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A Scorching Play On Cool Air

Inside Wall Street


A tiny company in the $26 billion worldwide air-conditioning business, ICC Technologies may have a future that's, well, quite hot. Already, a $2.4 billion Big Board-listed chemical corporation, Engelhard, has formed a 50-50 joint venture with ICC to develop and market ICC's new alternative air-conditioning system that uses no compressors or ozone-depleting refrigerants, such as chlorofluorocarbons (CFCs). Because of their harmful effects on the environment, CFCs will be banned by 1995 through an international accord. Therefore, ICC's proprietary desiccant-cooling technology--extracting moisture from incoming warm air--could be a big seller.

The stock, now at 41/2, "is tremendously undervalued," says investment adviser John Westergaard. With ICC's market capitalization of about $45 million, "investors are paying no premium for the open-ended opportunity presented by ICC's technology." A single major contract, he figures, "will take the market cap to $100 million virtually overnight."

In the ICC system, air moves through a desiccant wheel that removes moisture from the air, then passes through a temperature-reducing thermal wheel before entering the conditioned space. The system starts by creating dry air, which is easier to cool--and cheaper because it uses less electricity. ICC's Desert-Cool unit also uses the desiccant technique for humidity control and heating.

Westergaard sees the company breaking even in 1995 and turning profitable by 1996. "A year from now, the stock will hit 15," he says.GENE G. MARCIAL

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