A-Power Energy (APWR) Big Earnings Miss, But Raised Guidance; CEO: "Seasonal Weakness"

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08:56:31 am on June 16, 2009

A-Power Energy (APWR) is trading down this morning after badly missing earnings estimates.  The company reported an EPS of just .04/share which was well short of analyst estimates of .12 and a more than 50% drop over the year ago quarter.  Revenues were basically flat over the year ago quarter at 31.2%.  The CEO is blaming the poor quarter on seasonality and poor weather conditions in Northeast China.. perhaps he needs to take a look at the numbers compared to 1Q 2008. 

“The first quarter is typically slow for us due to seasonality and weather conditions in the northeast region of China,” said Mr. Jinxiang Lu, A-Power’s Chairman and CEO. “However, we managed to forge strategic partnerships, including with GE Drivetrain Technologies, improve our cash flows and strengthen our cash position during the slow winter months. As we are poised for expansion, we have also been closely monitoring our G&A expenses.”

That’s not to say I don’t like the future prospects for A-Power.  The company is the best China wind energy play that I know of and announced this morning that the first two units of the 2.7MW wind turbine are expected to be delivered in about a month to Jinzhou Jinxia New Energy.  They are also diversifying with a push into developing biomass fuel plants and have made several announcements recently including an announcement this morning that the company has signed a $14 million contract with Sanmenxia New Energy Bio-Electricity. 

The CEO commented: “… And I am very pleased to announce that we have arranged the shipment of the first two units of the 2.7MW wind turbine, made with Fuhrlander’s technology and main components from Europe. They are expected to be completed for delivery by the end of July. We are gradually ramping up our production to meet the growing demand for the larger, more advanced, and more reliable wind turbines, as more and more Chinese wind farm developers are looking to increase power generation capacity. And our existing relations with GE, Fuhrlander, Norwin and several domestic, emerging Chinese wind component makers like Jiangsu Miracle, plus our experience and relationships in China’s power market in general, position us to benefit well from this emerging trend of bigger and better wind turbines in China.”

Looking ahead, the company is raising revenue and net income guidance for 2009.  They now expect revenues to be at least $320 million (previous $290) and after tax net income around $32 million (previous $29 million).  The estimates are based on current signed DG contracts which are subject to change based on customer payment and construction schedules.

A-Power Energy (APWR) is currently trading down 6%, but well off the morning lows.

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