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Sinoma $34 million USD acquisition of Tianhe Blades

News International-French

8 Jun 2012

Sinoma recently announced that it intends to invest $34 million USD to acquire Gold Wind Tianhe Blades to enhance their competitiveness.

The announcement shows that, Sinoma Blades intended acquire 100% stake of Gold Wind subsidiary Gold Wind Investment Holdings wholly owned Tianhe Blades Jiangsu Co., Ltd completely with cash. The final sale price will be the underlying asset assessed value of estimated $34 million USD with the transitional period PL.


Tianhe Blades is mainly engaged in production, assembly and sale of 1.5 megawatts or more wind turbine blades and the R&D of wind power generating equipment; 1.5 MW and above blade repair. As of December 31, 2011, Tianhe Blades total asset is $76 million USD, net assets is $27 million USD. 2011 operating income is $31 million USD, net profit loss of $12 million USD.


Sinoma’s main business is composite wind turbine blade products, the company's current main source of profits. The first two years of development was very rapid. However, since last year, the wind turbine blade market prices have gone down, resulting in the decline of its revenue and gross margin are varying degrees of. The end of 2011, Sinoma total assets are $413 million USD, $200 million USD of owner's equity, the annual total operating income of $200 million USD, net profit of $10 million USD.


Gold Wind said the transaction is Gold Wind timely adjustments to meet the changes in the industry and market. It is an effective means of resource allocation. It will contribute to the appropriate reduction in productive fixed assets investment proportion. It shows its focus on the product development, quality, sales and other sectors. But market analysts believe Gold Wind is stripping off their own bad assets.


Sinoma said Tianhe Blades, currently is at a loss, but with Sinoma experience and strengths in blades technology, management, cost and other aspects, the operating costs will further be reduced the overall competitive ability would be enhanced. Eventually Tianhe will make progressive realization of profit.


The analyst who requested anonymity pointed out that the present situation, the wind power industry sees no signs of recovery. Sinoma premium on acquisition sees less possibility of profitability in the short-term. At the same time, the domestic wind power manufacturing companies all engaged rapid expansion in recent years. The market blind expansion fierce competition drove a wave of prices reduction. The major manufacturers’ gross margin went all the way down.


Due to the deteriorating market environment, Sinoma wind turbine blades business is in a slump. 2011 blade sales are about 1,600 sets, far lower than 2,300 sets generally expected at the beginning of the year. The sales price converted only about $120000 USD per set and net profit of about $6300 USD per set. 2009, the average selling price was $200000 USD / set, net profit of $43000 USD per set. 2010, the average price was $154000 USD / set and net profit of $26000 USD / set.



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