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XZERES is aggressively expanding into Europe - Analyst Blog

XZERES is aggressively expanding into Europe

Steven Ralston, CFA

Over the last three months, XZERES (XPWR) has aggressively expanded into Europe, announcing significant dealer agreements with VG Energy, Ltd. (the largest distributed wind energy dealer in the U.K) and Weole Energy (the largest distributed wind energy dealer serving France).

In late September, XZERES signed for an exclusive dealer arrangement with VG Energy, Ltd., which requires a minimum of $5.0 million in turbines to be purchased from XZERES over the next 15 months in order to maintain the agreement's exclusivity in certain areas of the United Kingdom. With a dominant market share (roughly 36%) in the 15 kW-to-100 kW segment, VG Energy will utilize XZERES wind turbine products to address the 6.1 kW-to-15 kW market in the U.K. The agreement further improves the confidence that XZERES can maintain very high sequential quarter top-line growth above 30%.

Importantly, the President of VG Energy, Jim Paterson, stated that XZERES products are "the most reliable and dependable wind turbines that we have found after extensive market research around the World." This comment is a testament to the quality of the XZERES product line. Within three weeks of the agreement's announcement, VG Energy placed its first order for $360,000.

In late October, XZERES signed a dealer agreement with Weole Energy, the largest distributed wind energy dealer serving France. Having established distribution relationships in the U.K., this agreement expands the company's presence into the distributed wind energy market of Continental Europe. All 37 countries in the European Union have feed-in tariffs, with Germany, Spain, Italy, Portugal and France having accelerated the addition of new capacity in the last few years. We expect XZERES to expand distribution throughout Continental Europe, especially Germany and Italy with similar dealer agreements in the near future.

Management has plans to expand globally in phases. With the groundwork having been laid for Europe, management also plans to expand into the international markets of Asia, specifically Vietnam, Japan, South Korea and the Philippines. A $3.2 million turbine order in the Republic of Vietnam was announced in August. Ultimately, management intends to achieve a global sales and marketing footprint.

We reiterate our Outperform rating on XZERES and our price target of $1.50.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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