The financial sector of the "cold and cold" fan industry in the emerging industries is tight

In 6 years, investing more than 70 million yuan, but only producing two prototypes, is now planning to retreat. This is the true experience of Wuxi Baonan Machine Manufacturing Co., Ltd. (hereinafter referred to as “VenXi Baonan”) in the fan manufacturing industry.

Three months ago, Harbin Air-conditioning Co., Ltd., a state-owned company, invested more than 2,600 million yuan in wind power and spent more than one year, but chose to withdraw.

Behind them, there are more companies that are facing a crisis of survival and facing a choice of advances and retreats. Even the leading companies such as Sinovel and Goldwind, which once had unlimited scenery, have fallen into a dilemma of falling profits and tight cash flow. The more pessimistic industry expectation is that of the more than 80 wind power machine companies in the country, more than 70 will be eliminated by the market in the future.

Since 2005, China's wind turbine manufacturing industry has rapidly emerged. After rapidly entering into the homogenous competition stage dominated by price wars, the spring has just begun but quickly entered the winter. In a series of internal and external problems, such as the slowdown in the growth of the industry, the bottleneck of the grid connection, and the tightening of credit policies, this strategic emerging industry is beginning to open the shuffle.

Those who exited

If anyone is willing to make more than 10 million yuan, Wuxi Baonan is willing to transfer a prototype of 2 MW wind turbine and all intellectual property rights. In order to get this, Wuxi Baonan spent 6 years and more than 7,000 yuan in funds.

Founded in 1991, Wuxi Baonan, the chief printing machinery manufacturer, whose chairman Zhang Baonan foresees that the printing machinery market will gradually shrink in the Internet era. In 2005, the profits accumulated over many years were put into wind turbine R&D. At that time, China’s wind power industry had just At the beginning, imported fans abroad dominated the market.

Unlike many domestic companies that purchased licenses to produce wind turbines from abroad, Wuxi Baonan decided to independently design and develop a more advanced 2 MW doubly-fed asynchronous fan at that time. With the help of foreign experts, the first prototype was developed in 2008, and it was connected to the grid in Jiangsu Rudong Wind Farm the following year. However, due to the fact that the technology is not yet mature, the market has not yet been opened up, and the lack of funds. After the production of the second prototype, the development of wind turbines at Wuxi Baoan has stalled.

A person from Baoxi, a city in Wuxi, said that currently the fan industry is fiercely competitive and the profits are relatively meager, and it is not cost-effective to continue to invest.

Since 2005, China's wind power has entered an explosive growth period, and wind power installations have doubled in five consecutive years. By the end of 2010, China's cumulative installed capacity reached 44.73 million kilowatts, ranking the world's first. Under the market traction, China's wind turbine manufacturing industry has risen rapidly in the past six years, and a large number of companies have rushed in. Local companies have quickly gained market dominance while there is a structural surplus in production capacity.

As of the end of 2009, there are 86 wind power machine companies in China, including more than 10 complete machine manufacturers with mass production capacity. The production capacity of these 10 companies has exceeded 15 million kilowatts, plus the capacity of foreign fan manufacturers in China. The actual capacity of China's wind turbine manufacturing industry has reached 25 million kilowatts. In 2010, China added 18,200 kilowatts of wind power capacity. The industry expects that the average annual installed capacity in the next few years will be approximately 15 to 18 million kilowatts.

According to Li Junfeng, deputy director of the Energy Research Institute of the National Development and Reform Commission, the average annual increase in wind power installed capacity in China during the 12th Five-Year Plan period will fall back to double-digit, while the production capacity of wind turbines will be largely released, basically all at an annual average of 100% growth. Substantial production capacity Excess has appeared.

Under the current market pattern, wind turbine enterprises such as Wuxi Baonan, which do not possess the advantages of technology and scale, have generally encountered a crisis of survival. Some companies have begun to search for new outlets, and even voluntarily withdrew from the market.

In January of this year, Harbin Air Conditioning decided to end wind power R&D activities and concentrate on expanding and strengthening its main business. The company decided to enter the wind turbine manufacturing industry in October 2009 and has invested more than 26 million yuan over the past year to introduce technology, purchase spare parts and carry out research and development.

Kazakhstan Air indicates that the main reason for retreating from wind power manufacturing industry is the rapid increase in the number of domestic wind power enterprises and the homogeneity competition. At the same time, the state implements an access system for enterprises entering the industry after entering the market and raises the barriers to entry. The company continues to engage in wind power business risks. Larger.

It is understood that a wind turbine company in Nantong, Jiangsu Province also intends to withdraw from the market. A Zhejiang wind turbine manufacturer is seeking to sell its shares to a European company.

The industry expects that in the future, there will be some wind turbine manufacturers ranking behind and withdrawing from the market one after another.

Tight cash flow

Although there is no need to worry about the survival issues like companies such as Wuxi Baonan, leading companies such as Sinovel, Goldwind and other industries have had a hard time this year. They are suffering from the deteriorating financial situation, especially the sharp increase in accounts receivable. And falling cash flow.

According to the 2011 quarterly report released by Huarui Wind Power on April 27, the operating income in the first quarter of this year was 3.359 billion yuan, an increase of 20.35% over the same period of last year; and the net profit was 439 million yuan, an increase of 1.02% over the same period of last year. Goldwind's operating income for the first quarter of this year was 1.856 billion yuan, a slight increase of 0.04% year-on-year; net profit was 206 million yuan, a decrease of 16.99%.

In the financial data of the two companies in recent years, the increase in operating income and net profit in the first quarter of this year both set the lowest record.

The more noteworthy financial indicators are accounts receivable and cash flow from operating activities. SinoRui wind power accounts receivable further increased from 8.927 billion yuan at the end of last year to 10.847 billion yuan at the end of March. At the end of 2009, this indicator was 3.919 billion yuan, an increase of 171.7% over a one-year period.

In the cash flow from operating activities in the first quarter of this year, Sinovel Wind Power was -1.9 billion and Goldwind was -3.9 billion, which was not satisfactory.

Behind the deterioration of these two indicators is the impact of industry supply and demand reversal and national tightening credit policies on wind turbine manufacturers. In an interview reply to this newspaper, Huarui Wind Power stated that the reasons for the increase in accounts receivable are various. On the one hand, the overall economic situation of the country in 2010 was in a state of monetary tightening, which was manifested in interest rates, etc. This has caused many companies to have tight funding (especially those with slower returns), including the main customers of Sinovel. This has produced a chain reaction throughout the industry, leading to an increase in accounts receivable, which is a relatively normal fluctuation in the course of business development.

However, a number of state-owned wind farm developers said that the company’s bank loans have not been affected by the credit tightening policy, and the speed of approval and construction of wind power projects has not slowed down significantly.

According to the analysis, the account receivable from wind turbine manufacturers has increased, mainly because wind farm developers have the right to speak in the buyer's market. The payment terms have been significantly looser when compared to the short supply of wind turbines several years ago, and the payment rate has slowed down. In addition, some developers with non-standard operations built wind farms without obtaining approval from the project, resulting in no grid-connected power generation and no funds to pay for wind turbines.

With the intense competition, wind turbine manufacturers have waged a price war in recent years. The quotation of complete machine for wind turbines has decreased from 6,500 yuan/kW in 2008 to 4,000 yuan/kW at the end of last year, and the lowest price has dropped to 3,200~3,400 yuan. /kW, is considered lower than the cost price.

Under the double pressure of price drop and rising costs, the gross profit margin of wind turbine manufacturers continued to decline. Li Shengmao, a senior research fellow at China Investment Consulting Co., Ltd., said that the average gross profit margin of the domestic fan manufacturing industry has dropped to about 17%, compared with more than 25% in the previous two years. Some companies even have gross margins exceeding 30%.

The deterioration of the operating conditions of wind turbine manufacturers has begun to conduct in the upstream component industries. In early April, Sinovel delayed the acceptance of the 1.5 MW and 3 MW wind turbine core electronic components that American Superconductor Corporation originally scheduled to deliver in March, and delayed the payment of some of the contracts shipped in fiscal 2010. This move caused the US Superconductor to report a loss in the fourth quarter of fiscal 2010, and the profit fell during the entire fiscal year. After the news was announced, the price of the US Superconductor stock fell sharply and some investors initiated a class action lawsuit against it.

Opening of the integration period

At present, the growth rate of wind farm development downstream of the wind turbine manufacturing industry has not yet slowed down significantly, and the corporate benefits have not fallen. The industry expects future wind power on-grid tariffs to be adjusted downwards. The bottleneck of the grid network and the increase in grid-connected technical standards will force some developers to reduce the construction speed of wind farms, which will cause the wind turbine manufacturing industry to face a more severe situation and rank behind. The already squeezed living space of enterprises will be further squeezed.

As of the end of 2010, of the more than 80 wind power plant companies in China, the top 3 rankings of Sinovel, Goldwind and Dongqi have reached 56% of the cumulative market share in China's wind power market, ranking the top 10 companies in the accumulated market. The share reached 85%, while more than 60 companies ranked after the 20th had only 3.9% market share.

According to Xie Changjun, general manager of China Longyuan Power Group Co., Ltd., the largest wind farm developer in China, the next stage of wind turbine manufacturing will enter the era of big waves, sand and mergers, and the final retention of 8 to 10 companies is a more reasonable level.

Xu Hongliang, chairman of China Fulin Wind Energy Engineering Co., Ltd., also expects that more than 70 wind power machine companies ranked behind will likely be eliminated by the market.

From the perspective of the development history of foreign wind power markets, there have been dozens of manufacturers competing in the fan manufacturing industry during the melee period. However, with the intensified competition and market integration, only Denmark Vestas, Spain and the United States and the United States. More than ten leading companies such as Siemens in Germany have persisted so far.

Senior investment researcher Li Shengmao believes that the withdrawal of companies such as Kazakhstan air-conditioning and Wuxi Baoan is only a prelude to the integration of wind turbine manufacturing. It is expected that the industry will enter a large-scale integration period in 2012, whether horizontal mergers and acquisitions or vertical integration among enterprises. Integration will occur frequently.

Most of the companies that may be eliminated or integrated in the future of wind turbine manufacturing are entering the market later and are undergoing R&D. The slightly better companies have just produced prototypes or are conducting trials in small batches. Most of these companies rely on investment impulses to enter the industry, but do not know where the technology comes from, nor where the market is. As competition intensifies and industry barriers increase, it is difficult for them to have a chance to obtain large orders.

However, in the view of an industry insider, even if some of the lower-ranking wind turbine companies exit the market, their losses are not as large as the outside world has imagined. On the one hand, a considerable number of companies have not invested a lot of real money in R&D, and the plant and production equipment used can also be converted; on the other hand, many companies have received local government land, taxes, etc. during the process of entering the manufacturing industry of wind turbines. With the support of the parties, the land that was originally acquired at a low price has now appreciated significantly.

For companies like Wuxi Baonan, the earlier they exit the market, the smaller the losses they suffer. An individual from the company said that it is not easy for the company to develop prototypes. If companies are willing to take over, the company can reduce some losses, and these technologies can also play a role. However, a person familiar with the matter said that even if Wuxi Baoan gave the technology white to others, others may not necessarily, because now no company is willing to use immature technology to produce fans.