Announcement: Recently the company signed the Purchase and Sale Agreement with Germany-based Fuhrlaender. The company will provide 2.5 MW wind turbine wheel-hub and nacelle (contracted value: about Rmb345m) and the contract duration is 2008-2010.
The company is one of the leading suppliers of automated conveying systems (currently involved in auto assembly line, bulk goods conveying and the airport logistics transport) in China. With the expansion of the market and customer resources, this business is expected to gain a growth rate of 20-30% in the next few years. As early as 2006, the company was optimistic about the prospects of wind power and began to enter the market. Till now, cooperation has been built with domestic and foreign enterprises such as Wuxi Ryle Zhufeng Technology (bamboo blades for wind turbines), Wuxi Chengfeng New Energy Equipment (fiber reinforced plastic blades for wind turbines), Baicheng Tianqi New Energy Equipment (wind turbine towers and nacelle covers) and the main products include supporting parts for wind power generators. The company signed the supply contract with the international wind turbine manufacturer this time (contracted value accounted for 80% of the company’s operating income in 2007), which showed that the company had entered the stage of large-scale production and begins to harvest after the two-year development. We have previously taken contributions of its wind power business into consideration and profitability of its spare parts under the current high steel prices remains unclear. 08-09 EPS is temporarily reiterated as Rmb0.52 and Rmb0.77 and OVERWEIGHT rating is unchanged.