Thursday, December 29, 2011

China Ming Yang Wind Power Group's CEO Discuses Q3 2011 Results - Earnings Call Transcript


Calvin Lau - Director - IR

Chuanwei Zhang - Chairman, CEO

Manfred Loong - CFO


Yan Gee - Mizuho Securities

Eva Hou - Morgan Stanley

Jun Li - ICBC International

China Ming Yang Wind Power Group Limited (MY) Q3 2011 Earnings Conference Call November 10, 2011 8:00 AM ET


Good morning and good evening, ladies and gentlemen. Welcome to the Third Quarter 2011 Ming Yang Wind Power Group Limited Earnings Conference Call. At this time, all participants are in listen only mode. With us today are Mr. Chuanwei Zhang; Chairman and CEO, Mr. Manfred Loong, CFO; and Mr. Calvin Lau, Director of Investor Relations.

After management's prepared remarks, there will be a question and answer session. This conference call contains forward looking statements. These statements constitute forward looking statements within the meaning of Section 21(e) 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, expect, anticipates, future, intends, plans, believes, estimates, targets, goals, strategy and similar statements.

Such statements are based upon management's current expectations and current market in operation conditioning and relate to events that involve known and unknown risk and 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 forward looking statements.

Future information regarding these risks and other risks and 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 Calvin Lau, Director of Investor Relations. Mr. Lau, please proceed.

Calvin Lau

Thank you, operator and thank you for joining us today. We have issued our Third Quarter 2011 Earnings release just now. I hope you have a chance to actually review it. The presentation used for this call is also available on our website. We welcome you to ask questions later on.

In today's call, Mr. Zhang will discuss the latest business and operational developments of Ming Yang. And Mr. Loong will walk you through the Company's financial performance for the quarter. And then, Mr. Loong will brief you on the company's outlook and guidance. After that, we will open the floor to questions from the audience. I'd like to now turn the call over to Mr. Zhang. Please proceed.

Chuanwei Zhang

(interpreted) Ladies and gentlemen, good morning and good evening, everyone. I am Chuanwei Zhang, Chairman and CEO of China Ming Yang Wind Power Group Limited. Thank you for joining us in our results announcement for the Third Quarter of 2011. And I also want to thank you for your great support.

I'd like to take this opportunity to share some thoughts on the current situation of China's wind power industry. After that, I'd like to talk about what Ming Yang has achieved and the steps ahead we're going to take under such circumstances.

Looking at the industry, on the whole, we can see that the Chinese government's very determined to wind power development. China has very stable wind power policies and very specific goals. Meanwhile, we can see that the wind industry has entered into a period of restructuring.

The symbol of the industry restructuring is that the focus changed from speed and size to quality and efficiency. From quantitative to qualitative. Meanwhile, China is very determined to maintain the growth of the industry, as well as its size. And we strongly believe that the China government, which shows support by policy and China would continue its role of a leader in the global wind industry.

In China's government 12th-five year plan is that we need to reach the 100 gigawatt goal. And during the five years from 2011 to the first half of 2013, the wind industry is going to experience further integration and transformation. And we believe that during that period, the industry growth rates will be 15 to 18 gigawatts per annum.

And for the rest three years, the growth rates will exceed 25 gigawatts per annum. Only by doing -- only by doing so that we can realize the goals put forward by the Chinese government, as well as China?s promise to the world that non fossil fuel energy consumption will reach 15% of all energy consumption.

In order to fully implement this initiative, China's government has setup standards for the wind turbine, as well as wind farms, tariff stabilizing mechanism. And also, China plans to build a couple of regional carbon trading platforms in areas such as northern China, eastern China, and southern China, as well as west, north.

And in this way, China can go CDM exchange platform so that China can maximize capital resources to boost China's wind power growth. Meanwhile, to ensure the successful transformation of the wind power industry from speed and size to quality and efficiency.

We can see that the Chinese government has taken -- implemented two initiatives to ensure the successful growth of China's wind industry, first of all, continued support in the areas with rich wind resources, such as areas in the northwest, and continued effort on building grid transmission network.

Meanwhile, it also continues strategy development in the coastal areas. And as well as offshore wind project. We can see that in the next five years with these two large scale initiatives, China's wind industry would have a large scale of development and China will also implement this initiative systemically.

In the next two years, China's wind power industry structure will include the development of offshore wind power, including in Yunan area, as well as distributed energy and solar and the wind energy storage.

In the rest three years, the focus was switch to the grid connection project in Northwest, Northeast and seven -- the north part in China in -- and especially the development of big wind base, and as well as offshore wind projects and distributed energy, so that we can achieve the goal of 100 gigawatts by 2015. And that also brings big market opportunities. And Ming Yang will utilize its overall advantages such as technology, new innovative business model to seize the opportunities.

Just now I shared some thoughts on the industry development, the market, and the market opportunities. Now I'd like to talk about management in the past nine months, especially in the third quarter. What we have done to ensure our share and profit in development.

The annual goal for this year is to first, recognize revenue of 1.5 to 2 gigawatt, and to increase our market share to more than 10%. In order to achieve those goals, our tactics are implement innovative business model, and to increase our market share.

Our innovative business model, in fact, is a combination and integration of the capital finance, product technology, service, engineering, operating, as well as management. And this year, competition is getting fiercer. And we have price war, we have fewer projects, but with our successful innovative business model, we can see that our business model value is highlighted. And this year, more than 60% of our orders are from our EPC and BOT business model.

With our innovative business model, we have built our client's loyalty. Among our five biggest partners, the top five power producers are repeated customers of Ming Yang. And since they're facing more difficult environment and it gets more and more challenging to develop their projects, we provide wind resources, finance leasing, and our innovative business model, we greatly help them to foster the development of their projects.

Now Ming Yang's become the turbine supplier for Huadian, Huaneng and Datang. And we also support the major operators in China, that is Southern Grid, Three Gorges New Energy and we also helped to provide services to some regional developers by -- so that we increase our customer base and also increase the market share, as well as optimize our client's structure.

This year, our increase of market share, as well as numbers of orders, is a symbol of our successful innovative business model. And in the future, I believe our business model will be our core competitiveness.

The second topic I'd like to talk about is how to maintain our profit. As I know that the industry, especially our investors, pay a lot of attention to the declining turbine prices. And I can tell you that ever since June this year, I can see that the turbine prices started to increase -- to recover. And under such circumstance, MingYang insists on its quality first principle, and continue our cost reduction, and also, strive to maintain our profit, which is a basic concept behind our management.

The turbine prices has declined by 24%. However, we meant to reduce our costs by technology, financing, operations, etcetera. We manage to offset the decreasing turbine prices, so that we're confident that we can maintain our broad profit margins, and also, reach the comprehensive annual gross margin of 18%.

In terms of cost reduction by means of technology, we focus a lot on customization. This year, we manage to reduce our costs by 6% year over year by means of technology.

In terms of reducing costs by quality, we try our best to -- we focus a lot on quality management. And we avoid any kind of quality issue, so that we manage to reduce our costs. And as recognized by the whole industries, Ming Yang's products are among the best -- among the most cost effective and the best quality. This is because we remain pru -- we always stay prudent and active -- implement active quality control. And we have bought quality insurance, which is more than 20 million RMB.

This year, big banks including ICBC and construction bank have granted us credit facilities worth $15 billion RMB. And with that, we make full use of the financial tools we have obtained to decrease the cost of financing. And we have integrated the line of selling, payments, et cetera. And we manage to implement successfully our cost management and quality management.

In terms of cost of financing, we managed to stay at 3%. However, our peers? are 5%. And that's our success, because we've made full use of our financial tools, that includes finance leasing And this year, our collection of receivables have achieved 57%.

We also manage proactive operating cost management. And we intend to maintain our operating costs for this year within 8%.

We will continue to promote our industrialization and large scale development of our SCD series. This year, we made greater efforts in the production of our SCDs. And we have both systems of testing and product from October this year, we basically finished the production of small batch SCD products, that 2.5 megawatts, 2.75 megawatts and 3 megawatts SCD.

We have realized the self-supply production of our SCD blades, including the 100 meter blades and 110 meter blades, as well as gear boxes, generators, and electric control systems.

SCD in Rudong has finished -- has passed its 240 hour test. And in Xinjiang, our first pilot program over there will finish installations by the end of this year and in Hebei test wind base. Our 3 megawatts SCD will go through LBRT test and --

We have already finished the designing of our 3.5 megawatts SCD, as well as 6.5 megawatt SCD. We have produced various kinds of wind turbines that is catering to low wind speed area.

By innovative production development, Ming Yang has become -- has attained the most complete production line. And we are -- we have the highest self supply ratio among the industry.

Meanwhile, we also achieved a certain success in our overseas markets, offshore markets, and the integration of high end industry supply chain. In terms of the overseas markets, we have made our efforts in new economies such as South Africa, Bulgaria, and India. And we expect to win orders by the end of this year.

As for our offshore wind market, I'm very pleased to report to you that the first commercial offshore wind market -- wind project in Guangdong Zhanjiang has started construction. The size of this wind project is 50 megawatts. And I believe by the end of this year, our 3 megawatt SCD will finish installation.

Meanwhile, we also have cooperation with the Southern Grid and Yudean Group. And we -- the size of the project is 600 megawatts. And we expect to start at the cooperation and construction next year.

In terms of high end industry supply chain, we also have good results. We've managed to support the industry chain by using rare earth and carbon fiber.

What I just talked about is that our management in the past nine months, especially in the third quarter, strives to maintain our strong growth. Given such typical business environment, and the industry restructuring period, I'm very happy about our work.

The third topic I'd like to talk about is the implementation and Ming Yang's strategy to become a market leader. And I'd like to say that we should take this industry difficulties, but to look at it as an opportunity.

Investors, analysts, I know you may have heard from the media that our peers in China are dealing with problems that in the past three to five years. And that is the quality issues, operation issues, R&D issues, and business models as they implement extensive development. However, we already laid solid foundation in those areas.

From Ming Yang's perspective, this industry restructuring is actually a strategic opportunity for Ming Yang. We would like to take this opportunity and become the market leader.

And now I'll stress that in the fourth quarter of this year and next year 2012 will be the most difficult time of China's wind power industry. And there are five strategies that Ming Yang would implement.

First of all, we would continue to promote innovative R&D and to make SCD the driver of our strong growth. We will strive to realize our overall advantages by providing various kinds of wind turbine catering to different weather conditions and various wind resources, including onshore, offshore, low temperature, high temperature, low speeds, high plateau, etcetera.

I believe in 2012, our sales of our SCD generators would pick up more than 30% of our sales. By that, we are confident that we will reach revenue recognition of 1000 megawatts.

With the cost advantage of our SCDs, we are very confident that we will achieve steady gross profit margins. And when the SCD product started to go into operation, are confident that Ming Yang's gross profit margin will exceed 18%

Well, we believe that by making investments and making good use of the advantages of our SCD, we will turn its potential into our advantages.

Our second strategy is to speed up our offshore wind projects. And we are going to make our wind turbines design more mature and by engineer projects locking more wind resources and by conducting pilot projects.

By the end of 2012, we'll start three to five offshore wind projects with a size more than 1 gigawatt. In terms of the numbers of the wind project, there will be three in Guangdong, one in Jiangsu, and one in Hainan.

By 2012, our revenue recognition of offshore wind projects will be no less than 100 megawatts and also become a successful comprehensive service provider on total solutions.

Our third strategy is to continue to promote our innovative business model. In the coming 20 months, by continuing our innovative business model, that is EPC and BOC model, we will integrate our financial resources, capital resources, and government support to increase our market share, maintain our gross profit and to realize our core operating capabilities. By 2012, we plan to realize 20% on profits from providing service.

The fourth strategy is to continue to implement our overseas strategy. We'll make good use of the $5 billion credit facilities granted by CDB. And secondly, by the advantages of our innovative technology, capital, human capital, and products. We will implement our overseas expansion in a steady and healthy manner, and by 2012 we strive to achieve 15% to 20% of our total revenue from the overseas market orders.

I'm very happy to report to you that we've already set up a team working together with CDB on the use of the credit facility. And our talks are based on the projects we have in China and also in overseas markets and our talks are mainly on how to apply our innovative business model and how to use the capital. I believe by the end of 2011, and we would start to use part of the credits just in case, provided by TCB.

Our sixth strategy is to increase the usage of new materials such as rare earth, carbon fiber, and also strengthen our production of generators, gearboxes, blades, and electric control systems. And we will use the next two to three years to build big growth poles that worth ten billion RMB.

And you know, we secured rare earth supply in Jiangsu Ganzhou. And meanwhile, we're in talks with international companies on the production of carbon fiber. And internally, we are thinking how to increase our usage of carbon fiber on the blades of offshore wind turbines.

And so much for my talk in terms of industrial advances and management for the past nine months, especially third quarter and strategies that we are going to implement in the future.

Now, that concludes my prepared remarks. I'd like to give the floor to our CFO, Manfred Loong.

Manfred Loong

Thanks, chairman. Good morning or good evening, everyone. First of all, I would like to highlight our accomplishments in a few key areas during the quarter. We saw a solid year-over-year increase in revenues amid challenging macro and industry environments. We also saw benefits from our cost reduction initiatives that we have put in place so far this year. And we were able to maintain a healthy cash position.

As I walk through our key financials, I will be focusing on year-over-year comparisons while I will provide some revenue and cost reduction comparisons from a year-to-date perspective. Revenue for the third quarter of 2011 was RMB1,904.8 million, a year-over-year increase of 28.2%, primarily reflected the number of turbines commissioned and equivalent of total power output of 555 megawatts, or 370 units of 1.5 megawatt turbines.

Revenue for the first three quarters, up by 23.7% to RMB4.7 billion, driven by strong demand for our differentiated products. These numbers compare favorably with a few key players in the wind turbine manufacturing space amid a challenging environment as a result of Ming Yang's initiatives and efforts.

Gross profit for the third quarter of 2011 was RMB305.6 million, up 22.9% year-over-year. Gross profit for the first three quarters, up by 32.3% to RMB934.6 million. Gross margin for the quarter was 16%, compared with 16.7% in the third quarter in 2010. This slight change was due to a year-over-year decrease of 17.2% in unit selling price of turbines in respective period, offset by our continuous cost reduction efforts.

Although the gross margin on customer contracts may vary, however, we have insisted on using quality components across the board due to our focus on quality. Our cost reduction efforts have allowed us to continue to be a cost leader, and we managed to lower our costs down to largely offset the price pressure. We're pleased that our gross margin for the first nine months of 2011 is maintained at 19.9% level.

Operating expense as a percentage to revenue was 8.8%. If we excludes share-based compensation charges of RMB28.4 million and provision against trade receivables of RMB28.7 million, operating expense as a percentage to revenue stands at 5.8%, compared to 5.5% for the corresponding period of 2010. There were no share-based compensation charges booked in the third quarter of 2010, and this is the first time that we booked trade receivable provision.

Profit for the period was RMB102.7 million, compared with RMB177.4 million in the same period in 2010. Basic and diluted earnings per ordinary share were RMB0.82, compared to RBM1.70 for the corresponding period in 2010.

And finally, our cash position. Cash and cash equivalents as of September 30, 2011 was RMB1,423.7 million, or $223.2 million equivalent, compared with RMB2,486.0 million as of December 31, 2010. The change in cash and cash equivalents is primarily due to change in working capital.

As you may be well aware, we sign strategic cooperation agreements with China Development Bank, including $5 billion worth of potential financing. This will provide more flexibility and enable us to accelerate growth, both domestically and internationally. On an ongoing basis, we'll continue to closely monitor and manage our cost.

This concludes the financial reporting session, and I would now turn the call back to Calvin.

Calvin Lau

Thank you, Manfred. We will now open the floor for questions. Please limit your questions to two per person. Thank you. For the benefit of our English speaking participants, please make sure your questions are in English only. Operator, please open the call to Q&A now.

Question-and-Answer Session


Operator Instructions). And you have a question from the line of Echo He of Maxim Group.

Calvin Lau

Hello, Echo. It's Calvin here. Are you there?


Operator Instructions). You have a question from the line of Yan Gee of Mizuho Securities.

Yan Gee


Calvin Lau

Hi, Yan.

Yan Gee

Hi. Can you hear me?

Calvin Lau

Yes, go ahead.

Yan Gee

(spoken in Chinese) So my first question is about could you please talk about the remaining issues going forward on grid access? And maybe talk about some risks possibly pose to your full year guidance.

Chuanwei Zhang

(interpreted) This is no longer a new issue, but first of all I'd like to make it clear that all the products that Ming Yang delivers has no grid issue. All of them are grid connected and have went into operation, and that's what sets us different from our peers.

In China we had a concession project, but that didn't have any standard for grid access. That is also why we had this grid access problem. But, as I mentioned earlier, one year ago China has already started to build a transition network and we have seen some improvements such as an area at Gansu.

And for your second question, I think national evaluation is a good thing for the overall wind industry development as well as the grid access because we can make sure -- because it can provide assurance that all of the turbine makers can make the standard and also to further their development. And it also ensures that China's wind power industry will embark on a healthy and steady growth path.

Yan Gee

(inaudible - spoken in Chinese) So my follow-up question is on maybe processing review time for the grid operator to approve your grid access application. Do you see the processing time possibly is prolonged, or is longer than the beginning of the year? Or maybe there's the variability on that?

Chuanwei Zhang

(interpreted) I think your question refers to the grid accident that happened twice in Jiuquan in this April to September, and this involves the grid access evaluation process, also a measure to foster a safe grid. And I think by this measure they want to ensure the transmission, especially in the Northern area in China.

And as for how long does it take to pass the evaluation process, well, I don't think it's going to increase the time amounts for big wind projects; however, for smaller projects I think it's just normal to go through the evaluation process.

Yan Gee

(inaudible - spoken in Chinese) Okay. So my second question is about the cost reduction potential. So as commodity prices coming down, like copper and steel, and also there is potentially an oversupply on key components, and so maybe you can talk about your cost target for 2011 and possibly 2012. Thanks.

Chuanwei Zhang

(interpreted) It's a good thing that price has started to recover and I also see that demand is declining, so the turbine prices might decrease again. And given such difficult financial environment and the concentration of orders, it makes -- the turbine makers? life very difficult and their demand for components has declined.

In Ming Yang's case, we will continue to reduce our costs with our advantages in technology and better customization of our products, which has settled in a leading position in this industry because we have in-house R&D.

And the selling price of our 1.5 megawatts generators, excluding VAT, will be RMB2,700/kW, but we will strive to achieve 2,600. And for our SCD products, we strive to achieve 2,500. And for SCD products, including VAT, which we strive to realize between the range of 4,000 to 4,100/kW.

Yan Gee

(inaudible - spoken in Chinese) (interpreted)

The 2,600, yes, for a 1.5 megawatts, you just mentioned. Is that for 2011?

Manfred Loong

In truth -- this is Manfred. Hi, how are you doing?

Yan Gee


Manfred Loong

The costs that we mentioned is really the production cost going forward. If you look at our Q3, we already cut the costs that we reported, the 2,800, give or take. And if you take away their cost of warranty, then it's already at 2,700. So moving forward into 2012 with the manufacturing costs coming off the assembly line, probably it's about 2,700. We are hopeful that we will go to 2,600 production cost-wise in the year 2012. Hope that answers your question.

Yan Gee

Yes, that's great color. So maybe my last question is, if I may, is on ASP. So including 17% of VAT, it seems like based on my calculation your ASP is still as high as RMB4,100 per kilowatt. So that imply a significant gap to the current market price, and so maybe you can talk about when do you expect the market price flow through your P&L.

Manfred Loong

Our current price has got a very good mixture of the older projects and the newer projects. The newer projects, meaning the projects that were assigned in 2010 and onward. But as we speak, I probably can't give you a hint into the current signing price, which is somewhere between RMB3,600 per kilowatt to RMB3,800 per kilowatt, including VAT.

So, moving forward, as the Chairman already said, that a trend of better ASP on contract signing and we will continue to push down our costs. So I think we feel very confident that we'll be maintaining a good margin on an annual basis.

And in addition to that, the Chairman has mentioned that there will be, going forward, we would try to have a better balance, a good balance in terms of SCD and which is 3 megawatts primarily and remaining the 1.5 megawatts going forward. So with that, then we will be -- for that margin would be very achievable target for us.

Yan Gee

Okay, that's great color. I'll hop back in queue. Thanks.

Manfred Loong

Thank you.


(Operator Instructions). And you have a question from the line of Eva Hou of Morgan Stanley.

Eva Hou

Hi. Thanks for taking my questions. I have four questions. The first one is what is management guidance --. Hello?



Calvin Lau

Hi, Eva. How are you?

Eva Hou

Thanks for taking my questions. I have four questions. The first one is what is management's guidance on the order delivery in 2012? My second question is we understand that Ming Yang has 85 units SCD orders on hand. Would management please provide the detailed delivery schedule for those SCD orders?

My third question is we noticed that the new order in Q3 was 295.5 megawatts. Was the order intake lower than expected? My final question is that the chairman just mentioned that Ming Yang will extend the value chain to some new materials such as rare earth and some other key components. We wonder, will Ming Yang prepare the CapEx or the chairman?s private company will invest? Thank you.

(spoken in Chinese).

Chuanwei Zhang

Okay. (interpreted) We are very optimistic about the sales in 2012. It is expected that by 2012 our market share will be in the range of 15% to 17%. To be more specific, we will reach revenue recognition of 2.5 to 3 gigawatts and annual growth rate of more than 30%, and especially in offshore wind market and overseas market.

I believe that in 4Q this year our orders will cover our revenue recognition plan for the 2012. And for the delivery of our SCD product, we are delivering turbines to Dabancheng, Zhanjiang 15 megawatts wind project and then we will start to deliver SCD to Hebei, Hami, Yangjiang and Zhanjiang?s offshore market.

And recently, we also win some new orders of our SCD products, which will be delivered in 2012. That's why I said that I'm very confident that SCD products will reach 30% of our revenue recognition in 2012.

I'm very satisfied with our new orders in the third quarter. Actually, our orders won in the fourth quarter, is better than expected. That's why I'm so sure that our market share will increase dramatically in future -- in 2012. And also, the revenue recognition targets for the 2012 will be realized.

Your question regarding the high end industry chain, we will work on that by means of joint venture with overseas companies and we will continue to, by means of our innovative business model, since it is our growth pole, so Ming Yang's investment in it won't be big, but it definitely shows great potential for growth.


And at this time, there are no further questions in queue, so I would like to hand the call back over to Mr. Calvin Lau, Director of Investor Relations, for closing remarks.

Calvin Lau

Okay. Thank you, operator. Thank you for joining us for Ming Yang's third quarter 2011 earnings call.

Chuanwei Zhang

(inaudible - spoken in Chinese).

Calvin Lau

If anybody else would actually like to ask any further questions, please do so now.


(Operator Instructions). And you have a question from the line of [Jun Li] of ICBC International.

Jun Li

Can you hear me?

Calvin Lau

Yes, Jun, we can hear you now. Please go ahead.

Jun Li

Okay. I have two questions. The first question is what percentage of the overseas project and the offshore projects in your order backlog currently? And the next question is what's the percentage of the revenue comes from the financial service you have mentioned, because you have managing 60% of WTG has come from the financial model -- new business model? (spoken in Chinese)?

Chuanwei Zhang

(interpreted) As for our offshore wind projects that cover Zhanjiang, Yudean Group. It was China's first offshore commercial wind project and our first wind turbine started installation and there will be 16 more. We have signed contracts with Yudean and Southern Grid. That's worth 300 megawatts each and delivery will be realized in 2012.

And as for our overseas market, we haven't signed any contracts -- we haven't win any orders yet. What we are doing is basically EPC.

Actually, in South Africa we have won orders of 150 megawatts from South Africa market, but we haven't signed any contracts yet. And in Bulgaria market, we have EPC. And by the end of this year, we will deliver the first batch and in 2012 we would start to deliver 125 megawatts. And also, we are in talks with companies in Australia and India, but no contract has signed yet.

Our revenue realized from finance leasing takes up about 57% in the past nine months. And the combination of the innovative business model and finance leasing, the orders that we have won from this combination have increased in the past nine months and we expect that it would continue to increase in the fourth quarter. And basically, this combination will show more through our net value in 2012 and especially in the overseas market.

Manfred Loong

Just one supplemental clarification. The 57% was referred to throughout the year so far and we're able to collect with financial instruments. And the orders signed using the enhancement of financial capability is about 15% to 20% so far for the nine months. And Q4, there would be -- we are expecting more to be using that leverage.

And overseas, this particular combination of financing as well as the EPC new business model has proven to be very effective.

Jun Li

(inaudible - spoken in Chinese) (translated) Among the 300 megawatts projects with Yudean and Southern Grid, how much of that is signed? As I noticed from your disclosure that the SCD orders signed falls in the range of 250 to 260 megawatts.

Chuanwei Zhang

(inaudible - spoken in Chinese).

Jun Li

(inaudible - spoken in Chinese).

Manfred Loong

So the question has to do with how much of the contracts is in the order and how much contracts not in our backlog yet. So the generic answer here is we have different projects going on with the Guangdong customer and of which 50 megawatts is already in our contract signed. The rest of them are really -- still already engaged, but the actual contract is to be signed. So it's just for everyone who's on the call.

Jun Li

Thanks. My questioning is done. (spoken in Chinese).

Chuanwei Zhang

(inaudible - spoken in Chinese).

Jun Li

(inaudible - spoken in Chinese).


And you have a question from the line of Yan Gee of Mizuho Securities.

Yan Gee

Hi, can you hear me?

Calvin Lau


Yan Gee

Okay. I'll be really quick. This question is for Manfred. So, how many -- if I remember correctly, you authorized a $50 million buyback program, and so how many shares did you buy back in 3Q and how much remaining capital under the buyback program?

Manfred Loong

Yes, okay. We can only talk to the numbers as of September 30, okay? As of September 30, our total accumulated shares through share repurchase program is 1.44 million shares. As we speak right now, as we shared previously, the board has approved us to utilize up to the maximum on no more than $50 million for the share repurchase program. So we can initiate that at any time that we deem -- or change that share repurchase scale as we deem necessary.

Yan Gee

Okay. So, can we possibly expect some buyback during 4Q and maybe coming quarters?

Manfred Loong

We have not determined the exact approach for the 4Q and the coming quarters. This is yet to be reviewed and to discuss with the board.

Yan Gee

Okay, great.

Manfred Loong

All right, thank you.


At this time, there are no further questions in queue, so I'd like to hand the call back over to Mr. Calvin Lau, Director of Investor Relations, for closing remarks.

Calvin Lau

Thank you, operator. Thanks, everybody, for joining us today and tonight for Ming Yang's third quarter 2011 earnings call. Please feel free to call either me or my team with additional questions and we'd be more than happy to answer them. Thank you and have a good day.


Ladies and gentlemen, this 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.


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