A-Power (Nasdaq:APWR) Reports Solid Results
Posted: 06 June 2008 06:54 AM   [ Ignore ]  
Total Posts:  20
Joined  2008-05-06

June 6, 2008 – A-Power Energy Systems (Nasdaq:APWR) released its Q1 financials this morning, affirming, in our opinion that at $23.19 (yesterday’s close) this stock is cheap and has tremendous upside. Here are the data points:

• Increase in Q1 revenue 85% to $32.3 million from $17.5 million Y/Y

• Increase in Q1 net income 79.1% to $2.9 million, or $0.09 per share from $1.6 million Y/Y

• Cash on hand of about $94 million up from $36 million at the end of 2007 and no debt

• Backlog of $700 million, up from $398.2 million at year end 2007
• Expects to complete wind facility in June and will be producing turbines in Q3

• Affirmed earnings guidance for 2008 of $35 to $45 million, or about $1.04 to $1.34 per share.

Assuming about 33 million shares issued and outstanding, the stock is trading at a market cap of about $765 million, or about 21x the low-end of its income guidance for 2008 (17x the high end). It is trading at 1.09x backlog, 8x cash on hand, which in our mind, are demonstrative of the fact that the stock price does not fully reflect the growth in the business. Our target trading range for the stock remains at $32 to $42, a 39% to 82% increase from current levels.

Disclosure Note: SCPEditor is LONG APWR