July 30, 2009 / 4:21 PM / 10 years ago

UPDATE 4-China's wind industry boosts American Superconductor

* Raises FY09 outlook

* Posts better-than-expected Q1 results

* Largest customer Sinovel to double production in 2009

* Shares up as much as 39 pct (Adds company comments)

By A. Ananthalakshmi

BANGALORE, July 30 (Reuters) - A strong wind industry in China and an even stronger outlook for the sector helped American Superconductor Corp (AMSC.O) post solid first-quarter results and boost its full-year view.

Shares of the energy technology company rose as much as 39 percent on heavy volumes on Nasdaq.

“China, in particular the China wind industry, is the primary driver for our growth today,” CEO Greg Yurek said in a conference call with analysts.

In 2008, China grew the installed based of wind turbines to about 12 GW and early this year declared that they intended to add another 10 GW or more in 2009, Yurek noted.

Research by China Wind Energy Association projected that China would grow its wind power installed base between 108 GW and 132 GW by 2020.

According to the Global Wind Energy Council, China could well be the leader in wind energy development.

Broadpoint Amtech analyst John Hardy said American Superconductor will continue to benefit from the Chinese government’s increasing commitment towards wind energy and new customers in China.

Hardy, who has a “neutral” rating on the stock, expects continued strong results at the company.

American Superconductor spokesperson Jason Fredette said China is the reason why the company has not been hurt by the worldwide recession.

He said the country will continue to generate most of the company’s revenue in the next few quarters.

“But the reality is, looking further, as other economies continue to rebound, we would expect our percentage of revenue from China to gradually decline,” Fredette said.

He said the company was primarily targeting emerging economies like India.

Fredette also said the company was in discussions with some parties regarding commercial cable orders. He said the company would be able to bring its first commercial order for superconductor wires in two to three years.

He declined to identify the parties the company was in discussions with.

Analysts cited continued strong orders from American Superconductor’s largest customer - Sinovel Wind - for the company’s better-than-expected results and outlook raise.

Sinovel Wind, which started manufacturing wind turbines less than four years ago, is China’s largest wind turbine maker and one of the top 10 in the world, and accounts for nearly 70 percent of the company’s revenue.

On Wednesday, American Superconductor said it has accelerated shipment of wind turbine components to Sinovel Wind, increasing the overall contract value by $20 million to $470 million.

Fredette said the company would start seeing the revenue impact of this contract from the second quarter.

CEO Yurek said Sinovel is looking to double its production in 2009 and further growth is expected in 2010 and beyond.

Analyst Hardy said American Superconductor’s customer concentration problem will dissipate though this year and 2010.

“It is obviously a very good problem to have when your largest customer continues to accelerate orders,” he said.

OUTLOOK BRIGHT

For 2009, the company now sees adjusted earnings of 41 cents to 47 cents a share on revenue of $260 million to $270 million.

It had earlier forecast 27 cents to 30 cents a share and revenue of $225 million to $235 million.

The company expects second-quarter revenue and profit to be flat to slightly down compared to the first quarter.

For the first quarter, the company posted net income of $1.8 million, or 4 cents a share, compared with a net loss of $6.1 million, or 14 cents a share, a year ago. Excluding items, it earned 12 cents a share. Revenue grew 83 percent to $73 million.

Analysts were expecting it to break even and post revenue of $58.1 million, according to Reuters Estimates.

American Superconductor shares were up $6.41 at $32.69 in afternoon trade Thursday. They touched a high of $36.47 earlier in the session and were among the top percentage gainers on Nasdaq. (Editing by Jarshad Kakkrakandy, Vinu Pilakkott)

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