Strong Buy on Sunpower Group Limited SGX 5GD

Sunpower Group Limited

SGX: 5GD

Woraphop Viriyaroj, Corporate Account Executive

Heffernan Capital Management

Symbol 5GD

Exchange SGX

Current Price SGD 0.29

52 Week High/ Low SGD 0.17-0.35

Shares Outstanding 329M

Market Cap (in $ mn) 97.05

P/E Ratio 6.57

Recommendation:

Sunpower group Limited is a strong buy with a

2011 price target of $1

Key Developments:

• Revenue improved by 62.3% to RMB265.9 million in 3QFY2010 from RMB163.8 million in 3QFY2009

• Group optimistic on growing momentum of energy conservation and environmental protection

• Secured RMB90.5 million in orders from repeat customers in the Purified Terephthalic Acid industry

• The Subsidiary Company has signed a RMB149.5 million (SGD28.8 million)

contract with Heng Li Petrochemical

About the Company

Sunpower Group Ltd. is an investment holding company. The Company specializes in the

design, research and development and manufacture of environmental protection products and

solutions, using heat-transfer technologies for the petrochemical, chemical, solar energy, coal

liquefaction, pharmaceutical, tobacco, metallurgical and transportation industries.

The Company’s divisions include Heat pipes and heat pipe exchangers; Pipes supports;

Pressure vessels, and Energy saving and environmental protection systems. Its energy-saving and

environmental protection systems are mainly energy-recovering systems, such as Flare-Gas

Recovering Systems.

The Flare-Gas Recovering Systems are used to recover petrochemical byproducts

contained in flare gas, or waste gas.

The Company’s heat pipes and heat-pipe exchangers facilitate the recovery of residual

heat in petrochemical, steel and chemical projects. It focuses on corrosion-resistant heat

exchangers

Company’s Website: http://www.sunpower.com.cn/

IR Contactor: Charles Chen

Tel: (+86)25-52169787

Fax: (+86)25-52169700

Email: [email protected]

Business Overview

Around 85 percent of Sunpower's revenue comes from China and the remaining from overseas markets like Southeast Asia, the United States and Europe.

Sunpower is currently among the top three companies in China's high-end market for energy-saving products and aims to be number one in three to five years, Ma said, adding that Japanese company Morimatsu and state-owned firm Bao Se are its chief competitors.

High-end heat exchangers and pressure vessels use more durable metals like titanium and nickel alloys and require more advanced manufacturing procedures.

News

Sunpower Group Ltd.'s Jiangsu Sunpower Technology Co., Ltd. Secures Contract

Wednesday, 10 Nov 2010 08:30am EST

Sunpower Group Ltd. announced that its wholly owned subsidiary, Jiangsu Sunpower Technology Co., Ltd., (Sunpower Technology) has signed a RMB149.5 million (SGD28.8 million) contract with Heng Li Petrochemical (Da Lian) Ltd. (Heng Li Petroleum) a subsidiary of Heng Li Group. Under the contract, Sunpower Technology will supply energy efficient core equipment made up of titanium and titanium alloy, for phase one of Heng Li Petrochemical’s Purified Terephthalic Acid (PTA) project. With a PTA production capacity of 1.2 million tons per annum, Heng Li Petrochemical aims to build a world class environmental plant that integrates energy efficient technology.

Sunpower Group Ltd.'s Subsidiary Secures RMB54.0 Million Worth of Contracts

Tuesday, 19 Oct 2010 12:41am EDT

Sunpower Group Ltd. announced that its wholly owned subsidiary, Jiangsu Sunpower Technology Co., Ltd., has signed two contracts worth RMB54.0 million (approx SGD10.6 million) with Jiaxing Petroleum Co., Ltd., a subsidiary of Tong Kun Group Ltd. Under the contracts, Sunpower Technology will supply core equipment such as heat exchangers and dehydration towers to meet Jiaxing Petroleum’s purified terephthalic acid (PTA) annual production capacity of 800,000m3. The contracts are expected to be delivered by Fiscal 2011.

Sunpower Group Ltd.'s Jiangsu Sunpower Technology Co. Ltd. Receives Contract Worth

MYR36.5

Monday, 27 Sep 2010 09:05am EDT

Sunpower Group Ltd. announced that its wholly-owned subsidiary, Jiangsu Sunpower Technology Co. Ltd. has signed a core equipment manufacturing contract with Zhejiang Shaoxing Yuandong Petro-chemical Co., Ltd. or Yuandong Petrochemical on September 16, 2010. The contract focuses on the manufacturing of energy-saving heat exchangers, with a total contract value of MYR36.5 million. The equipment, is expected to be delivered in 2011 and will be supplied to Yuandong Petro-chemical’s three-phase, 14 million tons, purified terephthalic acid (PTA) production project. This is another major contract of the Group relating to PTA projects, after the previous contracts secured from Zhejiang Yisheng Petro-chemical Co. Ltd. and BP Belgium.

Sunpower Group Ltd's Secures Contract From Blue Diamond international Co., Ltd

Monday, 2 Aug 2010 07:32am EDT

Sunpower Group Ltd. announced that Jiangsu Sunpower Technology Co., Ltd (Sunpower Technology), a wholly owned subsidiary of the Company, had on July 20, 2010 entered into a contract (Contract) with Blue Diamond international Co., Ltd (Blue Diamond) to supply 5 sets of Hastelloy equipment such as energy recovery device and reboiler for a contract value of USD9.4 million.

Source: Reuters

Daily Chart

Outlook

With a strong business presence in China, the Group is poised to take advantage of the opportunities present in the market. According to an article on Bloomberg news, China, the world’s biggest polluter and energy user, will continue to implement measures including tax incentives, price reforms and financial subsidies to spur environmental and power conservation in the next five years. Quoting Mr.Xie Zhenhua, Vice Chairman of China’s National Development and Reform Commission in a press conference on the 29th of September 2010: “The country will spend 83.3 billion yuan ($12.5 billion) on energy and environmental conservation in China in 2010 after investing 128.5 billion yuan from 2006 to 2009.” This strong message sets the tone for the Chinese government’s commitment towards encouraging sustainable development by improving energy efficiency.

"The market is vast because heat exchangers and pressure vessels are required in almost every industry. The demand for energy-saving business can continue for decades," executive director Frank Ma told the Reuters Climate and Alternative Energy Summit.

"The Chinese government has many policies to encourage companies to lower their energy consumption. Our customers also desire to improve their profit by cutting their operating costs," he added.

"We are in the top three in terms of revenue, brand name, experience. Our target is to be the top in this area," Ma said, adding that Sunpower had a compounded annual growth rate of 25.6 percent from 2005 to 2009.

Financial Statement

VALUATION RATIOS

Company Industry Sector S&P 500

P/E Ratio (TTM) 6.57 23.23 27.12 17.84

P/E High - Last 5 Yrs. -- 0.47 0.33 18.98

P/E Low - Last 5 Yrs. -- 0.07 0.07 4.83

Beta 1.11 1.17 1.15 1.27

Price to Sales (TTM) 0.54 2.10 1.92 2.09

Price to Book (MRQ) 1.44 1.70 1.44 2.84

Price to Tangible Book (MRQ) 1.51 2.15 1.64 19.10

Price to Cash Flow (TTM) 5.26 11.71 14.93 10.46

Price to Free Cash Flow (TTM) -- 22.45 15.56 47.74

% Owned Institutions -- -- -- --

DIVIDENDS


Dividend Yield NA 1.23 1.29 1.68

Dividend Yield - 5 Year Avg. 0.00 1.57 1.17 2.46

Dividend 5 Year Growth Rate -- 5.53 9.30 -6.46

Payout Ratio(TTM) 0.00 26.27 29.85 39.62

GROWTH RATES


Sales (MRQ) vs Qtr. 1 Yr. Ago 62.33 40.01 469.02 9.36

Sales (TTM) vs TTM 1 Yr. Ago 30.90 12.04 7.14 8.94

Sales - 5 Yr. Growth Rate -- 4.09 8.04 9.86

EPS (MRQ) vs Qtr. 1 Yr. Ago 38.38 306.74 168.97 5.76

EPS (TTM) vs TTM 1 Yr. Ago 46.42 -- -- --

EPS - 5 Yr. Growth Rate -- 2.79 11.39 6.98

Capital Spending - 5 Yr. Growth Rate -- 3.00 18.07 4.90

FINANCIAL STRENGTH


Quick Ratio (MRQ) 1.08 2.53 1.27 0.67

Current Ratio (MRQ) 1.44 3.20 1.58 0.99

LT Debt to Equity (MRQ) 15.89 22.56 53.94 118.67

Total Debt to Equity (MRQ) 72.25 33.27 71.63 173.06

Interest Coverage (TTM) -- 0.20 0.15 19.01

PROFITABILITY RATIOS


Gross Margin (TTM) 26.57 26.70 21.51 32.87

Gross Margin - 5 Yr. Avg. 23.14 31.34 23.45 29.18

EBITD Margin (TTM) 13.57 -- -- --

EBITD - 5 Yr. Avg 11.41 16.92 13.00 18.55

Operating Margin (TTM) 12.41 10.46 8.23 --

Operating Margin - 5 Yr. Avg. 10.22 12.80 8.86 16.25

Pre-Tax Margin (TTM) 11.08 10.68 8.28 15.01

Pre-Tax Margin - 5 Yr. Avg. 8.79 13.72 8.91 15.86

Net Profit Margin (TTM) 8.93 6.77 5.85 11.14

Net Profit Margin - 5 Yr. Avg. 7.73 8.66 6.01 11.64

Effective Tax Rate (TTM) 19.34 41.85 28.84 50.15

Effecitve Tax Rate - 5 Yr. Avg. 12.13 36.68 103.57 25.24

EFFICIENCY


Revenue/Employee (TTM) -- 99,674,605 49,981,433 676,313

Net Income/Employee (TTM) -- 5,682,584 3,140,451 84,785

Receivable Turnover (TTM) 2.28 4.22 5.87 10.51

Inventory Turnover (TTM) 2.61 3.49 13.80 6.76

Asset Turnover (TTM) 0.87 0.59 0.56 0.55

MANAGEMENT EFFECTIVENESS


Return on Assets (TTM) 7.74 3.93 2.92 6.01

Return on Assets - 5 Yr. Avg. 7.23 7.06 4.26 5.77

Return on Investment (TTM) 24.10 5.07 4.14 7.71

Return on Investment - 5 Yr. Avg. 21.62 10.40 7.40 7.46

Return on Equity (TTM) 24.52 6.63 6.89 18.04

Return on Equity - 5 Yr. Avg. 22.01 12.81 10.77 9.25

CONTACT:

Mr. Woraphop Viriyaroj

Corporate Account Executive

Heffernan Capital Management

Email : [email protected]

Mr Woraphop Viriyaroj passed Level 1 of the Chartered Financial Analyst (CFA) in the year 2010 and Certified Investment and Securities Analyst (CISA) Level 2 in 2010 and holds a degree in Industrial Engineering.

Price Estimate by Shayne Heffernan PhD

Shayne Heffernan of Ebeling Heffernan holds a PhD in Economics serves as CEO of Heffernan Holdings Inc and Co Founder of Ebeling Heffernan www.ebeling-heffernan.com and oversees trading at www.heffcap.com

Bangkok

Suite 53 Athenee Tower 63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 THAILAND

Tel: +66 2 126 8000 Fax: +66 2 126 8080

New York

347 5th Avenue, Suite 1402-508 Ny, NY 10016

Tel: +1 646-403-9881 Fax: +1 646-403-8014

Singapore

3 Raffles Place #07-01 Bharat Building Singapore 048617

Tel: +65 6329 6408Fax: +65 6329 9699

Disclaimer

Ebeling Heffernan (EH) distributes research and other information purchased and compiled from outside sources and analysts. This

report/release/advertisement is a commercial advertisement and is for general information purposes only. Do not base any investment decision

on information in this report/release/advertisement. EH is not a registered Investment Advisor or a member of any association for other

research providers. Under no circumstances is this report/release/advertisement to be used or considered as an offer to sell or a solicitation of

any offer to buy any security or other debt instruments, or any options, futures or other derivatives related to such securities herein. All

information herein is not intended to be used for investment advice. Price Targets are academic theory and should not be relied upon. The

majority of these profiled companies are highly risky OTC Bulletin Board or Pink Sheet companies. All readers of this information indemnify EH

from any liability for all accessed information. EH will not be responsible for updating any of its information in its report/release/advertisements.

EH advises recipients of all such data to be validated from the issuing company including all statistical information derived from SEC filings, from

data sources or financial information and data from the issuing company contained herein. The reader should seek professional financial advice,

verify all claims and do his/her own research and due diligence before investing in any securities mentioned. EH will not be liable to any person

or entity for the quality, accuracy, completeness, reliability or timeliness of information in this report/release/advertisement, or for any

direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information, products or services from any

person or entity including but not limited to lost profits, loss of opportunities, trading losses, and damages that may result from any

incompleteness or inaccuracy in any of EH’s profiled companies. When paid in stock, EH its affiliates, directors, officers, outside sources, investor

awareness groups and employees may liquidate shares at any time or hold for investment purposes. Readers are advised to review SEC periodic

reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D, www.sec.gov.nasd.com, www.pinksheets.com, www.sec.gov

and www.finra.com. SPC is compliant with the Can Spam Act of 2003. Investing in micro cap and small cap securities is speculative and carries a

high degree of risk. Investors can lose their entire investment. The Private Securities Litigation Reform Act of 1995 provides investors a 'safe

harbor' in regard to forward-looking statements. EH cautions all investors that such forward-looking statements in this

report/release/advertisement are not guarantees of future performance. Investors should understand that statements regarding future

prospects may not be realized. This report/release/advertisement does not have regard to the specific investment objective, financial situation,

suitability, and the particular need of any specific person who may receive this report/release/advertisement. Investors should note that income

from such securities, if any, may fluctuate and that each security's price or value may rise or fall substantially. Accordingly, investors may receive

back less than originally invested, or lose their entire investment. Past performance is not indicative of future performance. The Company has

not paid compensation for this commercial advertisement. HCM. has written this commercial advertisement for EH.

Documents

Strong Buy on Sunpower Group Limited SGX 5GD