December 16th, 2021 | 12:43 CET
Memiontec, E.ON, RWE - Fighting the crisis with basic services!
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The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
Memiontec - Still an insider tip!
The Company from Singapore is currently still considered an insider tip. The name is a portmanteau and is made up of the words "MEMbrane", "ION," and "TEChnology" - which describes pretty much exactly what it is all about. The Company offers complete solutions on the subject of (waste) water treatment, mainly based on membrane ion exchange technology as well as other chemical, physical and biological processes. The Group, which has sites in Singapore, Indonesia and China and can look back on more than 20 years of experience, is thus focusing on a megatrend of the coming decades.
Clean drinking water is a resource that is becoming increasingly scarce in many parts of the world due to rapid population growth - especially in Asia. For this reason, Memiontec is a sought-after partner for government institutions, such as the national water authority PDAM in Indonesia, and for local authorities, industrial companies and agricultural producers. In addition to individual modular systems and complete plants, including maintenance contracts, the Company specializes in two public-private partnership (PPP) concepts: Build-Own-Operate-Transfer (BOOT) and Transfer-Own-Operate-Transfer (TOOT). In both cases, Memiontec invests in a water treatment infrastructure with private partners and the public sector, becoming both the infrastructure operator and the seller of the treated water.
The concessions for the projects usually have a term of at least 25 years, thus ensuring long-term, predictable and continuous earnings. It is precisely in this area that the Company, currently valued at around SGD 126 million, plans to grow to ensure a dividend yield of an incredible 25% in the future. The share price, which has almost quadrupled since the IPO in March, is currently consolidating at a high level.
E.ON - The electricity and gas multinational that makes it in water, too
Around 50 million customers in Europe rely on the services of the German power and gas supplier E.ON. And some of them also when it comes to water. Since the takeover of the former RWE subsidiary Innogy SE, E.ON has taken over the entire distribution network business, including water supply, from Innogy. In exchange, RWE received the renewable energy business. Several years earlier, E.ON had already spun off the conventional power generation business and floated it on the stock market under the name Uniper.
In the meantime, E.ON focuses mainly on services related to a secure supply and offers extensive services on the subject of energy and mobility transition, such as advice on solar energy or the installation of charging points for electric vehicles at home or on the road. The Company is one of the major beneficiaries of rising energy prices. Investors also seem to be feeling this. The share price has risen by around 35% since March. With a P/E ratio of 13.5 for 2022 and a dividend yield of almost 4.5%, the stock is still quite favorably valued and has the potential for a new upward breakout. Analysts currently see the share as a buy and place the price target at around EUR 12.20 on average.
RWE - One man's grief is another man's joy
Another heavyweight in the energy sector is Essen-based RWE. The Company is one of the largest energy suppliers in Europe and generates around 70% of its revenue from the trading and sale of electricity and gas. The remaining 30% is almost entirely distributed among the energy generation sector. So while consumers, the logistics sector and the manufacturing industry are groaning about the high energy prices, RWE is on the winning side here.
The Group can also make good use of the additional income generated, as it wants to make itself fit for the future and benefit from the energy transition. The Company recently announced a strategic partnership with the Russian Novatek Group. It includes a planned production of "blue" hydrogen and ammonia from natural gas, in which the carbon is to be captured and stored. "Blue" energy sources are seen as an intermediate step in decarbonizing industry. Ammonia is expected to replace LNG gas in the medium term, as it can draw on roughly the same infrastructure and is suitable as a fuel for power plants and large marine engines.
In addition, the companies agreed to cooperate in the field of LNG gas, which is needed for gas-fired power plants used to compensate for fluctuations in green electricity generation. However, these announcements have hardly any influence on the share price. Most analysts recommend the share as a buy with an average price target of around EUR 42.50, corresponding to a price potential of around 24%.
The keyword is Megatrends - The energy transition, eMobility, secure basic supply with access to clean drinking water. All three companies are likely to benefit from these trends. If you are looking for security, RWE is interesting. E.ON is also tempting, primarily because of its high dividend yield and low P/E ratio. However, Memiontec's shares are likely to be the most exciting. Due to the long-term concession agreements and the high yields, the share will undoubtedly continue to march north.
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