What management did really well in 2020 was to avoid a capital raise.. and their last one at 44cents in 2019 (just shy of A$40m, and oversubscribed mind you) was a masterstroke in hindsight and that fortuitous cap raise allowed FLC to remain undiluted so far through a global pandemic... the refinancing of our debt facility also assisted greatly, and getting the Ivory Coast online was a nice finish to a rather difficult year.
But Fluence did feel like an awkward company for a while under Henry... staff and focus were spread too thin and little was accomplished across various strategies which were hard to consolidate. I'm really liking the focus and engagement that Richard has brought to the business this year... the year is young, but we are already seeing this focused business strategy yielding some significant milestones.
Hats off to Richard for having the bravery and commitment to do what he did... it's not easy getting rid of a CEO and then taking the reigns ... you put your reputation at risk if you fail... and Richard really didn't need to risk his reputation or sacrifice his precious time, unless he felt extremely strongly about it... being the largest shareholder is one thing, and I have a feeling it's not just money that is driving Richard... he has more than enough wealth to retire and remain a non-exec ... but he is putting himself out there again ... maybe the extreme disparity between what he felt was the company's value and how the market is valuing this company was too wide.
But whatever the reason, I am on board with his vision. I have always thought that it was in Fluence's best interest to narrow their focus geographically... too many hubs and overheads for such a thinly capitalised company. Richard not only cut down the geographies, but he narrowed their product focus .. and this will enable them to continue to drive down overhead costs (SG&A), which have steadily been coming down already and is set to continue throughout this year.
We know China is a massive opportunity that just got real. But outside of that I couldn't help but notice Richard's emphasis on the Phillipines... as we all know in the water space, nothing happens quickly. So when Richard mentioned the Phillipines had recently passed new regulation to enforce stricter water treatment, I thought they may be somewhat at the beginning of the transformation journey with the Phillipines... but Richard's reference to 'recent regulation' being passed was in fact in 2016. This means that Fluence have been making small inroads for the past few years... and in early 2021 there are now 8 Aspiral plant installations, and the water regulatory knocking of Fluence's door and asking them to help clean up this mess. I have a feeling that we may get some news here soon... but I'm hoping that Fluence will be asked to help clean up Laguna de Bay, the largest lake in the Phillipines which sits just outside of Manilla.
The lake provides up to a third of Manilla's fish, and excess nutrients leeching from surrounding farmland/sewage are making this lake poisonous to humans and fish ... and it's an internationally recognised problem. If Fluence are brought into to address this.. it will put us up in lights. If the government is serious about addressing this issue, then the technology is available to make it an affordable solution. Though this is only one project Fluence may be considered for, I'm sure there are many more out there judging from Richard's tone.
When a new disruptive technology is finally accepted by the industry... then caution and skepticism is quickly replaced with urgency, new untapped possibilities and ultimately FOMO. Having the Three Gorges commit to volume MABR installations in what we can expect to be a nationwide wide adoption, is IMO what I would consider the earliest sign of noteworthy widespread adoption of MABR... and to confirm this, we will need to see existing partners start ramping up MABR sales... more new partners jumping on board, and if I see another national SOE start bulk ordering I'm going to call it for what it is... Fluence will have officially transferred from a "what if" company, to a "when will" company.
(20min delay)