Friday, November 08, 2019

OriginClear: Shareholder Calls Time

Earlier this week OriginClear (OCLND:  OTC) announced the sale of a modular water system to a customer planning to set up retail operations in a rural area with no connection to municipal services.  The water treatment technology developer has struggled to gain traction for its products, so the headline was welcome news.  However, a comment posted with the news article sounded a different tone.  The poster rather snarkily points to the low price point of the water system and that after so many years in development, OriginClear needs many more than just one system sale to deliver respectable returns.
Point taken, but let’s get some facts before we dismiss OriginClear altogether.

Tuesday, November 05, 2019

Little Biotech that Can

PreveCeutical Medical (PRVCF:  OTC or PREV:  CN) is an early stage life sciences company with a focus on compounds using natural substances for health and wellness products.  The company has licensed a selection of natural health products for sleep, pain and anxiety treatment, including a commercially-proven blue scorpion venom solution.  PreveCeutical intends to bring these unregulated products to market to generate revenue in the near-term in order to finance an ambitious research and development program.

Through its research partner at the University of Queensland in Australia, the Company is pursuing a wide-ranging drug research platform.  When the therapeutic candidates reach commercial stage, the arrangement gives PreveCeutical exclusive license of resulting technologies and provides for royalties to the University’s commercial arm, UniQuest, from future revenue streams. 
Recent advances demonstrate the team’s dedication and tenacity in moving forward with PreveCeutical’s research and development agenda despite lean capital resources.  The following list of accomplishments helps distinguish the company as the ‘little biotech that can.’

Friday, November 01, 2019

MEOH: Love-Hate Investment Case

Me mind on fire,
Me soul on fire
Feelin' Hot Hot Hot!

The world’s largest supplier of methanol, Methanex (MEOH), reported third quarter financial results earlier this week.  The multi-continental operation recorded a $10 million net loss on $1.8 billion in total sales in the three months ending September 2019.  The numbers were disappointing as about an equal level of production in the same quarter last year produced significantly higher revenue and profits.  Declining methanol selling prices was cited as the primary cause of top-line erosion and shrinking profit margins. 
What is management’s solution to flagging performance?  Expansion! Methanex is building a third production facility in Louisiana next to two existing facilities.  The location gives the company easy access to natural gas supplies and makes it possible to leverage existing operational and managerial talent.  When the third facility comes online, production will be expanded by 1.8 million metric tons.  Management also disclosed during the recent earnings conference call that a new natural gas source has been pinned down to supply the company’s Chile production facilities.  The Chile plant is undergoing refurbishment.
Image result for methanol image
Methanex leadership is likely taking a long-term view on methanol demand, seeing healthy trend into the future.  Popularity of methanol-based transportation fuels is a key demand driver.  Methanol is used as a gasoline component for internal combustion engines and methanol-fuel vehicles are gaining popularity in China. Industry research firm Research and Markets has predicted that the market for methanol could grow at an annual compound rate of 5.6% for the next five years.  The forecast acknowledges that overall methanol demand is negatively impacted concerns for health and environment.  The mixed news for methanol derives from its principal source  - steam reformation of methane in natural gas.

Tuesday, October 29, 2019

Greed, Pain and Shame in Coal Bankruptcies

Yet another coal company has declared bankruptcy.  Murray Energy, the largest private coal mining company in the U.S., has sought Chapter 11 bankruptcy protection after failing to meet loan payment deadlines.  A forbearance agreement has been reached with creditors representing more than half of the debt.   The arrangement is hoped to give Murray’s leadership time to restructure the company. 
Murray’s founder and chief executive officer, Robert Murray, is typical of coal industry leadership  -  quick to bombast and belligerence where reason and strategy might have worked better.  Instead of acknowledging that a cheaper competing product in the form of natural gas could permanently erode market share, Murray appealed to a kindred spirit in reality TV personality turned politician Donald Trump.  Like Trump, Murray thinks in superlatives, calling himself the King of Coal. In the hopes of a more favorable business environment, Murray supported Trump’s political campaign and plan to roll back safety and pollution regulation, withdraw from the Paris Accord, and repeal the Obama Administration Clean Power Plan. 
For the most part, Trump delivered on these campaign promises.  Unfortunately, the measures resulted in not much more than an assault on the environment and did little to save the coal industry.  The price of natural gas is still far lower than coal.  As recently as last week, the price of natural gas at the Henry Hub was $18.27 per megawatt hour while the price of Central Appalachian coal was $29.44 per megawatt hour.  Uneconomic coal-fired power plants are likely to continue closing and orders for coal will continue to decline.