WWT.V - More upside.


Water Ways Technologies Inc. (WWT.V) through its subsidiaries, is a global provider of Israeli based agriculture technology, providing water irrigation solutions to agricultural producers. WWT.V competes in the global irrigation water systems market with a focus on developing solutions with commercial applications in the micro and precision irrigation segments of the overall market. At present, Water Ways Technologies' main revenue streams are derived from the following business units: (i) Projects Business Unit; and (ii) Component and Equipment Sales Unit.


Water Ways Technologies is capitalizing on the opportunities presented by micro and smart irrigation, while also making a positive mark on society by making these technologies more widely available, especially in developing markets such as Africa and Latin America and developed markets such as China and Canada.


Water Ways Technologies irrigation projects include vineyards, Cotton fields, Apple and Orange orchids, Blueberries, Medical Cannabis, fresh produce cooling rooms and more, in over 15 countries.


Coverage was initiated in December 2019. with a subsequent note on August 2020.


News Releases


Aug. 27 - Reports Q2 2020 Financial Results.


Sep. 4 - Appoints Jay Richardson to the Board.


Sep. 9 - Signs Agreements to Deliver Irrigation Projects in Ethiopia: To deliver four vegetable irrigation projects in Ethiopia with an aggregate value of CAD $680,000. All four vegetable irrigation projects cover an area of 94 Hectares.


WWT.V signed the agreements with a wholly owned subsidiary of Midroc Ethiopia Investment Group, one of the largest investment companies operating in Ethiopia. WWT.V expects additional orders in the coming years. 


Sep. 10 - Expands Its Ethiopian Business and Receives an Order for a Gold Mine in Ethiopia: The water supply system valued at CAD$325,000 will supplies water to the Meli Gold mine in Northern Ethiopia, using a unique pumping system from available wells. WWT.V expects to recognize revenue in Q4 2020.


Sep. 21 - Announces Shares for Debt Settlement: Issuance of an aggregate of 828,077 Common Shares to a total of 5 service providers in settlement of an aggregate amount of $54,965.41 owing to the service providers.


Oct. 13 - Receives CDN$1.2M Orders to Deliver Soil Moisture Conservation Supplies in Canada and North Africa: Received several orders to deliver degradable plastic mulch (“Mulch”) to customers in Canada and North Africa.


The Mulch will be used to increase soil moisture conservation, thereby reducing water usage and related costs. The orders totaling CDN$ 1,200,000 are to be delivered in the next six months (of which the $488,000 of orders due from North Africa are conditional on the Company receiving an Irrevocable Letter of Credit from the purchaser).


Nov. 24 - Receives First Blueberries Turnkey Irrigation Project in China: Announce that its 73% owned Chinese subsidiary, IRRI-AL TAL (Shanghai) Agriculture Technology Company Ltd. has signed a contract to deliver and install a 200,000 sq./m turnkey irrigation project, for blueberries, in the Province of Yunnan in China.


IRRI-AL TAL (Shanghai) is expected to deliver and install the project and recognize revenue partially during Q4 of 2020 and partially during Q1 of 2021. The total value of the order is approximately CAD$460,000.


IRRI-AL TAL (Shanghai) signed the contract with a subsidiary of Driscoll, one of the largest berry growers operating in the world, controlling roughly one-third of the berry market.


WWT.V expects to receive additional projects from the Client in 2021 assuming the successful installation in Q1.


Nov. 30 - Reports Q3 2020 Financial Results.


Dec. 29 - Announces Appointment of New Financial Officer: Effective January 1, 2021, Mr. Guy Nathanzon will serve as Chief Financial Officer ("CFO"). He will oversee all accounting and finance functions, while providing strategic recommendations and support Water Ways' evolving growth strategy, vision and mission.


Jan. 7 - Strong Backlog of Orders to Deliver Irrigation and Agricultural Components Totaling Over CDN$3 Million: Received orders totaling over CDN$3 Million, since October, 2020 of which CDN$1.8 Million have not been disclosed.


The orders received included: 1. Orders for agricultural and irrigation supplies from customers in Canada and the U.S. totaling over CDN$2.4 Million of which CDN$1.2 Million have not been previously disclosed; and 2. Orders for irrigation products from a distributor in Peru totaling over CDN$0.6 Million.


Water Ways expects to recognize most of the revenue from these orders in Q1 of 2021.


Jan. 19 - Signs a CAD$1.3 Million Irrigation Project in Central Asia: Uzbekistan. The value of the project (aggregate revenue) is CAD $1,300,000. The project servicing a field of several crops including: 250 hectare of carrots, potatoes and corn and a 40 hectare almond grove, will be irrigated using the WWT.V’s drip irrigation technology.


Water Ways expects to recognize revenue from the project within the first 6 months of 2021. Ohad Haber the Company's Chairman and CEO commented: "I am extremely pleased with the signing of the contract. This is the second large scale irrigation projects we are implementing in Uzbekistan. In 2019 and 2020 we completed a large cotton irrigation project and we were chosen to lead this project as a result of the reputation we gained by completing the cotton project."


Jan. 28 - Announces a CAD$233,000 Order for Its Medical Cannabis IOT Precise Irrigation and Fertilization System: Received the fourth commercial order in Israel since December 2019, for its Medical Cannabis IOT Irrigation and fertilization systems. The CAD$233,000 order was received from an Israeli Licensed Producer who is currently building a 7,000 Square meters (approximately 75,000 Square feet) facility in Israel. WWT.V expects to deliver and install the system by the end of April 2021 and will recognize revenue within the first six months of 2021.


Feb. 8 -Received an Order for an Irrigation and Fertilization System From South Africa: received its fifth commercial and first international order for its Medical Cannabis IOT Irrigation and fertilization system.


The CAD$160,000 order was received from a Licensed Producer in Southern Africa who is currently building a 10,000 Square meters (approximately 110,000 Sq. ft.) Medical Cannabis Cultivation facility. The system is an Internet of Things ("IOT") controlled irrigation and fertilization system for Cannabis cultivators and growers.


Water Ways believes the system is one of the first in the world that was designed for the specific needs of Cannabis growers and cultivators worldwide. The Company expects to deliver and install the system by the end of May 2021.


Feb. 16 - Signs Largest Contract in Company History; CAD$4M Cotton Irrigation Project in Central Asia: for a large cotton irrigation project in Uzbekistan. The value of the project is approximately CAD$4,054,000 and is to be completed in the second quarter of 2021. Water Ways was chosen to execute the project with the same customer for which the Company completed a very successful implementation of a similar project in Uzbekistan in 2019.


The Water Ways solution deploys fully automated drip irrigation technology across a field of 1,200 hectares of cotton and includes 4 reservoirs totaling 141,000 cubic metre for water security and sedimentation of silt, fed by water channels. WWT.V will assist implementing and optimizing in order to improve the yield and output of the farm.


Feb. 22 - Water Ways $0.06 Warrants to Expire on March 3, 2021. 6,219,141 common share purchase warrants, exercisable at $0.06, originally exercisable at $0.4 (Series 1); and 5,000,000 common share purchase warrants, at an exercise price of $0.06, originally exercisable at $0.25 (Series 2) has been set to March 3, 2021.


Feb. 24 - Signs Its First Irrigation Project in Canada: Canadian subsidiary, Heartnut Grove WWT Inc. ("HGWWT") based in Mt. Brydges, Ontario, signed its first contract to design and construct a complete irrigation project. The project will be delivered to a field of 520 acres growing Roma tomatoes, Bell peppers & cucumbers in Bayham, Ontario.


The project, with an expected revenue of CAD$350,000, will use the latest Israeli-based irrigation technology and is designed by Water Ways' engineers. HGWWT expects to deliver and install the project in the second quarter of 2021.


Mar. 11 -Announces Proceeds of CAD$602,000 Received From the Exercise of Warrants Since February 15, 2021:


Ohad Haber, the Company's Chairman and CEO commented: "We see the exercise of Warrants as a vote of confidence from our shareholders as a result of our recent increase in sales as reflected in recent press releases".


Mar. 18 -Signs Agreement to Deliver a Strawberry Irrigation Project in Ethiopia: value of CAD $330,000 subject to receipt from the client of an irrevocable letter of credit. Agreement with a wholly owned subsidiary of Midroc Ethiopia Investment Group. Previously, Water Ways successfully implemented projects with the Group in 2020.


The strawberry irrigation project covers an area of 20 hectare of greenhouses, using Israeli drip irrigation technology. Water Ways expects to recognize revenue from the project in the second and third quarter of 2021.


Mar. 25 - Chinese Subsidiary Experiences Strong Growth, Generating Projects Exceeding CAD $750K: Chinese subsidiary, IRRI-ALTAL (Shanghai) Agriculture Technology Company Limited has received orders for the following two projects with a value exceeding CAD$750K to be delivered in the second and third quarters of 2021.


1.Planning, supply and installation of an advanced net house, trellising and irrigation system for a 13.5 hectare apple orchard in the Shandong Province. 2.Planning, supply and installation of an advanced irrigation and fertigation system for a 11.5 hectare apple orchard in the Shanxi Province.


Ohad Haber, President, CEO and Chairman of the Board of Water Ways, commented: "2021 has started with strong sales in China after our subsidiary, IRRI-ALTAL (Shanghai), delivered three projects in 2020. I am confident that we will see additional orders and further growth in the next months in China".


Summary


WWT.V has been re-valued in the past three months from a base of $0.065 to $0.07 cents to about $0.11 t0 $0.12 cents.


Earnings

FY 2020 was off to a good start with Q1 2020 earnings, but COVID-19 had a material impact on the business.

Overall, Q2 and Q3 2020 revenues came in much lower than respective quarters in FY 2019. COVID-19 restrictions in addition to some changes in dates of revenue recognition are at issue. Per Q3 2020 MD&A (number in $USD):


The revenues from service projects for the nine months period ended September 30, 2020, amounted to $1,651 compared to $3,235 for the nine months period ended September 30, 2019. The decrease is due to the change in the date of recognition of revenues from the projects and the delay in the Company's ability to finalize existing projects or obtain new projects.


However, Product revenues were much higher than FY2019.


Whether WWT.V will be able to surpass FY 2019 performance is unknown, but YTD 2020 Product sales have already eclipsed the whole of FY 2019. This is positive given circumstances and aligns with WWT.V predictions:


The Company believes that the Event (Covid-19) is an opportunity for the worldwide smart irrigation business. The Event has proved that countries need to be self-sustainable for their food supplies in times of world crisis.


The Company believes that there will be a growing demand for smart irrigation in countries that experienced shortages in food supplied during the Coronavirus crisis as they will seek to grow crops domestically.


Financing

No release were issued which is somewhat unusual given the Cash & Equiv. reported in Q3 2020 but as per MD&A:


In order to assist with meeting short-term financial needs to fund operations, as of September 30, 2020, Water Ways Technologies has access to the following sources of financing: credit lines with a major Israeli bank totaling approximately $785 and access to supplier credit of 180 days with several key suppliers. In addition, Water Ways Technologies aims to manage liquidity and potential credit risk in relation to customer receivables though use of letters of credit and trade insurance policies to reduce fluctuations in its liquidity position.


In addition, WWT.V recently disclosed proceeds of $0.6M from the Exercise of Warrants.


Order Activities

WWT.V has reported orders from a number of countries around the globe: Ethiopia ($1.33M), North Africa ($0.48M), Canada and US ($3.46M), China ($1.21M), Peru ($0.60M), Uzbekistan ($5.3M), South Africa ($1.6M) and Israel ($0.23M).


In essence a total of $14,25M in order (including backlog) were released in the last eight months. The record size order from Uzbekistan at $4M which represents nearly 25% of the FY 2019 revenues was definitely the highlight of the period.


The Water Ways solution deploys fully automated drip irrigation technology across a field of 1,200 hectares of cotton and includes 4 reservoirs totaling 141,000 cubic metre for water security and sedimentation of silt, fed by water channels. WWT.V will assist implementing and optimizing in order to improve the yield and output of the farm.


Otherwise, orders from North America, China, Ethiopia and South Africa were on the rise.


Appointment

Jay Richardson (Board Director) and Guy Nathanzon as new CFO were reported.



In Short

The penetration of each of the subsidiaries in their respective markets is by far the key achievement for the period. This has led to a re-valuation of the company. As Covid-19 restrictions subsides, Service revenue should also return.


Notable: Global food self-sufficiency in the 21st century under sustainable intensification of agriculture.


Currently, 500 million small farms world-wide (most of which are rain-fed croplands), provide approximately 80% of food consumed in the developing world (United Nations 2018). Hence, by sustainably expanding irrigation onto rain-fed croplands in locations where sustainable irrigation is deemed feasible (Rosa et al 2018, 2020), crop production and food availability can be increased without incurring in the environmental impacts arising from the expansion of the land footprint of agriculture into pristine ecosystems


As such, The drip irrigation market is projected to grow at a CAGR of 10.8%, to USD 9.3 billion by 2025. Drivers cited:


a) Government Programs and Subsidies, b) Efficiency in the Use of Water in Drought-Prone Areas, c) Cost Efficiency in Agricultural Production and d) Enhanced Crop Yields.


Hence, this story is likely to have more upside.



DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.

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