Thursday, December 10, 2009

Tiny China Wind Systems Could Be a Big Winner

By Eric Jackson Senior Contributor

12/9/2009 2:30 PM EST
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Global wind power is estimated to be a $23 billion market, and one of the fastest-growing markets in the space is China. In 2006, China accounted for just 9% of that total amount invested, but if current growth rates continue, China will become the leading wind farm user in the world. Additionally, the government may endorse the technology in an effort to reduce extreme air pollution in coastal cities. Clearly, anyone interested in investing in wind technology should have China on his radar screen.

There are more than 40 suppliers -- domestic and international -- competing in the Chinese wind market today. Any Chinese governmental edicts favoring the industry would obviously first benefit the domestic suppliers, and that's where today's pick comes in.

China Wind Systems (CHWY - commentary - Trade Now) is a very small player in the Chinese wind market. It has small market capitalization (just $64 million) with a very low trading volume (just 17,000 daily average over the last three months), making it highly speculative. Its primary business is to supply the gearboxes and bearings used in windmills. Although it's not a model of good corporate governance, a number of characteristics make China Wind an attractive long investment at the moment.

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