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 November 17, 2015 - 6:00 AM EST
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MY Reports Third Quarter 2015 Unaudited Results

ZHONGSHAN, China, Nov. 17, 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 quarter ended September 30, 2015.

Third Quarter 2015 Operating and Financial Highlights:

  • Total revenue was RMB1,738.8 million (US$273.6 million), compared to RMB1,716.8 million in the third quarter of 2014.
  • Gross profit was RMB326.1 million (US$51.3 million), compared to RMB225.6 million in the third quarter of 2014. 
  • Gross margin was 18.8%, compared to 13.1% in the third quarter of 2014. 
  • Total comprehensive income was RMB104.6 million (US$16.5 million), compared to RMB71.5 million in the third quarter of 2014.
  • Profit for the period was RMB91.5 million (US$14.4 million), compared to RMB71.5 million in the third quarter of 2014.
  • Basic and diluted earnings per share were RMB0.59 (US$0.09) and RMB0.58 (US$0.09), respectively, compared to basic and diluted earnings per share of RMB0.58 and RMB0.57, respectively, in the third quarter of 2014.
  • Total wind turbine generators ("WTG"s) for which revenue was recognized amounted to an equivalent wind power project output of 530MW, representing 128 units of 1.5MW WTGs and 169 units of 2.0MW WTGs, compared to 524.5MW in the third quarter of 2014.

"During this quarter, we were glad to see an increase in profitability." said Mr. Chuanwei Zhang, Chairman and Chief Executive Officer of Ming Yang, "Looking ahead into the next five years, we see both opportunities as well as challenges in China's wind industry. Currently, government officials indicated that new wind power installations under the 13th Five-year Plan ("FYP") will not be lower than that during the 12th FYP period. Concurrently, proposals for reductions in the electricity tariffs over the next five years were also recently announced, with the goal of achieving price parity for wind energy at the end of the 13th FYP."

He added: "Ming Yang has been developing wind turbines and wind farm solutions that focus on high electricity generation and low life-cycle costs. The new policies are set to intensify the competition among WTG manufacturers in China and call for more innovation in terms of technologies and business models; nevertheless, we see healthy growth opportunities that we can capitalize on going forward."

Third Quarter 2015 Operating Data and Unaudited Financial Results

Revenue

Revenue in the third quarter of 2015 was RMB1,738.8 million (US$273.6 million), compared to RMB1,716.8 million in the third quarter of 2014.The increase was due to the combined effects of (1) a slight increase in the number of WTGs commissioned (measured by power output), and (2) the approximately 3.6% increase in average WTG selling price in the third quarter of 2015 compared with the corresponding period of 2014.

WTGs for which revenue was recognized in the third quarter of 2015 amounted to an equivalent wind power project output of 530MW, or 128 units of 1.5MW WTGs and 169 units of 2.0MW WTGs. In the third quarter of 2014, revenue was recognized for WTGs with a power output of 524.5MW. 

Gross Profit and Gross Margin

Gross profit was RMB326.1 million (US$51.3 million), compared to RMB225.6 million in the third quarter of 2014. Gross margin in the third quarter of 2015 was 18.8 %, compared to 13.1% in the third quarter of 2014. The increase in gross margin was mainly due to the combined effect of (1) an approximately 3.6% increase in average WTG selling price in the third quarter of 2015 compared with the corresponding period of 2014, and (2) synergy in reduction in cost of electrical components as a result of the acquisition of China Smart Electric Group Limited (RENergy) in May 2015. On an adjusted basis, should warranty provisions be excluded from cost of sales, the Company's adjusted gross margin would be 22.1% for the third quarter of 2015, compared to 16.3% for the corresponding period of 2014.

Selling and Distribution Expenses

Selling and distribution expenses were RMB96.9 million (US$15.2 million) for the third quarter of 2015, compared to RMB67.9 million for the corresponding period in 2014, representing an increase of 42.7% which was mainly due to the increase of RMB21.3 million in transportation fee because (1) more blades were delivered in the third quarter of 2015, and (2) longer transportation distance was required for some projects.

Administrative Expenses

Administrative expenses were RMB111.7 million (US$17.6 million) for the third quarter of 2015, compared to RMB38.4 million for the corresponding period in 2014, representing an increase of 190.9%. The increase in administrative expenses was mainly due to the combined effect of (1) provision for doubtful trade and other receivables of RMB28.2 million (US$4.4 million) being made in the third quarter of 2015 as compared to RMB20.3 million provision being reversed in the corresponding period of 2014, (2) an increase in share-based compensation expense by RMB13.1 million (US$2.1 million) compared to the third quarter of 2014 as a result of 5,120,000 new share options granted to the employees and the issuance of 250,000 own shares to certain senior management personnel, and (3) an increase in staff costs of RMB10.3 million (US$1.6 million) due to the increased monthly salary and staff headcount.

Research and Development Expenses

Research and development expenses were RMB32.5 million (US$5.1 million) for the third quarter of 2015, compared to RMB24.5 million for the corresponding period in 2014. The increase was due to more research and development activities carried out during the period.

Net Finance Income

Finance income was RMB30.0 million (US$4.7 million) for the third quarter of 2015, compared to RMB39.8 million for the corresponding period in 2014. The decrease in finance income was mainly attributable to the decrease in interest income from bank deposits and entrusted loans.

Finance expenses were RMB46.8 million (US$7.4 million) for the third quarter of 2015, compared to RMB50.8 million for the corresponding period in 2014. The decrease in finance expenses was mainly due to the repayment of RMB1 billion of the Company's medium-term notes that matured on January 12, 2015, which offset the Company's increase in interest expense on discounted bills.

Profit Before Income Tax

Profit before income tax was RMB109.2 million (US$17.2 million) for the third quarter of 2015, compared to RMB85.9 million for the corresponding period in 2014.

Income Tax Expense

Income tax expense was RMB17.7 million (US$2.8 million) for the third quarter of 2015, compared to RMB14.4 million for the corresponding period in 2014. The increase was primarily due to the higher profit recorded during the third quarter of 2015. 

Total Comprehensive Income and Earnings per Share

As a result of the cumulative effects of the factors discussed above, total comprehensive income for the third quarter of 2015 was RMB104.6 million (US$16.5 million), compared to RMB71.5 million for the corresponding period in 2014.

Basic and diluted earnings per share were RMB0.59 (US$0.09) and RMB0.58 (US$0.09) for the third quarter of 2015, respectively, compared to basic and diluted earnings per share of RMB0.58 and RMB0.57, respectively, in the corresponding period in 2014.

Foreign Currency Translation Differences

Foreign currency translation difference was an exchange gain of RMB13.0 million (US$2.0 million) for the third quarter of 2015 compared to a loss of RMB0.02 million in the corresponding period in 2014, as a result of depreciation of Renminbi against U.S. dollars.

Cash and Cash Equivalents

Cash and cash equivalents as of September 30, 2015 were RMB846.5 million (US$133.2 million), compared to RMB2,169.8 million as of December 31, 2014.

Recent Business Developments

  • MY's new 3.0MW three-blade super compact drive ("SCD") WTGs have been installed at a Guangxi wind farm -- In October 2015, the first batch of the innovative SCD WTGs utilizing technologies developed by Ming Yang with Aerodyn, a German WTG design firm, were installed at a Gongcheng wind farm project, Guangxi, China and are expected to be connected to the grid before year end of 2015. This SCD WTG model is an ideal choice for wind farms located in wind-rich Xinjiang and Inner Mongolia areas that generally require larger power output, as well as wind projects in low-wind onshore regions where land geography and transportation is difficult for conventional products.
  • MY's flagship product MY2.0-118/121 WTG has been well received by the market -- In November 2015, Wuxue Dajin, the first wind farm project equipped with the Company's latest flagship WTG model began to generate power. With a 118/121-meter blade design, this new product is currently the largest in terms of rotor diameter among WTGs with the same capacity in China in operation and is capable of generating 20%-30% more electricity compared with older versions of 2.0MW WTGs. Recently, it recorded time between failures of 900 hours, demonstrating great reliability alongside high power supply.
  • Indian joint venture GWPL to complete construction of its first wind farm project in December -- MY's Indian joint venture, GWPL, is expected to complete a 10.5MW demonstration project located in India in December 2015, which comprises of seven units of 1.5MW WTGs supplied by MY. MY has obtained certain local and international certification and has introduced two 1.5MW WTG models to the Indian market. In the future, MY expects to continue to introduce more products to India, including models with 2.0MW or larger power output.

Business Updates

Order Book Updates

  • New Sales Contracts -- During the third quarter of 2015, Ming Yang entered into sales contracts for wind power projects with a total output of 434.0 MW, representing 214 units of 2.0MW WTGs and 2 units of 3.0MW WTGs.

Order Backlog -- As of September 30, 2015, the Company's order backlog was approximately 3.99 GW, representing 611 units of 1.5MW WTGs, 1,465 units of 2.0MW WTGs, 46 units of 2.5-3.0MW SCD WTGs and 1 unit of 6.0MW SCD WTG.

Industry Updates

  • In October 2015, China's National Development and Reform Commission released a draft consultation paper regarding the possible electricity tariff reduction for wind farm projects connected to the grid in 2016-2020, according to current news reports. It is said that the wind power electricity tariff will be cut by RMB0.02-0.03/kWh each year from 2016 to 2020, until it reaches the same price level as coal fired power.
  • According to a speech given by officials of China's National Energy Administration at the China Wind Power Trade Fair 2015, during the 13th FYP period (2016-2020), the government will no longer focus on new capacity addition and grid-connection capacity targets. Instead, there will be a policy change with an aim to stabilize the wind sector, primarily concentrating on the wind curtailment issues. Although the officials have yet to announce the capacity targets and policy details under the new FYP, they confirmed that the new wind power addition during the 13th FYP period will be no less than that during the previous 12th FYP. Other areas the authorities would like to improve include wind project location planning, optimization of subsidy schemes, technology-driven cost savings and administration for on-grid projects. 

Earnings Guidance

Based on the Company's current order book and its current views and estimates on its current operating and market conditions and its current business plans and customer demand, the Company expects that for the quarter ended December 31 2015, (i) its estimated revenue will be in the range of RMB2.0 billion to RMB2.2 billion, compared to RMB2.0 billion for the quarter ended December 31, 2014; and (ii) its estimated net profit for the period will be in the range of RMB95 million to RMB115 million, compared toRMB84 million for the quarter ended December 31, 2014. Please note that these projections are subject to change and changes may be material.

These estimates do not include any potential costs that may be incurred by the Company in connection with the preliminary proposal by Mr. Chuanwei Zhang to acquire all of the Company's outstanding shares not already beneficially owned by him, which is further described below.

Subsequent Event

Preliminary Proposal to Acquire All Outstanding Shares of the Company

The Company received a preliminary non-binding proposal letter dated November 2, 2015 from its Chairman and Chief Executive Officer, Mr. Chuanwei Zhang, to acquire all of the Company's outstanding shares not already beneficially owned by Mr. Zhang in a "going-private" transaction for US$2.51 per American Depository Share or ordinary share in cash. The board of directors of the Company will form a special committee consisting of all independent directors to review and evaluate this proposal. The Company cautions its shareholders and others considering trading its securities that neither the board of directors nor the special committee will make any decision with respect to the Company's response to the proposal by Mr. Zhang. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this proposal or any other transaction, except as required under applicable law.

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 accounting policies that are consistent with the 2014 annual financial statements which were prepared in accordance with 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. The purchase price allocation for the acquisition of RENergy was preliminary and unaudited as at September 30, 2015.

Currency Conversion

Solely for the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB6.3556 to US$1.00, the noon buying rate in New York for cable transfers of Renminbi for U.S. dollars on September 30, 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 Tuesday, Nov 17, 2015 at 7:00 am (Eastern)/ 4:00 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):         

  +65-6713-5090

Mainland China:                      

  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 3Q2015 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 dialling:

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:                                   

9018-9052

The replay will be archived for seven days following the earnings announcement until November 24, 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:

China Ming Yang Wind Power Group Limited
Ricky Ng
+86-760-2813-8698
Email: 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 Sep 30,


2014


2015


2015


RMB '000


RMB '000


USD '000

Revenue

1,716,771


1,738,784


273,583

Cost of sales

(1,491,134)


(1,412,664)


(222,271)

Gross profit

225,637


326,120


51,312

Other income

6,380


42,024


6,612

Selling and distribution expenses

(67,949)


(96,947)


(15,254)

Administrative expenses

(38,419)


(111,723)


(17,579)

Research and development expenses 

(24,512)


(32,542)


(5,120)

Profit from operations

101,137


126,932


19,971

Finance income

39,785


29,951


4,713

Finance expenses

(50,760)


(46,836)


(7,369)

Net finance expense

(10,975)


(16,885)


(2,656)

(Loss) / gain on disposal of subsidiaries

(4,045)


163


26

Share of loss of associates

(249)


(964)


(152)

Profit before income tax

85,868


109,246


17,189

Income tax expense

(14,370)


(17,720)


(2,788)

Profit for the period

71,498


91,526


14,401







Other comprehensive (loss) / income for the period






Foreign operations - foreign currency translation
differences

(21)


13,032


2,050

Total comprehensive income for the period

71,477


104,558


16,451







Profit  attributable to:






Shareholders of the Company

72,361


91,285


14,363

Non-controlling interests

(863)


241


38


71,498


91,526


14,401







Basic earnings per share(1)

0.58


0.59


0.09

Diluted earnings per share(2)

0.57


0.58


0.09







Total comprehensive income attributable to:






Shareholders of the Company

72,340


104,317


16,413

Non-controlling interests

(863)


241


38


71,477


104,558


16,451







(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 Sep 30,


2014


2015


2015


RMB'000


RMB'000


USD'000

Revenue (A)

1,716,771


1,738,784


273,583







Cost of sales (B)

(1,491,134)


(1,412,664)


(222,271)

Less: warranty provision

53,362


58,585


9,218

Cost of sales excluding warranty provision (C)

(1,437,772)


(1,354,079)


(213,053)







Gross margin [D=(A+B)/A]             

13.1%


18.8%


18.8%

Adjusted gross margin [E=(A+C)/A]          

16.3%


22.1%


22.1%

 

 

CHINA MING YANG WIND POWER GROUP LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts expressed in thousands)



As of


As of

December 31, 2014

Sep 30, 2015


RMB '000


RMB '000


USD '000

Assets






Non-current assets






Property, plant and equipment

781,224


935,387


147,175

Intangible assets

76,426


636,732


100,184

Lease prepayments

344,563


339,692


53,448

Investments in associates

69,936


69,233


10,893

Investments in joint ventures

867,848


981,700


154,462

Other investment

30,000


30,000


4,720

Trade and other receivables

1,076,040


1,044,398


164,328

Prepayments

120,842


168,370


26,492

Deferred tax assets

222,343


262,835


41,355

Total non-current assets

3,589,222


4,468,347


703,057







Current assets






Inventories

2,015,820


2,532,186


398,418

Trade and other receivables

4,454,126


6,496,705


1,022,202

Prepayments

104,104


127,244


20,021

Other current assets

15,015


9,103


1,432

Pledged bank deposits

306,883


454,924


71,578

Cash and cash equivalents

2,169,810


846,502


133,190

Total current assets

9,065,758


10,466,664


1,646,841

Total assets

12,654,980


14,935,011


2,349,898







Equity






Issued share capital

864


1,051


165

Reserve for own shares

(39,386)


(35,017)


(5,510)

Capital reserves

3,721,039


4,346,082


683,819

Translation reserves

(78,704)


(66,325)


(10,435)

(Accumulated losses) / retained earnings

(173,829)


26,917


4,235

Total equity attributable to shareholders of the
Company

3,429,984


4,272,708


672,274

Non-controlling interests

48,169


85,897


13,515

Total equity

3,478,153


4,358,605


685,789

Liabilities






Non-current liabilities






Deferred tax liabilities

13,961


24,537


3,861

Provisions

198,949


262,855


41,358

Trade and other payables

298,410


331,709


52,192

Deferred income

309,398


354,009


55,700

Total non-current liabilities

820,718


973,110


153,111







Current liabilities






Bond payable

999,749


-


-

Trade and other payables

5,649,670


7,793,308


1,226,211

Short-term bank loans

551,450


532,900


83,848

Income tax payable

44,309


133,224


20,962

Provisions

301,966


328,541


51,693

Deferred income

67,652


62,165


9,781

Deferred revenue

741,313


753,158


118,503

Total current liabilities

8,356,109


9,603,296


1,510,998







Total liabilities

9,176,827


10,576,406


1,664,109

Total equity and liabilities

12,654,980


14,935,011


2,349,898

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/my-reports-third-quarter-2015-unaudited-results-300179944.html

SOURCE China Ming Yang Wind Power Group Limited


Source: PR Newswire (November 17, 2015 - 6:00 AM EST)

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