NEW YORK (TheStreet) -- SinoCoking Coal and Coke Chemical (SCOK) was falling 28.9% to $4.35 Thursday after entering into an agreement to sell $14.3 million worth of common shares to two institutional investors.
The mineral mining company announced it will sell 2,818,845 shares in a direct offering to the two unnamed investors. The shares in the offering are priced at $5.10 a share.
The investors will have an option to purchase up to $10 million of additional shares and warrants after the initial offering at $6.08 a unit.
SinoCoking plans to use the proceeds front eh offering for working capital and other general purposes.
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 increase in net income, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. 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:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 46.8% when compared to the same quarter one year prior, rising from $0.50 million to $0.74 million.
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SCOK has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
- SCOK, with its decline in revenue, underperformed when compared the industry average of 3.0%. Since the same quarter one year prior, revenues fell by 20.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Net operating cash flow has significantly decreased to $0.01 million or 99.33% 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