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It’s boom time for clean tech stocks

A Carnegie Wave Power device

Companies on the Australian CleanTech index are outperforming the ASX200 and the ASX Small Ordinaries index, according to data released today by Australian CleanTech.

The CleanTech Index, comprising 64 firms with a combined market capitalisation of A$23.7 billion, rose from 50.03 to 52.96 over the month of May 2016, recording a 5.9 per cent gain. This compared to the ASX200 gain of 2.4 per cent and the ASX Small Ordinaries Index gain of 4.0 per cent.

The CleanTech Index has also outperformed the wider market over the past 12 months, leading the ASX200 by a massive 21.7 per cent.

Australian CleanTech managing director John O’Brien John O'Brien

Australian CleanTech managing director John O’Brien

Founder and managing director of Australian CleanTech John O’Brien said part of the reason the sector was performing so strongly was due to recovering ground following slumps in previous years. The Index is also being boosted by the presence of strongly performing New Zealand renewable energy firms including Mighty Rivers and Meridian Energy, which are listed on the ASX as well as the New Zealand stock exchange.

Renewable energy stocks generally are doing well, he said, as investors now have renewed confidence in the Renewable Energy Target. Some, such as Carnegie Wave Power, are also gaining ground as they move out of the research and development phase and start generating revenue from energy sales.

“There is increased demand for the shares,” Mr O’Brien said.

The best performing sub-index for the month was the Australian Efficiency & Storage Index with a 12.3 per cent gain, led by strong gains for Orocobre and Galaxy Resources as the value of lithium resources for energy storage continues to increase, with prices for lithium carbonate rising by 47 per cent compared to the 2015 average.

In total, 14 companies experienced share price growth greater than 20 per cent. Others include:

  • Emefcy group, developers of bio-energy systems and energy-efficient wastewater systems
  • CleanTeQ, developers of water purification and metals recovery systems
  • Genex Power, developers of the 50MW Kidston solar project and the 330MW Kidston hydro pumped storage power generation projects in Northern Queensland
  • Greenearth Energy Limited, a renewable energy company active in industrial energy efficiency, CO2-to-fuel conversion and conventional geothermal resources in Australia and the wider Pacific Rim
  • Quantum energy, developers of heat pump hot water systems
  • Infigen energy, renewable generation development and operation, including Capital Precinct wind and solar assets that supply the ACT
  • Intec, developers of the “Intec Process” that produces base and precious metals from industrial waste
  • SECOS Groups, manufacturers of bioplastics and sustainable packaging
  • Ralph Sarich’s Orbital engine and technology enterprise
  • Australian Ethical Investment
The Cleantech Index

The CleanTech Index

Mr O’Brien said there were few solar firms performing strongly in the index because the majority were still private firms.

There are also not many of the data-driven energy-efficiency and energy management tech firms listing, he said.

Mr O’Brien said that for the tech-based firms, it is a lot cheaper for them to get to market, as they are able to generate returns with a lower capital spend requirement compared to an entity like Carnegie, which invested $90 million in getting to the point it could start earning revenue.

There are, however, a growing number of microcaps that are performing well, he said, such as Eden Energy, developer and supplier of a low-emissions carbon-fibre concrete product, and one of the top performers.

The minerals and high-tech metals recovery firms are also performing strongly, as there are quite a few companies that have recognised the money that can be made from the waste streams of the mining industry.

“At the moment it is still more about opportunism,” he said.

According to Mr O’Brien, there will be increasing activity in the reprocessing and recovery-from-waste sector through time due to the necessary shift towards a circular economy.

But there are some firms that are operating in the metals space that are more impacted by global prices for virgin commodities. The more traditional metals recycler SIMS Metals Management, which obtains its resource from post-consumer and industrial metals recycling, showed the greatest market capitalisation loss of any firm in the index.

In terms of the global trends, Mr O’Brien said that if the goal was to create jobs, investment and trade, the cleantech sector was one the government should be backing.

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