RECENTLY, API announced a new venture to set up wind powered plants in China.
However, this deal is unlikely to contribute to FY05 earnings.
Together with this deal, API placed out 30 million new shares at 15.5 cents
each. This raised about $4.48 million.
As we had warned during the share placement (see report dated Jan 25, 2005),
the discounted price for the placement shares would have a negative effect on
its share price.
Indeed, API's share price fell to the current level of 14.5 cents (the
52-week high is 19 cents and the 52-week low is 13.5 cents).
As API's FY04 performance is in line with our expectation, we are retaining
our FY05 estimates.
We are projecting a 9 per cent rise in FY05 earnings to $5.9 million due to
continued strong demand for electricity consumption in the PRC coming from both
industries and consumers.
At 14.5 cents, the stock is trading at 8.6 times FY05 earnings and 7.7 times
FY06 earnings. Yield is also fairly attractive at 4.8 per cent. With its profit
returning to the old level of more than $5 million per year, we are retaining
our 'outperform' rating and medium term fair value of 19 cents. - OUTPERFORM
