Knobias Clip Report (02-12-2008)
Submitted By Knobias ClipReport
APWR: Reports Two New Power Generation Contracts Worth $72.3M
A-Power Energy Generation continued its disbursement of positive news on Tuesday after the Company announced the signing of two new contracts to develop distributed power generation systems worth a combined $72.3 million.
The first is a $44.5 million contract to construct a 24 MW distributed power generation system for a new paper and pulp plant in Wuzhong, China. The project is expected to begin in June 2008 and will take about 12 months to complete. The second is a $27.8 million contract to construct a 24 MW stand alone distributed power plant in Hailen, China. The project is expected to begin this month and will be completed in approximately 12 months.
Shares spiked to highs of $19 before falling to lows below $17 on investor trepidation, ending the day down 5.5% on 700K
The Company recently announced an agreement with Norwin A/S of Denmark which gave GaoKe the exclusive right to produce and sell Norwin’s 750 kW and 225 kW wind turbines in China. The Company also announced that GaoKe received letters of intent for 380 2.5 MW wind turbines which was noted as utilizing all of the anticipated plant capacity through 2009. GaoKe is the Company PRC operating subsidiary.
Assuming the Company finalized all 380 LOI’s, they would recognize some $1.12 billion in sales and some $112 million in profits, using average prices and the margins provided but disregarding the $17.4 million in license fees and the LOI’s for the smaller 750kW versions. In comparison, the Company (formerly Head Dragon Holdings Limited) reported revenue of $38.76 million in the third quarter producing $4.19 million in income. Nine month results displayed revenue of $110.45 million and $11.85 million in income.
With the new contracts, the Company will now add another $72.3 million in revenues over this year and next. But even with the positive news, investors were timid in their buying and the strange reaction also caused many to simply stay away. The news and reaction are similar to what Chinese names have experienced many times before. China steel names saw increased attention last September before long consolidations. Chinese, though almost all, solar name have experience the same during 2007.
But with many taking notice of the Company, and the propensity for positive news, the name is certainly one for investors to watch over the coming months as they begin to build these wind turbines and power plants. Investors would be wise to watch.
Visit 1800blogger to see all of our industry leading blogs.
