The Envirosuite Ltd (ASX: EVS) share price has now more than doubled from 13 cents on September 5 to 29 cents today after the 'environmental management technology' company announced a deal that secures it a "strategically funded entry to the China market."
The deal will see Envirosuite place 50 million shares to its Chinese backer Mr Zhigang Zhang at 8 cents per share coupled with performance options over plenty more shares down the line.
In return Mr Zhang, who's reportedly a 'prominent leader' in the Chinese environmental protection sector, is tasked with delivering $10 million of revenue from China by December 31 2021 in order to have further performance options over shares vest.
Envirosuite offers air quality management hardware and technology, which means the polluted urban and industrial environments of China are a potentially big market for it.
Notably two different directors of the business acquired more Envirosuite shares of their own on-market just a week prior to the announcement.
This goes to show how director or insider buying can often be a good indicator to outsiders as to how a company is travelling. Another company that's also seen heavy insider buying recently is Dicker Data Ltd (ASX: DDR).
Envirosuite now has a market value around $115 million, which looks reasonably high to me given it reported a net loss of $6 million on revenue of $7.7 million for the financial year ending June 30, 2019. For now then Envirosuite looks a speculative bet and I am not a buyer of shares.
