# D2O - Duxton Water



## System (13 August 2016)

Duxton Water Limited presents an opportunity to invest in Australian Water Entitlements. Income will be generated by leasing the annual Water Allocations, from purchased Water Entitlements, to primary producers over a 3 to 10 year term. It is anticipated that the Water Entitlements will appreciate in value as they are held over the medium to long term. Revenue streams are expected to be regular and predictable and demonstrating low correlation with traditional asset classes. Water Entitlements have historically generated a gross yield of 6%-7% per annum.

It is anticipated that D2O will list on the ASX during September 2016.

http://www.duxtonwater.com.au


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## So_Cynical (4 October 2016)

Bought a few today @ 1.035, order part filled, has been sitting there for a few days..

Duxton water owns water entitlements that they have leased to related party primary producers on a long term basis and will generate a gross initial yield of 5.9% ~ floated a couple of weeks ago @ 1.10 ~ D2O will pay a dividend in the next 12 months and will pass on franking credits.

The Australian agricultural water market is valued at about 11 Billion, D2O is the only listed player, i figure big industrial farms need water thus they have to buy it or lease it, either way they have to pay, Govt's are buying back to improve river flows, no new entitlements will be issued so entitlements will grow in value over the years, always be in demand.

One of the Duxton property's that uses D2O water is called Merriment, here is a brief video of the property and farming practices below.
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## So_Cynical (25 September 2017)

So_Cynical said:


> (Oct 4, 2016)D2O will pay a dividend in the next 12 months and will pass on franking credits.




And with just a week and a half to go, at last the maiden dividend 0.023 CPS 75% franked.

The announcement says that the payment relates to 1 quarter ?? so they will pay quarterly? DRP discount of 3%.

http://www.asx.com.au/asxpdf/20170925/pdf/43mlxyngt9jsn0.pdf


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## So_Cynical (24 October 2018)

Non Renounceable Entitlement Offer, 1 new Share for every 2 existing Shares at an Issue Price of $1.30, its a big cap raising, water is expensive, SP has been going ok and yield is good at around 4.2% ~ 70% franked over the last 3 dividends.

Water for irrigators - D2O is a kind of infrastructure stock, thus defensive.


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## CBerg (24 October 2018)

So_Cynical said:


> Non Renounceable Entitlement Offer, 1 new Share for every 2 existing Shares at an Issue Price of $1.30, its a big cap raising, water is expensive, SP has been going ok and yield is good at around 4.2% ~ 70% franked over the last 3 dividends.
> 
> Water for irrigators - D2O is a kind of infrastructure stock, thus defensive.



I had a look at this back in March and the only thing that stopped me is I get the feeling water access/rights could be one of those things that gets caught up in politics of the drought & Murray Darling water flows. Although I am on the lookout for ways to invest in water I'm not sure this is the one for me.


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## So_Cynical (24 October 2018)

CBerg said:


> I had a look at this back in March and the only thing that stopped me is I get the feeling water access/rights could be one of those things that gets caught up in politics of the drought & Murray Darling water flows.




Water rights and entitlements are very secure, if governments want to change things then they buy the entitlements at market, there is a somewhat robust water entitlements trading market in Australia, politics can make a difference for sure but the fundamentals around Ag production and water make the sector somewhat untouchable. 

Murray Darling water rights have a current combined value of over 13 Billion, politically it would be very difficult to disenfranchise rights holders, political death to any party/govt that didn't tread very very carefully, as evidenced by pretty much nothing happening with the last lot of MDB reforms.


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## Cam019 (31 December 2018)

This is my top pick for the 2019 full year tipping comp.

Reasons: Short, intermediate, and long term trends are up with price recently breaking through some minor resistance. Price tightening up now, could be a little micro pattern with some further upside. I also love the fact that there is no left hand side price action to contend with. Let's see if, and where this one can run to in the next 12 months. Good luck to all!


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## Smurf1976 (30 January 2019)

Down over 9% in the past two trading days.

The company's business seems rather "boring" in that it's a fairly predictable, steady sort of business and not something where they're going to invent the smartphone or find oil etc. That being so, the price seems rather volatile.

Anyone know any reasons behind the recent plunge?

I don't hold, it's just one I've been following since noting more than one person picked it for the 2019 full year competition.


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## So_Cynical (31 January 2019)

Smurf1976 said:


> Down over 9% in the past two trading days....Anyone know any reasons behind the recent plunge?




The share price was up 6.3% on the 23rd and 24th  i suppose its asking a bit much for the price to not decline a little with all the MDB negative news of late.


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## finicky (27 March 2020)

I noticed this one on my 'defensive' watchlist had a good bounce today. I haven't looked a lot into the company.

D2O 3 MTHS DLY


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## InsvestoBoy (27 March 2020)

Is this the same company that runs DBF? Duxton Broadacre Farms?


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## Dona Ferentes (14 May 2020)

after one of the sharpest fall/ rebounds, D2O is puddling along (in a nice way)






announced today  ... " _D20 is pleased to reaffirm its intention to pay a fully franked 2.9 cent dividend in September 2020 and a fully franked 3.0 cent dividend in March 2021_." "_In addition, the Company has advised of a fully franked dividend target of 3.1 cents to be paid in September 2021 and a target of 3.2 cents fully franked to be paid in March 2022, *giving our shareholders 24 months visibility* in these uncertain times._"



> At 30 April 2020, Duxton Water Ltd is invested in approximately $326.8 million of water assets with the remainder of the portfolio held in cash and net current assets. The Company has approximately 169ML ($0.66 million) of water entitlements in its acquisition pipeline at 30 April 2020.





> Whist we have seen retracement in permanent entitlement values over the last three months, the value uplift experienced over the last 36 months reflects long-term drivers rather than the recent drought conditions. Irrigators have over the last 10 years, significantly enhanced their marginal return per megalitre through both more efficient use of water and conversion to higher value commodities.





> At the same time, we have seen significant steps taken to return water to the environment through the Government buyback program which has returned between 20-22% of entitlements that were previously available to the consumptive pool. The combined impact has seen stronger demand for a reducing available water supply and subsequent increase in water prices. Irrigators themselves have been the greatest beneficiaries from this capital appreciation as they collectively own the majority of water entitlements on issue in the Southern Murray Darling Basin (MDB) .


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## Dona Ferentes (14 May 2020)

A similar story comes from the Argyle Water Fund, as diclosed in BAF monthly report


> After many consecutive months of gains, the Argyle Water Fund’s NAV value declined 2.3% in April 2020 reflecting a range of factors. The pullback represents the largest monthly decline to the Fund’s value since inception, but was not at all extraordinary by comparison to other asset classes in the period. Put in context, NAV has declined to January 2020 levels and remains up 13.0% FYTD





> The Water Fund’s performance in April cannot simply be interpreted as a result of rainfall across the southern Murray-Darling Basin, however there is no denying this has had an impact on sentiment. In the first week of May, the Murray River system’s weekly inflow was the highest since mid-August 2017. So far however, the accumulated rainfall has not contributed greatly to critical upper catchment irrigation storages in the sMDB, which remain lower than at this time last year (sMDB at 35% capacity).





> Current BOM forecasts indicate an above average chance of exceeding median rainfall across much of southern Australia into August 2020. Irrigation farmers are therefore optimistic the three year-long drought phase has abated and expected winter rainfall will fill storages in order to guarantee higher water allocation announcements for the 2020/21 Summer irrigation season.  Time will tell if this scenario plays out. But for now, there is limited buying interest for remaining water allocation volumes for the 2019/20 season, but good demand to carry any water allocation volumes forward into the 2020/21 season in case the forecasts are proved wrong.





> The prospect of greater water availability for next season has removed buying pressure from water entitlements in the near term. This has been exacerbated by capital market turmoil. Buyers with appetite to invest in water entitlements have stood aside for the time being, reflecting their continued risk appetite for this asset class relative to others which have experienced far greater price volatility. However, there is no evidence of any panic selling of entitlements – volumes on offer have indeed been very limited. The price correction is more characterised as a reflection of buyers’ standing aside in a cautious approach after many months of consecutive gains. The Water Fund is currently finalising another cash distribution to be paid in June 2020 reflecting income generated from leases of water entitlements and water allocation sales achieved in the 2019/20 season.


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## Dona Ferentes (29 November 2021)

Prices for permanent water entitlements in south-eastern Australia have surged to record highs .... This comes despite a wet year sparking floods and filling the major dams that serve capital cities and the Murray-Darling Basin. The Bureau of Meteorology has warned of more flooding as a wetter-than-average summer befalls an already saturated landscape in eastern Australia.

Water releases from the second-biggest storage on the Murray River, the massive Hume Dam near Albury-Wodonga, have accelerated in recent days as a flood mitigation measure. The dam is 98 per cent full while Melbourne and Perth water storages are at 25-year and 29-year highs. Even the Menindee Lakes near Broken Hill  have overflowed in recent weeks.

But the abundant supply of water across the Murray-Darling Basin has failed to stop a rally in prices for the “permanent” water entitlements that give owners a perennial right to extract a certain volume of water from that river system.

Permanent water prices in the Murray River zone between Echuca and the South Australian border hit a record high of above $8000 per megalitre [million litres] on Thursday, and the chief executive of water brokerage company Waterfind, Tom Rooney, said prices in SA and parts of NSW were also close to record highs.

Mr Rooney said the record prices were partly influenced by banks’ demand for agribusinesses to get a greater proportion of their water from “permanent” entitlements, rather than the highly volatile “temporary” water market, where prices are far more sensitive to dam levels.


> “_You have got cheap money, you have got large demand from agribusinesses that have planted a lot of ground without permanent water backing it, and you have got the banking industry wanting growers to have better security on their water_,” he said. “_We see continued upward pressure on the permanent water price. They’re not making any more of it, in fact they are making less of it.”_




The record prices have come despite the fact the federal government is no longer buying back water entitlements in the Murray-Darling to boost the environmental health of the river system.

Prices for temporary water in the Murray-Darling have slumped in recent weeks, reflecting the abundant supply in the system. Temporary water in Victoria’s saturated Goulburn River system was last week selling for close to $70 per megalitre, down from $350 per megalitre a year ago.


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## Dona Ferentes (8 August 2022)

The recent wet season hasn't diminished trading on water rights. In fact, the ability to make a dollar seems to have been bolstered.

D20 has been buying back shares, as they probably think they're undervalued: "_By 30 June 2022, the Company has bought back a total of 1 million shares at an average price of $1.56 per share since November 2021. The Board believes buying back shares at the current discount to NAV is in the interest of all shareholders_."

An unlisted fund reported near-20% returns, stating that an abundant supply of water across the Murray-Darling Basin has failed to stop a rally in prices for the “permanent” water entitlements that give owners a perennial right to extract a certain volume of water from the river system.


> _“In a wet period like this, you would expect the devaluation of the entitlement. But outside of that little glitch at the start [of the year], they have just continued to trend up_,” Kilter Rural chief executive Cullen Gunn said.






> “_That’s driven by the market becoming more sophisticated with a more mature outlook about what’s going to happen. “In the past, the market was quite short-sighted ... they would say ‘it’s wet now, it’ll be wet forever’ and prices will come off a lot. That’s happened with [the price of] allocation in the spot water market at the moment. But the entitlements have trended up this whole year. That and the lease rates have helped our performance._”


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