July 15, 2008 – OK, we recommended Yingli Green Energy (NYSE:YGE) a Chinese midstream solar company on May 30, when it dipped below $20 to $19.94 commenting at that point, based on its fundamentals and performance that the stock was cheap. Since then, the company has announced several deals including five contracts into Korea (7MW), sales into Belgium (10MW), four orders into Germany (64MW) and has begun production of its 200MW expansion. Citi upgraded the stock to a Buy on June 2. And today, the stock is trading at what we think is a pretty massive discount to 2008 forecasted sales and earnings at $14.73.
Based on a P/S (ttm) multiple it is getting this morning of 3.31 (on a fully diluted basis), and based on our forecast of $1 billion in sales for 2008, we think that a 3.31 P/S model against 2008 revenue would put the stock at $25.54, a 71% premium to this morning’s stock price. Based on a P/E (ttm) multiple it is getting this morning of 28.98 (on a fully diluted basis and based on our forecast of $120 million in net income for 2008, we think that a 28.98 P/E model against 2008 earnings would put the stock at $26.84, an 82% premium to this morning’s stock price.
We thought the stock was cheap at $19.94. This morning, at $14.73 we are pounding the table on the stock and believe at current levels the risk-reward here is startling.
Disclosure Note: SCPEditor is LONG YGE.