MY Reports Fourth Quarter and Full Year 2015 Unaudited Results
China Ming Yang Wind Power Group Limited , a leading wind energy solution provider in China, recently announced its unaudited financial results for the quarter and the full year ended December 31, 2015.
Fourth Quarter 2015 Operating and Financial Highlights:
Total revenue was RMB2,160.3 million (US$333.5 million), compared to RMB1,996.0 million in the fourth quarter of 2014.
Gross profit was RMB342.4 million (US$52.9 million), compared to RMB271.9 million in the fourth quarter of 2014.
Gross margin was 15.8%, compared to 13.6% in the fourth quarter of 2014.
Profit for the period was RMB77.5 million (US$12.0 million), compared to RMB84.0 million in the fourth quarter of 2014.
Total comprehensive income was RMB85.9 million (US$13.3 million), compared to RMB80.9 million in the fourth quarter of 2014. Basic and diluted earnings per share were RMB0.47(US$0.07) and RMB0.46 (US$0.07), respectively, compared to basic and diluted earnings per share of RMB0.68 and RMB0.66, respectively, in the fourth quarter of 2014.
Total wind turbine generators (“WTG”s) for which revenue was recognized amounted to an equivalent wind power project output of 626.5MW, representing 159 units of 1.5MW WTGs and 194 units of 2.0MW WTGs, compared to 638MW in the fourth quarter of 2014.
Full Year 2015 Operating and Financial Highlights:
Total revenue was RMB6,797.1 million (US$1,049.3 million), compared to RMB5,872.4 million in 2014.
Gross profit was RMB1,103.5 million (US$170.3 million), compared to RMB813.1 million in 2014.
Gross margin was 16.2%, compared to 13.8% in 2014.
Profit for the year was RMB277.8 million (US$42.9 million), compared to RMB354.5 million in 2014.
Total comprehensive income was RMB298.6 million (US$46.1 million), compared to RMB350.0 million in 2014. Basic and diluted earnings per share were RMB1.90(US$0.29) and RMB1.88(US$0.29), respectively, compared to basic and diluted earnings per share of RMB2.90andRMB2.86, respectively, in 2014.
Total wind turbine generators (“WTG”s) for which revenue was recognized amounted to an equivalent wind power project output of 2,032.5MW, representing 507 units of 1.5MW WTGs and 636 units of 2.0MW WTGs, compared to 1,852MW in 2014.
Mr. Chuanwei Zhang, Chairman and Chief Executive Officer of Ming Yang, commented “Driven by the tariff policy, wind energy operators rushed to install projects within the year and this resulted in a 66.4% year-over-year growth in terms of grid-connected power capacity addition, according to National Energy Administration (the “NEA”). However, during the year, the wind farm operators faced severe wind curtailment issues, especially those whose projects are located in the northern part of China.”
“During China’s 13th Five-Year-Plan period (2016-2020), we believe that there will be an opportunity for Ming Yang to rise to the next level by innovating on its business model and providing full life-cycle wind energy solutions to our customers. Recently, a number of new supportive policies have been rolled out, which we believe will lead to an improvement in curtailment and subsidy in the future. Currently, we are striving to develop technologies that can drive electricity generation while lowering per kWh costs, and we are confident we will be able to capture the growth opportunities.”
Fourth Quarter 2015 Operating Data and Unaudited Financial Results
Revenue
Revenue in the fourth quarter of 2015 was RMB2,160.3 million (US$333.5 million), compared to RMB1,996.0 million in the fourth quarter of 2014.The increase was mainly attributable to the approximately 5.0% and 3.8% increase in average 1.5MW WTG and 2.0MW WTG selling price on a per KW basis, respectively, in the fourth quarter of 2015 compared with the corresponding period of 2014.
WTGs for which revenue was recognized in the fourth quarter of 2015 amounted to an equivalent wind power project output of 626.5MW, or 159 units of 1.5MW WTGs and 194 units of 2.0MW WTGs. In the fourth quarter of 2014, revenue was recognized for WTGs with a power output of 638MW, or 280 units of 1.5MW WTGs and 109 units of 2.0MW WTGs.
Gross Profit and Gross Margin
Gross profit was RMB342.4 million (US$52.9 million), compared to RMB271.9 million in the fourth quarter of 2014. Gross margin in the fourth quarter of 2015 was 15.8%, compared to 13.6% in the fourth quarter of 2014. The increase in gross margin was mainly attributable to the increase in gross profit for WTG sales, which was a combined effect of (1) an approximately 5.0% and 3.8% increase in average 1.5MW WTG and 2.0MW WTG selling price per KW, respectively, in the fourth quarter of 2015 compared with the corresponding period of 2014, and (2) the 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 19.4% for the fourth quarter of 2015, compared to 16.6% for the corresponding period of 2014.
Selling and Distribution Expenses
Selling and distribution expenses were RMB121.2 million (US$18.7 million) for the fourth quarter of 2015, compared to RMB79.2 million for the corresponding period in 2014, representing an increase of 53.0% which was mainly due to the increase of RMB32.6 million (US$5.0 Million) in transportation cost because (1) more WTGs and blades were delivered in the fourth quarter of 2015, and (2) longer transportation distance was required for some projects. Besides, there is an increase in share-based compensation expense by RMB5.8 million (US$0.9 million) compared to the fourth quarter of 2014, mainly as a result of certain treasury stocks being awarded to certain management personnel in December 2015.
Administrative Expenses
Administrative expenses were RMB151.0 million (US$23.3 million) for the fourth quarter of 2015, compared to RMB99.0 million for the corresponding period in 2014, representing an increase of 52.5%. The increase in administrative expenses was mainly due to the combined effect of (1) provision for doubtful trade and other receivables of RMB43.5 million (US$6.7 million) being made in the fourth quarter of 2015 as compared to RMB31.6 million provision in the corresponding period of 2014, and (2) an increase in share-based compensation expense by RMB19.5 million (US$3.0 million) compared to the fourth quarter of 2014 as a result of certain treasury stocks being awarded to certain management personnel in December 2015.
Research and Development Expenses
Research and development expenses were RMB20.6 million (US$3.2 million) for the fourth quarter of 2015, compared to RMB23.2 million for the corresponding period in 2014.
Net Finance Income
Finance income was RMB23.6 million (US$3.6 million) for the fourth quarter of 2015, compared to RMB48.0 million for the corresponding period in 2014. The decrease in finance income was mainly attributable to (1) the decrease in interest income from bank deposits and entrusted loans; and (2) we did not recognize the finance income of RMB12.1 million in respect of certain wind farms of our EPC joint venture in the fourth quarter of 2015 as a result of wind curtailment.
Finance expenses were RMB23.8 million (US$3.7 million) for the fourth quarter of 2015, compared to RMB38.4 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 RMB95.6 million (US$14.8 million) for the fourth quarter of 2015, compared to RMB97.5 million for the corresponding period in 2014.
Income Tax Expense
Income tax expense was RMB18.1 million (US$2.8 million) for the fourth quarter of 2015, compared to RMB13.5 million for the corresponding period in 2014.
Total Comprehensive Income and Earnings per Share
As a result of the foregoing, total comprehensive income for the fourth quarter of 2015 was RMB85.9 million (US$13.3 million), compared to RMB80.9 million for the corresponding period in 2014.
Basic and diluted earnings per share were RMB0.47 (US$0.07) and RMB0.46 (US$0.07) for the fourth quarter of 2015, respectively, compared to basic and diluted earnings per share of RMB0.68 and RMB0.66, respectively, in the corresponding period in 2014.
Foreign Currency Translation Differences
We recorded other comprehensive income of RMB8.4 million (US$1.3 million) for the fourth quarter of 2015 upon translation of the financial statements of our non-PRC entities into Renminbi, as a result of depreciation of Renminbi against U.S. dollars. We recorded other comprehensive loss of RMB3.1 million in the corresponding period in 2014 for such foreign currency translation difference,
Full Year 2015 Operating Data and Unaudited Financial Results
Revenue
Revenue in 2015 was RMB 6,797.1 million (US$1,049.3 million), compared to RMB5,872.4 million in 2014. The increase was mainly attributable to (1)an increase in sales of WTGs in 2015; and (2) the approximately 3.5% and 3.1%increase in average 1.5 MW WTG and 2.0MW WTG selling price on a per KW basis, respectively, in 2015 compared with the corresponding period of 2014.
WTGs for which revenue was recognized in 2015 amounted to an equivalent wind power project output of 2,032.5MW, or 507 units of 1.5MW WTGs and 636 units of 2.0MW WTGs. In 2014, revenue was recognized for WTGs with a power output of 1,852MW, or 844 units of 1.5MW WTGs and 293 units of 2.0MW WTGs.
Gross Profit and Gross Margin
Gross profit was RMB1,103.5 million (US$170.4 million), compared to RMB813.1 million in 2014. Gross margin in 2015 was 16.2%, compared to 13.8% in 2014. The increase in gross margin was attributable to the increase in gross margin for WTG sales which was mainly due to the increase of selling prices and the decrease of production cost as a result of the synergy effect from acquisition of RENergy. On an adjusted basis, should warranty provisions be excluded from cost of sales, the Company’s adjusted gross margin would be 19.5% for 2015, compared to 16.9% in 2014.
Selling and Distribution Expenses
Selling and distribution expenses were RMB325.5 million (US$50.2 million) in 2015, compared to RMB237.2 million in 2014, representing an increase of 37.2%, which was mainly due to the increase of RMB84.1 million (US$13.0 million) in transportation fees, because (1) more WTGs and blades were delivered in 2015; and (2) longer transportation distance was required for some projects. Besides, there is an increase in share-based compensation expense as a result of certain treasury stocks awarded to certain management personnel in December 2015 as mentioned above.
Administrative Expenses
Administrative expenses were RMB460.2 million (US$71.0 million) in 2015, compared to RMB243.1 million in 2014, representing an increase of 89.3%. The increase in administrative expenses was mainly due to the combined effect of (1)provision for doubtful trade and other receivables of RMB130.2 million (US$20.1 million) being made in 2015 as compared to RMB3.6 million provision reversed in 2014; (2)an increase in share-based compensation expense by RMB19.5 million (US$3.0 million) compared to 2014 as a result of certain treasury stocks awarded to certain management personnel in December 2015; (3) an increase in staff costs of RMB18.4 million(US$2.8 million) due to the increased employee headcount for expansion of Beijing Jieyuan Xinneng Investment Co., Ltd., a wholly owned subsidiary of us and as a result of our acquisition of RENergy.
Research and Development Expenses
Research and development expenses were RMB94.0 million (US$14.5 million) in 2015, compared to RMB89.5 million in 2014. The increase was due to more research and development activities carried out in 2015.
Net Finance Income
Finance income was RMB125.7 million (US$19.4 million) in 2015, compared to RMB168.6 million in 2014. The decrease in finance income was mainly attributable to (1) the decrease in interest income from bank deposits and entrusted loans; and (2) we did not recognize the finance income of certain wind farms of our EPC joint venture as mentioned above.
Finance expenses were RMB115.3 million (US$17.8 million) in 2015, compared to RMB173.6 million in 2014. The decrease was mainly due to the decrease in average loan and the repayment of medium-term notes as mentioned above.
Gain on Loss of Control of Subsidiaries
Gain on loss of control of subsidiaries of RMB124.5 million was recognized in 2014 as a result of our deconsolidation of GWPL since January 1, 2014. There was no such gain in 2015.
Profit Before Income Tax
Profit before income tax was RMB332.1 million (US$51.3 million) in 2015, compared to RMB399.0 million in 2014.
Income Tax Expense
Income tax expense was RMB54.4 million (US$8.4 million) in 2015, compared to RMB44.5 million in 2014.
Total Comprehensive Income and Earnings per Share
As a result of the foregoing, total comprehensive income for 2015 was RMB298.6 million (US$46.1 million), compared to RMB350.0 million in 2014.
Basic and diluted earnings per share were RMB1.90 (US$0.29) and RMB1.88 (US$0.29) for 2015, respectively, compared to basic and diluted earnings per share of RMB2.90 and RMB2.86, respectively, in 2014.
Foreign Currency Translation Differences
We recorded other comprehensive income of RMB20.8 million (US$3.2 million) in 2015 upon translation of the financial statements of our non-PRC entities into Renminbi, as a result of depreciation of Renminbi against U.S. dollars. We recorded other comprehensive loss a loss of RMB 4.5 million in 2014 for such foreign currency translation difference.
Cash and Cash Equivalents
Cash and cash equivalents as of December 31, 2015 were RMB1,697.9 million (US$262.1 million), compared to RMB2,169.8 million as of December 31, 2014.
Recent Business Developments
MY launched the our 2.0MW WTG with the largest rotor diameter – In November 2015, MY’s latest 2.0MW product featuring its 121 meter blades design was unveiled and is expected to provide customers with a new solution to reduce per kWh costs. This new product has been certificated by China General Certification and TUV Rheinland.
MY completed the design of the MY SCD3.0MW-135 WTG – This next generation of 3.0MW SCD products is a successor to the existing MY SCD3.0-121 product. With the aim of providing a solution to wind projects in low-wind onshore regions where land geography and transportation are difficult for conventional products, a pilot installation of this new product is targeted to be completed and grid connected in mid-2016.
MY announced strategic rollout for technology upgrade – Ming Yang has been working closely with the Energy Research Centre of the Netherlands (ECN) to develop a cutting-edge model-based control system to boost power generation of various WTG products while ensuring reliability. In addition, MY acquired the core technology of the SCD gearbox by soliciting a seasoned in-house research team and cooperating with a German research firm.
