Portable Desalination Plants from Modern Water

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With water being an essential commodity and water shortages being discussed regularly on the news, investors are thinking ahead and looking for ways to invest in a technology that will allow us access to the 97.5% of water on this planet that contains salt. However pure-play desalination stocks are not so easy to come by. Many of the top companies involved in desalination are either large construction and engineering firms with a relatively small percentage of their overall business focus being placed on desalination, or smaller privately held companies with a majority focus on desalination but which are not accessible to retail investors. In response to these findings, one of our readers suggested a small UK micro-cap called Modern Water as a possible desalination play.

About Modern Water

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(All numbers in USD)
Founded in 2006, UK based Modern Water (LON:MWG) is a micro-cap stock with a market cap of just $17 million. This minuscule size can be explained in part by the fact that the stock has lost -80% of its value over the past 5 years. The Company is split into the following two divisions:


The desalination component falls within the membrane processes division along with wastewater treatment. This division has an intellectual property portfolio of 96 granted patents across eight main patent families and claims to be the world leader in forward osmosis technology, a desalination technique that uses 30% less energy than the popular method of reverse osmosis. While revenues for this division are currently insignificant, bidding began in 2014 on a $33.8 million wastewater treatment contract which the Company is optimistic about winning. Revenues for the membrane processes division were $55,000 and $88,000 for 2013 and 2014 respectively, none of which came from the sale of desalination equipment. These amounts only represent a fraction of the company’s total revenues, almost all of which come from the monitoring division.

Modern Water’s 2014 Revenues fell -20% from $5.4 million in 2013 to $4.3 million in 2014. Throughout 2014, the company burned through $7.1 million in cash ending the year with $10.5 million in cash remaining. While cost of sales came in at $2.5 million, the Company spent $8.6 million or twice their revenue for the year on General and Admin expenses.

With an extremely poor share price performance, high overhead costs, cash on hand to last about 1.5 more years at current burn rate, and declining revenues, Modern Water does not seem to hold much appeal for investors at the moment. However, during 2014, Modern Water launched a range of packaged seawater reverse osmosis desalination plants branded as “AquaPak” with capabilities varying from 109 to 1,090 cubic yards of water per day. Below you can see the AquaPak 500S which is a compact plug and play unit, and about the size of a standard shipping crate:


Some applications for these portable desalination plants include temporary or emergency water supply, construction site water supply, offshore oil rigs, golf resorts, and hotel complexes. Modern Water expects sales for these units to “materialize in 2015”.

The extent to which Modern Water (LON:MWG) could be considered a desalination play is based on the commercial viability of their new range of portable desalination plants. If meaningful revenues are realized during 2015 then we can begin to extrapolate some numbers to see what sort of growth they might be looking at provided they can scale production for this product range.


Also worth noting is that the Company’s Executive Chairman and co-founder Neil McDougall stepped down at the end of 2014 and the company is currently looking to move to a “more conventional non-executive chairman model” as they look for someone to fill that role. This change in leadership is positive as investors must be very frustrated with company leadership given the dismal share price performance. Hopefully, investors will receive some indication of how well the AquaPak product line is selling without having to wait for the next annual report to be released.


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  1. I am long Modern Water plc. I bought in too soon, I know, because I believe in the technology, However, the recession and the fact that RO desalinization plants already up and running are not economically able to change to FO, has not helped sales, hence the dismal performance.

    However, I am continuing to hold on the basis that trading will improve in 2015, and that with an economic recovery, more entities will want to start desalinization processes as fresh water becomes ever scarcer.

    For those technologically inclined, patient enough, and with investment funds available, a stake in Modern Water plc (LON:MWG) will, IMHO, prove rewarding over time.