Monday, August 8, 2022
Martin Hennecke
HKEx Stock Code : 01185 
Corporate Profile
The principal activities are manufacture and sales of wind energy related products, sales of electricity from operation of wind farm, manufacture and distribution of elevator motors, trading of chemical materials, development, manufacture and distribution of communication products, ITS, broadband systems, equipment and accessories.

Business Review - For the year ended December 31, 2012

Business of Wind Energy

In 2012, the directdrive wind turbine developed by the Group with proprietary intellectual property rights participated in fierce competition in the domestic market which is currently a buyers' market, and was highly recognized by wind farm developers within the industry for its simple structure, high reliability, high efficiency and low operation and maintenance costs. The Group continued to give full play to the advantages of technology, quality and service of CASC directdrive wind turbines. On this basis, the Group capitalised on its products' leading edge and achieved cost control by adopting the strategy of technology advancement and batch production through research and development, thereby achieving high supply chain performance and enhanced cost effectiveness to proactively address challenges. Through Inner Mongolia Wind Turbine General Assembling Plant, Gansu Wind Turbine General Assembling Plant and Jiangsu Energine Wind Turbine General Assembling Plant, the Group realized mass production of a number of self-developed models (especially 1.5MW excitation magnetic directdrive wind turbine, 2MW permanent-magnet directdrive wind turbine and 2MW excitation magnetic directdrive wind turbine), and adopted the strategy of establishing good relationship with several provincial and autonomous regions' governments to gain their supports and leveraging on provincial and autonomous regions' quotas for wind energy to obtain more wind resources in seeking more production orders for wind turbines, thereby increasing our market share.

At present, the Group has considerable wind energy resources in various major wind power bases planned by the State, including Wulatehouqi in Inner Mongolia, Jiuquan City and Wuwei City in Gansu, Ningde City in Fujian, Chuxiong City in Yunnan and Tieling City in Liaoning, laying a robust foundation for the Group's batch production of wind turbines during the year, which in turn will bring in promising income to the Group.

Since the directdrive wind turbines are characterized by gearless drive, the use of low-speed largetorque generators, full-power convertor and strong resistance to grid voltage fluctuations, their advantages include low wear and tear, high efficiency of electricity generation, small size, light weight, easy to maintain and low operating cost when compared with the traditional wind turbines. As such, the directdrive wind turbines, in particular, the 1.5MW and 2MW excitation magnetic directdrive wind turbines being launched mainly by the Group from now onwards have visible optimism in the market. In addition, the AC-DC-AC total inverter grid-connection technology employed by directdrive wind turbines can meet the standards under the ¡§Design regulations for grid-connection technology of large-scale wind farms issued by National Energy Administration in 2011, which provided a series of requirements such as low-voltage ride-through, grid compatibility and power test, bringing rare opportunities to the Group's wind turbine business.

In 2012, the Group sold a total of 16 sets of 2MW wind turbine and 143 sets of 1.5MW wind turbine.

Meanwhile, the Group also successfully entered into sales contracts for 240,000 KW 2MW excitation magnetic directdrive wind turbine (120 sets) which will be delivered in 2013, including the sales contract for 200,000 KW 2MW excitation magnetic wind turbines in Yumen City, Gansu, with Huadian New Energy and the sales contract for 40,000 KW 2MW excitation magnetic wind turbines in Xiapu City, Fujian, with Energine Min Jian.

Research and Development of Technology

During the first half of 2012, the Group has identified 1.5MW and 2MW excitation magnetic directdrive wind turbines as its flagship products in the future. Based on wind farm conditions such as wind speed, air density and altitude, we researched and developed 1.5MW excitation magnetic directdrive wind turbines with wind wheel diameters of 77, 83 and 88 meters and 2MW excitation magnetic directdrive wind turbines with wind wheel diameters of 90, 93, 97 and 101 meters.

In September 2011, the Group established a science and technology committee, which formed a research and development project team on 2MW excitation magnetic directdrive wind turbines to undertake the special research on intellectual property of 2MW excitation magnetic directdrive wind turbines. The Group has applied for 4 patents for invention and 7 patents for utility model and registered 5 softwares in relation to wind energy in 2012. One of the invention patents was recognized as outstanding invention by the China Academy of Launch Vehicle Technology (¡§CALT¡¨). We completed the installation of the prototype of 2MW excitation magnetic directdrive wind turbine in June 2012, which is currently in good operating condition at full capacity. In 2013, a project on the research and development of 3MW permanent-magnet directdrive wind turbine will be pursued.

Production Management

In 2012, during the process of batch production of 1.5MW excitation magnetic and 2MW permanent magnetic directdrive wind turbines, the management system and business process suitable for batch production were further improved. The Group has clearly clarified the driving department for the management of scientific research and production with enhanced management planning. Through special project plan and deployment manoeuvring, orderly batch production of wind turbines was ensured under the guidance of the plans. The management procedure was reorganized with clear-cut definition of responsibilities and duties between different departments. Thus we can achieve efficient operation of personnel movement, logistics, cash flows and information flows in the various processes of sales, planning, design, production, purchasing and finance, as well as effective closed-loop management and control.

In 2012, the Group's focus of production management was on strengthening of quality assurance management. The Group improved all aspects of quality control according to the characteristics of directdrive wind turbines and formulated the Procedures for the Treatment of the Parts and Components with Abnormal Quality, the Procedures for the Treatment of the Wind Farm with Abnormal Quality and the Procedures for the Treatment of the Plant with Abnormal Quality. Also, the Group established the Quality Tracking System for the Installation of Wind Turbines which needed measures to be taken to follow up and confirm the effects in a timely manner. Furthermore, the Group organized quality engineers to prepare the quality control requirements for the parts and components according to the degree of importance and the level of risk of various parts and components, and specified the quality requirements for, among others, the manufacturing, testing, inspection, packaging and delivery of the parts and components, based on the national standards and technical specifications.

In addition, the Group included the quality requirements for the parts and components in contracts, which resulted in the advancement of quality control and the increased emphasis on product quality by suppliers, hence product quality was effectively improved, quality disputes were reduced and product quality risk was lowered. The Group successively completed the preparation of the quality control requirements for key parts and components of the 1.5MW excitation magnetic wind turbines, 2MW permanent magnetic wind turbines and 2MW excitation magnetic wind turbines, and established a team of quality engineers in order to enhance the detection capacities for the parts and components through purchase of the detection equipment, provide scientific basis for the evaluation of quality of large parts and components for acceptance such as the nacelle, hub and tower of wind turbines and ensured the quality of the wind turbine assembling.

The Group focused its efforts on the strengthening of the safety check and risk management. The Group implemented the comprehensive supervision and inspection on subsidiaries and investigated 29 potential safety risks, carried out the monthly safety self-inspection activities and thoroughly investigated the potential safety risks down-to-earth with ¡§zero tolerance¡¨, organized the staff to study the safety risks at various posts, proper preventive measures and emergency treatment measures, and carried out drills on the fire safety emergency plan in the Inner Mongolia Industrial Park which effectively improved the emergency treatment capacities of the front-line staff. Safety slogans and logos were posted, and various safety promotion materials were distributed at public places, staff dormitory and production workshops of each plant zone of subsidiaries. Experienced safety officers were hired to give safety training lectures. Safety knowledge tests were carried out on all middle-level executives of the Group and all the staff were educated on safety during festival days. Subsidiaries under the Group had signed production safety notifications with all of their staff, which not only enhanced the safety awareness of the staff, but also further refined the production safety management and ensured that no material accidents occurred throughout the year.

Trading of Materials

In 2012, BEI continued the trading business of chemical raw materials in connection with production of wind turbine blades and recorded a significant increase.

Wind Farm Operations

The Group's wind farm operations comprise a wind farm controlled and operated by the Group in the CASC Long Yuan (Benxi) wind farm of Liaoning Benxi, installed with 29 sets of 850KW wind turbines with a capacity of 24,650KW; three wind farms invested and constructed by the Group: the Jilin Tongyu wind farm of Jilin Longyuan, installed with 236 sets of 850KW wind turbines with a capacity of 200,000KW; the Jiangsu Rudong wind farm of Jiangsu Longyuan, installed with 100 sets of 1.5MW wind turbines with a capacity of 150,000KW and the Datang Wanyuan Xinghe wind farm of Inner Mongolia Xinghe, installed with 55 sets of 900KW directdrive wind turbines with a capacity of 49,500KW.

In addition, Energine Min Jian New Energy Investment Co., Ltd., the Group's associated company, formally engaging in offshore and land wind power projects in eastern Fujian through its subsidiary, Yingkou Wind Power Generation Co., Ltd., secured market orders for the Group for the purchase of 2MW directdrive wind turbine models produced by the Group.

Business of New Materials

Jiangsu Aerospace Wan Yuan REPM Motor Co., Ltd., controlled and operated by the Group, is a hightech enterprise which specializes in the research and development, manufacture, and sales of rareearth permanent-magnet gearless traction machines for elevators. The ¡§¯è¤Ñ¸U·½¡¨ branded rare-earth permanent-magnet gearless traction machines and its driving control system researched and developed by the company itself had filled the technological gap of the domestic gearless elevator sector.

Wuxi CASC Energine Xindali Electricity Co., Ltd. (¡§Wuxi Wind Turbine Plant¡¨), the Group's associated company, is engaged in batch production of 900KW and 1.5MW generators. Its selfdeveloped 1.5MW excitation magnetic directdrive wind power generator, with application of many new technologies, was awarded the First Prize of Outstanding Contribution to Science and Technology Progress in 2011 by CALT. Therefore, the Group is equipped with the internal capacity to supply core parts and components of wind turbines, including blades and generators, thereby reducing its reliance on upstream suppliers of the wind turbine supply chain for purchasing generators and controlling the supply risk of the wind turbine supply chain and production cost.

Business of Automotive Component Parts

Automotive engine management systems

Beijing Delphi Wan Yuan Engine Management Systems Co., Ltd, a jointly controlled entity, is a leading supplier in the domestic automotive electronic fuel injection market with a stable market share, ranking the second nationwide and supplies to almost all major domestic automobile manufacturers. As for export sales, its products are sold to automobile manufacturers in Europe and North America.

The jointly controlled entity recorded sales revenue of HK$3,351.56 million in 2012, representing an increase of HK$302.11 million year-on-year. Its sales expansion and costs reduction were successfully achieved.

Automotive sealing systems

Beijing Wanyuan-Henniges Sealing Systems Co., Ltd., a jointly controlled entity, is a company specializing in manufacturing of medium-to-high class automotive sealing products in the domestic market. Its quality control standards are on par with the international advanced level. The jointly controlled entity not only realized the development and ancillary items to the medium-to-high class models in the domestic market, but also attained the system standards applicable to Germany, France, United States, Japan and South Korea with its products.

The jointly controlled entity recorded sales revenue of HK$763.48 million in 2012, representing an increase of HK$186.24 million year-on-year.

Business Outlook - For the year ended December 31, 2012

In May 2012, the Company entered into agreements on joint research and development with various international and domestic renowned colleges, institutions and corporations in an effort to realize batch production of high-quality graphene and high-performance energy storage battery pack leveraging on their proprietary graphene extraction technology. Graphene, a kind of new material with singular flake structure composed of carbon atoms, is one of the best conductive materials in the world. The anode material of lithium ion battery made by graphene is able to significantly increase the energy storage capacity and shorten charging time of the battery, thus effectively resolving the bottleneck problem of applying lead-acid battery and traditional lithium ion battery to electric vehicles. The energy storage device of graphene is characterized by extra-long recycling life and high current during the process of charging and discharging, therefore there is huge market room of graphene-based new battery anode material and super capacitor under the research and development. Currently, the above research work has achieved certain stage results, and industrial production of the establishing project will commence after substantive results have been achieved later this year.

Looking ahead, the Group will continue to improve the progress in domestic production of wind turbines, focus on the development of 3MW and 5MW wind turbines in line with the Twelfth Fiveyear Plan to capture the future market share of wind turbines and increase cooperation opportunities with other large-scale power generation groups, refine the batch production of rare-earth motors and secure financing for the Group. We will further expand the scale of energy conservation and environmental protection business as well as strengthen our internal management to ensure the sustainable development of the Group and create greater benefits for shareholders in wealth and good reputation.

Source: China Energine (01185) Annual Results Announcement
Chairman Han Shuwang Issued Capital (shares) 3,969M
Par Value HKD 0.1 Market Capitalisation (HKD) 1,707M
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