Since I first wrote about NF Energy Savings Corp. (NFES.OB) in late July as a growth play on clean energy infrastructure in China, the stock price has increased by over 60% thanks to new deal flow and strong 2Q09 results yesterday.
NF Energy is a manufacturer and service provider for the improvement of energy efficiency and the reduction of emissions in China. NFES is a leading provider of wind cogeneration equipment and flow control systems for coal, hydro, and nuclear cogeneration facilities with 20-30% market share in the rapidly growing thermal power device market and 10% share in the market for hydropower devices.
On 7/29/09, NF Energy signed a Strategic Cooperation Agreement with GE Enterprise Development (Shanghai) Co. LTD , a General Electric (NYSE:GE) subsidiary, to jointly promote sustainable market development and to cooperate in energy savings projects in China.
Earlier this week, the company announced a deal with the Liaoning Government for the implementation of an energy efficient lighting system, which will involve replacing traditional lamp bulbs with compact fluorescent lights for office buildings.
Yesterday, NF Energy reported that its 2Q09 revenue more than doubled (+137%) the company’s previously issued guidance, resulting in record 1H09 revenue and net income thanks to the Chinese stimulus package and the focus on energy efficiency in the country. Revenue for 2Q09 increased 21% from 2Q08 to $5.2 million while net income increased 9% from the year-ago period to $1.2 million or $0.03 per fully diluted share. On 5/22/09, NF Energy reported an order backlog of $35.9 million and estimated that $2.2 million would be completed during 2Q09.
NF Energy ended 2Q09 with $11 million in cash receivables, $2.7 million in payables, and no long term debt. The company expects to issue updated guidance in the near-term to reflect the growing demand in China for its products, which was underestimated in previously issued estimates – as reflected by the revenue reported yesterday that exceeded guidance by 137%. NF Energy noted that its business continues to accelerate in 2H09 (aided by the China economic stimulus plan), including widespread utilization of the company’s energy-saving products and strong demand for wind power infrastructure components.
Please visit the company’s Pro-Active News Room website for more information and resources, including the 3Q09 corporate presentation and a stock research report written on 7/20/09 by Catalyst Financial Resources with a high-risk buy rating and $2.50 price target. Data sources for this article include the National Bureau of Statistics of China, Credit Suisse estimates, China Electric Council, NFES Corporate Presentation, NFES SEC filings, and the NFES research report by Catalyst Financial Resources (with some highlights from this report summarized below).
Disclosure: No positions