APWR: Self-Off Creates Buying Opportunity. Reducing Estimates to Account for Dilution Related to Sale of $40 Million in Senior Convertible Notes. Price Target to $12.50 from $14.00.

FY09 Earnings to $0.88 from $0.95.
FY10 Earnings to $1.25 from $1.40.

Key Points:
• We are re-iterating our Buy rating on APWR. The company’s shares have declined in excess of 40% primarily
as a result of its Q109 miss (June 16) and its subsequent announced sale of $40 million in senior convertible
notes (June 19). We believe the pullback is overdone and that an investment in APWR at current levels
represents a favorable risk/reward opportunity. Our $12.50 price target is based on 10x our FY10 earnings
estimate of $1.25. APWR is currently trading at 5.9x FY10 earnings, has $1.80 in cash (ex-raise), and no debt.

• We continue to expect the company to announce additional Distributed Power Generation (DG) contracts in
the coming months, enabling it to increase its FY09 guidance of $320 million in revenue and $32 million in net
income. In particular, we believe the company is in negotiations to finalize a contract(s) in Thailand that could
add $300 million over approximately 3 years. Additionally, the Shenyang Power Alliance enables APWR to bid
on large projects both within and outside of China. The Shenyang Government owns 20% of the Alliance and
will guarantee up to $300 million in project financing. Underlying APWR’s DG growth potential in China is the
continued increase in energy consumption, the country’s overstrained grid, and increased emphasis on energy
conservation.

• Though we continue to see execution risk associated with APWR’s ramp-up of its wind turbine business, we
believe the shipment of its first two units (expected by the end of July) could act as a catalyst for APWR shares.
We are modeling the company to produce and ship 13 of its 2.7MW turbines by year-end as opposed to the
company’s production plan (not guidance) that calls for 30. We note APWR has not included revenue from its
wind turbine business in its guidance.

My TAKE on the Dougherty report::: Good analysis but too light on the wind turbines for end of 2009, they using 13, I think APWR can mistakenly make 20 even though mgt has said 30.

all in all, too light a price target based on what is going to come into 2010, market will be forward looking given what will take place later 2009 into 2010 with more DPG, Shenyang Power Alliance , and the Vietnam and Pakistan contracts along with the almost sure Thailand warm weather contract during winter 2009 into 2010.