Texas-based Synthesis Energy Systems (SYMX) is an energy and technology company. The company builds, owns and operates coal gasification plants which utilize its proprietary U-GAS fluidized bed gasification technology to convert low rank coal and coal wastes into higher value energy products like transportation fuel and ammonia.

SYMX’s fiscal 2009 results were better than expected. The company recorded a net loss of 60 cents per share, better than the Zacks Consensus Estimate of 64 cents. Last fiscal year, it had posted a net loss of 80 cents per share. Revenues totaled $2.1 million compared to $0.3 million a year ago, largely driven by the sales from the Hai Hua plant which commenced commercial production last December.

SYMX has a compelling story as the wide spread between the cost of its inputs (low quality coal) and outputs (syngas, methanol, various chemicals) create significantly high gross margins. With the strategic partnerships and alliances the company has formed, it should be able to gain market share and grow its global footprint while taking on a fraction of the operational and financial risks associated with operating independently. As such, we maintain our Outperform recommendation for the company.
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