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EnigmaDude (97.27)

Clean Coal in your stocking

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March 23, 2011 – Comments (6) | RELATED TICKERS: SYMX

I have been watching Synthesis Energy Systems (SES) for a little while now.  The stock ticker is SYMX. The stock is suddenly on a tear and I have been looking into reasons why.  For some background, here is a snippet about their clean coal technology:

SES is a technology company that builds and operates coal gasification plants utilizing the companies proprietary U-Gas Technology. The U-Gas technology is a fluidized bed gasification process that converts low rank coal and coal wastes into higher value products. SES has offices in Houston, Texas and Shanghai, China and licenses the technology from the Gas Technology Institute. The U-Gas technology has the feedstock flexibility to use low rank coal, high ash coal and high moisture coals as well as biomass. The technology can be deployed efficiently on a smaller scale which enables the company to construct plants quickly and in many cases in close proximity to the coal source.

Apparently the Japan disaster is creating an increased emphasis on coal companies in general, and I believe the alternative energy aspect of coal gasification has generated exceptional interest in this company, especially with their presence in China and plans to expand into India.

The company has been around for a few years but the stock has languished for the past several years, until this month.  I have seen price targets ranging anywhere from $3 by the end of this year to more than $20.  I'm not sure if the recent interest is sustainable, but it certainly bears watching.

Does anyone in the CAPS community have additional insights into this dramatic pop (up more than 30% today)?

6 Comments – Post Your Own

#1) On March 24, 2011 at 11:53 AM, Bonghits (< 20) wrote:

where do you see 20 dollar targets?  i see three dollars and haven't heard of anyone initiating coverage or anticipating such a colossal jump.  i hope you aren't talking about wild eyed investors on message boards...

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#2) On March 25, 2011 at 1:30 PM, EnigmaDude (97.27) wrote:

Sorry to interrupt your ganja-induced haze but I did find a Seeking Alpha article (I know, not much better than a message board) that poses the question, Is Synthesis Energy the Next 20x Bagger?  

There is no analyst coverage and that is why I posted this blog on CAPS.  So does anyone have any thoughts on the future of coal gasification as an alternative energy source, and SYMX in particular?

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#3) On March 31, 2011 at 9:23 AM, EnigmaDude (97.27) wrote:

I should have trusted my instincts on this one!  Stock is up nearly 50% in pre-market trading after announcing a deal with China Energy:

Co announces it has signed an agreement with China Energy Industry Holding Group for a cash investment of ~$83.8 mln to support the co's business strategy in China, including project development and investment. This agreement significantly strengthens the co's balance sheet and provides additional financial flexibility for co to execute on its business plan in China and around the world. China Energy will receive ~37.3 mln shares of newly issued stock at closing, representing an ~43.5% ownership stake in co. China Energy is entitled to receive additional shares of common stock bringing their total ownership position to 60% on a fully diluted basis contingent upon it using best endeavors to establish a coal gasification JV with funding of ~$3.0 bln for either synthetic natural gas, transportation fuels, power or fertilizers combined with the market value of co's common stock reaching $8.00 per share or above on average for 20 consecutive trading days provided that the measurement period occurs six months after the closing.

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#4) On March 31, 2011 at 10:42 AM, wolverine1987 (< 20) wrote:

Enigma, do you think the upside is done after today? The additional shares are dilutive. On the other hand, given a chinese firm may eventually own a majority stake, the market would be huge for them in China

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#5) On March 31, 2011 at 10:54 AM, EnigmaDude (97.27) wrote:

From what I can tell, this is just the launching point for this stock.  If the share price reaches $8 within 6 months, there is another $3B that China Energy will invest (if I am correctly interpreting the agreement).  Also, Reuters rates this company a 10 out of 10, which they rarely do.  This is still speculative but the upside potential is enormous.

Read the 8-K that was filed today and decide for yourself:

http://biz.yahoo.com/e/110331/symx8-k.html

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#6) On March 31, 2011 at 6:06 PM, wolverine1987 (< 20) wrote:

Thanks, I did read it. The $8 target is intriguing, as is the price action. On the other hand the numbers are poor. Guess that's why they call them specualtions 

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