Yes, there is uncertainty as to whether the company will meet their China targets, and as you would be aware, this is hardly a new concern.
Which is why the other development mentioned in the announcement today is so important: namely, the complete acquisition of Phoslock Europe.
It is not ideal for any company to have all their eggs in the 'China basket'.
While the Chinese market offers a great deal of upside potential, the bureaucracy in China moves with all the speed of a clockwork steamroller, and the country has an autocratic and somewhat prickly government to boot.
It isn't hard to imagine that if relations between the Chinese government and that of Australia were to sour at some stage in future, Beijing might retaliate by making life difficult for Australian companies operating in the country.
By comparison, Europe is a much more reliable place to do business, and even if the upside potential may not be as great in the short term, a dollar earned in Europe is probably more valuable than one earned in China, as a company operating in Europe has more certainty that a successful job will lead to repeat business and recurring cash flow.
Thus, the announcement today is quite encouraging, given that we now know that the company is intends to increase their exposure to the more reliable European countries.
Having said that, the short-term upside potential offered by the European markets should not be underestimated, and Germany in particular.
I've mentioned the recent situation in Germany in a few previous posts, and I won't bring it up here again in case I sound like a broken record, but in brief, there is good reason to suspect that the services offered by this company are likely to be in strong demand in Germany over the next six months or so.
(20min delay)
