Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

China Ming Yang Wind Power Group Limited (NYSE:MY)

Q4 2010 Earnings Conference Call

9 March 2011, 8:00 AM ET

Executives

Calvin Lau - Director - IR

Chuanwei Zhang - Chairman, CEO

Manfred Loong - CFO

Analysts

Paul Clegg - Mizuho Securities

Boris Kan – JPMorgan

Edward Chun - Clairvoyance Capital

Pey Yap - Morgan Stanley

Edwin Pang - Credit Suisse

Laurent Wong - Merrill Lynch

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2010 China Ming Yang Wind Power Group Limited Earnings Conference Call. Your two -- three hosts for today is your Chairman and CEO, Chuanwei Zhang; your CFO, Manfred Loong; and Calvin Lau, Head of Investor Relations. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

(Operator Instructions)

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 US 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, goals, strategy 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 risk, uncertainties or 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 risks and other risks, uncertainties or factors is included in Ming Yang's filings with the US Securities and Exchange Commission. Ming Yang does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise except as required under applicable law. I would now like to turn the call over to your Director of Investor Relations, Calvin Lau. Please proceed.

Calvin Lau

Thank you, Chanelle, and thank you, everybody, for joining us today for China Ming Yang Wind Power's Fourth Quarter and Full Year 2010 Financial Results Conference Call. The fourth quarter and full year 2010 earnings release was issued earlier today and is available on the Company's website at www.mywind.com.cn. We have already provided supplemental presentations -- presentation material for today's earnings call, which can also be found on our IR section of the website. I hope you've all had the chance to review by now.

On the call today from China Ming Yang Wind Power are Mr. Zhang Chuanwei, Chairman and Chief Executive Officer; and also Chief Financial Officer, Mr. Manfred Loong. And in the call today, we'll have Mr. Zhang discussing business and operational developments. Then, Mr. Loong will take you through a discussion of the Company's financial performance. After that, we'll open up the floor to questions from the audience. And with -- I would like now to -- like to turn the call over to Mr. Zhang. Please proceed.

Chuanwei Zhang

(interpreted) Ladies and gentlemen, I'm Zhang Chuanwei, Chairman and CEO of China Ming Yang Wind Power Group Limited. Today, we are pleased to announced Ming Yang's fourth-quarter and full-year earnings for 2010.

We have achieved and exceeded our operational targets this quarter, but before I provide a detailed update of our results, I would like to take this opportunity to share with you some of the latest developments in China's wind power industry.

China has become a world leader in the wind power industry. Industry analysts from Global Wind Energy Council shows that China has increased their installation capacity, and accumulative installation capacity in 2010 reached 16.5 gigawatts and 40 gigawatts respectively, making China the world's number one in terms of wind power installation capacity.

In China’s twelfth five year plan, wind power is included as China's strategic, emergent energy industry, and we are likely to see continued, fast and steady growth in this industry. China has been promoting the development of wind power as a state policy, and the construction of the national grid, and the issues associated with the grid are gradually being resolved.

In Inner Mongolia and Jillin, where grid networks have been established, construction of large-scale grids have now been completed and opened. Large-scale wind power developments have also been launched in central, eastern and southern China where no grid systems were previously established.

Manufacturing in China's wind power industry has become more and more concentrated. The top five wind turbine manufacturers in China, including Ming Yang, currently account for over 60% of the domestic market. Competition among the top five wind turbine manufacturers have gradually switched from just the competition on pricing to a comprehensive competition in generating the latest wind turbine technology and focusing on product quality, electricity power quality, electricity generation capacity and the cost per kilowatt.

We have seen the price of wind turbine units decrease steadily and the profitability of a business relies on a manufacture's ability to handle large-scale operations and integrate upstream capabilities to reduce supply chain costs.

These are the strengths and the competitive advantages of Ming Yang. And because of this, we are confident that we will achieve a stable and high-growth profit margin for the year ahead. I will now go through the operating performance of Ming Yang in the fourth quarter of 2010.

Ming Yang performed very well this quarter. We successfully recognized the revenues of 802 units, which exceeded our internal target. While we continue to experience price decreases per unit, we achieved a gross profit margin of 22.3% in the fourth quarter.

Our orders of the 1.5-megawatt wind turbines continue to be in high demand with sales revenue increasing 404% compared to the same period last year. As of December 31, 2010, accumulative signed orders since our inception amounted to 2,258 units, consisting of 2,207 units of 1.5-megawatt wind turbine generators and 51 units of SCD wind turbine generators.

In the fourth quarter, Ming Yang entered into sales contracts for 160 units of 1.5-megawatt wind turbine generators and 16 units of 2.5 and 3-megawatt SCD wind turbine generators, which increased the Company's order backlog to 1,288 units.

In addition, the number of orders awarded but yet to be signed amounted to 595 units, including 67 units of SCD wind turbine generators as of December 31, 2010. Our current order book for 1.5-megawatt turbines has fully covered our expected sales targets in 2011.

The update on our SCD prototype, our first 2.5-3-megawatt SCD prototype situated in Rudong has been connected to the grid. The prototype has been trialed and the test results have been positive and compliant with the design standards. Currently, our second SCD 3.0-megawatts prototype has been delivered and in store in Xinjiang and it is being prepared for connection to the grid.

As a result of good operational performance, together with the technology and cost advantage of the SCD prototype, we have made significant breakthroughs with respect to SCD orders. Since winning a bid for a total of 200 megawatt SCD wind turbine generators for government-authorized wind farm projects in the Hami area last October, we have won cumulatively 200 megawatt SCD offshore and onshore bids in wind power project tenders of top five, state-owned wind farm operators in January 2011.

Meanwhile, as a leading wind power manufacturer in Guangdong Province, we are actively implementing offshore wind power projects in our home province in collaboration with the top five national wind farm operators using integrated solutions such as EPC and BOT in offshore wind farm projects.

Production capacity and industrialization status, our Zhongshan manufacturing facility has established a new manufacturing line to assemble generators and gearboxes for SCD wind turbine generators.

The Tianjin manufacturing facility has started to ramp up its small batch SCD wind turbine generator production capabilities. The testing stands for complete units have been stored and tested. The procurement of major components for the initial batch of 18 SCD wind turbine generators were secured and the components arrived on schedule.

5.0/6.0MW R&D status update, the initial designs of our SCD 5.0 and 6.0-megawatt wind turbine generator and the blades were launched in October last year. These have now been completed, and the components for the prototype have been ordered.

Since the price of each unit continues to decrease, we have adopted the following three major channels to effectively lower the manufacturing cost of wind turbines.

The first is through increased scale procurement; secondly, through technology optimization together with our suppliers; and thirdly, through a unique financial payment structure to utilize capital in a more effective and efficient way for both parties.

We have successfully managed to pass on the margin pressure resulting from the drop of wind turbine price industry-wide so that our procurement cost is on average reduced by 10% by our suppliers in the beginning of 2011.

Post-IPO, we have been putting more than ever emphasis on risk control in our daily operations and adopting more stringent quality control measures. In a quality investigation launched by the State Energy Bureau, Ming Yang is one of the few manufacturers who has no record of accidents due to poor quality control.

Meanwhile, with respect to corporate governance, we made advances in the implementation of the Sarbanes-Oxley Act. We committed to establish an effective surveillance and the risk control systems to safeguard our business operations.

Now, I will actually address our growth strategies in 2011. Under the current macro financial environment as well as tightening monetary policies, the success of our IPO enables us to maintain a strong balance sheet. We will rapidly implement the following development strategies to maintain faster growth this year and for the coming three years.

First, increase market share, thanks to the technological cost advantage of our SCD wind turbine generators, we will undertake the offshore wind project planned by the Guangdong government by bundling with the wind farm operators or further leveraging our BOT model.

To lead China's offshore wind turbine market, we will also explore opportunities in the coastal areas of China such as Jiangsu, Hebei, Shandong and the Fujian Provinces. Meanwhile, we also aim to transform secured onshore and offshore wind resources into commercial orders.

Secondly, promote new business models such as EPC and BOT, on the back of our advantages in product technology relationships, with the quality customers and an integrated business model, we are committed to transforming our business from being a manufacturer to a full-service provider through innovative operating models such as EPC and BOT, which are underpinning the by financial tools such as finance leasing.

Thirdly, develop and integrate high-end industry chain, utilizing our strong balance sheet following the IPO, we accelerated the development and integration of a high-end supply chain.

We conducted the research on carbon fiber to lower costs of the blades for large-capacity SCD wind turbine generators; we also conducted research on Rare Earth to back up permanent magnet motor as well as research on batter and energy storage projects to support the wind-solar hybrid storage solution. Last but not least, we also conducted the research on IGBT (Insulated-gate bipolar transistor) project to expand industry chain of control system.

Fourthly, promote wind solar hybrid storage solution projects, leveraging the technological advantage of the hybrid solution, we will further explore and secure onshore wind and solar resources in western China through a pilot project in Yunnan, Guizhou, Gansu, Ningxia and Xinjiang, providing a pioneering energy solution.

Also, further accelerate expanding the international presence, now we are in the final stage of signing the first development agreement with US Duke Energy where we will make a breakthrough in the North American market. Meanwhile, we will utilize product cost, technology and the financial advantages to explore markets in northern and eastern Europe, south Asia and in South America. I will now pass it over to Manfred Loong, our CFO, to provide a detailed update on the 2010 fourth quarter results.

Manfred Loong

Thank you, Chairman. And let me take you through our key financials. We have continued to deliver strong top and bottom line throughout the quarter. The top -- the total quarter four revenue was RMB1.7133 billion, an increase of 403.9% compared to the same period last year, and was primarily due to the growth in the number of wind turbines commissioned during this period.

In the fourth quarter, we commissioned 253 units of 1.5-megawatt turbines compared to 239 units last quarter, which generated the recognized revenue of RMB5.5178 billion for the full year. Gross profit for this quarter increased to RMB382.9 million, an increase of 818.2% from Q4 2009, with gross margins increased to 22.3% of this quarter compared to 12.3% for the corresponding period last year. For the full year, our gross profit was RMB1.0874 billion with gross margins stated at 19.7%.

Now turning to our bottom line, this quarter we achieved a total comprehensive income of RMB212.2 million compared to a total comprehensive loss of RMB90 million for the same period last year. Our total comprehensive income in 2010 amounts to RMB690 million compared to a total comprehensive loss of RMB223.1 million last year. The increase we have seen this quarter is primarily due to a significant decrease in average turbine production costs while recognizing revenue from a favorable mix of old and new projects.

On the profit margin improvement, we continue to show improvement as a result of our rapid growth and benefits stemming from economy of scale. Our cost of sales consists of the raw material costs and, two, labor, three, depreciation of production equipment and facilities and others, which primarily includes the estimated costs of warranty provision at 3.3%.

We managed to control our -- the raw material costs and lower them as a percent of revenue from 92% in 2008 to 85% in 2009 and further to 70% in Q4 of 2010. As a result, localization increased purchasing power and production optimization.

Our operating expense as a percentage of total revenue was 8% in Q4 2010 compared to a 26.7% for the same period last year. This is primarily due to, again, the scale and also a significant reduction of transportation costs as the result of our close proximity of production base to our customers.

Our selling and distribution expenses were RMB64.5 million for the quarter, mainly due to the higher volume of turbine shipments and including RMB5.2 million from share-based compensation expenses. Administrative expenses were RMB60.2 million, primarily from the professional fees related to the Company's IPO last October and RMB22.8 million in the share-based compensation expenses.

And the R&D expenses were RMB15.6 million. While this was up from last quarter because of the investment needed for the development of turbines in SCD that operated in extreme conditions, our R&D expenses were down on a quarter-to-quarter basis due to the heavier early-stage development expenses related to the 2.5-3.0-megawatt SCD turbine prototype in the fourth quarter of 2009.

If we take out the share-based compensation totaling RMB34.4 million and the professional fees of RMB7.4 million in the quarter, our operating expenses for the quarter would have been 5.6% of revenues. We have maintained a strong financial position at all times since the Company has started, and following our IPO last year our cash and cash equivalent is in a very strong position with RMB2.486 billion on our balance sheet at the end of December 2010.

We have maintained an appropriate amount of debt for our business, and the debt-to-equity and the debt-to-EBITDA ratio continue to fall, however, at 15.6% and 5.7% respectively. Looking at the year ahead, based on our current market and operating conditions, estimated production capacity and forecasted customer demand, we expect to achieve revenue recognition of an estimated 1,400 1.5-megawatts WTGs and 100 units of 3.0 SCD units in 2011. We're also looking at the first batch of SCD units to be commercially delivered by the end of March or early April. Thank you, for your attention. And I'll now hand it back to our Chairman (inaudible)

Chuanwei Zhang

(interpreted) Ming Yang is a one of the three listed wind turbine manufacturers in China. With the fast growth of China's wind power industry and the rapid launching of offshore wind power projects in China, we will further demonstrate our competitive advantage, especially our unique cost and technology competitiveness of SCD.

We are confident that we can capture more market share in the future. And, at the same time, we will maintain faster growth to become a global leader and an overall solution provider through continuous innovation over the next three years.

Calvin Lau

Okay. Thank you, Chairman. Thank you, Manfred. And we'll now open to the floor for questions. Can I please remind everybody that in order to save time and have a better proceedings and -- please limit your questions to two each time you ask questions. Thank you. Operator, please open the floor to questioning now.

Question-and-Answer Session

Operator

Thank you.

(Operator Instructions)

Your first question comes from the line of Paul Clegg, Mizuho.

Paul Clegg - Mizuho

Hi, gentlemen. Thanks, for taking my question. Congratulations on the strong results. If I heard you correctly during the prepared remarks, you were talking about getting Duke Energy to potentially use your turbines. I'm very curious about that.

Are you bringing financing as a part of that deal? And are you bringing performance guarantees? And is this for the 1.5 or 2.5 to 3-megawatt turbines? And then, I have a follow-up question.

Chuanwei Zhang

(spoken in foreign language)

Calvin Lau

(interpreted) For the Chairman, provides that financing options available to -- for to actually decide and we'll anticipate they would hope to choose our 3-megawatt SCD product.

Paul Clegg - Mizuho

Okay, very good. And then I was -- had another question about the new rules published by the NDRC recently and how they affect you. They seem to try to disadvantage smaller turbine sizes. And obviously you have both 1.5 and then 2.5 to 3 megawatt turbines.

So -- but you obviously sell a lot more 1.5s at this point. So, I was just curious how you viewed that announcement, if you think it will have a significant impact in the short term and if it affects your strategy at all going forward?

Chuanwei Zhang

(spoken in foreign language)

Calvin Lau

Well, the Chairman basically replied that the NDRC policies, which came forth are exactly what Ming Yang needs and also hopes to see. So, it's actually beneficial for the Company.

And the Chairman remarks that as China gradually develops and China's wind power industry gradually developments into a more mature -- mature stage that -- that these policies will help to actually enhance the Company's competitiveness and going forward actually help us in terms of our product offerings in the marketplace.

Paul Clegg - Mizuho

Thanks, very much for your response.

Operator

Your next question comes from the line of Boris Kan with JPMorgan.

Boris Kan - JPMorgan

(spoken in foreign language) (translated)Greetings to the management team. I have two questions for you. Firstly, How many SCD orders have been awarded by the end of 2010? And what customers are these orders from? Are they from the top five power generation group? And the second question is that among the bids initiated by the top five power generation group, how many shares do your orders make up for?

Chuanwei Zhang

(spoken in foreign language)(translated) Thanks. We have a total of 118 SCD WTG orders on hand, including 51 units signed and 67 units awarded pending for contract. And we expect to recognize income of 100 units SCD WTG in 2011 and we expect the cumulative SCD orders (including orders signed and awarded) would exceed 300 units by the end of 2011.

Boris Kan - JPMorgan

(spoken in foreign language) (translated) Excuse me, by the 118 units you’ve mentioned, how many are from the--

Chuanwei Zhang

(spoken in foreign language) You mean our customers for these orders, right? The orders are from China Huaneng, China Huangdian, Guangdong Yudean and top five power generation group and provincial energy investment group.

Boris Kan - JPMorgan

(spoken in foreign language) Great, thank you. And the second question is that in the past six month or one year, among the tenders you submitted and won, how much shares you make up for each tender?

Chuanwei Zhang

(spoken in foreign language) (translated) Let’s take the two large tenders we submitted in January 2011 for example. For the 500MW tender initiated by China Huaneng, we won 150MW. And for the 700MW tender initiated by China Huadian, we were awarded 450MW. Our SCD WTG has passed trials and gained endorsement from our customers. With the enhanced reliability and quality of our products and the competitive advantages of our SCD WTG, we are confident that our market share will grow to fifteen to seventeen percent in 2011 in terms of newly installed capacity.

Boris Kan - JPMorgan

(spoken in foreign language) (translated) Great, thanks very much. I have no further questions.

Chuanwei Zhang

(spoken in foreign language)(translated) Thanks for your questions.

Calvin Lau

Operator, please? The next question, please?

Operator

Your next question comes from the line of Edward Chan of Clairvoyance Capital.

Edward Chun - Clairvoyance Capital

(spoken in foreign language) (translated) Hello, management team. I have a question on cost control. You mentioned just now that you expect to cut costs by ten percent in 2011. Do you mean by cutting ten percent from the RMB3,506/kW cost of goods sold in Q4 2010?

Chuanwei Zhang

(spoken in foreign language) (translated) A Strategic Supply Chain Conference was held January 2011 to discuss with suppliers to further enhance the cost competitiveness of our wind turbines. And we called for tenders from various suppliers and we’ve been able to cut ten percent of the total purchase costs compared to those at the end of 2010, and even over ten percent for some material, parts and components. The renegotiated prices have been adopted in January 2011. Secondly, we dedicated to enhance the existing 1.5 MW wind turbine product family through technology and process optimization, as well as research and development by working with our strategic suppliers. We’re confident that through technology and process optimization, there’s still room for cost reduction of our 1.5MW WTG in the coming year. We’re confident that we can maintain a gross margin of over eighteen percent.

Edward Chun - Clairvoyance Capital

(spoken in foreign language) (translated) So what’s your cost of goods sold per kilowatt for 2011? How much do you think you can get?

Chuanwei Zhang

(spoken in foreign language) Let’s hand it over to our CFO Manfred.

Chuanwei Zhang

(spoken in foreign language) (translated) Excluding the 3.3% warranty provisions, our manufacturing costs in 2010 were approximately RMB3,500-3,600/kW. And as you may noticed from this Q4 presentation, our costs were around RMB3,300-3,400/kW. Based on this, we may be able to cut costs by over ten percent.

Edward Chun - Clairvoyance Capital

(spoken in foreign language) (translated) Well, by over ten percent—would it be less than fifteen or over fifteen percent?

Manfred Loong

(spoken in foreign language) (translated) For the first quarter in 2011, it would be approximate eleven to twelve percent. Based on the costs in the first quarter, there will be a ten percent further reduction on the costs bu the end of 2011.

Edward Chun - Clairvoyance Capital

(spoken in foreign language) (translated) Great, thank you.

Calvin Lau

Operator, the next question please?

Operator

(Operator Instructions)

And your next question comes from the line of Pey Yap, Morgan Stanley.

Pey Yap - Morgan Stanley

(spoken in foreign language) (translated) Greetings to Chairman ZHANG, Manfred and Calvin. I’m with Morgan Stanley. I have a question on the average sales price of WTGs. The ASP of wind turbines in the fourth quarter of 2010 increased compared to Q3 in 2010. My first question is that what’s your ASP in the first quarter of 2011? And what will be the case in the fourth quarter of 2011?

Chuanwei Zhang

(spoken in foreign language) Let’s hand it over to our CFO, Manfred.

Manfred Loong

(spoken in foreign language) (translated) As we mentioned in previously section of this announcement, we had a favorable mix of old and new projects in Q4 2010. The ASP for our wind turbines in Q4 was around RMB4,600/kW. Going forward, we have a general guidance that we would be able to maintain a gross margin of 18-20% in the upcoming quarters of 2011. ASP could be estimated by adopting this expected gross margin in the year. But there will be fluctuations just like the year of 2010.

Pey Yap - Morgan Stanley

(spoken in foreign language) (translated) Is the 18-20% gross margin estimation based on the ASP of your orders on hand? You mentioned that your orders acquired in 2010 fully cover the sales target for 2011. And do you mean you’re confident that you can maintain a 18-20% gross margin based on the ASP of these orders?

Manfred Loong

(spoken in foreign language) (translated) Yes, that’s how we estimated.

Pey Yap - Morgan Stanley

(spoken in foreign language) (translated) Great. You mentioned you will deliver a total of 100 units of SCD wind turbine. My second question is that when will you start delivering SCD wind turbine and what will be the ASP and your costs?

Chuanwei Zhang

(spoken in foreign language) (translated) One hundred units is our target. And we’re confident that we’re able to fulfill that target. In March 2011, we will start batch delivery and maintain a delivery of over ten units each month. And we’ve accomplished in-house supply of major parts of SCD wind turbine, such as generator, gearbox, control system and blade. As the in-house supply strategy matures, we’re able to cut costs by a large margin to around RMB2,500/kW by the end of this year.

Pey Yap - Morgan Stanley

(spoken in foreign language) (translated) You mean this would be possible in the fourth quarter?

Chuanwei Zhang

(spoken in foreign language) (translated) Yes, the fourth quarter, when SCD wind turbine goes into batch production.

Pey Yap - Morgan Stanley

(spoken in foreign language) (translated) Great. And what would be the ASP for SCD now?

Chuanwei Zhang

(spoken in foreign language) (translated) ASP for SCD wind turbine…

Pey Yap - Morgan Stanley

(spoken in foreign language) (translated) Yes.

Chuanwei Zhang

(spoken in foreign language) (translated) Let’s hand it over to Manfred. For the orders signed…

Manfred Loong

(spoken in foreign language) (translated) ASP for SCD orders signed was around RMB4,100.

Pey Yap - Morgan Stanley

(spoken in foreign language) (translated) Is this ASP for onshore SCD wind turbine?

Manfred Loong

(spoken in foreign language) (translated) That’s correct.

Pey Yap - Morgan Stanley

(spoken in foreign language) (translated) Would there be any difference for offshore SCD wind turbine?

Chuanwei Zhang

(spoken in foreign language) (translated) Higer, ASP for offshore SCD wind turbine would have a RMB200-300/kW mark up.

Pey Yap - Morgan Stanley

(spoken in foreign language) Good. Thanks and that would be all.

Chuanwei Zhang

(spoken in foreign language) Thank you.

Calvin Lau

Operator, next question please?

Operator

(Operator Instructions)

Your next question comes from the line of Edwin Pang, Credit Suisse.

Edwin Pang - Credit Suisse

(spoken in foreign language) Okay. Basically, the -- my question is on two things. One is basically what is Ming Yang's plans in terms of investments into non-wind -- non-wind-turbine-related businesses?

I would think basically San Zhang talked about investing in wind farms at [what goal when is done]. And how much money will you be putting into these kind of storage facilities or wind solar combinations or these non-wind-turbine-related activities?

And the second thing is on the pricing. We were to understand from market sources that prices for wind turbines has fallen to about 3,600, including tax, including the AT. And I understand Mr. Zhang mentioned that this price is not for this year's delivery but for next year's delivery.

Now, if you want to maintain your sort of dollar margin of about RMB800 to RMB900 per kilowatt, what do you think your -- basically your cost can go -- how low can your cost go basically for next year?

Calvin Lau

(spoken in foreign language) (interpreting the questions to the Chairman)

Manfred Loong

(spoken in foreign language) (interpreting the questions to the Chairman)

Chuanwei Zhang

(spoken in foreign language) (translated) For BOT and EPC projects, we adopt finance leasing other than direct capital investment. We adopt finance leasing services by ICBI to provide EPC services, integrated solution of engineering, equipment, technology and finance, to our customers. With the equipment we provided and the finance support, time for payment collection would be shortened. Extra value may also be gained from our professional engineering services and warranty.

Calvin Lau

(spoken in foreign language) (further interpreting the questions to the Chairman)

Calvin Lau

Okay. (interpreted) So, the Chairman reiterated the absolute lowest cost target we're aiming for right now is around a 2,350-kilowatt -- RMB2,350 per kilowatt to RMB2,400 per kilowatt level.

Manfred Loong

By the time we produce --

Calvin Lau

(interpreted) By the time we produce the wind turbines at the current market pricing level. And also, the Chairman would like to reiterate the position is that the market is now like moving away from the cost per wind turbine basis. We're doing the bidding process into more of a like a cost per energy, cost per efficiency, that kind of an environment.

And like the Chairman has mentioned previously, we are engaging in a whole series of developments in R&D initiatives to actually enhance our offering and enhance our wind turbines' efficiencies, particularly on the 1.5 megawatt legacy product in order to enhance our wind turbines' attractiveness during the tendering process for wind power projects.

Edwin Pang - Credit Suisse

Okay, thank you.

Calvin Lau

Operator, the next question please?

Operator

(Operator Instructions)

Your next question comes from the line of Laurent Wong, Merrill Lynch.

Laurent Wong - Merrill Lynch

(spoken in foreign language) (translated) Good evening,Chairman ZHANG. Congratulations for your strong performance. Does your license agreement with aerodyne set forth any terms on the SCD export? When can you export SCD wind turbines to overseas markets? Will there be any restriction on the units to be exported? If positive, would such restriction be more rigorous in 2013 and 2014?

Chuanwei Zhang

(spoken in foreign language) (translated) At the time of the licence agreement, we’re more focus on the domestic market. And at the end of last year, we entered into a supplementary agreement with aerodyne for our SCD wind turbine export to the North and South American markets. We’ve reached a consensus with aerodyne that there’s no specific restriction on the units of export provided strong market demand and product maturity and competitiveness.

Calvin Lau

Laurent?

Laurent Wong - Merrill Lynch

Yes. That's it for me, thanks.

Calvin Lau

Okay. Okay. Operator, next question please?

Operator

(Operator Instructions)

And there are no further questions in the queue. I would now like to turn the call back over to your CEO and Chairman, Chuanwei Zhang.

Chuanwei Zhang

(spoken in foreign language)

Calvin Lau

(interpreted) The Chairman would just like to have a few closing words. And the Chairman would like to say that Q4 and also full-year 2010 results have been very, very good, and the management team has been extremely satisfied with what the company has been able to deliver in terms of the results for the shareholders.

And the management team is confident during the 2011 we can maintain our high-speed, high-level rate of growth going forward into 2011 and beyond. We're confident that our order book can maintain and also try to exceed our stated targets for 2011, and we'll continue to work on our core quality and enhance our competitive offerings, particularly the SCD entering production and our market competitive advantages, as shown to all.

And with the current macroeconomic environment in China, we are particularly happy to report that our current competitive position is even more asset positioned to take advantage of the competitive landscape in China.

And hopefully in three years -- three and five years' time we are -- the Chairman has mentioned that we continue with our competitive technology offering and we'll continue to work on the [old] expansion strategy in order to broaden our market reach.

And with our new business model initiatives and also the supply chain enhancements and also the further development downstream and also upstream and also technology that we [have entered -- acquired now], we hope to continue to maintain Ming Yang's competitive market position and continue to develop our -- continue to enhance our shareholder offering and returns to the shareholders.

And lastly, I would just like to remind everybody that the transcript and also the web presentation will be -- the playback will be available on our website. And also, if you have any further questions please go to our IR section of the website at ir.mywind.com.cn. Thank you. Good evening. (spoken in foreign language)

Operator

Ladies and gentlemen, that concludes our presentation. Thank you, for your participation. You may now disconnect. Have a great day.

Editor: Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.

1

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: China Ming Yang Wind Power Group's CEO Discusses Q4 2010 Results - Earnings Call Transcript
This Transcript
All Transcripts