Due to softness in the global economy and a weakening credit market, APWR will have to cut their 2009 guidance for revenues and for net income.   APWR current management estimates are for one billion in revenues and over 100 million net income for 2009.   Current wind turbine facility problems, ie not getting wind turbines produced as management has promised will put 1Q09 revenues way behind current estimates and unless managment corrects the current slowdowns and problems, the 2009 guidance is a complete train wreck waiting to happen by APWR management.  

APWR management has a consistent habit of over promising and under delivering when it comes to wind turbine production and schedules.   Right now, they are 50 wind turbines behind past guidance and promises (20 2.7MW’s  and 30 750KW’s).  With current weakness and global slowdown, the ability to ramp production  and sales is in serious question.   The signing of GE as the primary gear box supplier will help with component delivery for 2009 and 2010 and will help APWR get investor confidence back up if you beleive the time table of 2010 given the past problems of delivering wind turbines at the start up.   Start ups of a brand new factory are always challenging and problems are always arising and being solved.  Hopefully, Furhlandher and Norwin can combine to get the problems solved so that production can finally commence.

Sales of wind units is probably dependent on seeing APWR management deliver already sold and contracted initial 50 wind turbines.   APWR management must deliver the contracted first 50 before other companies are going to give them future business.  Chinese government could sign a new contract for a huge amount when and if APWR delivers the first 50 units.   No news has been heard on the 750KW units by Norwin.

Distributed power contracts has slowed due to economic financing crisis and ongoing power reduction needs by developing countries due to economic conditions slowing in the affected countries.  Until world economies ramp, power needs and demands are going to slow down.   The 4Q08 cutting of APWR revenues for 2008 by 76 million might spill over to 1Q09 as most of the distributed power contracts spill over from one quarter to the next especially if speculation of the Thailand 300 million contract was baked into the guidance for 4Q08 and the 1Q09 and beyond.

Cold weather in China always prevents q1 work on distributed power stations and this is nothing new for APWR but I was expecting wind turbine revenues to make up for this shortfall in 1Q DG work which is very seasonal unless they would have landed the warm weather Thailand contract (which they have said is postponed and could actually happen anytime).

My estimates are now for 588 million Revenues for 2009 which is cut from original estimate of 880 million which was cut from one billion + 3 months ago.   I prefer to set the bar lower than the one billion plus that APWR management continues to stick with despite Jesup and Lamont has cut their estimates to 626 Million from 888 Million previously.  J&M continue to predict $1.44 for net income and I have cut my numbers to $1.10 given the weak and slow wind turbine production and the postponement or cancellation of the THAI Contract for 300 million in high margin DG business.   Wind Turbine margins will be severely impacted first six months of the  year and margins by management have bee projected in the 6-8% for the first few months.  Given the amount of misses by APWR management lately, I would suggest they have a meeting of the minds and give more realistic and attainable guidance versus what they have outstanding of one billion plus in revenues of current estimates and 100 million net income.  Its time to be a Nasdaq listed company and report as a nasdaq company and not a chinese company which most Americans do not beleive nor do they invest in.  Confidence and transparency can only be earned , trust by wall street is fleeting and reviewable on a daily basis.   Waiting till 2 days before quarter has ended to report  a “”"MISS”"” of 1/2 of your revenues is just NOT acceptable despite the fickle nature of getting major contracts signed and into the guidance and revenue stream.

My estimates are just that, plain old fashioned guesses and with this crazy stock market and worldwide slowdown and economic problems, anything can happen at any moment.  GE could buy APWR before 2009 is over and done with given the joint alliance on the gear box contract.   Nobody has a way of having perfect guidance as given by Jesup and Lamont and Roth Capital…..analysts evaluate and situations change on a weekly or monthly basis.   My faith in the company has been questioned due to the continued guidance for 2009 not being reworked and a more honest evaluation not in print and estimates.   Until APWR management addresses this problem with their own inner transparency to investors, I will not recommend this stock as before.   Management has the option to take their numbers down if they so choose, its all up to management to decide if they want to issue a MISS PR two days before quarter ends or just come clean after a thorough review.  My opinion is nothing more than my own backed by some serious study and alot of fact finding,  digging through alot of reports, and a lot of hopeful anticipation of covering the premier wind company in China on an ongoing basis.   No investment advice should be taken from this blog, none is given.

Opinions are not facts, and only a financial advisor should be trusted for sound investment advice.  I personally have a “”HOLD”" on this stock till management adjusts the 2009 and especially the 1Q09 guidance.