FLC (ASX) Ann: EMC and RWL Water Merger Complete Creating Fluence Corp

Originally posted by Lefevre ↑

I attended a small lunch presentation today from Richard Irving and Henry Charrabe.

A few notes :

The company is aware of the Siemens JV company naming themselves Fluence.
EMC/RWL have locked that name in earlier than Siemens JV have and are notifying them of such.
We have the legal upperhand.

Chinese wastewater treatment plant (which may consist on average 20 modules ) will take 4 to 6 weeks to set up.
Payment terms mean the last 10% is received on completion. We are way into profit by then.
Each module is built at a cost of US$5200. So sold on over 50% margin. As each line at the Changzhou factory is built the cost per module will drop and margin will increase.
All modules to be supplied around the world will come from China.
17 employees already in China.
105 in Israel with RWL and EMC tech staff already moving into the one new facility.
75 in Latin America
45 in Italy
25 in the USA
310 in total around the world.
Talked about the red tape bottle neck in California. There is 200 water agencies in California. Only one in each Chinese province.
An unnamed tech campus is nearly ready to go. Just waiting on permits. Will provide much profile.
Resort chain in pipeline for a while now. Not nailed yet.
MABR plants up to 5,000 cubic meters per day. After that becomes uneconomic. Below 5,000 cubic meters we have no real competition.
What methods are competing with Fluence in China ? There is MBR which uses 10 times more energy and hence OPEX is too high. There is activated sludge which is the most common which has a low Capex but much higher Opex. So the challenge is to educate the relevant authorities that there is a much better third alternative and that is MABR. The demo plants are going a long way to promote this fact.
RWL did have activated sludge in their repertoire but they is now being replaced by MABR.
Its estimated that one person in China or Israel uses 100 to 120 litres of water a day. In the USA its 200 litres. So given the 5,000 max cubic litres we can deal with bigger communities in China. Their is 440 mil people in Chinese rural communities and hence the $15 bil opportunity.

Bidding for Californian commercial plants right now but they really do need a demo plant set up to make it easier. A bit of red tape at Stanford holding it up but working through it. The Californians don't care if you have a demo plant in the Carribean, Florida or any where else in the USA as it might as well be on mars.

Estimate $150 mil in gross revenue for the company to break cashflow even. Continued to grow at 30% p.a. on the RWL side of the business which fits in with the overall announced growth rate of 30% p.a. But as EMC has minimal revenue for this calendar year and given the China proposition then I would suggest the revenue growth will be considerably more than 30% given that the first production line is quietly estimated to be at the A$100 mil capacity well before the end of next year. So I would estimate we will hit that $150 mil revenue run rate by sometime late next year.
They are confident the current cash balance will fund them through to the end of next year which I estimate they will be close to cashflow breakeven. Richard thinks calendar 2019 will be a very big revenue year.

Their is a lot of focus on China but Latin America and Africa are big targets. Given their is a defacto takeover of Africa by China and our relationships/agreements with some of the largest engineering companies in China/world we could have a rapid rollout down the track.

Apparently their is USA interest in Fluence as an investment as their is not much to choose from and especially ones with such growth prospects that an OTC ticker has been established.
I said well its not apparent in the market given the disappointing lack of buying.
They are well aware they need to appoint a larger brokerage firm in Australia to promote the stock and provide coverage. They are currently in discussions with at least 2.

Lots of newsflow going forward.
The quarterlies will still be getting pumped out.

All in all I am very confident going forward.

Cheers

Expand

What a fantastic and generous post. Thank you so much for the time, effort and detail that has gone into this post (and the many others too).

I'm looking fwd to Monday and the new ticker to follow. And a larger brokerage firm promoting the stock!

All best,
D

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Ann: EMC and RWL Water Merger Complete Creating Fluence Corp, page-5

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