With favorable policy support from the Chinese government, wind power has been witnessing a rapid development in recent years, with annual growth reaching more than 100 percent in the past few years. It’s estimated that China’s wind power industry will continue its high growth momentum in the coming years with the annual growth rate likely surpassing 60 percent, according to a recent article.

Our Buzz Stock of the Day — A-Power Energy Generation Systems Ltd. (Nasdaq: APWR) — could likely be a big beneficiary of China’s greening.

The power systems firm reported a net income of $10.0 million, or $0.30 per share, compared with earnings of $3.4 million, or $0.25 per share, a year ago. Analysts were projecting earnings of $0.15 per-share.

Revenue rose 93.5 percent to $81.4 million in the fourth quarter.

For 2009, the company expects revenue of about $290 million and net income of about $29 million. These targets are based on the Company’s current distributed power generation (DG) backlogs, which are subject to change when the company signs new DG contracts and/or recognizes revenues from wind turbine sales during 2009.

“After China posted robust growth rates in wind turbine installation from 6GW in 2007 to 12GW in 2008, the Chinese government recently unveiled another ambitious plan to invest $11.7 billion (RMB 80 billion) in expanding the wind energy market to 30GW and requiring utility companies to generate 15 percent of their power from wind by 2010,” said A-Power’s chairman and CEO, Jinxiang Lu. “As we believe many Chinese domestic wind turbine producers are facing technological barriers and component shortages in their mega-watt class turbine production, A-Power, with its European and U.S. relationships, is well positioned to gain market share.”

A-Power had cash and cash equivalents of $43.5 million as of December 31, 2008, compared with $59.7 million at September 30, 2008. Working capital as of December 31, 2008 was $97.0 million, compared with $95.8 million at September 30, 2008.

The Shenyang-based company has had quarterly earnings growth of 124 percent year-over-year, and quarterly revenue growth of 119 percent year-over-year.

A-Power’s P/E ratio is 7.8, well below the industry average of 11.4, making it all the more attractive at these levels.

“Alternative energy perhaps has a near-term problem with overexposure in our opinion, but the industry is not hype by any stretch, and China’s demand for power will only increase again once the global crisis has passed,” said Brian Yerger, a partner at ARDA Advisors.

With recently announced partnerships with General Electric, and European wind turbine makers Fuhrlander and Norwin, A-Power could become a major player in China’s alternative energy market.