Update on Harbin Electric (HRBN)

Here is the beaten down stock. The stock is roughly 40% off its highs reached 2 months ago. Market conditions have been bad. The stock broke out to the downside from its trading range of $21-$24, as explained earlier. That followed breaking 200 dma to the downside as well - bad technical sign. Low float stocks always get punished in market weakness. Coupled with that was an uncertainty over earnings, but the company delivered again!

Yesterday after hours the company released its 10k, and today it released very detailed PR highlighting the financials and providing a business outlook.
One analyst has been right on the money constantly with this company - Dutton Associates. They've given pretty accurate forecast, and they continue to believe in the long term of this company.

No need for me to copy all the highlights from the PR. I'll just mention a few, which caught my attention and will comment on them in red.

• Revenues from the acquired automobile specialty micro-motors business contributed approximately $10.5 million to total revenues, representing 42% of the total revenue growth. Dutton Associates have forecasted the revenues from this business to reach $10.0 million. This is going to be a major revenue driver moving forward, and it has had a very nice growth already.
  
• The remaining 58% of total revenue growth came from increased purchases by existing customers of linear motor, armature and micro-motor products, and the new Tower Type Oil Pump which was launched in early 2007. This is another important revenue driver. The Company delivered only 13 units of the Tower Type Oil Pump in 2007, but is planning to deliver more than 200 units in 2008. That's huge
  
• We are continuing the joint development of the linear motor driven train system for urban mass transportation with the Institute of Electrical Engineering of the Chinese Academy of Sciences (''IEECAS'') and expect that this product could begin to contribute to our business in 2009, assuming a successful test run at the end of 2008. Will be interesting to see how this works out in the long term
  
• Our proprietary technology and product development capability helped gross profit margin increase to 49.6% in 2007, in our view, a remarkable achievement given that gross margin very rarely exceeds 45% in our industry. This truly is a remarkable achievment having consistent growth margins so high.
  
• The Company's products that were sold directly to markets outside China increased to 12.4% of total sales in 2007 from 3.1% in 2006, reflecting the rapid growth of the Company's international business. Another revenue growth driver. This is important, as the company is beginning to sell their products outside of China, particularly in US.
  

Finally, just want to add that they forecast their revenues to reach over $350 million in 2010. The outlook is still very good. If anybody expected bad earnings, they sure were wrong. The company posted the numbers for the most part in line with the analyst expectations. The stock may not take off right away, as it will struggle with resistance points now, plus the market is still not out of the woods, but the long term for this company is very bright. It continues to deliver on
consistent basis, and whenever the fundamentals become crucial in the market again, the stock will find its value much higher from the current levels.