Jan814_1999 2010 Guidance/Oppenheimer/Raymond James

Time to line up some of the future looking APWR guidance for 2010 looking forward. jan814 and I agree that if APWR can and does deliver 33% wind factory for 2010, APWR wind revenues will ramp throughout 2011. Its all about delivering results and under promising then over delivering results!

I have taken a look at what the coming revenue and earnings numbers might look like, not only to include the recent financings, but also to reflect the failure of APWR to generate any revenue from turbine sales in Q4 of 2009. For FY 2010, I looked at the possibilities in two ways. First, I excluded all revenue from the Texas wind farm just in case that project does not materialize. Second, and separately, I included the Texas wind farm in the study, but moved the wind farm schedule to the right with 80 turbines being delivered in 2010 (total will eventually be 240).
But let’s start with Q4.
Without getting into a lot of detail, my Q4 Non-GAAP EPS is now $0.37 and FY2009 is $0.83. I doubt if too many folks are going to care too much about Q4 despite it being a record quarter, because all eyes will be on FY2010 and the emergence of APWR as a significant player in the wind turbine business. The delivery of those first ten turbines was like a breath of fresh, pleasurable, air.
Let’s look at FY2010, WITHOUT any contribution from the Texas wind farm.
I have increased DPG revenue by 20% to $384 million. DPG net margin is 11%.
On the wind turbine side I have APWR shipping 100 2.7mw turbines, 20 2.5mw units to the Saiwusu Wind Farm in Inner Magnolia (5 already shipped), 8 to the Rixhao Donggang Wind Farm in eastern China (5 shipped), and 72 of the big turbines to CACS (that 380 LOI is still good through 2010) or other customers. That 100 units is just 33% of the Shenyang first line plant capacity (without the 30% plant expansion).
Turning to the smaller turbines, I have APWR shipping 10 of the 1.5mw units in 2010 (they planned to ship 10 in 2009) and 30 of the 750kw units (they had hoped to ship 30 in 2009). These smaller units will total 40 which is 9.5% of the second line capacity at the Shenyang plant.
The prices of all the turbines are $.5 million for the 750KWs, $1.5 million for the 1.5MWs and $4.0 million for each of the 2.5/2.7MW units, recognizing that the big turbines for Texas will sell for closer to $5 million but the high shipping and handling costs of those Texas units may mean that 20% (or $1 million of the $5 million) may not contribute to net margin. Net profit margins are 8% for all turbines.
Total revenue for FY2010 comes out to $811 million, net income is $76.40 million, and EPS is $$1.34 on 57 million shares.

The 57 million shares are yearend F/D shares and include shares from options, shares from warrants including the new January 21 warrants, the January 21 financing shares, and the CEOs one million 2009 bonus shares. The 57 million shares also include five million future financing shares to help pay for the new Nevada plant , the Evatech China plant, and more turbine components, but do not include the two million 2010 CEO bonus shares because even though those shares are probable they are not yet guaranteed.
Now if we add 80 2.5MW turbines for the Texas wind farm in 2010, the revenue goes to $1.131 Billion, net income in dollars is $102.00 million, and EPS is $1.79. The Texas wind farm makes a difference.
As to what kind of a PE ratio we might apply to these earnings, consider the following.
1) Yahoo has APWR in the Electric Utilities industry and the average PE for those 63 public companies is 14.90. But there are many boring companies in that industry and APWR is more than a utility company. In fact it kind of stands out among those 63 companies because its’ year over year quarterly revenue growth is the sixth highest in the entire group. But a PE of 14.90 gives us a start.
2) APWRs current ttm PE is 15.75 even after the recent drop in price.
3) The average PE of China Analyst U.S. listed China stocks with a growth rate of 20-25% (APWR is 23%) is 22.34.
4) If the above estimates are close to reality, the various 2009 to 2010 growth rates come in as follows:
Without any Texas wind farm revenue:
Revenue growth will be 153% ($811 million versus $320 million). Earnings growth in dollars will be 145% ($76.40 million versus $31.20 million) . EPS growth will be 61% ($1.34 versus $.83).
With revenues from the Texas wind farm:
Revenue growth will be 253% ($1131 million versus $320 million). Earnings growth will be 227% ($102.00 million versus $31.2 million). EPS growth will be 116% ($1.79 versus $.83).
5) As of 1/29/10, Goldwind in China and a key competitor of APWR is trading at a 25.75 PE despite their recent announcement of a $1.5 billion share offering in Hong Kong.