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Gold/Mining/Energy : Synex International Inc. (SXI.T)
SXI 228.94-2.4%3:59 PM EST
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To: Ally who wrote (13)8/13/1998 3:59:00 AM
From: Dick Martin  Read Replies (1) of 42
 
I suppose that privatization and any deregulation would open up opportunities for a company like SXI and there is a demand for the power in the east unlike BC where hydro power is in oversupply. However SXI is still a very small company and power generation facilities are capital intensive so the company has to be careful about which project to develop. There probably are better investment possibilities for the company in places (internationally) where the needs are more in line with what the company can deliver. This is why I think that the relationship with New World Power Corp is a great development.

The debt load the company can carry is a good question, an example of this sort of problem is New World Power Corp. which had to sell most of its assets to reorganize. I don't think Synex will get itself into this sort of a mess but if Synex is to grow it will have to use its borrowing power wisely. I think Hydroelectric assets are very stable investments so have a stable value to borrow against.

The current situation is is complicated by the Yongnian Cogeneration Plant under Synex Noram Power Corporation. I understand that Synex wants to bring in other investors to participate in the project but I don't know how the equity would be spread out or what other parties would participate. With the Asian economy as it is, this may be one reason why the shares have been weak. Now Synex is developing internationally we have to factor in all the things that go with that; foreign exchange, international politics, regional economics.

Dick Martin
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