A-Power Energy Generation (PINK:APWR)

The GEO Team is awaiting the filing of the firm's 2007 10 K for further analysis.

Currently, it appears that APWR has approximately 33 million shares outstanding and is essentially paying no taxes. Applying a standard tax rate to the company would infer EPS of $.29 for 2007.

Fully Taxed adjusted EPS guidance range for 2008 is $.67 to $.86. This would translate into a minimum of 130% EPS growth rate for 2008.

Valuing APWR is somewhat challenging. Typically the GEO Team applies a

- P/E of 25 to fully taxed trailing EPS in conjunction with a 15 P/E on the four quarters forward fully taxed EPS to obtain an idea of what a stock may be worth in the short-term.

AND

- A P/E of 25 on the four quarters forward fully taxed EPS to obtain an idea of what a stock may be worth in the longer-term.


However, there are certain instances when we may look to other methods to derive additional valuation possibilities such as:

- When the company's short or long term EPS growth rate exceeds 50%.
- When the company is involved in a HOT sector.
- When the company is the leader in their industry.

APWR meets all three of these criteria. In addition the management seems very focused with a goal of maximizing shareholder value:

"We believe one of our most important tasks is not just to ensure a strong current performance, but at the same time to create the conditions for sustainable long-term success with the goal of becoming the leading clean energy company in Asia. We feel that we took a major stride in that direction in 2007 – in the interest of our stockholders, our employees and A-Power.” (Source: Press, March 31, 2008)

In cases like this the GEO Team may use EPS growth rates and/or higher P/E's in the analysis of potential value. Please refer to the Potential Valuation Scenario section of this discussion for an example an example.


The GeoTeam has held a position in APWR for sometime now.