FLC (ASX) Fluence China

Originally posted by Relax1: ↑

@ywtoh @stockrock @jamesc666

It feels like the excitement is coming back, which is good, big things are starting to happen in the background, although the wider market probably doesn't realize it yet. With this BEWG news, it probably pays to keep the excitement in check a little, as we have not yet heard directly from BEWG.

Until we hear from BEWG the scope of R&D they are going to be doing with Fluence, it feels a bit like a CGGC moment. The benefit here is that Fluence are already working with 3 Gorges Group on projects, and they own 15% of BEWG shares, so there is already a directly related prominent industry body that has recognized the quality of Fluence MABR based products. In fact, 3 Gorges may very well have introduced BEWG to Fluence, and asked them to work together to find mutual benefit, as 3 Gorges will be responsible for distributing finance for a lot of projects under the 14th 5 year plan, of which the provincial level plans are only now starting to be released. Now that provincial plans are being released, SoE's will be able to start planning around their targets.

I think BEWG would look at Fluence's current product suite, and feel that they are one of the most flexible single tech's for the rural decentralized sector. To range from 5m3/d to 20,000 m3/d applications, while working in both the cold northern regions as well as the flood prone and desert regions is better than some other tech. Add in that they can now integrate MABR + MBR together in one package in the Aspiral XS, while targeting reuse. BEWG would probably feel that they have the production advantages for the containers at scale though, so there may be a way for Fluence to produce spirals and BEWG to produce a range of standardized containers that they want to use, in the required sizes to suit the 14th 5yp applications and Fluence ship them the spirals for integration. This starts to get into how Fluence can work with partners like this, but ensure that they protect their IP. I'm sure the Fluence team are aware of this and it seems to date to have held up pretty well, considering they have had their designs in the market since 2017.

This could really be a company maker if it works out. But it could also come to nothing like CGGC. We will have to do our best to keep tabs on hows things progress.

Probably important to remember that Hang Shijen will in some way shape how the R&D partnership goes, so her thinking will be crucial.

https://mp.weixin.qq.com/s?search_click_id=8750028270562350727-1632514827404-359002&sub&__biz=MzIyOTczNTc1MA%3D%3D&mid=2247487361&idx=1&sn=98a4b89793b0c6c4d2aa61b179a38f73&chksm=e8bf63a8dfc8eabe777bb7531c4c00f9c7877699b0488d5416f162e67a09c38225acf03c7025&&scene=20&subscene=10000&clicktime=1632514827&enterid=1632514827&fbclid=IwAR1Hk-RwfFLKvUMrBKTqEu8nJ5XhOIgL-DLi7g-ZhvlK9Vsiu5sOUJ0Y_f0#rd

Plus a bit more of her personal story.
https://mp.weixin.qq.com/s?search_click_id=8750028270562350727-1632515013977-373063&sub&__biz=MzU5NTg2MTE1OQ%3D%3D&mid=2247485775&idx=1&sn=ee256c02b06c128db3e3927c2ad25db7&chksm=fe6ac287c91d4b9149d4d8379533696494fe365c2e6091f904f935ab9431053500084b126a0a&&scene=20&subscene=10000&clicktime=1632515014&enterid=1632515014&fbclid=IwAR3zCN1uToK1Rq3hr85Ye_7f76839fI0zMLwch9uDKr0CbxtEcJPiQ_Dhkc#rd

Another talk:
https://mp.weixin.qq.com/s?search_click_id=8750028270562350727-1632515194946-436747&sub&__biz=MzA5NjgxMTMwNA%3D%3D&mid=2650236211&idx=1&sn=7ef41703523b80a77acdad2b450cf73c&chksm=88a9a574bfde2c62dc845f8d3ea550ec7d021aaf9e8d2f0f0acc51f64c71fff007e52665dced&&scene=20&subscene=10000&clicktime=1632515194&enterid=1632515194&fbclid=IwAR0ee1oAd2NWx7bZ7MFm93A6F9JLNYBs4dEUwwJ8IvI5CbRiMgA7nOGvGZM#rd

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Originally posted by ywtoh: ↑

@stockrock. In a word, yes. BEWG's playing in the premier league. Its expertise is in handling complexities and large scale projects.

However, I must temper our enthusiasm. One single project cannot be made up of all MABRs only. From reading the case study above, and link below, and following the industry for the last few years, BOTs like BEWG use a combination of treatment methods and solutions including A20, MABR and even MBR, or a combination of these depending on conditions on the ground, in-fluent types etc. They too want to diversify over-reliance on one supplier. Besides, BEWG has their own MBR plant.

For a brief description of the various types of technologies BEWG employs, see this https://www.bewg.net/en/xwzx/jtxw/2018/09/12/542.html.

https://www.bewg.net/uploadfile/2021/0528/20210528110529690.pdf. BEWG is a behemoth, yet it is more dynamic than the other national SOEs. Have a read of their of Sustainability Report 2020, and you can get that feel that it is more a publicly owned co than a SOE.

On spending on new capacity, it is absolutely the last resort. They will try to schedule production, take on another shift etc before spending money on capex. FLC's CEO of China runs quite a tight ship. As I have said before, we are quite lucky to have him on board.

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Fair points from the both of you, consider my expectations tempered.

I wonder what ever happened to CGGC... the 20m³ Jingmen, Hubei province plant was built... however the follow up wins didn't eventuate (they were targeting 345 waste water treatment plants in Hebei). Never quite got closure on this, we may never know.

But whilst comparisons may be drawn to what happened with CGGC back in 2016... I would hope that management have learnt from that experience, and CGGC being an engineering / construction company is somewhat different to BEWG who is a pure water services and environmental protection services provider... the former builds anything between railroads to power stations, mixed in between those are waste water treatment plants... the latter is 100% in water supply and water treatment facilities.

Management seem to have taken a very different approach as well... the CGGC ASX announcement was price sensitive and the MOU had module targets which sent expectations sky high. The BEWG collaboration is as low key as you'll see for something that could be just as if not more lucrative for Fluence... not even on the ASX, just a news item on the FLC website.. it'll probably make its way on a newsletter soon as well.. but maybe it is a case of once bitten twice shy / keeping expectations low, and if all goes well surprise on the upside.

The other thing to point out would be that CGGC may have acted on 'belief / FOMO' rather than on data. It was also just on the modules, as opposed to FLC's Aspirals which are an end to end product. BEWG would have had feedback from three gorges, as well has the myriad of data generated from the 281 MABR plants in operation. Even though there are no outlandish predictions made by FLC, I'm feeling like this BEWG collaboration has more substance than the CGGC one.