A-Power Down; Issues Weak Forecast

Shares of Chinese alternative energy player A-Power Energy Generation Systems are among the biggest losers in the pre-market Wednesday, even as A-Power beats earnings expectations.
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SHENYANG, China (

TheStreet

) --

A-Power Energy Generation Systems

(APWR)

beat earnings expectations for the fourth quarter of 2009, however, its outlook for 2010 is well below the forecast of the limited number of analysts that cover the Chinese alternative energy stock.

Shares of A-Power were down between 8% and 10% in pre-market trading, and continued the drop after the opening bell, changing hands down more than 12% within 10 minutes of the market open.

A-Power shares were among the most active early movers on the Nasdaq Stock Market -- more than 275,000 shares were traded early on Wednesday morning in the pre-market, and A-Power's share decline was $1.45, to $10.55. A-Power's average daily trading volume is 1.2 million shares.

The biggest gap between the Street and A-Power Energy is with the alternative energy company's revenue outlook for 2010. Granted, there are only two analysts who cover A-Power Energy, but those two analysts forecast 2010 revenues of $543 million.

A-Power Energy management is guiding the revenues of $380 million and net income of $45 million. Revenues in 2009 were $311 million, a 17.5% year-over-year increase.

For 2010, analysts were forecasting earnings of $1.32 per share of A-Power Energy. For the full year 2009, A-Power's revenues of $311 million resulted in earnings per share of $1.05.

In the fourth quarter, A-Power Energy reported earnings of 61 cents a share, excluding one-time charges, versus a Street estimate of 41 cents.

The gap between A-Power GAAP-based earnings, including one-time charges and expenses, and the non-GAAP earnings used by the Street, was $44 million. On a GAAP-basis, A-Power had a loss of close to $24 million of 69 cents a share.

Gross margin increased in the fourth quarter from 17.8% to 21.3%, driven by sales of higher margin wind turbines.

However, the company hedged its bets on growth in the two most important wind turbine markets, saying it continues to grow in the U.S., but not as much in China.

Jinxiang Lu, A-Power's Chairman and CEO stated in the earnings release, "As our DG solution continues to extend its growth track record and win customers in China and aboard, our wind business is picking up speed. While Chinese domestic customers remain interested in large wind turbines with proven records, our involvement in the Texas wind farm development paved the way for our foray into the much larger US wind energy market."

-- Reported by Eric Rosenbaum in New York.

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