April 16, 2008
Knobias Clip Report (04-15-2008)
By admin
Submitted By Knobias ClipReport
APWR: Reports $150M Thai Power Generation Contract
Tuesday’s session saw a disappointing economic data release in the form of the wholesale price index. The Labor Department reported that wholesale prices rose by 1.1% last month which was the second largest jump in over 33 years. The largest was 2.6% seen in November. Analyst had been expecting a more modest .4% increase for the month.
Core inflation, which strips out food and energy, saw its number rise by just .2% which was down from .5% last month. Over the past 12 months, wholesale prices have jumped by 6.9% while core inflation is up by 2.7%, which is the largest year over year increase in almost two years.
The inflation problem presents a darned if you do, darned if you don’t predicament for the Fed. If the Fed stops the rate cuts to curb inflation, the economy risks falling into a more intense slowdown. If they continue to cut, the burden will fall on the consumer in the form of higher prices, which will end in the same result of economic slowdown. The stagflation will certainly present a problem for everyone in the country until added efficiency or higher wages begin to take effect.
One company that did have a positive piece of news was A-Power Energy Generation Systems, Ltd (APWR). The Company is the largest provider of distributed power generation systems in China and will enter into China’s wind energy market in 2008. The Company is also focused on developing and commercializing additional renewable energy technologies and has strategic relationships with both Tsinghua University and the China Sciences Academy in Guangzhou.
On Tuesday, the Company announced that it signed a contract with National Power Supply Co., Ltd., a subsidiary of Advance Agro Public Co. Ltd., a large Thai-based conglomerate, to develop a 300 MW distributed power generation system worth approximately $150 million for a large paper mill project located about 100 kilometers south of Bangkok, Thailand.
The system will be built to utilize two separate fuel sources. Half of the system will be a conventional distributed power generation system fueled by coal, while the other half will be a biomass distributed power generation system fueled by recycled waste from the paper mill. The project is expected to begin in May 2008 and will take about 24 months to complete.
The contract is the last in a list of new announcements for the Company in 2008. In February and March, the Company announced LOI’s for 380 2.5MW wind turbines; two new distributed power generation contracts worth $72.3 million, acquisition candidate, Liaoning International Construction & Engineering Group, awarded two construction contracts totaling $11 million and entered an expansion agreement with Inner Mongolia Wulahot Hengwang Heat & Electricity Generation Co., Ltd. to increase the size of its existing contract worth $175 million by approximately $105 million to $280 million.
Before the latest $150 million dollar paper mill project, the Company noted that its backlog stood at $566 million and that it expected $1.05 to $1.35 in EPS for 2008.
Following Tuesday’s news, shares only gained 1% on limited volume. The Company seems to have gone too far, too fast with positive news to investors which could be having a negative effect. Not helping the situation is that most of the contracts and announcements are with Asian entities, making it hard for analysts to confirm their validity. In any event, the name is one to watch over the coming months with the large amount of contracts and possible revenue as momentum traders could jump on the name at any time.
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