How To Trade An SEC 8-A12B Filing: RINO International Corporation (RINO)
Posted by Timothy Sykes on Wed 8th of Jul, 2009 08:15:02 AM
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THIS SEC filing is why I sent the following to TIMalert subscribers yesterday afternoon:
Bought 1500 RINO at $9.48, stock is just under its highs at $10.05, up a ton today already on THIS SEC filing that is opens the door to an official announcement the company has gotten NASDAQ listing…methinks this probable upcoming announcement will be a catalyst to push it above $10, ideally to the $10.50-$12 range…very nicely gradual uptrend so the trend is my friend here, stop loss at $9 if I’m wrong, $1-$2 of upside if I’m right about the announcement…obviously some people are also anticipating it so it’s not like I’m beating people to the punch here, just a solid risk-reward setup for a trade with a 2-5 day time horizon
TIMalert subscribers also got a followup to that analysis later last night…you gotta subscribe to get all that goodness!
So What Does SEC Form 8-A12B Mean?
A filing with the Securities and Exchange Commission (SEC) that is required when a corporation wishes to issue certain classes of securities, including rights to buy such securities at a future date. This filing is also known as the Registration for Listing of a Security on a National Exchange Form. Included in SEC Form 8-A12B are details of the issuer and the security.
Zzzzzz, long story short, this SEC filing usually precedes an official press release that the stock is getting listed on a major exchange….could take days or weeks…which doesn’t even really matter because as CEUA proves, the SEC filing is usually just the beginning of the runup–see how that stock has done since that initial jump on the June 18th filing (also thanks to RedChip being the sketchy promoters that they are, c’mon RINO, hire them!):
And the theory is that once RINO goes NASDAQ, people will see this is a $250 million Chinese water treatment company earning 50 cents/share per quarter, or $2+/share per year, meaning this thing trades with a PE of 5, less than 1/5th the valuation of competitor and recent hot IPO DGW Duoyuan Global Wtr Inc (NYSE)
Superman (proven swing trader) has a good comparitive post HERE and below is most of his findings:
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.
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.
Chinese accounting is basically worthless, but DGW is now steady in the low $20s meaning if RINO trades at even 1/2 of DGW’s valuation, it’ll be a $25 stock…I’m not a patient man so all I want is a solid breakout past $10 and even yesterday’s late day weakness, there seems to be limited downside potential with NASDAQ right around the corner….which is why I’m still long 1500 shares at $9.48.
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