Macro Tsimmis

intelligently hedged investment

A-Power Energy Generation Systems, Ltd. (APWR) update

Posted by intelledgement on Tue, 30 Dec 08


Remember a couple of weeks back when we took a long position here, we quoted management as averring that they “are not expecting that the current financial crisis is likely to dampen demand for electricity in China?” Well…that was then, and this is now.

Our Chinese co-generation and windpower play, A-Power Energy Generation Systems, Ltd. (APWR), today announced that they were cutting their 4Q08 guidance for revenues to less than half (from $158 million to $76 million) and for earnings to less than one-third (from $15.5 million to $5 million) the previously announced figures.

Jinxiang Lu, APWR’s CEO, stated, “Due to the unusual current macro economic conditions, a few of our key potential contracts, which we expected to close in the fourth quarter, were postponed.”

LOL a good example of the risks of investing in individual stocks: looks as if our purchase at $6.14/share on 18 December was the highest close of the month; the stock opened December at $4.30 and closed at $3.62 on 5 December before rallying to the aforementioned close of $6.14. Since then, it has been mostly downhill; APWR closed at $4.88 yesterday and is down again sharply today on this announcement.

That’s OK. Barring the apocalypse, this is a long-term buy-and-hold investment in the China growth story for us, and when the stock gets back to $30, we expect no one will much care if we bought at $4 or $6. (At least we did not buy it in June when it was going for north of $30/share!)

Previous APWR-related post:


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