Water decontaminator Phoslock is cleaning up in China’s dirty lakes
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Yet another of Australia’s water decontaminators is making a motza out of China’s enormous dirty water market.
Phoslock Water Solutions (ASX:PHK) began selling into China in the second half of calendar 2017, and sales tickets have already reached $3.5 million.
The company specialises in returning large bodies of polluted water to health, be they lakes or rivers.
Phoslock — developed in Australia by the CSIRO — is designed to treat blue-green algae blooms in natural water bodies by safely removing phosphate.
It is chaired by investor supremo Laurence Freedman, one of the pioneers of the investment management industry in Australia.
Phoslock yesterday reported $2 million in customer receipts for the December quarter — almost double the $1.1 million reported in the previous quarter. Operating cash burn reduced from $1.5 million to $563,000.
The shares have quadrupled over the past year. They were up another 8 per cent to 27c in Monday afternoon trade, valuing the company at $120 million.
The first stage of Phoslock’s biggest Chinese project — an inner city canal — is worth $5 million to the company.
It’s completed about 40 per cent of the project with the balance due to be finished by June.
Phoslock has $15 million of contracts in China, and has built a factory for its bacterial products in Changxing, Zhejiang province, which started production four months ago.
Phoslock has projects in eight countries around the world, from the UK to Brazil to New Zealand, and reeled in receipts in the last six months of $3.4 million.
The difference between the size of sales figures just from China — $3.5 million — and total receipts is one of the issues of doing business in that country.
The company said debtors totalled $4.5 million, largely made up of Chinese business partners because of drawn-out payment terms.
Fluence Corp (ASX:FLC) and De.Mem (ASX:DEM) are two other Australian listed water companies that entered the Chinese market in the second half of 2017.
Fluence, the product of a merger between local player Emefcy and US business RWL Water, has consistently failed to please investors in spite of hitting all of its post-merger targets including a major splash into China.
It’s shares have dropped from a pre-merger price in the high 90 cents to 42.5c on Monday night.
De.Mem has been equally as disappointing, falling from a 50c stag profit when it listed in April 2017 to 24c on Monday night — albeit a price that’s 4c higher than what it listed at.
Both companies have developed decentralised equipment that can can be used in the industrial and municipal waste water treatment sectors.