NF Energy (OTC BB: NFEC): To Russia With Love

Big news out of NF today. NFEC announced it received a $700,000 contract from a Russian Hydro Power Plant, with a follow on order of $2.9 million to follow.

In case you're wondering or need a refresher course,NF Energy designs and manufactures gigantic valves used in hydro power plants. The technology saves an enormous amount of energy by making the the hydro electric power plant far more efficient. Using the NF valves, far less hydro energy is wasted, and energy is thereby saved.

To give you an idea of the scope of these valves, check out this image. This valve is about four times the size of the guy standing in front of it. Now, this guy might be 5'2" or 7'2"- I don't know. Either way, this thing is enormous, and it's a big mind boggling to visualize this valve controlling the water in a hydro power plant in order to turn a turbine and generate power.

We're not building power plants in the US. There's no increasing demand. All we can do is modernize some of our plants that run with older, inefficient technology.

However, in other parts of the world with gigantic emerging consumer classes, there is demand for infrastructure build out, and the Chinese are developing some highly efficient technologies.

Apparently, someone in Russia noticed NF makes some pretty cool gigantic valves, and they ordered. So, of far greater interest is the International nature of the order. Clearly, the company is diversifying its customer base. A company less dependent on a few clients is less risky and therefore more valuable. I'm hoping to see more of these kinds of orders.

As many of you have noted in emails, the volume of NF has dried up considerably since doing the reverse split, and the stock has slipped in value a bit.

Looking at the chart, I don't see anything wrong with the stock coming back down a bit after the run it made earlier this year. Here is the split adjusted chart.

I've drawn our Fib retracement lines back to my first coverage of the stock. As you can see, from July to late August this stock ran from $2.27 to $6.60. I'm taken out the ridiculous spike to $20- that was meaningless.

After a move of 190% in two months, this stock is entitled to come back and trade a bit sideways on lighter volume. It's just nature. It's storing up the energy to move higher. There's very little for sale. It's got a strong shareholder base.

There will be a catalytic event coming that will get this stock lit up again. It could be a huge contract, or an upgraded listing, or perhaps both. I don't know what it will be.

I do know the company has been willing to publicly forecast $24 million in revenues this year, which is 52% higher than last year, and probably lower than the actual numbers. After all, it's unlikely they will over forecast this number.

I'm looking for about $.48 per share in EPS this calendar year. Pretty soon, the market will start trying to figure out 2010 numbers, and start pricing those in. Can you think "wind components" in 2010. When investors start to figure that side out, this stock will have the wind at its back once again.

I believe we'll see new highs later this year, and another huge leg up next year as the energy saving type infrastructure build out in China gains momentum. The Chinese are committed to this, and they have the money.

Here is the complete text of today's news for your review:

NF Energy Saving Corporation Announces US $700,000 Russian Hydro Power Plant Energy-Efficient Flow Control Systems Project Additional US$ 2.9 Million Contract to be Signed Upon Phase One Completion SHENYANG, China, Oct. 6 /PRNewswire-Asia/ -- NF Energy Saving Corporation (OTC Bulletin Board: NFEC; "NF Energy"), a Chinese leader in energy efficient flow control systems, today announced it has been selected to provide a US $700,000 energy-efficient flow control system for a Russian Hydro Power Plant. Upon successful completion of the project, the company is expected to sign an additional contract with the Russian Hydro Power Plant to supply additional energy-efficient flow control systems with a total contract value of US $2.9 million. Mr. Li Gang, Chairman and CEO of NF Energy, commented, "We are very pleased to expand our presence into Russia and provide our energy-efficient flow control systems to this very large and well recognized Hydro Power Plant. The commitment to expand our contract upon successful completion of the first phase is further evidence of the cost effectiveness and quality of our systems." About NF Energy Saving Corporation Website: http://www.nfenergy.com NF Energy Saving Corporation (OTCBB: NFEC - News) is a China-based provider of integrated energy conservation solutions utilizing energy-saving equipment, technical services and energy management re-engineering project operations to provide energy saving services to clients. Headquartered in Shenyang city of China, the Company currently has 220 employees and several proprietary energy saving technologies and patents.