WindPower profit rises threefold to HK$100m

PUBLISHED : Wednesday, 18 June, 2008, 12:00am
UPDATED : Wednesday, 18 June, 2008, 12:00am

China WindPower Group, a mainland medicine distributor diversifying into clean energy, posted a threefold increase in annual net profit on the back of equipment manufacturing and related services.

The company yesterday reported a net profit of HK$100.06 million for the year to March, up from HK$33.6 million the previous year. Turnover jumped to HK$324.94 million from HK$59.48 million.

Net profit from the wind power business was HK$98.9 million for the year. The operation has been booked only since its acquisition in August last year.

Of the amount, about 40 per cent came from project engineering, procurement and building, 40 per cent from equipment making and 20 per cent from power generation and other income, said chief executive Liu Shunxing.

Chinese medicine distribution contributed HK$2.7 million of operating profit, a turnaround from a loss of HK$2.4 million the previous year.

'Power generation accounted for a very small portion of revenues because we only had one plant in operation in the period,' he said. 'It is also true that profitability from engineering and equipment production is much higher than generation.'

Beijing uses a competitive bidding project award system in the wind power sector, which saw many developers put in loss-making power tariff bids to win tenders awarded two to three years ago.

Later changes introduced criteria other than the tariff-based system that helped improve the financial viability of wind projects.

Mr Liu said China WindPower aimed to source 33 per cent of its profit from power generation, the same from engineering, procurement and construction, and the remainder from equipment manufacturing. He gave no time-frame.

With four operating plants totalling 169.5 megawatts (MW) in capacity, the company plans to invest 800 million yuan (HK$906.75 million) to install six more this year and add 297 MW.