NEW YORK (TheStreet) -- Synthesis Energy Systems  (SYMX) spiked to a one-year high of $2.49 as of 10:30 a.m. Friday after the company announced that its wholly owned subsidiary, SES Asia Technologies, had entered into a joint venture that would fortify its position in the clean coal gasification market in China.

Synthesis announced that SES Asia had entered into a definitive agreement with Zhangjiagang Chemical Machinery to form a joint venture called ZCM-SES Sino-U.S. Clean Energy Technologies. ZCM will contribute approximately $16.5 million to the venture for a 65% ownership interest, while SES will contribute exclusive usage of its advanced, proprietary gasification technology in Indonesia, Malaysia, Mongolia, the Philippines and Vietnam for a 35% ownership interest.

Synthesis shares skyrocketed in early morning trading on Friday and had a volume of more than 6 million shares by 10:45 a.m., compared to its average of 314,108.

Must ReadSynthesis Energy Systems And Zhangjiagang Chemical Machinery Company Join Forces To Become The China Market Leader In Clean Coal Gasification

TheStreet Ratings team rates SYNTHESIS ENERGY SYSTEMS INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate SYNTHESIS ENERGY SYSTEMS INC (SYMX) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself."

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

  • The gross profit margin for SYNTHESIS ENERGY SYSTEMS INC is rather low; currently it is at 22.30%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SYMX's net profit margin of -24.26% significantly underperformed when compared to the industry average.
  • SYMX has underperformed the S&P 500 Index, declining 12.29% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, SYNTHESIS ENERGY SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • SYMX's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
  • SYNTHESIS ENERGY SYSTEMS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, SYNTHESIS ENERGY SYSTEMS INC continued to lose money by earning -$0.34 versus -$0.40 in the prior year.
  • You can view the full analysis from the report here: SYMX Ratings Report