CHINA MING YANG WIND POWER GROUP LTD ZHONGSHAN, China, May 27, 2015 /PRNewswire/ -- China Ming Yang Wind Power Group Limited (NYSE: MY) ("Ming Yang" or the "Company"), a leading wind energy solution provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2015.
First Quarter 2015 Operating and Financial Highlights:
-- For the quarter ended March 31, 2015, total wind turbine generators
("WTGs") for which revenue was recognized amounted to an equivalent wind
power project output of 406MW, or 100 units of 1.5MW WTGs and 128 units
of 2.0MW WTGs.
-- Total revenue was RMB1,334.9 million (US$215.3 million) compared to
RMB1,224.0 million in the first quarter of 2014.
-- Among the revenue of RMB1,224.0 million in the first quarter of
2014, revenue of RMB321.1 million, representing WTGs with power
output of 99MW, was recognized under the EPC arrangements. None of
the WTGs commissioned in the first quarter of 2015 was under the EPC
arrangements. As such, total revenue other than EPC arrangements
increased by 47.8% in the first quarter of 2015 compared to the
corresponding period in 2014.
-- Gross profit was RMB189.1 million (US$30.5 million), compared to
RMB192.0 million in the first quarter of 2014.
-- Gross margin in the first quarter of 2015 was 14.2% compared to
gross margin of 15.7% in the first quarter of 2014. Gross profit of
the EPC arrangements in the first quarter of 2014 was RMB59.1
million, representing a gross margin of 18.4%, and projects other
than EPC arrangements recorded a gross margin of 14.7% in the first
quarter of 2014.
-- Total comprehensive income was RMB43.0 million (US$6.9 million),
compared to total comprehensive income of RMB185.8 million in the first
quarter of 2014.
-- Total comprehensive income in the first quarter of 2014 included the
gross profit of EPC arrangements of RMB59.1 million and a gain on
the loss of control of subsidiaries of RMB124.5 million. There were
no such items in the first quarter of 2015.
-- Basic and diluted earnings per share were RMB0.33 (US$0.053) and RMB0.32
(US$0.052), respectively, compared to basic and diluted earnings per
share of RMB1.54 and RMB1.51, respectively, in the first quarter of
2014.
"We are pleased with our strong year-on-year revenue growth in the first quarter of 2015," said Mr. Chuanwei Zhang, Chairman and Chief Executive Officer of Ming Yang, "Driven by a series of positive policies in China to promote the wind energy sector, demand for wind turbine products has been increasing recently. In addition, while we are on the track to evolve into a technology-driven, service-centric provider of comprehensive wind energy solutions, we also see growing business opportunities in the value-added service area throughout the entire life cycle of wind farm operations."
Mr. Zhang added, "In order to realize our vision and strategies, we took an important step earlier this month by acquiring a leading electrical systems total solutions provider in China, Tianjin REnergy Electrical Co., Ltd. and its subsidiary, (collectively "RENergy"). In addition to the anticipated significant cost and technology synergies, Ming Yang is also expected to be able to extend its current product and service offerings upon the completion of this acquisition. With this acquisition and the continued execution of our overall strategy, we are confident that we can deliver growing shareholder value in the years ahead."
First Quarter 2015 Operating Data and Unaudited Financial Results
Revenue
Revenue in the first quarter of 2015 was RMB1,334.9 million (US$215.3 million) compared to RMB1,224.0 million in the first quarter of 2014. Among the revenue of RMB1,224.0 million in the first quarter of 2014, revenue of RMB321.1 million was recognized under the EPC arrangements. As such, total revenue other than EPC arrangements increased by 47.8% in the first quarter of 2015 compared to the corresponding period in 2014 of RMB902.9million. The increase was due to the combined effect of (1)a 41.5% increase in the number of WTGs commissioned (measured by power output) as mentioned below, and (2) more 2.0MW WTGs with higher selling price being commissioned in the first quarter of 2015 compared with the corresponding period of 2014.
WTGs for which revenue was recognized in first quarter of 2015 amounted to an equivalent wind power project output of 406MW, or 100 units of 1.5MW WTGs and 128 units of 2.0MW WTGs. In the first quarter of 2014, revenue was recognized for WTGs with power output of 386MW, among which WTGs with power output of 99MW was under EPC arrangements. These 99MW WTGs were commissioned prior to the first quarter of 2014 but revenue was recognized in the first quarter of 2014 when the EPC project companies became financially independent from Ming Yang to settle the sales amount of WTGs. None of the WTGs commissioned in the first quarter of 2015 was under EPC arrangements. As such, in terms of power output, WTGs commissioned other than EPC arrangements in the first quarter of 2015 showed an increase of 41.5% compared to WTGs with 287MW power output in the first quarter of 2014.
Gross Profit and Gross Margin
Gross profit was RMB189.1 million (US$30.5 million), compared to that of RMB192.0 million in the first quarter of 2014. Gross margin in the first quarter of 2015 was 14.2% compared to gross margin of 15.7% in the first quarter of 2014. The gross profit of EPC arrangements in the first quarter of 2014 was RMB59.1 million, representing a gross margin of 18.4%, and projects other than EPC arrangements recorded a gross margin of 14.7% in the first quarter of 2014.
On an adjusted basis, should warranty provisions be excluded from cost of sales, the Company's adjusted gross margin would be 17.1% for the first quarter of 2015, compared to 18.9% for the corresponding period in 2014.
Selling and Distribution Expenses
Selling and distribution expenses were RMB53.4 million (US$8.61 million) for the first quarter of 2015, compared to RMB30.9 million for the corresponding period in 2014, representing an increase of 72.8%. The increase was mainly due to the increase in the number of WTGs transported.
Administrative Expenses
Administrative expenses were RMB89.2 million (US$14.4 million) for the first quarter of 2015, compared to RMB68.1 million for the corresponding period in 2014, representing an increase of 31.0%. The increase in administrative expenses was mainly due to provision for doubtful trade and other receivables of RMB27.5 million (US$4.4 million) being made in the first quarter of 2015 as compared to RMB5.8 million provision being made in the corresponding period of 2014.
Research and Development Expenses
Research and development expenses were RMB18.6 million (US$3.0 million) for the first quarter of 2015, compared to RMB19.6 million for the corresponding period in 2014.
Gain on Loss of Control of Subsidiaries
There was a gain on loss of control of subsidiaries of RMB124.5 million that was recognized during the first quarter of 2014 as a result of the Company's deconsolidation of Global Wind Power Limited ("GWPL") and accounted for GWPL as a joint venture under equity method of accounting from January 1, 2014, pursuant to the Company's waiver of certain voting power in GWPL. There was no such gain in the first quarter of 2015.
Net Finance Income/Expenses
Finance income was RMB33.6 million (US$5.4 million) for the first quarter of 2015, compared to RMB37.2 million for the corresponding period in 2014. The decrease in finance income was mainly attributable to the decline in interest income from bank deposits and entrusted loans.
Finance expenses were RMB17.7 million (US$2.9 million) for the first quarter of 2015, compared to RMB41.6 million for the corresponding period in 2014. The decrease in finance expenses was mainly due to the repayment of RMB1 billion of Ming Yang's medium-term notes that matured on January 12, 2015.
Profit Before Income Tax
Profit before income tax was RMB48.7 million (US$7.9 million) for the first quarter of 2015, compared to a profit before income tax of RMB200.5 million for the corresponding period in 2014. Profit before income tax in the first quarter of 2014 included the gross profit of EPC arrangements of RMB59.1 million and the gain on the loss of control of subsidiaries of RMB124.5 million as mentioned above while no such items were recorded in the first quarter of 2015.
Income Tax Expense
Income tax expense was RMB8.0 million (US$1.3 million) for the first quarter of 2015, compared to income tax expense of RMB13.2 million for the corresponding period in 2014.
Total Comprehensive Income and Earnings per Share
As a result of the cumulative effects of the factors discussed above, total comprehensive income for the first quarter of 2015 was RMB43.0 million (US$6.9 million), compared to a total comprehensive income of RMB185.8 million for the corresponding period in 2014.
Basic and diluted earnings per share were RMB0.33 (US$0.053) and RMB0.32 (US$0.052 ) for the first quarter of 2015, respectively, compared to basic and diluted earnings per share of RMB1.54 and RMB1.51, respectively, in the corresponding period in 2014.
Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2015 were RMB650.6 million (US$105.0 million), compared to RMB2,169.8 million as of December 31, 2014.
Recent Business Developments
-- MY acquired electrical systems provider, RENergy -- In May 2015, MY
announced the acquisition of a 99% majority equity interest in China
Smart Electric Group Limited ("China Smart"), a Cayman Islands company.
China Smart owns all of the equity interest in Wise Renergy Holdings
Limited, a Hong Kong company, which in turn owns all of the equity
interests in mainland China-based subsidiaries, Tianjin REnergy
Electrical Co., Ltd. and Tianjin Ruiyuan Electrical Co., Ltd. (all such
Renergy entities are collectively referred to as "RENergy"). RENergy is
China's largest supplier of core components for WTGs, including
components such as main control systems, pitch control systems and
converters. Ming Yang expects to integrate RENergy's patented electrical
control system technologies into Ming Yang's existing product offerings,
allowing Ming Yang to evolve further into a provider of comprehensive
wind energy solutions and to address a wider range of its customers'
requirements. For details of the transaction, please refer to the
related press release and presentation on the Investor Relations section
of the Company's website.
-- MY launched 3.0MW 120-meter three-blade super compact drive ("SCD") WTG
-- In May 2015, the innovative SCD wind turbine utilizing Ming Yang's
own technologies was unveiled. As an important complement to the
Company's current flagship product of 6.0MW two-blade offshore SCD, the
3.0MW 120-meter SCD mainly targets low-wind onshore areas, a significant
market after China started to focus the development of eastern and
southern areas.
-- MY is in the process of securing approximately 1GW wind resources --
Ming Yang's wind and solar farms investment arm has obtained government
approval for approximately 400MW quality projects and is in the progress
of applying for government approval for approximately 600MW quality
projects and Ming Yang anticipates to realize 2GW installations by 2017.
Ming Yang expects that the downstream projects will not only contribute
cash flow to Ming Yang, but will also act as demonstration projects for
Ming Yang's next-generation wind turbines.
Business Update
Order Book Update
-- New Sales Contracts -- During the first quarter of 2015, Ming Yang
entered into sales contracts for wind power projects with a total output
of 264 MW, representing 66 units of 1.5MW WTGs, 81 units of 2.0MW WTGs
and 1 unit of SCD 3.0MW WTG.
-- Order Backlog -- As of March 31, 2015, the Company's order backlog was
approximately 3.55GW, representing 1,005 units of 1.5MW WTGs, 930 units
of 2.0MW WTGs, 60 units of 2.5-3.0MW SCD WTGs and 1 unit of 6.0MW SCD
WTG. Cumulative signed orders since inception was10.41GW, representing
4,848 units of 1.5MW WTGs, 1,449 units of 2.0MW WTGs, 80 units of
2.5-3.0MW SCD WTGs and 1 unit of 6.0MW SCD WTG.
Industry Update
-- By the end of the first quarter of 2015, China's cumulative
grid-connected wind power capacity reached 101GW with, 4.7GW of new
installations added during the quarter, according to the National Energy
Administration (the "NEA") of China.
-- In order to meet its target of generating 15% of total electricity from
renewable sources by 2020, the NEA increased the next five-year plan's
cumulative power capacity target from 200GW to 250GW by the end of the
same year.
-- In an effort to balance electricity generation and consumption, the NEA
has prohibited provinces with curtailment rate over 20% from installing
new wind farms.
-- Quotas were set at provincial levels in order to give priority to
electricity from renewable sources by certain provinces in China. For
example, one notice from Inner Mongolia said that new energy will
represent 15% of total on-grid power generation by 2015, compared with
10% in 2014.
-- The 5th batch of wind power projects that were released by the NEA in
late April for the 12th five-year plan announced an aggregate power
capacity of 34GW, which was a record amount and beat market
expectations.
Earnings Guidance
Based on the Company's current order book and its current views and estimates on its current operating and market conditions, its current business plans and customer demand, and without taking into consideration the effect of its recent acquisition of RENergy, the Company expects that for the quarter ended June 30, 2015, (i) its estimated revenue will be in the range of RMB1.4 billion to RMB1.6 billion, representing an increase of 50% to 71% compared with RMB0.9 billion for the quarter ended June 30, 2014; and (ii) its estimated net profit for the period will be in the range of RMB50 million to RMB55 million, representing an increase of 327% to 370% compared with RMB11.7 million for the quarter ended June 30, 2014. Please note that these projections are subject to change and changes may be material. In addition, the second quarter is typically a seasonally slower period since it is a rainy season in many parts of China when the construction progress on customers' wind farms is generally slow.
Without taking into consideration its recent acquisition of RENergy, the Company affirms its projected ranges of estimated revenue, profit for the year, gross margin and operating income margin for the year ending December 31, 2015 as announced on April 7, 2015.
The Company notes that it acquired a 99% majority equity interest in RENergy in May 2015 and RENergy became a consolidated subsidiary of the Company since then. The Company purchases electrical controls systems from RENergy, and the unrealized profits in inventories arising from purchases from RENergy subsequent to the acquisition will be eliminated upon consolidation. The Company is in the progress of integrating the operations of RENergy after the acquisition. After completing the integration, the Company expects the acquisition may result in synergies and benefits, including increases in gross profit margin and/or a reduction in various costs. However, the Company is currently unable to quantify the likely financial effects of such potential synergies and benefits nor can the Company currently estimate with any level of certainty the operating costs to be incurred by RENergy, the fair value adjustment on RENergy's assets and liabilities on the acquisition date, and the related amortization and tax implication thereon. Accordingly, the Company has not revised its previously announced estimates to take into consideration the effectof the acquisition of RENergy.
Note to the Financial Information
The preliminary unaudited consolidated statements of operations and comprehensive income and consolidated statements of financial position accompanying this press release (collectively the "preliminary unaudited financial information") have been prepared by management using International Financial Reporting Standards, or IFRSs, as issued by the International Accounting Standards Board. The preliminary unaudited financial information is not intended to fully comply with IFRSs because it does not present all of the financial information and disclosures required by IFRSs.
Currency Conversion
Solely for the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB6.1990 to US$1.00, the noon buying rate in New York for cable transfers of Renminbi for U.S. dollars on March 31, 2015 as set forth in the H.10 weekly statistical release of the Federal Reserve Board. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollar amounts at such a rate or at any other rate.
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "to be," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "goal," "strategy" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Ming Yang's control, which may cause Ming Yang's actual results, performance or achievements to differ materially from those in the forward-looking statements. Actual results or events may differ from those anticipated or predicted in this press release, and the differences may be material. Further information regarding these and other risks, uncertainties or factors is included in Ming Yang's filings with the U.S. Securities and Exchange Commission. Ming Yang does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
Conference Call
Ming Yang's senior management will host a conference call on Wednesday, May 27, 2015 at 8:00 am (Eastern)/ 5:00 am (Pacific)/ 8:00 pm (China) to discuss its quarterly results and recent business activities.
To access the conference call, please dial:
United States: +1-845-675-0437
International (toll): +65-6723-9381
Mainland China, Domestic: 400-620-8038 /
800-819-0121
Hong Kong: +852-3018-6771
To access international Toll Free Dial-In numbers:
Hong Kong: 800-906-601
United States: +1-866-519-4004
Please ask to be connected to 1Q2015 China Ming Yang Wind Power Group Limited Earnings Conference Call and provide the following pass code: Ming Yang.
Ming Yang will also broadcast a live audio webcast of the conference call. The broadcast will be available by visiting the "Investor Relations" section of the Company's web site at http://ir.mywind.com.cn.
Following the earnings conference call, an archive of the call will be available by dialing:
United States: +1-855-452-5696
International: +61-2-8199-0299
Mainland China: 400-602-2065/400-632-2162 /
800-870-0206/800-870-0205
Hong Kong: 800-963-117
Passcode: 4612-9881
The replay will be archived for seven days following the earnings announcement until June 3, 2015.
About China Ming Yang Wind Power Group Limited
China Ming Yang Wind Power Group Limited (NYSE: MY) is a leading wind energy solution provider in China, focusing on designing, manufacturing, selling and servicing megawatt-class wind turbines, including cutting-edge SCD (Super Compact Drive) solutions, and providing post-sales value-added maintenance and technology upgrade services to wind farm owners. Ming Yang cooperates with aerodyne Energiesysteme, one of the world's leading wind turbine design firms based in Germany, to co-develop wind turbines. In terms of newly installed capacity, Ming Yang was a top 10 wind turbine manufacturer worldwide and the largest non-state owned wind turbine manufacturer in China in 2014.
For further information, please visit the Company's website: ir.mywind.com.cn.
For investor and media inquiries, please contact:
Investor and Media Contacts:
China Ming Yang Wind Power Group Limited
Johnson Zhang
+86-760-2813-8898
ir@mywind.com.cn
http://ir.mywind.com.cn
CHINA MING YANG WIND POWER GROUP LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts expressed in thousands, except share and ADS data)
For the three months period ended March 31,
2014 2015 2015
---- ---- ----
RMB '000 RMB '000 USD '000
Revenue 1,224,032 1,334,856 215,334
Cost of sales (1,032,026) (1,145,750) (184,828)
---------- ---------- --------
Gross profit 192,006 189,106 30,506
Other income 7,170 4,977 803
Selling and distribution
expenses (30,935) (53,367) (8,609)
Administrative expenses (68,107) (89,150) (14,382)
Research and development
expenses (19,597) (18,642) (3,007)
------- ------- ------
Profit from operations 80,537 32,924 5,311
Finance income 37,243 33,638 5,426
Finance expenses (41,595) (17,733) (2,860)
------- ------- ------
Net finance (expenses) /
income (4,352) 15,905 2,566
Gain on loss of control of
subidiaries 124,460 - -
Share of loss of associates (172) (91) (15)
---- --- ---
Profit before income tax 200,473 48,738 7,862
Income tax expense (13,238) (7,996) (1,290)
Profit for the period 187,235 40,742 6,572
======= ====== =====
Other comprehensive (loss) / income for the period
Foreign operations -
foreign currency
translation differences (1,440) 2,242 362
Total comprehensive income
for the period 185,795 42,984 6,934
======= ====== =====
Profit attributable to:
Shareholders of the Company 188,416 40,755 6,574
Non-controlling interests (1,181) (13) (2)
187,235 40,742 6,572
======= ====== =====
Basic earnings per share(1) 1.54 0.33 0.05
Diluted earnings per
share(2) 1.51 0.32 0.05
Total comprehensive income attributable to:
Shareholders of the Company 186,976 42,997 6,936
Non-controlling interests (1,181) (13) (2)
185,795 42,984 6,934
======= ====== =====
(1) The calculation of the basic earnings per share is based on the profit attributable to the shareholders of the Company and the weighted
average number of ordinary shares outstanding during the relevant periods.
(2) The calculation of diluted earnings per share is based on the profit attributable to shareholders of the Company and weighted average
number of ordinary shares outstanding after adjustment for the effects of all dilutive ordinary shares during the relevant periods.
(3) The reconciliation of adjusted gross margin (to exclude warranty provision from cost of sales) is as below:
For the three months period ended March 31,
2014 2015 2015
---- ---- ----
RMB'000 RMB'000 USD'000
Revenue (A) 1,224,032 1,334,856 215,334
Cost of sales (B) (1,032,026) (1,145,750) (184,828)
Less: warranty provision 39,355 39,694 6,403
------ ------ -----
Cost of sales excluding
warranty provision (C) (992,671) (1,106,056) (178,425)
======== ========== ========
Gross margin [D=(A+B)/A] 15.7% 14.2% 14.2%
Adjusted gross
margin[E=(A+C)/A] 18.9% 17.1% 17.1%
CHINA MING YANG WIND POWER GROUP LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts expressed in thousands)
As of As of
December 31, 2014 March 31, 2015
----------------- --------------
RMB '000 RMB '000 USD '000
Assets
Non-current assets
Property, plant and
equipment 781,224 793,173 127,952
Intangible assets 76,426 74,461 12,012
Lease prepayments 344,563 342,580 55,264
Investments in
associates 69,936 69,846 11,267
Investments in joint
ventures 867,848 925,602 149,315
Other investment 30,000 30,000 4,839
Trade and other
receivables 1,076,040 1,161,459 187,362
Prepayments 120,842 120,912 19,505
Deferred tax assets 222,343 225,673 36,405
------- ------- ------
Total non-current
assets 3,589,222 3,743,706 603,921
Current assets
Inventories 2,015,820 2,223,868 358,746
Trade and other
receivables 4,454,126 5,150,862 830,918
Prepayments 104,104 83,901 13,535
Other current assets 15,015 41,802 6,743
Pledged bank deposits 306,883 356,830 57,563
Cash and cash
equivalents 2,169,810 650,616 104,955
--------- ------- -------
Total current assets 9,065,758 8,507,879 1,372,460
Total assets 12,654,980 12,251,585 1,976,381
========== ========== =========
Equity
Issued share capital 864 864 139
Reserve for own shares (39,386) (39,386) (6,354)
Capital reserves 3,721,039 3,721,039 600,265
Translation reserves (78,704) (76,462) (12,334)
Accumulated losses (173,829) (133,074) (21,467)
-------- -------- -------
Total equity
attributable to
shareholders of the
Company 3,429,984 3,472,981 560,249
Non-controlling
interests 48,169 48,156 7,768
------ ------ -----
Total equity 3,478,153 3,521,137 568,017
Liabilities
Non-current liabilities
Deferred tax
liabilities 13,961 13,843 2,233
Provisions 198,949 192,141 30,996
Trade and other
payables 298,410 353,200 56,977
Deferred income 309,398 320,087 51,635
------- ------- ------
Total non-current
liabilities 820,718 879,271 141,841
Current liabilities
Bond payable 999,749 - -
Trade and other
payables 5,649,670 5,930,709 956,720
Short-term bank loans 551,450 700,785 113,048
Income tax payable 44,309 49,154 7,930
Provisions 301,966 327,878 52,892
Deferred income 67,652 71,134 11,475
Deferred revenue 741,313 771,517 124,458
------- ------- -------
Total current
liabilities 8,356,109 7,851,177 1,266,523
Total liabilities 9,176,827 8,730,448 1,408,364
--------- --------- ---------
Total equity and
liabilities 12,654,980 12,251,585 1,976,381
========== ========== =========
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SOURCE China Ming Yang Wind Power Group Limited
