The company makes environmental protection equipment for the steel industry in China. Specifically, RINO makes wastewater treatment, flue gas desulphurization (FGD) equipment, and high temperature anti-oxidation systems, which are all designed to reduce industrial pollution.
Rino was the first company in China to develop an FGD system specifically made for a steel plant's "sinter", which is an area in the plant that contains equipment that mixes powdered iron-ore with coking coal. This process has traditionally produced significant amounts of pollution. Rino has a first mover advantage and a dominant market position: of the 40 sinter FGD installations in China thus far, Rino accounts for 28 of these. The Chinese government recently announced a plan to double FGD's annually through 2011. China has about 500 sinters, less than 10% of which have been equipped with FGD systems. If you run the numbers, that's a lot of potential growth. There are currently 40 FGD installations, which should double to 80 next year, then 160 in 2011. In the most recent quarter, RINO posted EPS growth of 26% yr/yr to $0.78 while revenue rose 41% yr/yr to $63.3 mln.
Catalysts: The stock has clearly been helped by the overall strength in Chinese stocks. Another catalyst moving the stock was the Dec 23 price target increase by Rodman & Renshaw. The firm raised its target to $40 from $33 driven by the strong Q3 performance, a healthy outlook, diversifying revenue streams and a stronger balance sheet after the recent capital infusion. Finally, in late Nov, the stock popped on a Bloomberg.com report that China plans to more than double its environmental protection spending through 2015 to $454 bln. RINO is clearly a name set to benefit.
I agree. Maybe they are projecting flat---due to the fact it is an unknown on how many new contracts RINO will receive in 2010. We know China will not backpeddle on the tremendous pollution problem. A customer of mine went over to visit his plant in the bowels of China---and said he didn't see the sun for 7 days. The leaders in China have to also breathe the heavily polluted air. They will clean it up---big time. Go long RINO!
More telling than analysts' current estimates is the direction they are changing. In the last 30 days estimates have been raised significantly. The number of analysts covering RINO is going up. RINO will attract more interest as more analysts cover it.
Next year's estimates being essentially flat with this year's expected number is probably the analysts saying " Your guess is as good as mine ". If you look at the deviation of previously reported results from actual reported numbers, you can see they have good reason for further observation in order to get a better feel for where this company is headed. The accuracy of previous estimates has not been impressive.
RINO's market opportunities are just starting to be tapped and the government says money will be there to finance needed projects for years. If RINO manages to get only 1% of the $454 billion China will spend on environmental projects in the next 5 years, that would represent huge growth from current levels.
As future earnings reports come in the number of analysts, their estimates and comfort levels with RINO wil rise. So will the stock.
It's not their accounting. It's analyst estimates that are made on the basis of many factors including the company's input (in some cases not so many factors as in poor analysis by bankers). It really doesn't make a lot of sense to think that revenue projections for the period are up substantially but the net is constant. That would suggest that there is no margin and that as revenue increases expense increases the same amount. No business could survive that.
As someone else said -- do your own DD. Relying on the analysts (who are frequently looking to drive the price to accumulate or dump stock) is a recipe for disaster.
Ok, I will help you out. First of all, you have to remember that MANY times the estimates are way off....just look at RINO's last quarter for an example! Second, RINO only has a couple of analyst's that follow it, so this makes the estimate number even less likely to be correct or even near correct. Third, this is a Chinese company.....sometimes the estimates are completely out of whack and not updated for a variety of reasons. Look at China Agritech (CAGC). They made .88 last quarter and yet the estimate for 2010 is only .35 or something like that. That was the SAME estimate from MONTHS ago, and it has reverse split since then! Their EPS will more likely be way over 2 bucks, and yet it says 35 cents.......
In other words, do your own research, thinking, and analyzing....the analyst estimates are just ONE piece of the puzzle, nothing more.