fool.com's view of rino

http://caps.fool.com/Pitch/RINO/4599093/chinese-equities-are-taking-th.aspx?source=itxsittb0000001

TSIF (99.40) Submitted: 1/25/2010 3:40:27 PM : Start Price: $22.02 RINO Score: -20.82 Chinese equities are taking their turn of being beaten down after the multiple "China Scares". The tightening of lending is a real issue for some of the Chinese companies. The Google and Clinton sparing with China are probably over blown. From RINO International's perspective, the credit tightening could in fact be a serious issue. Their last contract award, a Flue Gas Desulphurization project for a major steel company involves Rino doing much of the work upfront, managing the plant, and receiving payments over time at 5.75% interest. The project is estimated to be done by this September and gross margins are estimated at 38%, but a a ten year contract RINO will need to dip heavily into it's cash/cash flow to build out the project, without immediate payback. With credit tighening this type of model could be an issue. Still, after a 15% knockdown on RINO's share price, I'm willing to take a chance that well ran companies, important to China's future are going to continue to receive the support they need. RINO is in one of the best business's considering China's pollution issues and the global focus on our carbon footprint.
Barring a severe credit tighening I expect RINO's 22% operating margins, 47% ROE, and 40% qoq revenue growth, with minimal current debt to keep RINO ahead. They also have an open shelf registration, that while I preferred they did not use, could be used to fund projects. If the projects remain as lucrative, then the additional share issues will be only a minor negative. Charge ahead.
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905mercur (
Report this Post . TSIF (99.40) Submitted: 3/22/2010 10:41:17 AM Recs: 0 Rec This .Unfortunately, RINO has several things going against it that makes it difficult to call.

The waves of "attacks" on Chinese Equities continues as several get accused of accounting issues. FUQI burned more investor trust last week.

The government crackdown on lending is a second unknown. From my studies, RINO is heavy into funding projects, but seems to have some buffer. They could issue shares at any time with their shelf registration.

Third, I'm not happy with the insider ownership. I like it high, but not so high that a few holders can dump and drive down share prices.

I suspect the short interest is a combination of the above AND the fact that RINO was down to $2 at one point. Many investors do not believe ANY equity deserves a 10x Rise, no matter thier margins and ROE. I tend to disagree, but again, that is some investors point of view.

If you can tolerate another 10%-15% down should we get another wave of Chinese bashing, then I think RINO is a good investment. Higher risk than many others, however.

Good luck.

Overall, I see WORSE case bottom for RINO if all goes bad against them at about $19. I see upside to the upper $20's if