Why Highpower International (HPJ) Stock Is Gaining Today

NEW YORK (TheStreet) -- Highpower International (HPJ) was gaining 10.6% to $6.46 Wednesday after announcing that its HEV/PHEV Lithium-ion battery received national level approval in China.

The company announced that its IESPD201E battery designed for hybrid electric vehicles and plug-in hybrid electric vehicles was approved by China's National Quality Control & Inspection Center for Buses.

"China will become the largest market for electric buses within the decade," Hihpower CTO Wenliang Li said in a press release. "This is another significant milestone for Highpower to get positioned for wider national adoption of our batteries in the HEV and PHEV market."

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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, compelling growth in net income and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and weak operating cash flow."

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

  • The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 22.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electrical Equipment industry. The net income increased by 645.0% when compared to the same quarter one year prior, rising from $0.11 million to $0.81 million.
  • 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 reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HIGHPOWER INTERNATIONAL INC reported lower earnings of $0.11 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus $0.11).
  • Net operating cash flow has declined marginally to -$4.49 million or 3.67% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, HIGHPOWER INTERNATIONAL INC has marginally lower results.
  • Currently the debt-to-equity ratio of 1.55 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, HPJ has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: HPJ Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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