Liquid Diamonds

Debra Fiakas, CFA submits:

Sino Clean Energy, Inc. (SCEI) is a China-based producer of coal water slurry fuel (CWSF) -- a highly viscous liquid fuel made from pulverized coal particles suspended in water. Expansion in production capacity and the addition of new customers have helped drive sales growth for Sino Clean Energy. The company reported $46.0 million in total sales in the year 2009, compared to $14.3 million in the previous year. The pace accelerated in the first nine months of 2010, with sales reaching $73.6 million, more than 2.5 times over the year-ago period.

Profits have followed sales. Profit margins have increased largely on better coverage of fixed costs at the higher sales levels even as raw materials costs have risen. The gross profit margin in the nine months ending September 2010 was 39.5% compared to 34.4% the same period in the previous year and 34.9% in the year 2008.

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