EMC Details

Achieving milestones: Emefcy Group Limited (ASX: EMC), a global leader in energy-efficient wastewater treatment solutions, has announced for its third commercial deployment success in China under the long-term cooperation agreement with Qingshuiyuan Environment Company (QSY). This involves construction of a Membrane Aerated Biofilm Reactor-based (MABR) plant in Xinjiang Province with a capacity of up to 500,000 litres per day. Development work at Henan Province is also expected under the agreement. Also, the agreement will continue with the merged entity – RWL Water and Emefcy (plans of merger announced in May 2017). It was earlier revealed that on a combined basis the groups would have achieved revenues of US$62 million ($A83 million) in 2016 with sales forecast in excess of US$90 million (A$120 million) for calendar 2017.Lately, the group had entered into a binding purchase agreement with Shanghai Winner Environmental Technologies Co., Ltd (“Shanghai Winner”) to develop a commercial wastewater treatment plant in China for VOSS of Norway ASA. This was the first of the many in a long-term cooperation agreement between Emefcy and Shanghai Winner.

Footprint expansion on technology-led growth: The group offers a commercially-proven wastewater treatment solution and relies mainly on its initial technology, SABRE-The Spiral Aerobic Biofilm Reactor. Further, EMC’s field-proven solutions are being deployed in China, the Americas, Africa and many other jurisdictions. The group has low cost, scalable plants to provide local sources of safe, recycled water. Further, the group has been able to save 90% of the energy used to treat water and its plants can be easily solar-powered for a net-zero solution.

Stock Performance:EMC stock price moved up 5% on May 24, 2017 and has moved up over 7% in last one month (as at May 23, 2017). We believe that it might be prudent to wait for further drive from the catalysts. Moreover, significant reliance is weighted towards the merger with RWL Water for earnings profile. Given the scenario, we put an “Expensive” recommendation at the current price of $ 0.93


EMC Daily Chart (Source: Thomson Reuters)

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