RINO (RINO) International Looks Attractive

How quickly the high fliers fall! Rino International (NASDAQ: RINO) is a Chinese small cap (just uttering that phrase makes one squeamish) that operates as an environmental protection and remediation company. It engages in designing, manufacturing, installing, and servicing wastewater treatment and flue gas desulphurization (FGD) equipment principally for use in the People's Republic of China. As China undergoes an extraordinary and rapid industrialization process, RINO may be a secular growth story worth investigating. More than three-quarters of RINO's sales come from FGD systems. Its FGD systems cost a third of what the competition costs, while removing 92-93% of sulfur, compared to 88% for its competitors. Not merely a health concern, China suffered global embarrassment over its pollution problems during the 2008 Olympics. Last November China announced that it plans to more than double its spending on environmental protection through 2015. On January 22 RINO signed an FGD contract with Shougang Jingtang Iron & Steel Co. valued at $118 million. Similar future contracts should continue to be a driver of revenue for RINO. In the third quarter RINO grew its sales 41% year-over-year to $63.3 million. Net income grew 73.3% year-over-year to $17.1 million, or $0.68 per share. At $20.60, RINO trades at 9.9 times the 2010 consensus EPS estimates of $2.09 per share. As recently as January 11 the stock traded as high as $32, but has since declined some 35%. The reason for the sharp decline was China's announcement of tighter monetary policy. Beijing this week told some banks to increase reserve ratios by 0.5% and some reports indicate banks were told to restrict new loans. While monetary policy changes will affect manufacturing output in the short run in China, the country is still expected to grow 8-9% in 2010. After the recent selloff in RINO, at $20-21 shares look attractive for those with a longer-term outlook of 6-12 months. Don’t miss out on The New York Traders Expo. This is the ultimate opportunity to test out the hottest products and software! Register FREE by calling 800/970-4355 and mention priority code 017068 or go to The New York Traders Expo