SmartHeat Soars but Catalyst Unclear (Update 1)
Updated from 3:29 p.m. ET to add the company's statement and closing share price.
NEW YORK (TheStreet) -- Shares of SmartHeat(HEAT) was the top percentage gainer on the Nasdaq, rising more than 45% on exploding volume.
The reason behind the investor exuberance is a bit murky. The China-based company, which makes clean tech heating equipment, reported its fiscal 2011 results after Monday's close, swinging to a deep loss from last year as sales dropped nearly 50% and it recorded heavy charges from goodwill impairment.
The positives appear to be its report of a strong sequential rise in sales in the fourth quarter, and management commentary that it believes a demand slowdown in China will be "temporary." SmartHeat also said it's undertaken restructuring efforts, including staff reductions, and is tightly controlling costs.
Still, a move of such magnitude nearly always has a clear catalyst, and this kind of volatility is worthy of wariness. SmartHeat itself, in a statement release shortly before the closing bell, pleaded ignorance to what was behind the buying.
The stock finished at $7.68, up 46%, with nearly 12.4 million shares changing hands. The issue's average trailing three-month daily churn is a little more than 70,000, according to Yahoo! Finance. Earlier in the session, the shares ran as high as $9.64, and they are now up 180% from Monday's close at $2.74.
SmartHeat completed a reverse 1-for-10 stock split in February when its shares sank below 50 cents each.
For 12 months ended Dec. 31, SmartHeat said it lost $24 million, or $6.20 a share, down from a year-ago profit of $22.7 million, or $6.79 a share. Revenue totaled $65.2 million for the year, down from $125.4 million in 2010. The latest results include charges from goodwill and inventory impairment of $9 million. Operating expenses soared to $43.6 million in 2011 from $18 million in the prior year.