Power technologies company, American Superconductor Corporation (AMSC) has recently announced plans to offer 4.6 million common shares to raise funds for capital expansion programs. The company will also grant the underwriters an option to purchase an additional 15% of the shares sold to cover any over-allotments.
Global financial services firm Morgan Stanley & Co. Incorporated (MS), Deutsche Bank Securities Inc., the investment banking division of Deutsche Bank AG (DB); and Jefferies & Company Inc., the principal operating subsidiary of global investment bank Jefferies Group Inc. (JEF) are acting as joint book-running managers for the public offering.
American Superconductor plans to use the cash from the public offering of shares to expand capacity at its superconductor wire plant and pursue deals that will allow it to grow and diversify its business. The company offers an array of proprietary technologies and solutions spanning the electric power infrastructure -- from generation to delivery to end-use. American Superconductor is a lead player in megawatt-scale wind turbine designs and electrical control systems.
American Superconductor also offers a host of smart-grid technologies for power grid operators that enhance the reliability, efficiency and capacity of the grid, and seamlessly integrate renewable energy sources into the power infrastructure. These include superconductor power cable systems, grid-level surge protectors and power electronics-based voltage stabilization systems.
American Superconductor competes with Power-One Inc. (PWER), Exide Technologies (XIDE) and AVX Corporation (AVX). American Superconductor focuses on rapidly-growing areas of the power and utility industry, specifically wind power and smart grid infrastructure technology.
American Superconductor’s core areas of expertise include megawatt-scale wind turbine designs and electrical control systems, along with a host of smart grid technologies for power grid operators to increase reliability, efficiency and capacity of the grid, apart from seamlessly integrating renewable energy sources into the power infrastructure.
The company has also built significant sales momentum in countries where dynamic voltage standards for wind farms have been put in place, such as Australia, Canada, New Zealand and the United Kingdom.
American Superconductor generates a substantial portion of its topline from its largest customer Sinovel, China's largest and the world's third largest wind turbine manufacturer. Sinovel accounted for approximately 76% of its total revenues for the six month period ending September 30, 2010.
Going forward, American Superconductor’s fortunes will shine with Sinovel expanding its capacity, line-extension of wind turbines and ambitious export sales growth.
American Superconductor’s substantial focus on China will aid its growth and offset the impact of a tepid U.S. and European wind market due to the after-effects of the global recession. In 2010, the company expects Chinese wind power installations to rise to between 16–18 GW, and exceed 20 GW in 2011.
Overall China plans to invest about $740 billion over the next decade to increase its non-hydro renewable exposure to 15% of its total power generated by 2020. This presents a golden opportunity for growth to the company to capitalize on its position as a leading provider of electrical components to Chinese wind turbine makers.
We maintain our Outperform recommendation on American Superconductor, which currently has a Zacks #2 Rank that translates into a short-term ‘Buy’ rating and indicates that the stock is expected to perform better than the overall U.S. equity market for the next 1-3 months.