SinoCoking Coal and Coke Chemical Industries Inc. (NASDAQ: SCOK) hit its stride right out of the gate Tuesday morning. The Chinese energy producer jumped again on new developments of its syngas conversion project in the Henan province.
SinoCoking closed Monday at $5.40 and made leaps and bounds in the first hour of trading reaching Tuesday, as high as $8.05 — roughly gains of 50% — on the recent developments with the Chinese government. This is a huge gain, but a news pop recently sent shares even higher than Tuesday’s news.
The previous Tuesday, this company posted a 52-week high of $9.37 on the news that it signed an exclusive agreement with the Institute of Process Engineering of the Chinese Academy of Sciences and the North China Institute of Science and Technology to reopen mines in the Henan province.
The Chinese government originally closed these mines due to environmental concerns. The deal was approved based on SinoCoking’s technology to produce clean burning fuel, syngas, without releasing meaningful levels of carbon dioxide. The first phase of this development is expected to be completed in February 2015, with expected revenues of $30 million to $45 million in 2015.
The jump in the stock price can be attributed to the local Chinese government of Pingdingshan agreeing, Tuesday morning, to provide SinoCoking with an extensive gas pipeline distribution network and gas storage system for the company’s syngas conversion project. The government may also issue “significant” financial grants to the company, depending on the initial performance.
SinoCoking recently traded at $7.26, up about 34% on the day. The stock had fallen since its high on September 9, but it has made a handy recovery in the days following.
The company does not have a consensus target price, but its 52-week trading range is $0.83 to $9.37. Even after the huge pop seen in the stock, SinoCoking’s market cap is listed as being just under $160 million.