MY Reports Third Quarter 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 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.
