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Tuesday, January 08, 2008
Gamesa - Wind Turbines
Image: courtesy of Gamesa (www.gamesa.es)

No 2 In The Wind Power Industry

Gamesa is headquartered in Vitoria, Spain and was founded in 1976 as a new technologies company focusing on robotics, microelectronics, the environment and composite materials. In 1994 they were incorporated as a company specialising in the manufacture of wind turbines. Gamesa's core business activity is renewable energy, with primary focus on wind power turbines and wind farms, and with a minority business unit in solar energy.

Gamesa holds the second place position for worldwide wind turbine sales with a 2006 15.6% (BTM Consult ApS) global market share and 5400 worldwide employees (with Vestas Wind Systems, 1st - with a 28% share). Based upon Friday's closing price (4 Jan/08), an investment in Gamesa stock a year ago (4 Jan/07-21.23 Euros) would have returned a 38.8% increase in share price.

As a pure investment in wind turbines, Gamesa's share price should correlate well with the expected 20-25% per annum increases in global wind turbine demand over the next ten years. In their Q3 sales release (November 16, 2007) the first 9 months 2007 sales revenue was up 59% at 2.206 billion Euros versus the same 9 month period in 2006. Gamesa's current PE of 38.885 in conjunction with their large growth potential in the Chinese and American markets makes them a 'buy' stock for long term capital growth in the wind turbine sector. The only risk area to watch is how well they can control the growth in their supplier base, which like for all wind turbine manufacturers, is stretched to capacity.

Approximately 94.3 % of Gamesa's revenue comes from sales of wind turbine hardware. About 8% of wind turbine sales comes from selling wind farms equipped with wind turbines. Additionally, Gamesa is in the solar farm business with solar farm sales in the first 9 months of 2007 of 125 million (5.7% of total 9 month 2007 sales revenue). Gamesa's most recent significant awarded contract (October 9, 2007) was for 430 million Euro with Endesa, the largest electric utility company in Spain, to supply G58-850kW and G8X-2.0 MW wind turbine generators over 2008 -2010.

There are six models of Gamesa wind turbines in their product offering and these come in .85 MW (2 models: G52, G58) and 2.0 MW (4 models: G80, G83, G87, G90). A new G10x model is under development that will be very large with more than 4 MW of power output.

Gamesa's (Symbol:GAM) primary trading market is Spain's Madrid Exchange, but it also trades on the Xetra DAX (GTQ1) and London LSE (GML) and four other exchanges in minor volume. Gamesa closed (Jan04/08) at 29.47 Euros with a 52 wk high of 36.44 Euros (6 Nov/07) and a 52 wk low of 20.05 Euros (10 Jan/07). The PE for Gamesa is 35.885 and the dividend yield is 0.226%.

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