Clean TeQ Water Ltd (ASX:CNQ) has maintained its 'buy' valuation from Pitt Street Research, with the 12-month share price target also remaining at A$1.83 per share.
The analyst reiterated its valuation after the company delivered a solid December quarter, growing quarterly cash receipts to $3.8 million from $1.6 million and securing new distribution agreements.
Clean TeQ’s shares are now trading at A$0.64, up 2.4% on the previous close.
The following are excerpts from Pitt Street’s Research Report:
Solid quarter
Clean TeQ Water Ltd (ASX:CNQ) completed a solid December quarter, growing its quarterly cash receipts from $1.6 million to $3.8 million. Driving the growth was progress being made across several of the company’s projects.
NESR distribution agreement
In November, the company entered into a five-year exclusive distribution agreement with the National Energy Services Reunited Corp (NESR) to promote the company’s unique water treatment and reuse solutions to oil and gas companies in the Middle East.
The deal can be viewed as an expansion trigger for CNQ to promote its HIROX technology to prospective customers in the Middle East and North Africa (MENA). It is expected to translate into further contract wins over the medium term.
Pact to promote BIONEX technology
In November, CNQ signed an exclusive three-year distribution agreement with MCC Energy Conservation and Environmental Protection to promote its BIONEX technology.
CNQ will work with its partner to promote its green technology across the steel sector in China, helping steel producers to reduce their operating costs and carbon footprint. The first large scale plant is scheduled to be commissioned in the coming weeks.
Launch of PHOSPHIX technology
The company also launched the new PHOSPHIX technology to enhance its portfolio by helping municipalities and industrial customers in removing and recycling phosphorus from their wastewater while cutting the operating cost to half.
We believe CNQ’s innovative technology, along with the launch of new products, will create opportunities to grow its business in key markets across the globe.
Townsville Project Update
Townsville City Council will issue a new tender due to a change in the scope of the Recycled Water Treatment Facility project. CNQ intends to participate in the new tender, given its experience and understanding of the project
Valuation range of A$1.83
In our research update on CNQ from November 2021, we valued the company at A$1.83 per share in the base case and A$2.37 per share in the bull case, using the relative valuation model. Following the distribution agreement with NESR and MCC Environment, we reiterate our A$1.83 per share valuation.