The company has two principle business divisions: CTC Cable and DeWind. The cable segment specializes in the development of aluminum conductor composite core (ACCC) conductors for use in electrical grid infrastructure. Aluminum costs less than copper, but it presents a number of challenges for long-distance transmission lines. Peak electrical loads can result in physically hotter temperatures. Standard cables can sag under these operating conditions. Pure aluminum is also less effective than copper as an electric conductor.
The ACCC design incorporates a core of ceramic fiber-reinforced aluminum wrapped in
Composite Technology Corporation's DeWind division was acquired in July, 2006. DeWind has outstanding turbine technology, and a history of technical excellence in Germany. Their older turbines have an installed base of over 580 units worldwide, mostly comprised of the 1.25 megawatt capacity D6 model. In the near-term, we believe the new D8.2 turbine has excellent opportunity to win large contracts for 2009 and beyond. The company has partnered with TECO Westinghouse in Texas for mass production, a major strategic leap forward for the company. Order flow could suddenly leap into the hundreds of millions of dollars within a year, should the company prove the capability to execute mass production. Our research suggest the company is on track.
Institutional investors are also taking a fresh interest. Credit Suisse owned 4% of Composite Technology Corporation from previous investment. On May 9, 2008 the company announced it had sold an additional $10 equity stake to Credit Suisse, and an option until June 30th for a further $40 million. While we can't be sure at this juncture, we see no reason why Credit Suisse will not make the additional $40 million investment.
Composite Technology Corporation trades with a market capitalization of roughly $260 million. On a trailing twelve month revenue basis given the momentum in their cable business, the stock trades at 4.7 times revenues. While this isn't cheap by conventional valuation metrics, it represents profound value in the alternative energy space, particularly when it looks like CTC is well on it's way to securing deployment contracts for the D8.2 wind system.
Before the open we will establish a limit order to purchase 17,000 shares at $1.07. We will write more about the company in the near future. The company trades on the over the counter market in the Unites States. On Yahoo Finance, the ticker is CPTC.OB
For more information, we suggest the following initial sources:
Visit their website: compositetechcorp.com Review their presentation at the Jefferies Global Clean Technology Conference (click here for PDF)
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