China WindPower plans sales to fund investment in wind farms
China WindPower Group has embarked on a 'sell some, build more' wind farm development strategy, as it seeks to realise gains from its past investments and generate cash flows to fund new projects.
The firm plans to sell 100 to 150 megawatt (MW) of its wind power plants each year to book 25 to 50 per cent gains and generate cash flow to fund more new projects, chairman Liu Shunxing said.
'We are selling our stakes in some plants, not only to our partners but also third parties,' he said. 'This way we can bolster our resources for new projects, which we hope to be able to wholly own in the future.'
The firm owns stakes of various sizes in its current projects, which averages around 60 per cent, said chief financial officer Hu Mingyang.
It yesterday posted a net profit of HK$427.2 million for last year, up 135 per cent from 2009. This beats the HK$322 million average forecast of seven analysts polled by Thomson Reuters by almost a third, partly helped by unexpected one-off gains totalling HK$21 million from the sale of its 49 per cent stakes in two plants of 50 MW each last year.
The main source of profit growth last year was from its investment in wind farms, whose contribution to net profit grew to 28 per cent from 18 per cent in 2009. It also earns money from consultancy and project design, engineering and construction, operation and maintenance, as well as wind tower tube production.
Liu said the company aimed to quadruple capacity at invested projects to 4,663 MW by 2015 from 1,163 MW last year, by adding at least 700 MW in new installations each year. Of last year's 1,163 MW, 657 MW is owned by the company based on its shareholding. Most projects are in north and northeastern provinces.
It takes about 1,000 MW to provide 831,000 mainland households' annual electricity consumption.
With equipment costs down from 5 million yuan (HK$5.9 million) per MW in 2009 to 3.6 million yuan, Liu said the firm would diversify into southern provinces.
The company has secured over 4,000 MW of wind resources in the south and 15,000 MW nationwide. China WindPower has also obtained 648 MW of solar power resources, but Liu said it was waiting for better incentives before developing them.
It would only invest in wind projects that can provide a 10 per cent return on investment and at least 8 per cent for solar projects, Liu said.
Fair weather
China WindPower hopes to add this much new capacity, in megawatts, each year until 2015: 700
