Hydrodec’s business is founded in a proprietary method of re-refining transformer oil by taking the toxins out so that it can be reused. It has effectively created its own market, allowing for the collection and resale of transformer oil at far reduced prices from the oil’s initial costs. The recycled oil, known as Superfine transformer oil, allows businesses in the electrical industry to save money, time and the environment.
Over the past several years since Hydrodec’s inception in 2004, the company has seen a number of minor setbacks which have deflated its price in the markets. For instance, it celebrated the opening of its first major refinery in October 2008, yet soon after suffered from a lack of working capital because its expectations for growth were not conservative enough. Hydrodec has been seen by many investors as a risky long-term investment, full of potential yet also full of potential losses. This is in part due to the fact that it is the only company of its kind providing PCB-removal services from recycled oil.
As of May 2011, Hydrodec has utilised a £2 million debt financing solution to help purchase feedstock and fund recent growth. Its recent investments around the world, especially in Japan where recycled transformer oil is in high demand, have made this debt financing a smart move in the eyes of many investors. However, there is always the worry that capital won’t flow as strongly as the company hopes that it will, due to the relative lack of similar companies for comparison. This keeps the price of Hydrodec stock volatile, which makes any investment in this AIM stock potentially quite valuable.
In the future, Hydrodec seeks to expand its business to cover other types of machine oil including hydraulic oils. This may make an investment in this stock a good idea over the medium to long term.