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28/02/18
21:19
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Originally posted by Wilson4
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Three things stood out for me in today’s announcement that in my view may have contributed to the sell off:
1.
30 Jan announcement:
Backlog ofUS$75 million anticipated to converted into revenue in 2018.
No guidance was given of when in 2018 but IMO most investors probably assumed earlier in 2018 rather than later because it slipped from 2017 into 2018.
28 Feb announcement:
Visibility of forecasted 2018 revenues is high, with approximately 70% (US$75 million) covered by the current backlog expected to be recognized in 2018.
Based on current backlog and pipeline, and consistent with historic experience, the Company anticipates bookings and revenue to be weighted to the latter part of the year.
So whilst this information is not factually different, today’s announcement does provide additional guidance of when in 2018 the 75M is expected to be realised. Time value of money for 75M is a pretty big deal IMO and may not show up in the quarterly’s until Jan 2019. Perhaps the market was pricing this in today’s sell off. Additionally, it could be seen as moving of the goal posts ever so slightly further afield and is now at a higher risk of further slippage (into 2019?).
2.
30 Jan announcement:
Strong momentum building in China with several opportunities in advanced stages of negotiation that are anticipated to be finalized after Chinese New Year and into Q2 2018.
28 Feb announcement:
There is strong momentum building in China with several opportunities in advanced stages of negotiation and anticipated to be finalised in the first half of 2018.
No mention of Chinese New Year which IMO may have caused investors to believe this time frame has either blown out or some negotiations may have fallen over / stalled? Could be reading too much into it but IMO the detail is important and this is disappointing. IMO the market was expecting an announcement of sales in China fairly soon after the Chinese New Year – late Feb – early March. Not any more they’re not.
3.
14 Sep 17 announcement:
According to the confidential MOU (100M USD Africa project), a construction agreement will be negotiated and signed between the parties by the second quarter of 2018.
28 Feb announcement:
Exclusive memorandum of understanding (MOU) signed with an African nation
to design and construct an advanced water treatment plant.
No mention of timing or the value in today’s announcement. Why wouldn’t you mention a 100M USD contract is on schedule to be signed in the next 4 months?
Overall. I get the feeling that management might be positioning themselves to back track from over promising and the need to softly inform the market of actually underdelivering… All IMO but today’s trading was disappointing.
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Your observations are very astute. Unfortunately the company has a history of "under delivering" relative to their announcements especially the past misleading announcements indicating huge near term sales of MABR in China. Potential investors are very responsive these days to the word "China" which in the case of this company caused sp to run to about a dollar on a few occasions only to retreat to current levels as China hopes become increasingly deflated with time. A long waiting game I think it will be before sp return towards a dollar. Others may have different views about the company or share price decline and they are welcome to them.