NEW YORK (TheStreet) -- Highpower International (HPJ) is sinking after announcing it had entered into definitive purchase agreements with several institutional investors for the sale of stock in a registered direct offering.
By midday, shares had tumbled 16.4% to $4.81.
The company said it would sell 1 million shares of common stock at $5.05 a share, plus warrants to purchase an additional 500,000 shares with an exercise price of $6.33 a share. The offering is expected to generate total gross proceeds of around $5.05 million.
In a statement, Highpower said it plans to use proceeds for general corporate purposes, including "research and development, sales and marketing, general and administrative, manufacturing, and capital expenditures."
The offering is expected to close on April 17.
Ardour Capital Investments acted as the exclusive placement agent for the offering.
TheStreet Ratings team rates HIGHPOWER INTERNATIONAL INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate HIGHPOWER INTERNATIONAL INC (HPJ) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 24.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 125.00% and other important driving factors, this stock has surged by 444.11% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- HIGHPOWER INTERNATIONAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, HIGHPOWER INTERNATIONAL INC reported lower earnings of $0.11 versus $0.13 in the prior year.
- The debt-to-equity ratio is very high at 2.02 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, HPJ has a quick ratio of 0.62, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Electrical Equipment industry and the overall market, HIGHPOWER INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: HPJ Ratings Report