China Ming Yang Reports Second Quarter 2013 Unaudited Results

China Ming Yang Wind Power Group Limited (Ming Yang), a leading wind turbine manufacturer in China, has announced its unaudited financial results for the second quarter ended June 30, 2013.

Second Quarter 2013 Financial Highlights:

Total wind turbine generators (“WTGs”) for which revenue was recognized amounted to an equivalent wind power project output of 161MW, or 90 units of 1.5MW WTGs and 13 units of 2.0MW WTGs, a decrease of 18.7% compared to 198MW, or 99 units of 1.5MW WTGs and 17 units of 2.5-3.0MW WTGs in Q2 2012.

• Total revenue was RMB537.4 million (US$87.6 million), a decrease of 32.7% compared to RMB798.0 million in Q2 2012.
• Gross profit was RMB66.1 million (US$10.8 million), a decrease of 43.0% compared to Q2 2012. Gross margin was 12.29% for Q2 2013, compared to 14.52% in Q2 2012.
• Total comprehensive loss was RMB87.4 million (US$14.2 million), compared to total comprehensive loss of RMB27.5 million in Q2 2012.
• Total comprehensive loss attributable to shareholders was RMB69.2 million (US$11.3 million), compared to total comprehensive loss attributable to shareholders of RMB26.6 million in Q2 2012.
• Basic and diluted loss per share was RMB0.51 (US$0.08), compared to basic and diluted loss per share of RMB0.25 in Q2 2012.

Recent Developments

• Completion of MY’s first 6.5MW SCD prototype WTG – On July 1, 2013, the Company announced that its first 6.5MW prototype super compact drive (“SCD”) WTG was successfully completed in June 2013. The 6.5MW SCD prototype utilizes the Company’s advanced two-bladed SCD technology. It is designed mainly for off-shore operation, and the Company believes that this SCD WTG prototype currently has the largest design capacity of its kind in the world.
• Strategic cooperation agreement with China National Nuclear Corporation – On June 13, 2013, the Company announced the signing of a strategic cooperation with China Nuclear Huineng Co., Ltd., a subsidiary of China National Nuclear Corporation (“CNNC”), a leading investor and owner of clean energy projects in China. Under the cooperation agreement, Guangdong Mingyang, a subsidiary of the Company and CNNC will join forces to develop wind and solar power projects in China. In particular, the two companies signed a memorandum of understanding on forming a joint venture company for the development of up to 300MW of wind projects in Henan province.

“We continue to leverage our market position in China and have successfully secured 396.0MW of new orders during the second quarter of 2013,” commented Mr. Chuanwei Zhang, chairman and chief executive officer of Ming Yang. “Our focus on product quality has enabled us to enhance our market share in China. Based on the amount of tenders won by us in the first half of 2013 compared to the total amount of tenders available in China during the same period, we are currently exceeding our market share in 2012 which was 8.7%.”

“Ming Yang is broadening its product portfolio to cater to customers’ needs in China and overseas markets. Our 2.0MW WTG can be configured with a rotor diameter from 88 meters to 110 meters, and it is beginning to gain traction in the Chinese market. We completed our first 6.5MW prototype SCD WTG in June, and can now offer a full range of products to cater to on-shore and off-shore applications.”

Second Quarter 2013 Unaudited Financial Results

Revenue

Revenue in the second quarter of 2013 was RMB537.4 million (US$87.6 million), representing a decrease of 32.7% from RMB798.0 million in the corresponding period in 2012. WTGs for which revenue was recognized amounted to an equivalent wind power project output of 161MW, or 90 units of 1.5MW WTGs and 13 units of 2.0MW WTGs compared to 198MW, or 99 units of 1.5MW WTGs and 17 units of 2.5-3.0MW WTGs for the corresponding period in 2012. The decrease in revenue in the second quarter was primarily due to the decrease in the number of WTGs commissioned, with lower average selling price, or ASP, recognized for WTGs commissioned compared to the corresponding period in 2012.

Gross Profit and Gross Margin

Gross profit in the second quarter of 2013 was RMB66.1 million (US$10.8 million), representing a decrease of 43.0% from RMB115.9 million for the corresponding period in 2012. Gross margin in the second quarter of 2013 was 12.29%, compared to 14.52% for the corresponding period in 2012. The decrease was primarily due to a decrease in the ASP of WTGs commissioned during the second quarter of 2013 which outpaced the decrease in cost of sales.

Selling and Distribution Expenses

Selling and distribution expenses were RMB34.3 million (US$5.6 million) for the second quarter of 2013, compared to RMB24.5 million for the corresponding period in 2012, representing an increase of 40.0%. The increase was primarily due to higher marketing and bidding expenses incurred in the second quarter of 2013.

Administrative Expenses

Administrative expenses were RMB70.0 million (US$11.4 million) for the second quarter of 2013, compared to RMB77.1 million for the corresponding period in 2012, representing an decrease of 9.2%.

Research and Development Expenses

Research and development expenses were RMB20.7 million (US$3.4 million) for the second quarter of 2013, compared to RMB22.7 million for the corresponding period in 2012, representing a decrease of 8.8%.

Net Finance Expense

Net finance expense was RMB39.1 million (US$6.4 million) for the second quarter of 2013, compared to net finance expense of RMB17.6 million in the corresponding period of 2012. The increase was primarily due to interest expenses of RMB20.5 million (US$3.3 million) on borrowings that were incurred by our subsidiary, Global Wind Power Limited, which was acquired in the fourth quarter in 2012.

Loss Before Income Tax Expense

Loss before income tax expense was RMB91.0 million (US$14.8 million) for the second quarter of 2013, compared to a loss before income tax expense of RMB19.8 million in the corresponding period of 2012.

Income Tax (Expense)/Benefit

Income tax benefit was RMB8.0 million (US$1.3 million) for the second quarter of 2013, compared to an income tax expense of RMB11.2 million in the corresponding period of 2012.

Total Comprehensive Loss and Loss per Share

Total comprehensive loss for the second quarter of 2013 was RMB85.9 million (US$14.0 million), compared to total comprehensive loss of RMB27.5 million in the corresponding period of 2012.

Total comprehensive loss attributable to shareholders was RMB68.5 million (US$11.2 million), compared to total comprehensive loss attributable to shareholders of RMB26.6 million in the corresponding period in 2012. For the second quarter of 2013, basic and diluted loss per share was RMB0.51 (US$0.08), compared to basic and diluted loss per share of RMB0.25 for the corresponding period in 2012.

Cash and Cash Equivalents

Cash and cash equivalents as of June 30, 2013 were RMB1,204.3 million (US$196.2 million), compared to RMB1,004.9 million as of March 31, 2013.

Business Update

Order Book Update

New Sales Contracts – During the second quarter of 2013, the Company entered into sales contracts for wind power projects with a total output of 396.0MW, representing 264 units of 1.5MW WTGs.

Order Backlog – As of June 30, 2013, the Company’s order backlog amounted to 2.4GW, representing 1,240 units of 1.5MW WTGs, 167 units of 2.0MW WTGs, 67 units of 2.5-3.0MW SCD WTGs and 1 unit of 6.0MW SCD WTG. Cumulative signed orders since its inception amounted to 6.5GW, representing 3,886 units of 1.5MW WTGs, 222 units of 2.0MW WTGs, 84 units of 2.5-3.0MW SCD WTGs and 1 unit of 6.0MW SCD WTG.

Note to the Financial Information

The preliminary unaudited consolidated statements of comprehensive income and consolidated statements of financial position accompanying this press release have been prepared by management using International Financial Reporting Standards, or IFRSs. This 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.

[mappress]

Press release, August 30, 2013; Image: mywind