Yesterday I was catching up reading over the posts from the past few days. Some interesting commentary and analysis there, both from long-term holders as well as from some new posters.
I was away for about a week in a remote part of Indonesia, attending the wedding of a relative in a region with limited internet access. When I finally crawled out of the jungle and got a chance to look at the ASX website, I felt like Rip Van Winkle. PET, which had the superficial appearance of a 'penny dreadful' stock just a week ago, now has the look of a main-street stock.
As Mickem noted in a previous post, it would be reasonable to assume that numerous fund managers are soon going to be running the ruler over this company. The prospect of a maiden dividend should also help turn some heads, especially with local interest rates now at rock-bottom.
I'm probably not going to post here much in future, as I have some trouble keeping up with the busier threads, and the PET thread (thankfully) now falls into this category. In my spare time I am a researcher/ writer, and one of the main reasons I post on Hotcopper is that it provides a good platform for sounding out ideas and allows me to keep my hand in writing, a skill which I don't get much of a chance to practice in my regular line of work. Although I am now shifting my focus more to other things, I will however continue to keep an eye on this thread in future.
In a post a few days ago, Dry Cow made mention of the recent heat wave in Europe. This subject ties into some research I have been doing over recent weeks, and I thought it might be of some interest here.
When I've been playing with Google Trends over recent weeks, I noticed that there seems to be an interesting relationship between searches for the terms 'Cyanobacteria' (which seems to be the most common algae-related search term) and searches for the term 'Heat wave'.
The chart below, taken from Google Trends, shows the frequency of searches for these two terms around the world over the past ten years. 'Cyanobacteria' searches are represented by blue, and 'Heat wave' searches by the red line.
In the above chart, there are two points that I feel are of particular significance.
1). Firstly, notice how the searches for the term 'heat wave' (shown in red) seem to be rising in a steady upward trajectory over time, with searches hitting a record high in 2018. That jump in searches for 'heat wave' last year also coincided with a surge in searches for the term 'cyanobacteria'.
Note that although the volume of worldwide Google searches rises by about 10% each year, the volume growth in searches for 'heatwave' on Google since around 2009 has far exceeded this.
My strong suspicion is that the number of Google searches for terms such a 'cyanobacteria' or 'heatwave' is broadly reflective of the level of concern around these issues in the world at any given time, at least for those countries in which Google is widely used. Thus, the large number of searches for these two terms in 2018 indicates that during the summer-time that year a record number of people in Google-using countries were concerned both about the heat and the extensive problems with algae.
Further, the fact that a large spike in 'Heat Wave' searches coincided with a similarly large spike in 'cyanobacteria' searches suggests that the heat in many countries was so extreme it was prompting an explosion in the growth in blue-green algae, and indeed, there is plenty of evidence from other sources backing up this conclusion.
This is a classic supply/demand crunch type situation. In Germany in the summer of last year, for example, extreme heat drove many people to their local water-hole in the hope of cooling off. Upon their arrival at the local lake, however, they would all-too-often be confronted by signs declaring 'Baden Verboten!', and their hopes of cooling off were thus dashed due to the blue-green grinch.
Thus, at the very time that recreational swimming areas are most in demand, the high temperatures also mean that many swimming areas ended up being closed as a result of algae contamination. Naturally, this leads to increased demand for products like phoslock, and I suspect that the increasing severity of heatwaves around the world has been a key driver underlying the strong growth of this company over recent years.
The chart showing the rising trend of searches relating to these two terms might also indicate that the world is undergoing a 'climate reset' type of situation, and for many countries plague-proportion algae in the warmer months might now be the new normal.
There is reason to suspect this situation is leading to changing perceptions of the phoslock product. Increasingly, in many countries, phoslock seems to be starting to be viewed as a more a necessity rather than a luxury, perhaps comparable to the situation with fluoride in drinking water.
2). The second feature that I thought notable in the above chart from Google Trends is the record number of 'heat wave' searches worldwide just within the past few weeks, shown by the spike in the red line on the far right of the above chart. The volume of searches so far this year even exceeds the number of searches for the same term last year by about 40%. It should be noted that most years searches for 'heat wave' don't peak until July, so the worst of the heat may not be over this year.
Potentially, this could lead to major algae problems in many countries, as we saw last year in places like Canada, Florida, the UK, Germany, and indeed most of northern Europe.
This isn't a given, by any means: last year, the horrible algae problems in these regions was caused by a combination of heat and a lack of precipitation. While we've had heat in spades so far this year, rainfall might help dampen the extent of the algae problem. Even so, with record breaking heat in many areas of Europe and North America (Alaska is being particularly hard hit at time of writing), I'd guess there would likely be serious algae problems in some places, and Europe and North America are key markets for Phoslock.
In summary, the evidence suggests that in the short to medium term, Phoslock is likely to see very strong growth not just from China, but also in regions such as North America and Europe, as the increasing severity of heat-waves in these areas are providing ideal conditions for problematic blue-green algae.
As a result of the extreme heat, which is reflected by the recent surge of 'heat wave' searches on Google Trends, in some countries we are likely to see terrible problems with cyanobacteria this year, as we saw and places like Germany and Canada last year. Thanks to that recent major Chinese lake contract, however, this year the company will be much better placed to fully capitalise on this type of situation.
(20min delay)