China Ming Yang Wind Power Group Limited Reports Third Quarter 2010 Results

ZHONGSHAN, China, Nov. 15, 2010 /PRNewswire-Asia/ -- China Ming Yang Wind Power Group Limited ("Ming Yang" or the "Company") (NYSE: MY), a leading wind turbine manufacturer in China, today reported unaudited financial results for the third quarter ended September 30, 2010.

Third Quarter Financial Highlights

• Total revenue increased 543% over Q3 2009 to RMB1,486.0 million (US$222.1 million).  

• Gross profit increased 862% over Q3 2009 to RMB248.7 million (US$37.2 million). Gross margin increased to 16.7% compared to 11.2% for Q3 2009.

• Total comprehensive income increased RMB226.0 million (US$33.8 million) over Q3 2009 to RMB177.4 million (US$26.5 million).

• Basic and diluted earnings per ordinary share were RMB1.70 (US$0.25) compared with basic and diluted loss per share of RMB0.49 for the same period in 2009.

Mr. Chuanwei Zhang, Chairman and CEO of Ming Yang, commented: "This is Ming Yang's first earnings announcement since our listing on the New York Stock Exchange and we are delighted with our strong performance this quarter.  Our 1.5MW wind turbines continued to be in high demand, with sales revenue growing 543% over 3Q 2009 and creating an order backlog of 1,331 units as of September 30, 2010.  The order backlog, together with 363 units of other orders awarded but yet to be signed, gives us great confidence in fulfilling our order needs for 2010 and 2011."

"We have also made significant progress with our pioneering SCD wind turbines.  We are very excited by our innovative SCD technology and the superior cost efficiencies it can bring to our customers.   Our Rudong prototype is successfully going through operational trials and we are looking forward to its commercial transfer.  We strongly believe that we are a technology leader in China's wind power equipment industry and that, going forward, we are well-positioned to capture a greater share of the fast growing wind power market in China."

Third Quarter and Nine Months Ended September 30, 2010

Total revenue increased 543% to RMB1,486.0 million (US$222.1 million) in the third quarter of 2010 from RMB231.2 million in the corresponding period in 2009.  The increase was primarily due to a significant increase in the number of wind turbines for which revenue had been recognized, from 29 1.5MW units in the third quarter of 2009 to 239 1.5 MW units in the third quarter of 2010.  For the nine months ended September 30, 2010, total revenue amounted to RMB3,804.6 million (US$568.7 million), representing a 357% increase from RMB832.7 million for the same period in 2009.

Gross profit for the third quarter of 2010 was RMB248.7 million (US$37.2 million), an 862% increase from RMB25.8 million for the corresponding period in 2009.  Gross profit increased in line with the increase in revenue for the quarter.  Average contract selling price decreased for the quarter but was partially offset by a decrease in manufacturing cost on a per wind turbine basis due primarily to cost-control efforts on Ming Yang's supply chain.  Gross margin was 16.7% for the third quarter of 2010, as compared to 11.2% for the corresponding period in 2009.  For the nine months ended September 30, 2010, gross profit amounted to RMB704.5 million (US$105.3 million), representing a 1,957% increase from RMB34.2 million for the same period in 2009.  Gross margin increased to 18.5% for the nine months ended September 30, 2010 from 4.1% for the same period in 2009.

Selling and distribution expenses were RMB29.7 million (US$4.4 million) for the third quarter of 2010, representing a 13% increase from RMB26.2 million for the corresponding period of 2009.  This increase was due primarily to an increase in the transportation expenses from higher volume of wind turbine shipments in the third quarter of 2010, partially offset by a decrease in the transportation cost incurred on a per unit basis.  For the nine months ended September 30, 2010, total selling and distribution expenses amounted to RMB84.6 million (US$12.6 million), as compared to RMB55.0 million for the same period in 2009.

Administrative expenses were RMB45.1 million (US$6.7 million) for the third quarter of 2010, representing a 187% increase from RMB15.7 million for the corresponding period of 2009.  This increase was due primarily to expenses incurred relating to the Company's initial public offering.  For the nine months ended September 30, 2010, administrative expenses amounted to RMB90.6 million (US$13.5 million), as compared to RMB42.7 million for the same period in 2009.

Research and development expenses were RMB6.2 million (US$0.9 million) for the third quarter of 2010, representing a 37% decrease from RMB9.9 million for the corresponding period of 2009.  The decrease was due primarily to expenses relating to the early development of the 2.5/3.0MW SCD wind turbine prototype in the third quarter of 2009.  For the nine months ended September 30, 2010, research and development expenses amounted to RMB29.4 million (US$4.4 million) as compared to RMB22.5 million for the same period in 2009, representing a 31% increase primarily from increased early development expenses for the 2.5/3.0MW SCD prototype in first half of 2010.

Net finance income was RMB9.4 million (US$1.4 million) for the third quarter of 2010 compared to net finance expense of RMB12.5 million in the corresponding period of 2009, primarily due to the gain in fair value change of foreign currency forward contracts of RMB 21.1 million recognized in the third quarter of 2010. Net finance expense was RMB35.8 million and RMB33.8 million (US$5.1 million) for the nine months ended September 30, 2009 and 2010, respectively.

Total comprehensive income for the third quarter of 2010 was RMB177.4 million (US$26.5 million), as compared to a total comprehensive loss of RMB48.6 million for the corresponding period of 2009.  For the nine months ended September 30, 2010, total comprehensive income was RMB477.8 million (US$71.4 million), as compared to a total comprehensive loss of RMB133.2 million for the same period in 2009.

For the third quarter of 2010, basic and diluted earnings per ordinary share were RMB1.70 (US$0.25) compared with basic and diluted loss per share of RMB0.49 for the same period in 2009.  For the nine months ended September 30, 2010, basic and diluted earnings per ordinary share were RMB4.73 (US$0.71) compared with basic and diluted loss per share of RMB1.35 (US$0.20) for the same period in 2009.

Currency Conversion

Solely for the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB 6.6905 to US$1.00, the noon buying rate in New York for cable transfers of Renminbi per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board as of September 30, 2010.  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 rate, or at any other rate.

Business Update

Offshore SCD Contract

Ming Yang has signed a purchase contract with China Guodian for 48MW capacity, which is equivalent to 16 3.0MW SCD units at the contract price of RMB 4,600 / KW. Ming Yang believes this is the first offshore 3.0MW purchase contract in China.  

Bid for Hami Wind Farms

• Ming Yang submitted a bid with its 3.0MW WTGs for government authorized wind farm projects in Hami district, Xinjiang, China in October 2010 and was verbally informed by the bidding committee that Ming Yang had successfully won its bid for a total of 200MW capacity, which is equivalent to 67 units of 3.0MW SCD WTGs. The amount won by Ming Yang represents one tenth of the total 2,000 MW capacity available for bidding.  

• Ming Yang was chosen primarily for its pioneering SCD technology, which delivers cost efficiency advantages over traditional wind turbines of the same rated power capacity produced in China.  Ming Yang's SCD wind turbines have a smaller size, weigh less, cost less to transport and install, and use innovative technologies that enhance the generator efficiency.

SCD Prototype

Ming Yang made significant progress with the commissioning of the company's first SCD wind turbine in Rudong, Jiangsu Province.  Test results have been positive and the turbine yawing, safety and rotor locking system have been working properly.  Manufacturing facilities for small batch production of SCD's are now operational.  In addition, Ming Yang's self-manufacturing and testing facilities to produce gearbox, generator and pitch control system are progressing as planned.

Order Book Update

Ming Yang's wind turbines continued to be in high demand.  As of September 30, 2010, Ming Yang has sale contracts for 272 units of 1.5 MW WTGs signed in the third quarter, which increased our order backlog to 1,331 units, consisting of 1,330 units of 1.5MW WTGs and 1 unit of SCD WTGs.  Cumulative signed orders since inception amounted to 2,048 units, consisting of 2,047 units of 1.5MW WTGs and 1 unit of SCD WTGs, as of September 30, 2010.  In addition, the number of orders awarded but yet to be signed amounted to 363 units as of September 30, 2010.

Business Outlook

Based on current market and operating conditions, estimated production capacity and forecasted customer demand, the Company targets to achieve revenue recognition of an estimated 800 1.5MW WTG units in 2010.  The company also targets to achieve revenue recognition of an estimated 1,400 1.5MW WTG units and 100 3.0MW SCD units in 2011.

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 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.

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," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target" 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.  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 will host a conference call to discuss the Company's results for its third quarter of 2010 on Monday, November 15, at 8:00 a.m. Eastern Time (Monday, November 15 at 9:00 p.m. Beijing/Hong Kong time).  The management team will be on the call to discuss the results for third quarter of 2010 and to answer questions.

Please ask to be connected to Q3 2010 China Ming Yang Wind Power Group Earnings Conference Call and provide the following passcode: 84405787.

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 www.mywind.com.cn

The passcode for replay participants is: 60254030.The telephone replay also will be archived on the "Investor Relations" section of the company's web site for seven days following the earnings announcement.

About China Ming Yang Wind Power Group Limited

China Ming Yang Wind Power Group Limited (NYSE: MY) is a leading and fast-growing wind turbine manufacturer in China, focusing on designing, manufacturing, selling and servicing megawatt-class wind turbines.  Ming Yang produces advanced, highly adaptable wind turbines with high energy output and low energy production costs and provides customers with comprehensive post-sales services.  Ming Yang cooperates with aerodyn Energiesysteme, one of the world's leading wind turbine design firms based in Germany, to develop wind turbines and share intellectual property rights. Ming Yang's key customers include the five largest state-owned power producers in China, with an aggregate installed capacity accounting for more than 50% of China's newly installed capacity in 2009. For further information, please visit the Company's website: www.mywind.com.cn