Two weeks after successfully booking several government contract renewals in South Korea, Aussie tech company X2M Connect (ASX: X2M) has signed three new contracts in China with its long time client LianQing to supply water quality sensor hardware and related accessories. 

Valued at a total of approximately $1.8m, these contracts will bring the total China revenue so far in FY23 to approximately $3.4m, surpassing X2M’s China revenues in FY22. 

These contract wins signify the advancement of X2M’s growing footprint in China. This involves establishing a business base in the country through the sale of hardware, then following up these sales with connection of devices to the X2M IoT platform. 

X2M CEO Mohan Jesudason commented, “These China-based contracts represent further steps in our efforts to validate the X2M strategy. We are pleased with the growth that continues to be recorded by our Greater China business. These latest LianQing contracts clearly demonstrate that our stated China growth strategy is now piece-by-piece being delivered.”

Focusing on delivering productivity improvements, cost savings and improved public safety, X2M has supplied its patented proprietary Internet of Things (IoT) solution mostly to enterprise and government clients in the utilities sector in the Asia-Pacific region. The solution connects devices such as water, gas and electricity meters and other utility sensors to the internet, enabling data exchange and the remote control of these devices. 

X2M’s business model consists of revenue from the sale of hardware and monthly subscription fees under Software as a Service arrangements. It is currently distributing solutions to more than 370,000 devices connected to the IoT platform, providing real-time information and control to clients operating over multiple radio technologies. 

A returning client, LianQing previously has signed six contracts with X2M between 2020 and 2022, all for water quality sensor hardware and related accessories. These contracts had been a great aid for X2M in establishing a footprint and growing presence in the region, contributing to approximately $2m in total combined revenue. 

Other than the LianQing projects, X2M has also been contracted by the Baoding City government in June 2022 to deploy approximately 22,000 water meters with valve control into the city, as a part of a river water replacement project in the district which has a population greater than 620,000. There has been a significant effort in China to improve water distribution and management from the source to the consumer. 

In the first half of FY23, the Company reported revenues of $9m, a 96% increase on the previous corresponding period (pcp). EBITDA loss and loss after tax amounted to $2.1m and $2.9m, which were an improvement of 30% and 55% on the pcp, respectively. Improvement in loss after tax was driven by improvement in EBITDA as well as one-off expense in the prior period related to the IPO. X2M also managed to increase the number of its enterprise/government customers to 58, up 38% on the pcp. 

Going forward, X2M will look to continue its global expansion, with subsidiaries already operating in Japan, South Korea, Taiwan and China.