Stock Alert for A-Power Energy Generation Systems Ltd. (APWR)
A-Power Energy Generation Systems Ltd. (NASDAQ: APWR)
A-Power Energy Generation Systems Ltd. (APWR), through its China-based operating subsidiaries, is the largest provider of distributed power generation systems in China, focusing on energy-efficient and environmentally friendly projects of 25 megawatt (MW) to 400MW. The Company focuses on the design, construction, and installation of distributed generation (DG) systems in China. DG involves the production of energy at the point of use, offering improved efficiencies and increased reliability over centralized power generation. GaoKe Energy is the principal operating unit of APWR, contributing over 99% of historical total revenue. It obtains contracts for DG systems and oversees the work associated with the projects as a general contractor. The Company has completed 17 DG projects, with more than 10 projects currently in construction. APWR has also entered China’s wind power market. It constructed facilities to assemble wind turbines, based on technology licensed from the Company’s European partners. In March 2009, the Company entered into an agreement to establish a joint venture partnership with GE Drivetrain Technologies to produce wind turbine gearboxes in Shenyang.
APWR was founded in 2003 and is headquartered in Shenyang, the People’s Republic of China.
| Share Statistics (10-June-10) | FY
2008 |
FY
2009 |
%
Chg |
Q4 2008 | Q4 2009 | %
Chg |
||
| Symbol | APWR | Revenue, $Mn | 264.87 | 311.25 | 17.5% | 81.42 | 125.89 | 54.6% |
| Current price | $9.13 | Gross marg. | 13.9% | 16.4% | 18.0% | 17.8% | 21.3% | 19.7% |
| 52wk Range: | 6.56-21.04 | Oper. margin | – | 9.1% | – | – | 10.3% | – |
| Avg Vol (3m): | 6,340,691 | Net margin | 10.8% | -5.4% | -150.0% | 12.3% | -19.0% | -254.5% |
| Market Cap. | 414.16M | |||||||
| Shares Outstanding | 25.20M | EPS, $ | 0.94 | -0.30 | -131.9% | 0.30 | -0.50 | -266.7% |
Source: Reuters.com, SEC Filings.
Financial Summary
For the first quarter of 2010, APWR reported revenues of $67.3 million, a 115.8% increase from the year-ago quarter’s $31.2 million. The increase was primarily due to continuing DG contracts including $9.8 million in revenue from the Company’s DG project in Vietnam.
Gross profit increased 248.4% to $9.8 million from $3.9 million in the same period of 2009. Gross margin was 14.5%, up from 12.6% in the same quarter of 2009. The improvement in gross margin was mainly attributable to higher sales and improved operating efficiencies.
GAAP net income attributable to the Company for the 2010 first quarter was $29.3 million compared with net income of $1.6 million in the same period of 2009. Diluted earnings per share were $0.64 compared with diluted earnings per share $0.04 in the same quarter of 2009. In the 2010 first quarter, total shares outstanding on a diluted basis were 45.7 million shares compared with 34.7 million in the same period of 2009.
As of March 31, 2010, the Company had cash, cash equivalents and restricted cash totaling $220.4 million compared with $179.8 million at December 31, 2009. Prepayments, deposits, other receivables from customers were $102.4 million compared with $52.5 million at the end of 2009. Short-term loans outstanding, as of March 31, 2010, were $69.1 million. Working capital increased by approximately $18.0 million in the 2010 first quarter to $173.4 million. Total stockholders’ equity rose to $339.6 million at March 31, 2010, from $252.6 million at December 31, 2009.
Source: A-Power Energy Generation Systems Ltd.
| Financial Strength (10-June-2010) | Company | Industry | Sector | S&P 500 |
| Quick Ratio (MRQ) | 2.94 | 0.56 | 1.29 | 0.81 |
| Current Ratio (MRQ) | 3.06 | 0.68 | 1.58 | 0.96 |
| LT Debt to Equity (MRQ) | 0.00 | 16.81 | 58.27 | 133.31 |
| Total Debt to Equity (MRQ) | 9.34 | 31.04 | 81.10 | 199.02 |
| Interest Coverage (TTM) | 99.57 | 0.07 | 0.22 | 41.35 |
Source: Reuters.com, SEC Filings.
Analyst Consensus
| Buy | Outperform | Hold | Underperform | Sell | No Opinion |
This is the consensus forecast amongst two polled investment analysts. Against the A Power Energy Generation Systems Ltd company.
| Analyst Detail | Buy | Outperform | Hold | Underperform | Sell | No Opinion |
| Latest | 1 | 1 | 0 | 0 | 0 | 2 |
| 4 weeks ago | 1 | 1 | 0 | 0 | 0 | 2 |
| 2 months ago | 1 | 1 | 0 | 0 | 0 | 2 |
| 3 months ago | 1 | 2 | 0 | 0 | 0 | 2 |
| Last year | 1 | 1 | 2 | 0 | 0 | 0 |
The one analyst offering a 12-month price target expects APWR share price to rise to 14.00 in the next year from the last price of 7.37.
Source: www.ft.com
Consensus Estimates Analysis
| # of Estimates | Mean | High | Low | 1 Year Ago | |
| SALES (in millions) | |||||
| Quarter Ending Jun-10 | 1 | 89.30 | 89.30 | 89.30 | 149.65 |
| Quarter Ending Sep-10 | 1 | 105.30 | 105.30 | 105.30 | 181.11 |
| Year Ending Dec-10 | 1 | 392.00 | 392.00 | 392.00 | 620.47 |
| Year Ending Dec-11 | 1 | 502.00 | 502.00 | 502.00 | – |
| EARNINGS (per share) | |||||
| Quarter Ending Jun-10 | 1 | 0.24 | 0.24 | 0.24 | 0.35 |
| Quarter Ending Sep-10 | 1 | 0.29 | 0.29 | 0.29 | 0.43 |
| Year Ending Dec-10 | 1 | 1.08 | 1.08 | 1.08 | 1.40 |
| Year Ending Dec-11 | 1 | 1.25 | 1.25 | 1.25 | – |
Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=APWR.O
Investment Highlights
APWR is an alternative energy company based in Shenyang, an industrial hub in Northeast China. With 17 projects completed since 2003 and more than 10 currently in process, the Company boasts of being the largest provider of distributed power generation systems, focusing on energy-efficient and environmentally friendly projects of 25MW to 400MW both in China and overseas.
The Company stated in its report that it believes the long-term outlook for growth in the power industry is highly favorable, both generally and particularly in rapidly developing economies, such as China. In China, power is needed both to support expanding industrialization and the increasing consumption of power by their increasingly affluent citizens. The Company believes China’s distributed power generation industry is entering a high-growth phase because of high efficiency and lowered environmental impact both of which contribute directly to two of China’s key objectives: ensuring a continuing supply of power needed for its rapid economic growth and reducing the environmental degradation associated with conventional power generation. APWR reported that China’s National Development and Reform Commission (NDRC) has set a goal that by 2020, 22% of the country’s total power capacity be in the form of cogeneration distributed power generation systems, up from approximately 10.9% in 2005.
With wind power becoming more attractive based on its low operational risk and improved technology, APWR also expects China’s wind energy industry to continue to experience strong growth. It entered the wind energy market in 2008 and has built China’s largest wind turbine manufacturing facility, located in Shenyang, with technologies licensed from German FUHRLÄNDER AG and Denmark-based Norwin, and a total annual production capacity of 1,125MW. In March 2009, it entered into an agreement to establish a joint venture partnership with GE Drivetrain Technologies to produce wind turbine gearboxes in Shenyang. By 2015, the World Wind Energy Association expects China to overtake the United States and become the leading wind power country in terms of capacity.
APWR also has strategic relationships with Tsinghua University in Beijing and the China Academy of Sciences in Guangzhou to develop and commercialize other renewable energy technologies.
Recent Company News
APWR has posted higher quarterly profit, boosted by better sales at distributed power generation systems segment, and lifted its full-year outlook on expectations of stronger turbine exports. Revenues are now expected to reach $500 million and net income to reach $60 million this year, as compared to previously announced guidance of $380 million in revenues and $45 million in net income, respectively.
Commenting on the Company’s business results, APWR Jinxiang Lu said: “We are very excited with our strong revenue growth and solid gross margin expansion in the first quarter. Although the first quarter is typically a slow season in our DG activities in most parts of China due to the winter weather condition, we set new records for both revenue and net income growth in first quarter of 2010. Our geographic diversification into southern China and international projects are contributing more DG revenues. Our wind turbine business continues to gain traction and we remain confident in the market outlook, as our larger turbines are receiving favorable consideration in China, and the outlook for future turbine exports also appears promising. With more components arriving and our production expanding, we are continuing to move forward on all facets of our wind turbine business, both domestically and internationally. On the financial side, we continued to work to strengthen our balance sheet and manage our cash flow to prepare ourselves for further expansion during 2010.”
Source: A-Power Energy Generation Systems Ltd.
Technical Analysis
Source: http://stockcharts.com
Wednesday, APWR closed above its 13-day moving average. This is generally considered to be an indication of a bullish trend.
APWR is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.
APWR’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below zero, which suggests that the underlying moving averages are bearish.
Comparative Analysis
| Company Name | Ticker | Price per | Mrkt. Cap. | P/E | P/S | ||
| June-10-2010 | symbol | Share, $ | $ Mn | 2010 | 2011 | 2010 | 2011 |
| General Electric Co. | GE | 15.68 | 167,410 | 14.38 | 11.79 | 1.07 | 1.09 |
| Median | n/a | n/a | n/a | n/a | |||
| A-Power Energy Generation Systems Ltd. | APWR | 9.13 | 414.16 | 8.23 | 5.71 | 1.07 | 0.73 |
Source: Thomson Financial
Insider Trading Activity
| NET SHARES PURCHASE ACTIVITY
Inside Purchases – Last 6 Months |
||
| Shares | Transaction | |
| Purchases | n/a | 0 |
| Sales | n/a | 0 |
| Net Shares Purchased (Sold) | n/a | 0 |
| Total Insider Shares Held | 0 | n/a |
| % Net Shares Purchased (Sold) | n/a | n/a |
| Net Institutional Purchases — Prior Qtr to Latest Qtr | |
| Shares | |
| Net Shares Purchased (Sold) | (2,293,550) |
| % Change in Institutional Shares Held | (29.0%) |
Source: Yahoo Finance
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