Investing for the Future of China
Author: skibare22 Jun
What happenned to APWR in the last 2 weeks???? What happenned to the solars in China last 2 weeks?? Did the tide turn and China decided not to spend that stimulus money ??? Answer to all of the above is nobody knows for sure but the reality is that China is going to build more wind power in next 5 years than entire world added together.
APWR has dropped 50% in past 2 weeks and if you have just stumbled upon my wind blog, one mans trash is another mans cash. I have been buying last 5 days in APWR for the future. Sure the stock has dropped but the company is in better shape today than they were six months ago. Guessing the short term investors forgot APWR just raised guidance an net income for the year and can raise guidance anytime they land a new DPG contract of which they are scheduled to land multiple new wins by end of 2009.
Well, WHY then did APWR drop 50% in last 2 weeks????? Answer, they raised cash to expand their business model and they missed their quarterly estimates by a few pennies. Reason to dump the stock??? Hardly!
I am going to CONTINUE buying as APWR drops for the future……..this aint for next months rent money and this aint for the faint of heart cause when U see the Thailand contract appear, the stock will skyrocket. Till then, it will probably continue to drop given the mood of the world for renewable energy at this present moment!
2 Responses for "Investing for the Future of China"
Fully agree with your analysis (this one and other) and enthousiasm about APWR. Their business model and fundamentals look very solid and promising. Like you say, for the moment the wind aspect is a bonus for the future, sort of a cheap call option.
The investment needs in energy for the next 20 years are staggering (over 20 trillion USD until 2030) and not everybody realises that 50% of this will need to be invested in electricity (the same as oil, gas, nuclear and alternatives combined…), and again a huge part of this in China (see IEA annual outlook and updates).
So what went wrong in the last two weeks?? I also had a bundle invested in APWR; mostly in options, so not much is left..But I bought again today and, based on the fundamentals, I’m still very confident that things will turn around.
But it also seems that the market has lost some confidence in APWR; as clearly indicated by you in your open letter to the management of APWR, their reporting is late, not always accurate, there is a lack of transparency, no quarterly guidance etc With a beta of almost 3 a loss of confidence is quickly translated into prices going downhill.
A second element could be the new CFO, Peter Mak. Have you done a lot of DD on him? He seems to be very well connected (too well it seems to me, he serves on the board of an endless list of companies -check out Venfund.com-). He retired from New Dragon Asia where he arrived in 2004. At the end of 2005 New Dragon issued a lot of preferred stock and warrants…and look what happened with the share price of NWD after beginning 2006 to now…
APWR also just announced they will issue preferred convertible bonds + warrants. It is understandable that as they grow they need to raise capital. But this is the stuff that make investors nervous; there will be a substantial number of bonds hanging over the market at probably relatively low conversion rates…
Finally, their results for 09Q1 were of course quite disastrous (and w/o any warning); even lower than 08Q1, which merits some punishment from the market, particularly for a growth company. And I don’t really buy their excuse of bad weather…
Still (very) optimistic about the fundamental long term prospects of APWR, but in the short term it does not look solid enough.
But you seems to know APWR a lot better than I do; look forward to your views
Postit
got to remember, I have been predicting for over a six month period the horrible 1Q09 and I was sadly right and NOT smart enough to know that the market would completely act ””’surprised”’ and just sell off and dump. Of course I had no clue Tobin was going to become a jerk and cut coverage all together after APWR refused to suit his demands for transparency. YES< APWR mgt needs a lesson in what USA investors DEMAND for transparency but they seem to just act like they dont know………I am trying to get them to use Twitter right now, lets see if they take my suggestion. The future is going to be very bright in 2010 for APWR and the GE ALLIANCE and the SHENYANG POWER Alliance…….wind will finally ramp in 2010 (NOT BEFORE) and up we go…….accumulate at WILL with both hands right now in this time frame if my advice! I know I am !!! I eat my own cooking!
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