AMSC just signed a very big contract with India's Inox corporation which will equate to $210 million in revenues over the next 3-4 years (and likely additional revenues beyond that time frame, according to statements by the CEO during last Monday's CC)
finance.yahoo.com
What this PR does mention is that Inox will be paying $12 million to license AMSC's Electronic Control Systems technology (minus the source code) so they can manufacture ECS domestically.
On December 16, 2015, the Company and Inox entered into a Technology License Agreement (the "License Agreement"). Under the License Agreement, the Company has agreed to grant to Inox (i) an exclusive license to use the Company's technology (not including the source code) to internally manufacture and supply ECS only for use in its Wind Turbines in India, and (ii) a non-exclusive license to use the Company's technology to manufacture, distribute and supply ECS only for use in its Wind Turbines in the rest of the world (together, the "License"). The grant of the License will become effective after Inox makes an advance payment under the Supply Contract and the upfront payment under the License Agreement discussed below. The License granted to Inox is subject to the limits on the number of ECS permitted to be manufactured by Inox as set forth in the Supply Contract.
Under the License Agreement, Inox is required to make payments to the Company in the aggregate amount of $12 million to be paid as follows: (i) an upfront payment to the Company of $6 million within thirty (30) days after execution of such agreement, and (ii) an additional $6 million as milestones are satisfied over the fifteen-month period from the License Agreement effective date.
This means that within 30 days, AMSC will be $6 million richer in cash, not to mention the likely revenues hitting in the first quarter.
Now.. regarding the stock, it's likely we're about to see a short squeeze based upon this news. Over 10% of the company's stock is short and some brokerages (Scottrade) have instituted online buy restrictions on the shares. If you want to buy the stock through them, you have to contact a live broker to place the trade. There are no restrictions to online selling..
There was no explanation for the restrictions, but Scottrade reps stated that their were no shares available to short.
This stock is going to more than double its revenues, with a stronger cash position, and a long-term contract in place.. Moreover, they are retaining control over their intellectual property via withholding source code (the problem they had with the Sinovel issue of intellectual property theft)..
As for Sinovel, they will likely be seeing themselves facing a criminal trial this next December, unless they decide to settle their issues with AMSC. If they do settle for a substantial $$$ amount, this will just prove to be gravy..
I think this company is a strong buy even with the restrictions. I see $10+ within a month or two, depending on any other pending news (I assume the company will issue a PR when they pocket that $6 Million from Inox)..
Bottom line, I wouldn't want to be short in this stock..
Hawk |
