16. July 2021 | 11:53 CET
Nel ASA, Memiontec, McPhy - Ride the wave
The world is in a state of flux. Due to the change from fossil fuels to renewable energies, everyone is talking about the shortage of raw materials such as lithium, nickel, or copper. However, the fact that there could be a water shortage is not yet ingrained in the population's consciousness. With the growing population, urbanization and the depletion of existing sources, water will become a precious commodity in the coming decades. New types of water treatment systems offer great potential.
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ISIN: NEL ASA NK-_20 | NO0010081235 , MCPHY ENERGY S.A. EO 0_12 | FR0011742329 , Memiontec Holdings Limited | SGXE56008290
Pioneer in water treatment
For 28 years, Memiontec has been successfully working on complete water and wastewater management solutions in Singapore, China, and Indonesia. The group supplies both municipalities and various industries in Asia. Over the years, the Company has built strong relationships with public sector customers, such as the state infrastructure developer Jakpro or the National Water Authority of Indonesia PDA, and major private customers in the region. In doing so, the Indonesian Company can offer customized solutions through the membrane, ion exchange, physical, chemical and biological processes, covering the entire water treatment value chain.
High synergy effects
The business model is based on four pillars that are interlinked and thus deliver strong synergy effects. The core business areas are, on the one hand, the provision of total solutions with engineering, procurement and construction services, the operation, maintenance and servicing of water and wastewater treatment plants, and the sale and distribution of modular and customized systems and equipment. Added to this, through interests in joint ventures with long-term public and private partners, was the operation and maintenance of water treatment infrastructure and the sale of treated water, known as BOOT projects. The concession contracts here run for several decades and guarantee Memiontec secure, recurring revenue streams.
The strategic investments in BOOT projects are to be further accelerated in addition to the expansion of the other business areas. In addition, the Memiontec Group intends to grow further through acquisitions and mergers. Likewise, expansion is planned, first into other Asian countries, then overseas. For the fiscal year ended December 31, 2020, the group reported revenues of USD 34.61 million, up 18.1% from fiscal 2019. Net income was USD 1.31 million. The urge for clean water is a growth market, evidenced by the strong order backlog of USD 93 million as of the end of April 2021. The dividend yield was a whopping 25% in 2021 and is even expected to expand in the future, barring unforeseen circumstances. Not only because of the high dividend, but Memiontec is also an up-and-coming Company in a long-term growth market.
Hydrogen as a source of hope
Hydrogen is the most common element in the universe and is present in bound form in almost all organic compounds. It has the lowest atomic mass of all elements: it is 14 times lighter than air, neither toxic nor corrosive or radioactive, does not ignite itself and burns with a colorless flame. However, since hydrogen does not occur on Earth on its own, but only in the form of compounds, it must be split off from a hydrogen-rich starting material with the aid of energy.
In water electrolysis, water is split into its components, hydrogen and oxygen, using electricity. In the process, the hydrogen moves to the negatively charged pole and the oxygen to the positively charged pole. The electrical energy used is converted into chemical energy and stored in the hydrogen. If the electricity required for electrolysis comes from renewable sources, so-called green hydrogen is produced.
One of the hopefuls of future energy is the Norwegian hydrogen producer Nel ASA. These were left by the British investment house Barclays on "overweight" with a price target of NOK 39, about EUR 3.74. Currently, the hopeful is quoted at NOK 17.9. The current chart situation points to a renewed test of the low for the year at EUR 1.58. The signs also continue to point to red for the French hydrogen Company McPhy Energy. The break of the critical support at EUR 20 offers room for the next support zone at EUR 15.
Currently, the water shortage is not yet in the minds of society. According to a forecast by the Intergovernmental Panel on Climate Change, a total of 44 million Europeans will be affected by water shortages by 2070. Thus, the topic of water treatment is an absolute future industry. Memiontec plays an important role here. Hydrogen will also remain an essential tool for the energy turnaround, but the associated shares are still in the correction phase.