A-Power Energy Generation Systems (NASDAQOTH:APWR)

CAPS Rating: 3 out of 5

The company provides distributed power generation systems and micro power grids for industrial companies, and manufactures wind turbines.


Player Avatar TSIF (99.96) Submitted: 12/1/2010 3:19:58 PM : Outperform Start Price: $4.67 APWR Score: -72.24

Usually very large catalysts take a few days to settle and I propably upthumbed A-Power on it's 25% down day a little early. A-Power announced a VERY large decline in earning and lowered it's forcasts. The issue is broad when you consider that they are China based as China Based companies are challenged by a few of their peers being accused of outright fraud on their books. This means that A-Power's large cash holding of $172 Million, well above current book value, cannot be trusted as a backstop to the $1 Million loss they reported this quarter. Apower has drifted from near $20 per early in the year to sub-$5 after today's trouncing. I won't write off A-power completely as some investors are doing, but it may take some time to snap back and I may be early in my start price.

Wind Power turbines remain uncommitted and power connector sales erratic. A large Wind Power order, 615MW is Texas, is on the edge of being either real or cancelled as financing is being sought. A-Power reported a $279 Million Dam project in China over 6 years. While this will come in slowly, it confirms (to me) that A-Power is able to earn large contracts. Uncertainty is a stock killer. Potential, however of a large order that would send A-Power up substantially makes the risk reward reasonable.

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