Agoracom Blog Small-Cap Company Feature: A-Power Energy Generation Systems, Ltd.

Posted by AGORACOM at 10:39 AM on Thursday, May 21st, 2009

As many of you know, we are very bullish on the long-term future of Chinese small cap and mid cap companies for two reasons:

1] The obvious reason – China is the fastest growing economy on the planet and nothing is going to slow down its ascent over the next 50 years and beyond. Investing in growth companies there just makes too much sense.

2] Great Results and Valuations – Many Small Cap Chinese Companies are listing in the US (OTCBB, NYSE Alternext and NASDAQ) with great financial results. Unlike many dubious US Small Cap Companies, Chinese Companies don’t seem to believe in losing money or failing to execute in a business plan. As such, 7-digit revenues and profits are very common.

From a valuation point of view, many Chinese companies became a victim of their own success in Q4 2008 and Q1 2009. Why? When the world needed to start liquidating, one of the first places they looked were China where most investors had significant gains to sell into. This resulted in the proverbial baby being thrown out with the bathwater and some great valuations.



They are a provider of distributed power generation systems in China and a fast-growing manufacturer of wind turbines. In fact, they are the largest provider of distributed power generation systems in China and they built China’s largest wind turbine manufacturing facility so this is a real serious company.

On April 9th, the Company announced its unaudited financial results for the fourth quarter and full year ended December 31, 2008.

Check out the full year results below!

Read Full Press Release

China Stocks TV Segment


  • Revenue up 73.5% to $265 million
  • Net Income up 87.% to 28.5 million


On a diluted EPS basis, it’s just $1.01 per share compared to $2.23 last year. That’s roughly cut into half but that’s not because their operating results didn’t live up to standards, it’s because they actually increased their fully diluted share number from about 7 million shares to 28 million shares (or four-fold) so they still did pretty well all things considering.

Also, you have to take this into account; Cash position $43.5 million. If you divide that by the number of shares outstanding, they’ve got a $1.50 in cash. Why is that important you ask? The Company closed yesterday at 4.47, let’s just call it 4.50. Take away that $1.50 in cash you can buy this company for just $3.00 a share and given the fact that they came in at a $1.01 EPS, you’re getting this company at 3 times earnings unless there’s something in this closet that we don’t know about that’s happened over the last year, this is unbelievable value.

As always, this is my view in a snapshot.  It is intended to give you a running start into your research.  Now, you have to do your own due diligence to make sure the valuation is not impaired by other factors including balance sheet items, lawsuits or any other negative events.

If you have any comments, I’d love to see them below.


We’ve provided investors with two great starting points to research great Chinese small cap and mid cap companies.

1. – tracks 250 of the best small cap and mid cap companies trading on North American exchanges. It provides you with the best of the best in two ways. First, the front page lists the best news of the day coming out of the space. It does so by giving you a text view of the best press releases by industry and via Chinese Stocks TV, a 5-minute broadcast every morning just after the open. Chinse Stocks TV is archived, so you can catch up on shows you missed.

Second, if you want to research each of the 250 companies to find candidates for your portfolio, it has a very intuitive directory that lets you quickly review each company on the master list, or parse it out by industry and exchange if you have a particular sector of interest. Cool stuff.

2. Right here on AGORACOM, you can refer to our China category for other featured Chinese Small-Cap Companies. As always, we will disclose any IR relationship with any public company. Given the sheer number of great Chinese Small-Cap Companies out there, you can expect us NOT to have an IR relationship with most of these companies.


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