About New Oriental Energy & Chemical Corp.
New Oriental Energy & Chemical Corp. is an emerging alternative fuel and specialty chemical manufacturer based in Henan Province, China. The Company is focused on the production of Dimethyl ether (DME), methanol and fertilizer products, and the Company expects to begin production of bio-diesel within the next year. The Company sells its products primarily through a network of distribution partners.
NOEC produces all it's chemical products from coal. The company started as a urea producer for use in fertilizers. The company continues to produce urea and has a max capacity of 150,000tons annually. Urea is a low margin business but will likely remain in demand due to the high need for fertilizer in China.
In addition to urea, NOEC produces methanol and has annual capacity of 100tons. Methanol is used as a fuel additive. China began requiring methanol additive to fuel to minimize pollution last year and there was a price spike due to lack of supply. For that reason, NOEC focused on methanol production in 2006. Supply has come online so prices have fallen.
DME can be produced from methanol. DME has many uses, including as a substitute for LNG and natural gas. NOEC is working with a local university to develop DME as a substitute for petro-diesel in vehicles.
NOEC views DME as a higher margin product with an increasing market. They have increased their capacity from 50tons to 150tons per day and will bring that extra capacity online in 9/07. The company eventually plans to produce 600,000tons of DME annually by 2010. This is the near term catalyst for NOEC. The company intends to shift from Methanol to DME depending on the prices/margins for each product. If they produce more DME, it will reduce their ability to produce methanol and vice versa.
Another short term catalyst for increased profits are the process improvements that NOEC just completed. They use coal as their main feedstock. Coal comes in lump or "dust" coal. Dust coal is 10% cheaper. NOEC has modified their equipment to allow them to use primarily coal dust. In 2006, NOEC spent 17 million on coal purchases so the 10% savings could be over a million dollars per year.
Overall NOEC is a producer of fertilizer components as well as fuel additives and fuel that will be in high demand due to the cleaner burning characteristics of both methanol and DME. Both product segments appear to have high growth potential in China and NOEC is preparing for that growth by dramatically increasing capacity.
Shares Outstanding: 12.64M
Total Cash (mrq): 8.1M
Total Cash Per Share (mrq): 0.62
Total Debt (mrq): 8M
Total Debt/Equity (mrq): 1.031
Revenue (ttm): 39.00M
Revenue Per Share (ttm): 3.93
Qtrly Revenue Growth (yoy): 7.90%
Gross Profit (ttm): 5.64M
EBITDA (ttm): 5.35M
Net Income Avl to Common (ttm): 3.02M
Diluted EPS (ttm): 0.30
Trailing P/E (ttm, intraday): 14.21
Here's an excellent investor presentation put together by NOEC