Oppenheimer Comments On SmartHeat Inc. Following Earnings Report

SmartHeat HEAT reported better than expected 4Q10 sales and roughly in-line EPS. Margins expanded y/y, driven mainly by cost controls and better economies of scale. Operating cash flows also turned positive in 4Q10, up from negative cash flows in 3Q10 and 4Q09. Management modestly lowered its 2011 sales and net income guidance to reflect macroeconomic risks. Oppenheimer believes the revised guidance is a prudent move as the company works to tighten its credit policies and improve its working capital management.

SmartHeat lowered its 2011 revenue and net income guidance from $135-160M and $25-30M to $120-150M and $22-28M to reflect inflation pressures and a tightening credit environment in China. Oppenheimer is maintaining its 2011 sales and EPS estimates of $151M and $0.77, relative to consensus estimates of $150M and $0.76.

Oppenheimer has a $6 PT and Perform rating on HEAT

HEAT closed Tuesday at $3.95