A-Power Energy (APWR) Crushed After Big Miss, Lowered Guidance; Texas Wind Project Likely Dead

In the “you can’t trust the management of a China based company department” .. and there are an increasingly large number of these lately.. A-Power Energy (APWR) finally reveals that indeed the company is far from a leader in the China wind energy space and is struggling in its other business as well.  To make matters worse, the big Texas wind project (Spinning Star) is on life support and will likely never happen if additional financing doesn’t take place by Dec 31st.  Given the history of APWR management it would be insane to lend this company money.  The CEO acknowledged that getting financing was a long shot. 

Here are the ugly results (more in press release).. Analysts expected the company to report a profit of .29/share, but the company managed only .02/share profit on an adjusted basis.  They reported less than half of the revenues analysts expected at just $57 million (analysts expected $144 million).  It’s no surprise then that the company had to lower guidance for the year and now see revenues of $310 million and net income of $50 million.

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CEO Jinxiang Lu who may be out of a job soon commented:  “A-Power’s results in the third quarter were less than we hoped we would achieve. The shortfall was due mainly to lower revenues in our Distributed power generation segment because of the timing of work under contracts, and to less-than-planned sales in our Wind power segment. Although Wind power achieved revenues of $15.5 million in the third quarter, we had assumed we would be able to book revenues from a major customer, Spinning Star LLC. However to date, Spinning Star has been unable to secure the expected construction financing for its wind farm project in Texas.”  (Additional comments made as mentioned above indicate they will likely never see revenue from Spinning Star).

The company did acknowledge that they were “in discussions” with several different wind energy project developers in the US but that no binding contracts have been signed. 

The bottom line is that APWR has very little credibility left and this is perhaps one of the biggest earnings misses I have covered in the two years I’ve been covering green stocks earnings reports.  If you’re looking for a play on China wind energy which is a struggling industry now, but could provide big profits in a few years, then it’s time to focus on China Wind Systems (CWS) and China Ming Yang Wind (MY). 

4 thoughts on “A-Power Energy (APWR) Crushed After Big Miss, Lowered Guidance; Texas Wind Project Likely Dead”

  1. did U listen to the Conf Call ??

    did U hear the potential and future contracts???

    Yes, they MISSED bigtime this quarter but honest brutal accounting appreciatted vs cooking the books like some RINO like companies!

    will WIND SALES for 2011 be more or less than 2010??? Ever heard, BUY LOW , SELL HIGHER ?

  2. You just don’t give up do you? I read everything I need to read in the press release. Is there potential in APWR particularly at these levels? Yes. Is this a well run company that is a leader in the wind energy segment? NO. This stock is dead for quite some time and will be at least 6 months before this stock has a chance to get anything going again in my opinion.

  3. so, what U are saying is “”U DID NOT listen to the Conf Call”’??????? Not doing your due diligence, and then comically implying the CEO is going to be fired, well, that is too funny!

    the stock was ALIVE for 5% today but i guess U sort of kinda forgot that part of the equation….
    anyone can look out the back window AFTER the fact and drive the car in reverse, its those that can LOOK FORWARD , ie the 22kwh hybrid/wind/solar/LED light pole………how much revenues do U think this will add end of 2011 ?? More or less WIND REVENUES for 2011 than 2010??? that is all that matters…..

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