Some Good News in Alternative Energy (APWR, GE)

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A-Power Energy Generation Systems, Ltd. (NASDAQ:APWR) is a Chinese maker of distributed power generation systems and, just recently, wind turbines. The company reported fourth quarter and full-year 2008 results before the market opened this morning.

Diluted EPS for the quarter reached $0.30, double analysts’ estimates of $0.15, and revenues of $80.1 million exceeded estimates of $75.91 million. The company pointed out that the number of its fully diluted shares increased from 13.7 million in the fourth quarter of 2007 to 33.1 million in the 2008 quarter.

A-Power’s gross margins also increased in the fourth quarter, from 11.2% a year ago to 17.8%. For the full year, gross margins were 13.9%, up from 13.5% a year ago. With margins growing, the company heads into 2009 with a full head of steam.

The company recently signed an agreement with a division of General Electric Company (NYSE:GE) for turbine gearboxes for 2.7 megawatts of wind generators, and has established a joint venture with GE to build a plant in China to manufacture wind turbine gearboxes. A-Power launched China’s largest wind turbine plant in January with production capacity of 1,125 megawatts.

For 2009, A-power expects revenues of $290 million, up from $264.9 million in 2008. That seems a bit pessimistic because¬† it is based almost solely on sales of the company’s distributed generation equipment. The company notes that its wind power effort is “still in its infancy,” but it anticipates strong demand.

The share price is up more than 29% at $5.80 in fairly active pre-market trading. The 52-week share price range is $3.00-$31.89.

Paul Ausick
April 9, 2009