40 per cent in the first half, and 60 per cent in the second half.

This means that the company is set to deliver an even better second half.

Strong growth outlook

Approximately $15 million of De.mem standalone CY21 cash receipts are already visible, compared to CY20 cash receipts of $16.5 million.

This $15 million excludes any potential additional project awards, organic growth, or Capic cross-sell potential, from now until the end of the year.

Importantly, its growth has been driven through recurring revenues from projects and equipment sales.

Capic forecasts

De.Mem acquired Capic, a Perth‐based supplier of high value‐add specialty chemicals, last April.

Capic generated around $300k of revenues in April, which compares favourably to its historical three‐year average revenues of $3.3m before the acquisition.

Capic’s highly complementary business provides significant synergy potential, as De.mem introduces its complete “one stop shop” offering.

This  includes providing membrane products and water treatment and filtration equipment, to Capic’s well‐established WA mining customer base.

De.Mem’s CEO, Andreas Kroell, has said the Capic acquisition was a perfect fit for De.mem, which will see it take market share in the lucrative WA market and add significantly to its revenue.

“Strong recurring revenues underpin our cash receipts, with upside from organic growth, cross‐sell and up‐ sell, new project awards and De.mem‐Capic synergy potential,” says Kroell.

Diversified client base and revenue streams

De.mem works with a diversified client base, and some of the biggest blue chip companies in Australia, with the likes of Rio Tinto, AGL, and Coca Cola.

It  focuses on the decentralised water treatment business, using its patented-membrane technology,which essentially filters and blocks unwanted constituents from water by using nano-sized pores in the membranes’ structures.

The company has just come off a record March quarter, delivering an 5 per cent increase in cash receipts to $3.5 million compared to pcp.

The De.Mem share price has risen by more than 80 per cent over the past year, to trade at 29c today.

This article was developed in collaboration with De.Mem, a Stockhead advertiser at the time of publishing.

 This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.