Cowen’s Stone Comments on HOKU (Nasdaq:HOKU) – Maintains Neutral Rating
Source: http://feedproxy.google.com/~r/smallcappulse/feed/~3/Dtk0-GlByL8/Posted on Wednesday, September 30th, 2009 | In Investing Lessons, Small & Micro Cap
September 30, 2009 ndash; Cowenrsquo;s Rob Stone weighed in on HOKU Scientific (Nasdaq:HOKU) this morning, noting that its deal with Tianwei should clear the way for it to start its poly plant by Q1, 2010, but is maintaining a NEUTRAL ratingnbsp; on the stock ldquo;given dilution, remaining funding and execution risks.rdquo;
Key Takeaways
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Tianwei is converting about $50M in prepayments received by HOKU into equity and will provide $50M in debt (2 yrs at 5.94%) in exchange for 33.4millionshares, warrants fornbsp; 10M shares at $2.52 and an 11% reduction in the poly purchase price under two existing supply agreements
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Cutting estimates to reflect lower ASP and new shares ndash; projecting F10 revenue of $7.3M, $120M, $225M and $227M, reducing STP by $15Mnbsp; and projecting F10-13 EPS of ($0.31), ($0.27), $0.27 and $0.22.
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Expects stock to gap up to about 1.5-1.8x post-deal book value of around $1.84
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