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NEW YORK (TheStreet) -- Shares of SinoCoking Coal and Coke Chemical (SCOK) were gaining 54.9% to $3.64 on Monday after announcing its above-ground facility for the conversion of carbon dioxide into clean-burning syngas began its operations.

The new facility is now producing and transporting syngas to customers in and around the Chinese city of Pingsingshan.

SinoCoking said the new facility is currently operating at 60% of its capacity, and will work towards full capacity of 25,000 cubic meters of syngas an hour in the next 20 days. The company is also looking into using a gas compression technology to double output to 50,000 cubic meter an hour, CEO Jianhua Lv said in a statement.

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TheStreet Recommends

TheStreet Ratings team rates SINOCOKING COAL & COKE CHEM as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SINOCOKING COAL & COKE CHEM (SCOK) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, SCOK's share price has jumped by 94.40%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 11.0% when compared to the same quarter one year prior, going from -$0.95 million to -$0.84 million.
  • Net operating cash flow has significantly decreased to $0.10 million or 92.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SINOCOKING COAL & COKE CHEM's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: SCOK Ratings Report

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