trumanburbank

A-Power Energy Generation Systems, Ltd. Q2 2009 Earnings Call Transcript

Oops, I cut off my prior comment by mistake. Should've read,

"...Even so, an improvement in solar energy conversion efficiency from thin film panels from 8% to 13-15% would be a major breakthrough and would be huge news for the company. I share your skepticism. This line of business remains unproven. Nonetheless, I love the company and think that it has enough profitable and promising lines of business to generate significant growth over the coming two years."

A-Power Energy Generation Systems, Ltd. Q2 2009 Earnings Call Transcript

Reading the transcript, I think you're right to question the "30% efficiency" remark. I think the translation was mangled -- you'll note that the quote was, "...30 to 15%" efficiency. So I think the correct translation should've been, "...13 to 15%" not 30 to 15%. Even so, an improvement in solar energy conversion efficiency from thin film

On Aug 30 03:19 PM Wisdom vs. Information wrote:

> BIPV company they bought for $50M(?) wil raise their film efficiency from 8% to 30%? fact: not without a technological breakthrough not yet invented, much less developed...worries me about sanity/rationality of the entire enterprise.

Three Compelling Chinese Stocks

CHLN:
Love the company and the stock; thanks for the analysis (updating your analysis of a couple of years ago, which was also very good, if a little ahead-of-its-time in relation to stock price).

Correction/question related to sales prices per sq. meter in Xi'an: you state that
"Assuming Puhua achieves net income of 25% sales this would translate to net income, for CHLN alone, in the region of $100 million over the 4-year life of the project. These figures are arrived at by using sales price per sq metre of $850 – being recent sales price per sq metre achieved by CHLN. In reality Puhua is a very upscale project, is situated directly on the Ba river front and it should command selling prices a great deal higher than just $850 per sq metre, or $80 per sq feet."

Although it's possible that CHLN will achieve such prices in Puhua, the company recently quoted 4,955 RMB per sq meter in other projects for Q2, which translates into about $658/sq meter, not $850. This relatively modest housing cost in Xi'an is actually a significant positive for this company. Property prices in Xi'an have never experienced the bubble or crash seen in the coastal cities. Xi'an is much more affordable and has experienced steady, sustainable growth in sales generally and $ per sq meter. In addition, Xi'an is not overbuilt -- living space per capita is well below most other large cities, leading to substantial pent-up demand among Xi'an's large upper-middle class population (CHLN's typical target customer up to now).

Keep the generally excellent articles coming. Thanks.

Go East, Solar Companies

Right-click and "open in new window" and it's legible...

The Madoff Affair: Greed's Victory Over Common Sense

...Just to be clear, I agree with the author regarding due diligence, but disagree in part with prior commenter Josh Stern when he states that "...what I've heard doesn't lead me to believe that due diligence is the answer to the problem of fraud avoidance."

As I stated, due diligence doesn't always prevent fraud, but it does detect fraud, expose it and stop it with a high degree of certainty when dd tools are used appropriately. And when applied prior to investment, dd can prevent a particular investor from participating in a fraud such as the one perpetrated by Mr. Madoff. Of course, as we learned, if the police and regulators are informed and follow up appropriately, this type of dd should also bring the whole fraud to light, although it seems that unresponsive regulators failed to act on the signals in this instance.

The Madoff Affair: Greed's Victory Over Common Sense

Due diligence, and not even very concerted due diligence, apparenly kept many investors away from this toxic fund manager's clutches, so explain to us again why due diligence isn't the answer. The Mass Mutual-related hedge fund that was simply a feeder fund for Madoff just forwarded their entire $3.5 bil under managment to Madoff, charging their unsuspecting investors a 1% annual fee. I think that for $35 mil in annual fee income they could've scraped off a few dollars to look over Madoff's audits, which were apparently done by an unheard-of firm with one CPA and a calculator. Those who took the time to examine the Madoff trading strategy found that it's virtually impossible for it to have generated the reported consistent returns. To perform this due diligence one only needed access to google -- you could do it on your cell phone in a half hour. Yes, fraud will always be an element of the business world, but there is an entire mini-industry within the world of finance that is designed to evauate risk, "internal controls" and operational integrity (and even a freshly-minted junior auditor would immediatly have recognized the near-total absence of proper internal controls at Madoff). The private side of this mini risk-management industry works (or should work) hand-in-glove with their public sector counterparts in the SEC and related agencies. These mechanisms will never prevent fraud, but if properly funded and used as designed they will catch fraud quickly and consistently, with an almost mathematical certainty. Just ask your CPA.

(Disclosure: I'm not in the risk-management business, nor am I a CPA, but I do understand the fundamentals of internal controls, fraud prevention and forensic accounting.)

It ain't rocket science, but fiduciaries, managers of OPM (Other People's Money) and those who handle the public purse are responsible for understanding these tools well enough to know how and when to employ them.)

China: Wind Power for 1.3B People

Another wind power play in China is Jinpan International, a high-tech and profitable producer of power transformers that is moving into windmill transformers, a fast-growing part of this fast-growing business that opened a new plant which increased its capacity by 50 this year.

It was recently named to Forbes List of 'Asia's Best 200 Under A Billion for the second year in a row. Current P/E about 9.

Disclosure: I'm long Jinpan (NASDAQ:JST)

China: Wind Power for 1.3B People

Another wind power play in China is Jinpan International, a high-tech and profitable producer of power transformers that is moving into windmill transformers, a fast-growing part of this fast-growing business that opened a new plant which increased its capacity by 50 this year.

It was recently named to Forbes List of 'Asia's Best 200 Under A Billion for the second year in a row. Current P/E about 9.

Disclosure: I'm long Jinpan (NASDAQ:JST)

Solar Grade: A Silicon Revolution

Moore's law as applied to PV market is not a particularly useful or exact fit. See the article (Is PV Moore's Law Really On Track?) here:

blogs.spectrum.ieee.or...

Emerging Markets Infrastructure Is Booming

There must be some subway firms that will benefit from the fact that China will build more subway miles in the next 15 years than exist in all of Europe presently, though I haven't researched that space.

One more pure play is Jinpan International (JST:AMEX), a small but profitable and rapidly growing Chinese high-tech producer of electrical trasformers that should benefit from expansion of the electric grid in China (90% of company sales are in China). Currently selling a TTM PE of about 14, and just opened new production plant last month.

There must be many other firms with similar pieces of the transportation, power, water/sewer systems that will benefit from increasing governmental infrastructure investments, but it's difficult to find pure plays.

Disclosure: long JST

Chinese Solar Stocks Present Compelling Value

Sorry, that should say "S&P buy recommendation on TSL was posted 7/16/2008...

Chinese Solar Stocks Present Compelling Value

This S&P buy recommendation on TSL was posted 7/6/2008, including EPS estimate of $3.72 for 2008.

S&P MAINTAINS BUY RECOMMENDATION OF TRINA SOLAR ADSS Updating selected Q2 guidance, TSL now expects revenues of $200M-$205M, gross margin of 22.5%-23.5%, and operating margins of 14%-15.2%. These metrics are notably above our model and previous guidance. Consequently, we are raising our '08 earnings per ADS estimate by $0.54 to $3.72, supported by our confidence that management will continue to execute growth plans.

China's Biggest Real Estate Developer Approved for IPO

As with politics, all real estate is local. While there may be short-term bubbles in the hot Beijing and Shanghai mkts, China continues to urbanize at a rate and scale never experienced previously in history. Look to the second-tier cities, where property remains modestly priced and growth continues unabated. Xi'an, for example, just published its city development plan:

"Under Xi'an's new development plan, which was approved by the State Council of China on May 10, 2008 and covers the years 2008 through 2020, the population of the Main City Zone is expected to grow from 3.1 million people in 2007 to 4.5 million in 2010 and 5.28 million in 2020.

The new development plan also specifies that the average living area per person in the Main City Zone will increase from 161 square feet in 2007 to 237 square feet in 2010 and 355 square feet in 2020. To meet the new living area specifications, 567.4 million square feet of new housing will need to be built by 2010, and a total of 1.4 billion square feet of new housing will need to be added in the intervening 13 years from today to meet the new minimum specification by the end of 2020."

This is typical of growth projections for large cities in China. A recent McKinsey report estimated that China will soon have a billion urban residents, an increase from the present 650 million or so -- an increase roughly equivalent to the present population of the US.

Chinese real estate development has a considerable run ahead, with the occassional Beijing bubble along the way.

Disclosre: I own China Housing and Land Development (CHLN: NASDAQ)