A-Power Shares Rise On GE Wind-Turbine Gearbox Plant Venture

NEW YORK -(Dow Jones)- Shares of A-Power Energy Generation Systems Ltd.(APWR) rose 24% early Monday after the alternative-energy company announced a joint venture with GE Drivetrain Technologies for a wind-turbine gearbox assembly plant in China.

The companies also inked a supply agreement under which GE Drivetrain, a unit of General Electric Co.'s (GE) GE Transportation, plans to supply A-Power with more than 900 2.7 MW gearboxes beginning in 2010.

The companies said the agreements will improve A-Power's long-term position in China and the broader global market as well as build GE Drivetrain Technologies' customer base and launch the company into new geographies. The deals also support China's initiative to increase wind energy output to 30 gigawatts by 2020 from one gigawatt in 2005.

In recent trading, A-Power shares rose 24% to $6.09. The stock, which is down 51% in the last 12 months, traded as high as $6.38.

The companies' joint-venture agreement will create a wind turbine gearbox assembly business, of which GE Drivetrain will be the majority owner. The new assembly plant will bring multi-megawatt gearbox capacity to China and serve as GE Drivetrain Technologies' Southeast Asia manufacturing center. The manufacturing center is slated to begin serving customers starting in mid-2010, GE said.

A-Power is a provider of distributed power-generation systems in China and entered into China's wind-energy market in 2008. The company said it is focused on developing renewable energy technologies.

In December, A-Power slashed its fourth-quarter guidance due to the delay of certain contracts.

Following the news, Chief Financial Officer John Lin said in a Dow Jones Newswires interview that estimates were cut due to the delay of two major Chinese distributed power generation contracts. Lin said one - which is 20% of the company's backlog - was postponed because the contract partner didn't plan to pay its down payment, but wanted A-Power to begin work on the project.

A-Power's latest forecast is for fourth-quarter net income of $5 million on revenue of $76 million, down from previous estimates of net income of $15.5 million on revenue of $158 million.

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