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Ming Yang sees growth of offshore wind in southern China
Speaking to analysts on a conference call on Friday, chief executive Zhang Chuanwei said the National Energy Administration (NEA) last month approved two wind farms off Guangdong province, the first large offshore projects approved by NEA outside of the national concession projects.
The projects include a 200MW wind farm under development by the Yudean group and a 198MW project off Zhuhai developed by China Southern Power Grid.
“These are the first batch of projects with official approval from the government,” says Zhang. “We are confident we can lead development of the offshore wind industry in China and worldwide.”
China’s offshore wind industry has been progressing slower than planned with disputes between regulatory authorities holding back construction of the first round of concession projects granted by the NEA in 2010.
Manfred Loong, chief financial officer at Ming Yang prior to a reshuffling on 1 June, tells Recharge the first offshore concession in Jiangsu province is a “non-event” and the focus is moving to Guangdong.
“The Guangdong government is looking to establish the province as a renewables base and offshore projects are getting lots of support.”
Zhang says that a shift in demand away from China’s northern provinces to the south, including offshore projects, is set to benefit the Guangdong-based company this year, even as overall demand for wind turbines slows.
Zhang estimates total installation could drop to 12-15GW for 2012, down from 17.6GW in 2011.
Ming Yang saw a slow start to the year, reporting turbine shipments down by 60% in the first quarter after adverse winter weather delayed installation of its turbines on some wind farms while demand also declined.
The company also reported a 71% drop in revenues, as previously guided, to 406.6m yuan ($64.6m).
Demand for wind turbines has slowed in China since the central government took control of all wind project approvals at the end of the first half of last year amid fears over safety.
The slowdown is exacerbating price pressure caused by a surplus of equipment manufacturing capacity in the market.
Ming Yang says its gross margin for the first quarter was 10%, a “moderate improvement” on the previous quarter, but a substantial drop compared to the 26% in the first quarter of 2011.
The company reported losses of 116.2m yuan compared to income of 218.8m yuan in the same period of 2011, impacted by weaker revenues and a surge in selling and finance expenses.
Selling and distribution expenses increased by 87% to 70.3m yuan as the company responded to competition with more marketing and bidding.
Net finance expense was 48.2m yuan compared to a net finance income of 8.8m yuan. Around 26m yuan of these expenses were from bank fees paid for setting up financial leases, a method by which Ming Yang arranges for a bank to buy its turbines and lease them to cash-strapped customers, ensuring that it gets paid up-front and reduces its trade receivables.
Ming Yang has signed sales contracts worth 229.5MW in the quarter, mostly for 1.5MW turbines.
Its order backlog amounted to 2.2GW at the end of March and it has a further 1.2GW of orders pending contracts.
The company has promoted former chief financial officer Manfred Loong to chief executive of Ming Yang’s International subsidiary, incorporated in Hong Kong.