NEW YORK (TheStreet) -- China Hydroelectric Corp.  (CHC) was rising 22.7% to $3.35 after the company announced it has entered into a definitive agreement and plan of merger with CPT Wyndham Holdings Ltd. and CPT Wyndham Sub Ltd., both of which are affiliates of NewQuest Capital Partners and the funds it manages.

Wyndham will purchase China Hydroelectric for $1.17 per ordinary share or $3.51 per American Depositary Share. The company announced on Sept. 4, 2013 it had received a non-binding proposal letter from CPI Ballpark Investments Ltd, an affiliate of the NewQuest Funds, to purchase all of the Company's outstanding ordinary shares that they did not already own. The $3.51 price represents a 57.4% premium over the closing price of $2.23 ADS on Sept. 3 and a 60.5% premium over the volume-weighted average trading price of the ADSs during the 30-day trading period up to and including Sept. 3.

As of 3:17 p.m. on Monday, China Hydroelectric had a volume of more than 1 million, far above its average volume of 67,143 and nearly hit its one-year high of $3.37.

TheStreet Ratings team rates China Hydroelectric ADRs as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHINA HYDROELECTRIC CORP-ADR (CHC) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 81.3% when compared to the same quarter one year ago, falling from -$1.66 million to -$3.01 million.
  • Net operating cash flow has significantly decreased to $11.96 million or 52.02% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, CHINA HYDROELECTRIC CORP-ADR underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for CHINA HYDROELECTRIC CORP-ADR is currently very high, coming in at 85.31%. Regardless of CHC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CHC's net profit margin of -18.37% significantly underperformed when compared to the industry average.
  • CHC, with its decline in revenue, underperformed when compared the industry average of 6.1%. Since the same quarter one year prior, revenues fell by 18.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: CHC Ratings Report