Harbin Electric ( HRBN) is an electric motor company in China with a market cap of $650 million. Analysts are looking for 2010 earnings per share of $2.10 vs. $1.53 per share for 2009. This represents a 37% growth and a meager forward P/E of 10. We were impressed that the company recently reduced its debt to $9 million from $46 million, a development that may help investors justify the P/E multiple expansion that has already begun.Through a diversified product line that includes linear, micro and rotary motors, the company is capable of addressing a wide variety of industry sectors. In simple terms, the application of each product line depends on the industry served: rotary motors will serve most industrial automation applications;
linear motors focus on offering a more efficient, technologically advanced alternative to some industrial applications;
micro motors address non-industrial applications, such as automotive seats. Harbin plans on targeting higher-end niche market segments, while methodically entering new markets as applications for its motors evolve. Until recently, Harbin's product portfolio only consisted of linear and micro motors. The rotary motor line was recently added through the acquisitions of Weihai Simo Motors in July 2008 and Xi'an Simo Motors in October 2009. At a November China Growth conference, we asked Executive Vice President Christy Shue why Harbin is aggressively targeting the rotary market, given the benefits of the linear motors with respect to energy efficiency and maintenance and the ability to be configured into different sizes and shapes. She initially responded by emphasizing that Harbin sees growth potential in all three motor segments.