Rino Intl (RINO) Gets $117 Million 10YR Desulphurization Contract, Upgrade to Buy, Shares Up 10%

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09:26:05 am on January 22, 2010

Rino Intl (RINO) has been hit hard over the past two weeks after a torrid run this year, but is seeing a nice recovery this morning on news the company has landed a $34 million desulphurization construction and $84 million operations contract with Shougang Jingtan Iron & Steel.  The contract includes the design, construction and installation of two Semi-Dry Flue Gas Desulphurization Units which are expected to filter out more than 90% of the sulphur dioxide produced by the plant.  The design has already been initiated with construction expected to be completed by 2010. 

The construction contract terms don’t appear all that favorable for Rino, but hey, a contract is a contract.  The company will receive only $4 million one year AFTER the FGD units have received product approval by the customer and the State signs off on the environmental side.  The rest of the payment will be paid out in yearly installments of $3 million with 5.75% interest.  It will take 10 years to realize the full value of this contract!  However, the company has a 10 year $84 million operations contract that will commence upon approval from the State EPA.  RINO will receive $8.24 million annually through monthly installments, but the company will be responsible for supplies and staffing which looks like will be $6.21 million annually according to the press release.  Ok, so not quite as lucrative as the headline would have you believe after you factor in the costs and the time frame of the contract, but a win is a win.

Also boosting the stock was a Buy initiation at Standpoint Research.  Hat tip to Street Insider for the following analyst comment:

“RINO International has dropped by 30% in the last ten days and has created an attractive [but probably not perfect] entry point for investors with an 18-36 month time horizon. The shares are now trading at < 2X our 2011-2012 estimate for revenues. This is an attractive valuation for a company with high profit margins. The stock sold off as the market declined this week as it is volatile and very high-beta. Additionally, the baby was thrown out with the bath water and most Chinese stocks were dumped on news of Chinese government tightening in order to prevent a real estate bubble (and other bubbles). RINO should not have sold off, as the company is involved in cleaning up the environment and this is one area the government will not be compromising on.”

:: >>> Click Here For Your FREE Rino Intl Analysis

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