$ERII the only pure-play desalination stock in public markets.
Yesterday, Iran struck a Gulf desalination plant. The first time desal infrastructure has been targeted in the Gulf since Saddam destroyed Kuwait's plants in 1991.
Here is why this matters structurally:
- Qatar gets 99% of its drinking water from desalination.
- Kuwait: 90%. UAE: 90%.
- Bahrain: 95%
A leaked US diplomatic cable from Riyadh stated that the Jubail plant "supplies over 90% of Riyadh's drinking water" and the capital "would have to evacuate within a week" if it were seriously damaged.
Water is not a convenience in the Gulf. It is existential infrastructure. And it just became a confirmed military target.
Now here is the disconnect the market has not priced:
$ERII is down 42% from its 52-week high because of an earnings miss driven by three administrative megaproject delays with no connection to the conflict.
Management issued FY2026 guidance on February 25. Operation Epic Fury began February 28. The war is not in any analyst model, not in guidance, and not in the current price.
At $10.61, ERII trades at 17.7x forward earnings cheaper than every peer in the water sector, despite holding the only monopoly product in large-scale SWRO desalination, 65.1% gross margins, and a net cash balance sheet.
Bloomberg published on March 4: "The most precious commodity of this war is water, not oil."
As of today, no major financial media outlet has named $ERII as the pure-play beneficiary of that thesis.
The dots have not been connected publicly. That window is closing.
$ERII $XYL $PHO
