Interim Results Announcement August 2011

Transcription

1 HKEx Stock Code: 2208 Interim Results Announcement August 2011

2 # Agenda Industry Overview Company Overview Financial Performance Company Outlook

3 China Wind Outlook Annual Installed Capacity Forecast Cumulative Installed Capacity (GW) (GW) BTM Forecast Actual Installations 12th Five-Year Plan Cumulative installations - High forecast Cumulative installations - Low forecast 150 GW 115 GW E A 2011E 2012E 2013E 2014E 2015E Source:BTM, PRC s 12 th 5-Year Plan, analyst forecasts. #

4 # Key Events in China Wind Market Late 2010 Feb. & Apr May 2011 NDRC assumed leadership of wind farm approvals (incl. < 50 MW farms) Wind farm faults in Gansu, Hebei State Grid halted new connections May-June 2011 August 2011 Sept State Grid investigated faults NEB issued 18 final wind power standards State Grid to begin retesting all WTGs for LVRT

5 # China Wind Market: A Challenging 1H11 Slower Wind Farm Approvals NDRC revoked local DRCs right to approve sub-50 MW wind farms State Grid temporarily halted new wind farm approvals in May 2011 Stricter Standards National Energy Bureau finalized 18 wind standards in August 2011 State Grid will re-test wind turbines for LVRT and other standards Tighter Monetary Policy Tighter money affects sales because project financing is more scarce Slower receivables collections, higher financing costs Pricing Competition Average bidding price dropped 22% in June 2011 versus June 2010 Average bidding price dropped 8% in June 2011 versus Dec Higher Raw Materials Costs Steel and copper pricing have risen gradually since last year Rare earths pricing rose sharply since the beginning of 2011

6 # Price Competition: Bidding Trends Average Domestic Public Bidding Price Average domestic public bidding price decreased 8% during 1H11 Average (Dec. 10-Jun. 11) and 22% during LTM Goldwind (Jun. 10 Jun. 11) (RMB per kw) Jun-10 4,612 Goldwind s domestic public bidding price decreased 7% and 21% during the same respective periods Dec-10 3,950 Jun-11 3,615 Jul-11 3,732 Goldwind s average bidding price was more than 3% ABOVE the average bidding price during the LTM period Average domestic public bidding price rebounded 3% to RMB 3,732 per kw in Jul. 11 from RMB 3,615 in Jun. 11 Note: Average domestic bidding price are for 1.5 MW units. Data include VAT and exclude a bid from a foreign manufacturer in January Source: Company estimates.

7 Raw Materials Pricing: Rare Earths (RMB/kg) Rare Earths Spot Market Pricing Our permanent magnets are approx. 70% steel and 30% rare earths 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Dysprosium 镝铁价格 Neodymium 镨钕价格 Neodymium and dysprosium spot market prices increased 5x and 10x, respectively, since the beginning of 2011 In August, spot market price dropped 22% and 24% for neodymium and dysprosium, respectively Thanks to long-term supply agreements, PMs represented 6% of costs in 1H11, up from 5% in 2010 Source: Company estimates. #

8 # Agenda Industry Overview Company Overview Financial Performance Company Outlook

9 # Integrated Business Model Comprehensive Wind Energy Solutions Synergies Wind Power Services Pre-Construction Wind evaluation WTG selection Wind farm design Project Construction Site preparation EPC contracting Logistics Post-Construction Equipment servicing Spare parts support Remote monitoring Customer Loyalty Customer Demand WTG Manufacturing and Sales Low-maintenance, high reliability WTGs suitable for low wind, offshore, low temperature, high temperature, high altitude, and coastal installation. Expand Customer Base Increase Order Backlog Wind Farm Development Wind farm development Wind farm operation Wind farm sales Technology Validation

10 # Group Management, Diversified Business Creating Synergies that Drive Near-Term Profit Diversification and Growth Wind Turbine SBU Services SBU (Tianyuan) Wind Farm Development SBU (Tianrun) Techwin SBU (Tiancheng) International SBU Investment Management SBU Our core business Over 14 years of R&D and manufacturing Over 10 GW of WTG sales A trusted name in the wind power industry Synergy with other SBU Manage full life-cycle (wind resource appraisal, EPC, operations and maintenance) SCADA, EMS Wind farm, development, operation & sales Leverage our experienced team of wind farm development professionals Vertical integration Focus on electrical control systems WTG Solar Pursue mature and emerging wind power markets Establish flexible sources of financing Localize manufacturing Pursue strategic investments in partners, suppliers, and other key stakeholders Target key areas of the wind power value chain Strategic goals Innovative R&D Quality product at a competitive price Cost controls Quality controls Supply chain mgmt Maintaining strong relationships with customers Monitoring and maintenance support quality control Support ongoing sales of WTG Generate an appropriate return on investments One of the key profit centers Reduce costs Address supply bottlenecks Expand into new sectors, such as solar based on existing proprietary technology Support ongoing WTG sales by expanding our market footprint Establish Goldwind brand in new markets New source of profitability Address supply bottlenecks Generate an appropriate return on investments New source of profitability

11 # 1H11 Wind Turbine Sales Wind Turbine Generator Sales (MW) (MW) sold 2.5 MW 1.5 MW 4, kw 3 > WTG sales volumes decreased 6.1% to 1,246 MW in 1H11 from 1,326 MW in 1H10 Shift in product mix toward higher capacity WTG units: 2,036 3,851 1H11 includes 35 MW of 2.5 MW units and no 750 kw units 1,373 1,326 1,246 1, ,235 1, H10 1H11 Cumulative WTG Sales (MW) H10 1H11 < 35 1H10 includes 92 MW of 750 kw units and no 2.5 MW units Goldwind s global cumulative sales capacity surpassed 10 GW during 1H11 3,053 5,088 9,095 6,414 10,341 Source: Company filings.

12 Order Backlog Up 93% (MW) 1.5 MW 2.5 MW 3.0 MW All Strong Backlog Growth 6,984 6,580 < 9 < 9 1,613 5,330 1,743 7,327 < 12 1,548 Total backlog up 93% to 7,327 MW as of June 30, 2011 from 3,790 MW as of June 30, 2010 On a quarterly basis, backlog up 5% from 6,984 MW as of March 31, ,790 4,829 5,363 5,768 On a semi-annual basis, backlog up 11% from 6,580 MW as of December 31, June Sep Dec Mar June 2011 June 30, 2011 backlog included 159 MW of international orders Major Customers Longyuan China Power Guandong Nuclear Three Gorges Huadian Huaneng Guohua Jingneng Datang Note: Backlog data available by unit starting 2010/12/31. Source: Company filings. #

13 Contracted Backlog Up 45% Contracted Vs. Successfully Bid Backlog (MW) Total 7,327 Successfully bid 6,984 Under final contract 6,580 5,330 4,012 1,531 3,816 4,202 3,790 1,502 3,315 3,799 2,765 2,783 2,288 In general, developers will bid on a project first, and then wait for final permits before signing a contract and paying the deposit. Permitting has slowed, so conversion of successful bids to final contracts also slowed. In spite of slower permitting, the contracted backlog increased 19% to 3,315 MW as of June 30, 2011 from 2,783 MW as of March 31, June Sep Dec Mar June 2011 On a year-over-year basis, the contracted backlog increased 45% from 2,288 MW as of June 30, Faster Permitting Faster Conversion to Signed Contracts Source: Company filings. #

14 Wind Power Services Segment Cumulative Maintenance-Units Cumulative SCADA Systems Sold (units) 5,900 (systems) 60 4, June June June June 2011 Cumulative EMS Systems Sold (systems) June June 2011 Goldwind provided maintenance service for 1,450 units during twelve months ended June 30, 2011 SCADA remote monitoring systems tripled during the same period Energy Management Systems climbed to 30 systems as of June 30, 2011 Source: Company filings. #

15 Wind Farm Development Segment Total and Attributable Installed Wind Farm Capacity (MW) 1,200 1, Total Installed Capacity Attributable Installed Capacity , /12/ /06/30 Goldwind began developing wind farms for sale to developers and investors in 2008 Installed capacity as of June 30, 2011: 1,074 MW of total installed capacity (excluding 627 MW under construction) 513 MW of attributable installed capacity (excluding 557 MW under construction) Source: Company filings. #

16 Certified for LVRT at Zero Volts Goldwind s 1.5 MW unit was certified for LVRT by the China Electric Power Research Institute in 2010 In July 2011, Goldwind s 1.5 MW unit was certified at zero volts by third-party international engineering firm GL Garrad Hassan (GL) GL s zero volt LVRT certification exceeds NEB s standards Source: Company filings. # 15

17 Targeting New Markets: Low Wind Goldwind manufactures WTGs designed for a variety of environments including: low wind, coastal, offshore, high altitude, high temp and low temp Low wind WTGs represent a significant opportunity to alleviate regional grid constraints China has ample Class 2 wind near major urban centers In low wind conditions (6-8 m/s), over 130 units of Goldwind s 87/1500 units produced 5% more power than 82/1500 units with +98% availability Other low wind products: 103/2500 and 106/2500 for onshore market and 109/2500 for offshore market Examples of low wind markets in China Source: Company filings. #

18 # Sustainable Market Leadership Dominant Market Position Strong Order Backlog: +7.3 GW Cost Control Quality Control Innovative R&D Program Market Segmentation Integrated Business Model +14 yrs History +10 GW Sales Experienced Mgmt Team

19 # Agenda Industry Overview Company Overview Financial Performance Company Outlook

20 2011 Interim Financial Results Revenue Gross Profit and Gross Margin (RMB in millions) 6,417 10,667 17,475 6,265 5,172 7,000 6,000 5,000 4,000 3,000 2,000 1,000 (RMB in millions) 25.9% 23.7% 2,758 1, % 4, % 1, % 1, % 25.0% 20.0% 15.0% 10.0% 5.0% H10 1H H10 1H11 0.0% Goldwind generated revenue of RMB 5,172 mm in 1H11 vs. RMB 6,265 mm in 1H10 Sales volumes (MW) decreased 6.1% in 1H11 vs. 1H10 Goldwind generated gross profit of RMB 1,085 mm in 1H11 vs. RMB 1,516 mm in 1H10 due to lower sales volumes and lower ASP Gross margin remained well above the industry average at 21.0% in 1H11 Notes: Financial data are reported in IFRS. Source: Company filings. #

21 Effective Cost Reduction (RMB/kW) Cost to Manufacture 1.5 MW Units Other components -9% -14% -14% Blades Hub Nacelle Generator H10 1H11 Cost to manufacture 1.5 MW units decreased 14% in 1H11 versus 1H10 Source: Company filings. #

22 1H11 Profitability and Margins Gross Profit Net Profit 7,000 6,000 5,000 4,000 3,000 2,000 1,000 (RMB in millions) 25.9% 23.7% 2,758 1, % 4, % 1, % 1,085 4, % 3,500 3, % 2, % 2, % 1, % 1, % 500 (RMB in millions) 16.4% 14.1% 1, % 12.3% 2, % % 15.0% 10.0% 5.0% 0.0% H10 1H11 0.0% H10 1H11-5.0% EBITDA EBIT (RMB in millions) 19.7% 19.7% 2,101 1, % 17.7% 3,084 1, % 789 7, % (RMB in millions) 6, % 5, % 4, % 19.3% 15.0% 3,000 2,053 2, % 1,189 1, % 16.7% 16.6% 2,917 1, % % 25.0% 20.0% 15.0% 10.0% 5.0% H10 1H11 0.0% H10 1H11 0.0% Notes: Financial data are reported in IFRS. Net profit is net profit attributable to ordinary owners. Source: Company filings. #

23 Sources Uses Working Capital Management (Annualized Days on Hand) 30 Jun Sep Dec Mar Jun Inventory DOH Receivables DOH - Payables DOH = Cash conversion cycle: Goldwind actively manages working capital and has historically maintained inventory and receivables levels that are in-line with or lower than competitors Cash conversion cycle slowed in 2Q11 due to tighter credit and slower WTG installations Notes: Quarterly financial data are reported in China GAAP. Receivables, Inventory, and Payables Days on Hand are presented on an annualized basis to reflect the seasonal nature of the wind turbine manufacturing industry. Please see appendix for a detailed table. Source: Company filings. #

24 # Agenda Industry Overview Company Overview Financial Performance Company Outlook

25 # Overcoming Near-Term Challenges Slower Wind Farm Approvals Stricter Standards Tighter Monetary Policy Pricing Competition Higher Raw Material Costs New Markets Certified to Exceed Standards Planned Bond Issue Cost Reduction Initiatives Long-Term Supply Agreements Expand Market Share Continuous Technological Innovation Working Capital Management Quality Control Management Efficient Use of Raw Materials Integrated Business Model Ongoing Certification Program Production Planning and SCM Lower Lifetime Costs Substitute Materials, Alternative Designs

26 # 25 Rare Earths Strategies 1) Optimize generator to reduce the volume of rare earths 2) Testing several alternative materials to replace neodymium & dysprosium 3) Resume development of the hybrid direct-drive model 4) Monitor spot market closely: Prices have decreased +20% since July

27 # Opportunities for Growth Positive Catalyst Expected Outcome Industry Goldwind State Grid to complete re-testing for LVRT and other wind turbine standards Strong domestic support for wind power under the 12 th Five-Year Plan Improved transmission capacity from high wind to high population regions Increased barriers to entry due to higher WTG standards Increased awareness among major wind farm operators of Goldwind s superior quality, high efficiency, and low lifetime costs Establishment of best practices for long-term wind farm operations and maintenance Growth of distributed generation and lowwind markets near major urban centers Continue to build upon strong track record in international markets State Grid to resume approvals of wind farm grid connections at an accelerated pace Increased focus on orderly development of wind farms, high quality WTGs, adding grid capacity Support continued development of GW-level wind farms Support a recovery in average selling price among high quality WTG manufacturers like Goldwind Growth in domestic and international sales and market share Growth in demand for turn-key solutions, such as Goldwind s EPC, monitoring and maintenance services Growth in demand for specialized WTG models, such as Goldwind s successful low-wind units Accelerate Goldwind s growing international sales volumes

28 # Innovating for a Brighter Tomorrow 2H11 Stricter regulatory environment to result in higher barriers to entry, supporting healthy, orderly development of wind industry Major domestic wind farm developers increasingly seek out WTGs with lowest lifetime cost: High quality, high efficiency, high availability, low O&M costs 2012 and Beyond Recovery in ASP for high quality WTGs Stable growth in domestic market Accelerated growth in new markets Offshore and 6.0 MW prototypes Smart grid, Wind + Solar Advanced power storage technology

29 HKEx Stock Code: 2208 Interim Results August 2011

30 # 29 Appendix

31 # EBITDA and EBIT Reconciliation H10 1H11 Profit before tax Add back finance costs EBIT Add back D&A EBITDA 1,146 1,991 2, ,189 2,053 2,917 1, ,265 2,101 3,084 1, Note: Financial data are IFRS. Source: Company filings.

32 Cash Conversion Cycle Reconciliation Reconciliation of Days-on-Hand Data (China GAAP) 1Q09 2Q09 3Q09 4Q Q10 2Q10 3Q10 4Q Q11 2Q11 Sales 收入 1,147 2,661 2,925 4,006 10,738 1,855 4,450 4,588 6,703 17,596 1,856 3,339 Cost of sales (COGS) 成本 834 2,057 2,143 2,882 7,916 1,326 3,427 3,471 5,244 13,467 1,445 2,646 Sales - Last 12 Months 收入 - 过去 12 个月 10,738 11,446 13,235 14,898 17,596 17,596 17,596 16,485 Cost of Sales (COGS) - Last 12 Months 成本 - 过去 12 个月 7,916 8,408 9,777 11,106 13,467 13,467 13,586 12,806 Uses of Working Capital Notes receivable 应收票据 Accounts receivable 应收账款 2,065 2,853 3,014 2,710 2,710 2,897 5,363 6,788 7,065 7,065 7,342 9,231 Inventories 存货 3,004 3,350 4,156 2,854 2,854 4,006 4,075 5,010 4,391 4,391 6,599 8,607 Sources of Working Capital Notes payable 应付票据 ,082 1,763 1, ,863 3,420 3,483 3,483 2,166 3,507 Accounts payable 应付账款 1,626 1,778 2,339 1,998 1,998 2,833 3,558 4,365 4,648 4,648 4,994 5,351 Total receivables - Start of 12-Month Period 2,165 2,857 3,031 2,920 2,920 2,913 5,487 Total receivables - End of 12-Month Period 2,913 5,487 6,934 7,583 7,583 7,592 9,283 Average receivables - 12-Month Period 2,539 4,172 4,982 5,251 5,251 5,252 7,385 Total inventories - Start of 12-Month Period 3,004 3,350 4,156 2,854 2,854 4,006 4,075 Total inventories - End of 12-Month Period 4,006 4,075 5,010 4,391 4,391 6,599 8,607 Average inventories - 12-Month Period 3,505 3,713 4,583 3,622 3,622 5,303 6,341 Total payables - Start of 12-Month Period 2,126 2,385 3,421 3,760 3,760 3,545 5,420 Total payables - End of 12-Month Period 3,545 5,420 7,785 8,130 8,130 7,160 8,858 Average payables - 12-Month Period 2,836 3,902 5,603 5,945 5,945 5,353 7,139 Turnover and DOH based on average balance sheet items Receivables turnover Inventory turnover Payables turnover Receivables DOH Inventory DOH Payables DOH Cash conversion rate Turnover and DOH based on end of period balance sheet items Receivables turnover Inventory turnover Payables turnover Receivables DOH Inventory DOH Payables DOH Cash conversion rate #

33 # Change in Working Capital (RMB in millions) Inventory decrease (increase) Receivables decrease (increase) Advance payments & other receivables decrease (increase) Payables increase (decrease) Other payables increase (decrease) Provision increase (decrease) Decrease (Increase) in Net Working Capital Revenue Change in NWC as a Percent of Revenue H10 1H11 (1,156) (733) (1,443) (1,237) (4,216) (1,830) (394) (4,416) (2,720) (1,728) (527) 98 (340) (1) (747) 1,941 1,070 3,638 1,815 1,020 1,778 (659) (210) (1,642) (408) (313) (2,188) (3,604) (5,910) 6,417 10,667 17,475 6,265 5, % -2.9% -12.5% -57.5% % Notes: Financial data are IFRS. Source: Company filings.

34 DDPM s Technological Advantages DDPM s Advantages Result Why it matters Intrinsic LVRT capability DDPM is grid-friendly Meets national standards, Higher availability Full power conversion Higher power output Lower lifetime costs Fewer moving parts Technical availability >98% Lower tower-top weight Fewer mechanical failures Lower O&M costs Higher potential capacity utilization Scalable to higher capacity Easier to transport Higher availability, Lower lifetime costs Higher availability, Lower lifetime costs Well-suited for offshore Lower lifetime costs Source: Company filings. #

35 # 34 Corporate Information Goldwind Headquarters 8 Bo Xing Yi Rd. Economic & Technological Development Zone, Beijing Website : goldwind@goldwind.cn Corporate Contacts Ms. Jinru Ma Vice President and Secretary of the Board Ms. Yiqiao Zhong Ms. Kathryn Tsibulsky, CFA Investor Relations Manager Investor Relations Manager zhongyiqiao@goldwind.cn kathryntsibulsky@goldwind.cn Tel x Tel x. 1022