some resent research from fat prophets

As long term investors, we are prepared to wait patiently for the realisation of value provided our investment rationale remains intact. While we are well in the black from our initial recommendation (FAT117), GRD's share price has lost upward momentum since hitting an all-time high of $3.10 earlier this year.

"We would expect the market to factor in any positive earnings contribution well in advance of the official results. "

In recent months, price action in GRD has been volatile. After rebounding from a test of support at $1.80 in September, the stock hit $2.32 in October, before retreating for a further test of $1.80 this month. Investors should note, GRD traded 'ex' a 10-cent capital return in late October.

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In spite of the volatility, including dividends, GRD has returned close to 100 percent since our first recommendation. Click here to find out how we can help you identify this type of opportunity.

GRD's engineering division, Minproc, has continued to perform well (see FAT296). This is extremely important to the company as Minproc currently provides all of GRD's earnings.

Minproc has an impressive project pipeline with combined contract value of over $400 million. Encouragingly, the project pipeline has both commodity and geographic diversification. We derive further comfort from the division's success to date, together with its strong client relationships.

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Assuming Minproc continues to meet expectations, the key question for investors relates to the Global Renewables business. Specifically, when will the division contribute positively to earnings, and will it offer a meaningful source of growth?

Global Renewables' potential at this stage revolves around the Lancashire Council project in the UK. Management expect the project to process 600,000 tonnes of waste per annum and add $20 million each year to GRD's before tax earnings.

Given that this approximately doubles current operating earnings, the potential is indeed significant. Furthermore, the bulk of these earnings are relatively certain, as they will come from contracts with a UK local government council with built-in escalation for many of the related costs.

In terms of timing, management anticipate operations commencing in mid-2008. Therefore, earnings are likely to kick-in during the 2009 half-yearly results. We would expect the market to factor in any positive earnings contribution well in advance of the official results.

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