Water purifying and monitoring technology company Modern Water made good progress last year and, while the business still has much to prove, this could be the year that proves it - leaving the shares with speculative potential.
A key event during 2011 was the award of a contract to build its first commercial forward osmosis desalination plant, which turns sea water into drinking water. The plant is on schedule to be up and running by mid-way through the year and its successful completion could prove a spring board to further contract wins which are already in the pipeline. As well as the Middle East, management also believes its technology could find major markets in China and, potentially, even the UK.
China – which has $60bn (£38bn) earmarked to spend on urban water-waste infrastructure – is already a big market for the group's monitoring business, and it generated £500,000 of sales there last year. Indeed, total monitoring division sales reached £1.2m, compared with just £27,000 in 2010 and the division has been significantly strengthened by two acquisitions – Cogent Environmental and Microtox. These deals are already delivering cost savings and cross-selling opportunities, and broker Nomura Code predicts monitoring-related revenues of over £5m for 2012.
| Modern Water (MWG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 56p | MARKET VALUE: | £33.3m | |
| TOUCH: | 55-57p | 12-MONTH HIGH: | 60p | LOW: 39p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 51p* | NET CASH: | £11.3m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | nil | -2.43 | -3.70 | nil |
| 2009 | 0.10 | -3.66 | -6.03 | nil |
| 2010 | 0.03 | -4.11 | -6.88 | nil |
| 2011 | 1.24 | -4.61 | -7.64 | nil |
| % change | +4,033 | - | - | - |
Ex-div: Payment: *Includes intangible assets of £17.6m, or 30p a share | ||||
