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Tuesday, June 16, 2009

RINO.OB - Amazing Growth - Compare to Coming DGW IPO

There is an exciting IPO scheduled to trade the week of June 22nd. Duoyuan Global Water (DGW) They are a provider of water treatment equipment in China. China has a water scarcity issue so this is one of the hottest sector to me. Water and Air industry in China. By my calculations DGW would have done approximately $1 EPS with the post-IPO share count for 2008. The IPO is expected to price at $13-$15 for a 13-15 p/e and I would guess this gaps open much higher. The problem with hot IPO's in many cases is they gap so high that the only people that make money are the people who were able to participate in the IPO shares. I think I found a much better stock.

RINO.OB - RINO International Corporation, through its direct and indirect subsidiaries, including Innomind Group Limited and Dalian Innomind Environment Engineering Co., Ltd., its contractually-controlled affiliate, Dalian RINO Environmental Engineering Science and Technology Co., Ltd. ("Dalian Rino") and Dalian Rino's wholly-owned subsidiaries, Dalian Rino Environmental Engineering Project Design Co., Ltd. and Dalian Rino Environmental Construction & Installation Project Co., Ltd., is a leading provider of environmental protection equipment for the iron and steel industry in China. Specifically, RINO designs, manufactures, installs and services proprietary and patented wastewater treatment, flue gas desulphurization equipment, and high temperature anti-oxidation systems, which are all designed to reduce either industrial pollution and/or improve energy utilization.

This Company has amazing numbers:

Fiscal Year 2008 Sales Increase 119.8% to $139.3 million, **Adjusted Net Income Increases 119.9% to $39.0 million with EPS of $1.56 -- Reaffirms 2009 Guidance: Revenues expected to exceed $176.5 million Read 2008 Press Release

Q1 Net Sales Increased 87.0% to $35.6 Million while Net Income Increased 148.5% to $12.5 Million with EPS of $.50 vs. $.20 Read Q1 Press Release

"The first quarter represents a very strong start in 2009 as we made significant improvements in all of our key financial metrics," stated Mr. Zou Dejun, President and CEO of RINO International, "Our business continues to be driven by a number of fundamental factors all centered around China's desire to ensure that iron and steel manufacturers properly protect the environment, specifically the water and air. By collecting a significant portion of our receivables we ended the quarter with $47.9 million cash and cash equivalents on our balance sheet. This generated significant cash flow from operations, and puts us in an excellent position to capitalize on our growth opportunities for the balance of 2009. We ended the quarter with a backlog of approximately $61.8 million, which represents 8 desulphurization, 5 wastewater treatment and 1 anti-oxidation projects which will be implemented during the next two quarters. We are very confident that we will continue to provide incremental and robust top-line and bottom line growth for our Company".

There is one analyst that has estimates for RINO on yahoo that expect over $2 EPS. It does not look like they were updated for the recent Q1 results. See Estimates

If DGW is going to trade at a P/E of 20 or higher, it is easy to see why a Company like RINO seems extremely undervalued to me at current prices. If RINO is currently near or above a $2 EPS run rate with impressive growth and backlog, then a P/E of 13-15 like DGW is pricing at would be a $26-$30 stock.

Lastly, the Company stated in the 2008 year end conference call that they have applied to list on the Nasdaq. Listen to Conference Call

The float is 7.1m and outstanding shares are 25m according to Bloomberg Bloomberg

I am long RINO.OB

5 comments:

Anonymous said...

A better play on this upcoming IPO is CLWT. Their subsidiary, PACT, is a direct competitor to DGW in China and their customers are among the largest companies in the world. They manufacture water and wastewater filtration equipment, as well as install the systems. CLWT market cap is only 15mil, could see huge upside when DGW debuts.

Anonymous said...

CLWT is taking off now, nice pick here.

Anonymous said...

More info on the IPO DGW...
http://www.renaissancecapital.com/IPOHome/IPOProfile.aspx?ticker=DGW

Anonymous said...

if you like finding cheap stocks, you should look at MHH. you'll have to do a little work bc it is a spin-off but you will quickly realize that it's so cheap its mindboggling.

egarl said...

In addition to rino.ob take a look at cbpo.ob and chbt. The story on both of them is just what you want to hear. Fast growing, big moat, ahead of the pact technology and lots of government support

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