Portfolio Update: Harbin Electric
Harbin Electric (Nasdaq: HRBN) a U.S.-listed company focusing on linear motor technology with operations based in Harbin, China, on March 7 announced financial results for its fourth quarter and full year ended Dec. 31, 2006.
Revenues surged 70.9% to $40.4 million in 2006 from $23.6 million in 2005. Net income increased 84.4% to $18.4 million, or $1.01 per diluted share, from $10.0 million, or $0.67 per diluted share, in 2005. It should be noted that $6.7 million, or $0.35 per diluted share, of the $18.4 million is related to a change in the fair value of warrants.
In the fourth quarter of 2006, revenues grew 66.9% to $12.0 million, from $7.2 million a year earlier. Strong sales of linear motor and special motor products drove revenues, according to the company. The fourth quarter earnings growth was strong at 146.1% to $6.7 million, from $3.0 million in the year-ago quarter. It should be noted that $4.2 million of the $6.7 million is related to a change in the fair value of warrants.
Shares of Harbin are up approximately 441% since being added to the Rising Star Stocks portfolio on Sep. 18, 2006. Harbin is estimated to earn $0.89 per diluted share on revenues of $59.5 million in 2007, according to a single estimate gathered by Thomson Financial Network. For 2008, the company is estimated to earn $1.62 per diluted share on revenue growth of 73.4% to $103.2 million. Based on these estimates and the current price of $14.09, shares of Harbin trade at 15.9X the current year’s estimate and a low 8.7X the forward year estimate.
We maintain our Buy rating and are raising our price target of $13.00 to $16.00, which is based on a pricing multiple of approximately 10X forward year earnings.
Note: This portfolio update is from Rising Star Stocks, an independent investment advisory focusing on uncovering potential investments that are poised to revolutionize their industries. Rising Star Stocks is published monthly with an intra-month update and periodic special reports. For more information visit http://www.risingstarstocks.com
