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Modern Water plc (LSE:MWG) took advantage of David Cameron’s visit to China, using the opportunity to announce three new, significant contracts with entities in that country. The announcement was made at 12:41 pm and the Modern Water share price increased sharply almost immediately. Opening this morning at 36.65, the share price jumped to 39.70 in less than 10 minutes. Less than an hour later (1:39 pm) the stock had reach 43.74, an increase of 19.3%. As at this moment (1:48 pm), MWG is continuing to gain value to 43.50.
Modern Water is focused, as it name clearly implies, on a variety of services that provide and monitor clean water, making what we take for granted, available to emerging economies where that commodity is not readily available. MWG designed and developed the world’s first commercial forward osmosis desalination plant bases on its proprietary membrane technologies. The company has offices and operations on six continents.
Executive Chairman, Neil McDougall, used the occasion of David Cameron’s UK-China summit meeting to announce the three new contracts that have given MWG a larger footprint in China. The company has operated in China since 2008, having just announced the establishment of a Shanghai office on 26 November. McDougall said, “These contracts confirm Modern Water’s position as a world leader in forward osmosis technology. Delivering our technology in China for the first time is truly groundbreaking for the company and we are very excited about what the future holds for Modern Water in the country.”
Although financial details were not disclosed, we do know the essence of the contracts.
- Modern Water will act as the sole distributor in the Middle East and as a non-exclusive distributor to other countries outside of China for Hangzhou Water, for its containerized reverse osmosis desalination facilities.
- Beijing Green Science and Technology Company will act as exclusive distributor for Modern Water’s monitoring products. (This was initially announced in October.)
- Two other companies, Ottomen Estate Resources and Hangzhou Water will partner with Modern Water to build China’s first forward osmosis plant. The plant will be built on Xugong Island and will operate based on MWG’s technology. Xugong is about 35 km off of the China coast outside of the mouth of Hangzhou Bay. The island does not appear to have a residential population, but appears to be being used for industrial or military operations.
It appears that this announcement was time to help offset some of the negative reactions to proposed increase Chinese investment in projects in the UK, an idea that is of concern to many people, myself included. I hope to comment on that concept a bit more in the near future.
