{australien_flagge} When it comes to the climate, everyone is now talking about “net zero”. The industry for the treatment of industrial wastewater is going one step further: “net positive water” is now the benchmark. Similar to modern catalytic converters, which now emit cleaner air than goes in, the latest technology should make it possible for industrial plants, including mining companies, to produce more clean water than they consume.
The issue has increasingly been recognized as an ESG issue par excellence and is attracting interest from institutional investors. Amongst others Fidelity runs a dedicated sustainable-water-waste fund (Fidelity Sustainable Water & Waste Fund). This summer alone, two water treatment specialists went public in Europe: Dutch NX Filtration N.V. (NXFIL; NL0015000D50NX) and Danish Aquaporin A/S (AQP; DK0061555109). NX Filtration has raised approximately EUR 190 million in fresh capital. The stock market value is currently EUR 745 million. Aquaporin’s IPO was somewhat smaller. The company raised EUR 33 million in fresh capital and is currently trading at a market value of around EUR 200 million. Neither NX Filtration nor Aquaporin are currently profitable.
We had been reporting on Australia’s Parkway Corporate Limited (ASX: PWN; FRA: 4IP; AU000000PWN8) at Goldinvest for some time. Dynamic MD Bahay Oczakmak has set out to build Parkway into an industrial “Water Treatment Company.” By the end of 2019, he had brought a breakthrough Next Generation water treatment technology with origins at Victoria University into Parkway and became its largest shareholder on that occasion. In the following two years, restructuring and refinancing, Parkway is now fully funded and completely repositioned to take advantage of opportunities in the sector. Technologically, Parkway is expected to play on a par with other new entrants to the market, such as those that have recently listed in Europe. A differentiator to many of its peers, Parkway is concentrating on large high value markets, including industrial, energy and mining sectors. One insight into Parkway’s intentions, is its recent acquisition of Mawpump. The long-established supplier of industrial pumping systems throughout Australia. Existing customers include virtually all the major mining companies operating in Northern Australia. Parkway can therefore rapidly build and extend its offerings to the portfolio of existing clients. The mining industry has a huge challenges in terms of water consumption, even more so in water-scarce parts of Australia. Many legacy projects are a permanent drag on the financial balance sheet – not to mention the ESG balance sheet. Our thesis is that Parkway could benefit massively from the necessary renewal of the mining industry: The big issue in the future will not be “net zero” but the increasing demands of investors for the mining sector to aim to achieve “NET POSITIVE WATER”. This is clear in key regions like South America where a large proportion on the worlds copper and lithium is currently produced, also happens to be amongst the world’s driest regions. Bringing into question whether these resources will actually contribute to ESG benefits, unless they can be produced by consuming less water
Gaining customer trust first instead of waiting for the “big bang”
Parkway is commercializing a portfolio of next-generation technologies through its iWPaaS™ (acronym for “innovative Water & Wastewater Processing as a Solution”), which is being supported by global engineering services provider and partner Worley, among others. However, installing such an innovative system usually occurs as part of the conventional project development lifecycle, which generally has long lead times. That lead time is even longer with a new technology. Although the Parkway technologies promise prospective customers a substantial return on investment, the potential customers will thoroughly examine and, if necessary, commission studies before loosening up two or three-digit million sums.
Figure 1: Investment case summary from Parkway’s recent presentation.
In such a situation, many publicly traded start-ups would limit themselves to promoting the “Blue Sky” along the lines of: what if major mining A, B or even more locally K+S in Germany were to install such a system tomorrow? Of course, such big names would abruptly validate the market for technology and likely generate significant long-term licensing revenues. Nevertheless, Parkway is not sitting around waiting for project A or B. The company has positioned itself as an “integrated provider of all aspects of industrial wastewater management” through two acquisitions and the targeted hiring of highly qualified employees over the past twelve months. The calculus is to gain customers’ trust in conventional water treatment through ongoing business with products and services, so that they will eventually support Parkway’s more complex high-tech solution from a established solution provider.
Parkway successfully secured more than A$5 million in a heavily oversubscribed raising for its growth agenda in February this year at A$0.018. According to its quarterly report at the end of H2, Parkway still had A$7.5 million in cash. The current market value is around AUD 30 million at a share price of AUD 0.014. We recommend the company’s comprehensive new presentation:
For more information on the recent acquisition, see the following news story:
Acquisition of Mawpump Pty Ltd. —> here
Weitere Links zu den kürzlich in Europa notierten Wassertechnologieunternehmen sind unter anderem:
NX Filtration: —> Website
Aquaporin: —> Website
(Prospectus and offer details —> here)
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According to §34b WpHG and according to paragraph 48f paragraph 5 BörseG (Austria) we would like to point out that principals, partners, authors and employees of GOLDINVEST Consulting GmbH hold or may hold shares of Parkway Minerals and therefore a possible conflict of interest exists. We cannot exclude that other stock letters, media or research firms discuss the stocks we recommend during the same period. Therefore, symmetrical information and opinion generation is likely to occur during this period. Furthermore, there is a consulting or other service contract between Parkway Minerals and GOLDINVEST Consulting GmbH, with which a conflict of interest exists, since this contract includes that Parkway Minerals remunerates GOLDINVEST Consulting GmbH for the preparation of reports on Parkway Minerals.
