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Shunfeng Achieved Profit Turnaround in 2014 Interim Results

- Revenue up 6 times to approx. RMB 2.95 billion, Gross Profit surged 13.7 times
- Successfully completed various domestic and overseas acquisitions and enhanced integrated photovoltaic industry chain
- Proposing change of company name to "Shunfeng International Clean Energy Limited" to reflect its clean energy development strategy

Hong Kong, Aug 29, 2014 - (ACN Newswire) - Shunfeng Photovoltaic International Limited (stock code: 1165) announced the unaudited condensed consolidated interim results for the six months ended 30 June 2014 ("Review Period").

For the six months ended 30 June 2014, Shunfeng recorded a revenue of RMB2,946.0million, representing an increase of 608.12% from RMB416.0million for the corresponding period in 2013. Gross profit increased by RMB698.9million or 1,367.7% from RMB51.1million for the corresponding period of last year to approximately RMB750.0million for the Review Period. The increases in revenue and gross profit were primarily due to a substantial increase in the shipment volume of manufacturing and trading of solar power products after the acquisition of Wuxi Suntech. In addition, most of the solar power plants connected to grid by the Group in 2013 passed tests and commenced operation and generated revenue during the Period. The Group recorded a net profit of RMB503.9million for the Review Period, representing a significant improvement compared with a net loss of RMB672.7million for the corresponding period of last year. In consideration of reserving capital for enhancement of business development, the Board resolved not to declare an interim dividend for the six months ended 30 June 2014.

Solar Power Generation

With the successful acquisitions of solar power plants completed in 2013 and early 2014, the Group's market share in China's solar power generation market has soared to a prominent position. As at 30 June 2014, the solar power plants owned by the Group generated an aggregate of approximately 185,798 MWh, of which approximately 60% was generated by the solar generation plants located in the Xinjiang Region, whereas in July amounted to approximately 64,825 MWh, an increase of 8.5% compared with a single month solar power generation of June.

As at 30 June 2014, the expected annual designed capacity of the Group was 1,757 MW, with 876 MW were under construction.

As at the date of this announcement, the Group successfully realized a capacity of 20 MW on-grid connection with the solar power plant in Hebei Province. In addition to constructing and operating solar power generation projects, the Group proactively explores opportunities to integrate solar industry into other sectors, for example, it acquired an integrated project with a capacity of 6.6 MW in Lianyungang, Jiangsu Province, combining agriculture with photovoltaic industry, and completed connecting it to grid. Such project was designed to generate electricity above the agricultural greenhouse, introducing a new pattern of recycling economy which is land-saving, environmental friendly and resource-effective. Being conducive to achieve social, environmental and economic benefits, this new pattern also find an environmental approach for the utilization of new energy and energy saving and emission reduction work. It is considered to be the first integrated project of the Group to combine agriculture with photovoltaic industry, and also the direction for its future development.

Manufacture and Sales of Solar Products
On 7 April 2014, the restructuring plan of Wuxi Suntech Power Co., Ltd. ("Wuxi Suntech") was passed in the extraordinary general meeting by unanimous vote pursuant to which, Wuxi Suntech became a wholly-owned subsidiary of the Group, and its financial results was consolidated into the Group from April 2014. The acquisition of Wuxi Suntech enables the Group to expand its solar power generation business in domestic and overseas market. Riding on the significant rebound trend in the industry since the second half of 2013, the Group's shipment volume of solar products manufacturing business in the first half of 2014 amounted to 750.9 MW, an increase of 332.5% compared with the corresponding period of 2013. Our top 5 customers in the first half of 2014 represented approximately 44.7% of our total revenue as compared to approximately 47.1% in the corresponding period of 2013. Our largest customer accounted for approximately 13.4% of our total revenue during the Review Period as compared to approximately 15.0% in the corresponding period of 2013. These changes were mainly due to our continuing efforts to optimize the customer base. In the first half of 2014, our sales to PRC based customers represented approximately 69.3% of our total revenue, as compared to approximately 85.2% in the corresponding period of 2013.

Acquisitions and Overseas Business Development
Following the completion of acquisition of Wuxi Suntech, the Group has grown to an integrated one-stop solar enterprise with significant market share of installed solar power capacity in the PRC. By leveraging on the positive brand awareness of Shunfeng and Suntech establised over the years in the global market, the Group continues to expand the construction and operation of global solar power plant, manufacturing of solar products, solar energy storage and clean energy related businesses, thereby gaining access to clean energy sector and diversifying its businesses.

(a) Energy storage business
(i) Shanghai Everpower Technology Co., Ltd. ("Everpower")
The Group has acquired 28% equity interests in Everpower, a company engaging in hydrogen energy storage and hydrogen power generation with core hydrogen power technology, in a consideration of RMB48.5 million. Due to its uniqueness, hydrogen power can replace energy storage battery and diesel generator in many power generation fields and is widely used in such sectors as communication and power. The energy storage technology is complementary to solar power generation to resolve the interval generation problem of solar power and thus enhance its utilization rate.

(ii) Powin Energy Corporation ("Powin Energy")
The Group acquired 30% equity interests in Powin Energy in August 2014, a company specially engaging in energy storage battery management technology, in a consideration of US$25.0 million (approximately RMB153.8 million). Powin Energy owns advanced lithium-ion battery energy storage technology. The load shifting technology of Powin Energy is an application which utilizes advanced storage technology and advanced power management system, and specializes in tuning power generators to achieve the purposes of load shifting and stabilizing power supply. In addition, Powin Energy provides high speed, high efficiency and cost effective fast charging devices, which can be extensively used in car parks and for the charging of electric vehicles.

(b) Photovoltaic inverter business
The Group successfully acquired the inverter and building integrated photovoltaic business of Sunways AG and its brand in the first half of the year in a consideration of EURO2.2 million (approximately RMB19.1 million). The Group expects to establish and improve its research and development ability in internal inverter, storage and monitoring techniques through the acquisition, enabling the Group to have its own inverter production line. The Group also expects to expand into the distributed photovoltaic power generation system market through the acquisition, enabling it to provide integrated solutions of modules and photovoltaic inverters in the global photovoltaic market.

(c) Overseas business development
The year of 2014 marked an important milestone for the Group's investment in solar power generation business in overseas market.

(i) European business
The Group collaborated with Greenfield Solar International GmbH & Co. KG ("Greenfield") to jointly develop solar power plant project in the United Kingdom in 2014 and 2015. Wuxi Suntech became the exclusive supplier of solar modules of the project. The project is expected to provide consolidated capacity of 400 MW in 2014 and 500 MW in 2015. The Group will provide photovoltaic inverters, and Greenfield will provide construction project contracting services.

(ii) Japanese business
In July 2014, the Group announced to make a maximum investment of JPY7.5 billion
(approximately equivalent to RMB458.3 million) in a private equity fund, with the purpose to invest primarily in solar power plant projects with an accumulated capacity of 100 MW in Japan.

(d) Seawater power generation business
The Group and Taiwan Carbon Nanotube Technology Corporation ("Taiwan Nanotube") entered into a licence agreement, pursuant to which Taiwan Nanotube granted to the Group the licence to use its developing seawater power generation battery technology. Seawater power generation would be most suitable for coastal and maritime countries as a new form of energy solution since available natural resources could be effectively utilised. Hence, it is anticipated that the seawater power generation technology would be widely used, develop into a huge market, and would be of great commercial value.

Mr. Zhang Yi, the Chairman of Shunfeng commented, "We were delighted our 2014 interim results recorded a profit turnaround which further affirmed our foothold in the global photovoltaic industry and realize fruitful results from acquisitions.

Looking ahead, upon completion of acquisition of Wuxi Suntech, the Group has been poised to become an integrated solar enterprise focusing on solar power generation business and, in the long run, to be a leading one-stop clean energy provider in China and in the Asia region. Looking forward to the second half of 2014, the Group believes that through a series of acquisition plans of solar power plants and strengthening its management and operation team, it is determined to strengthen its position as a forefront ranking high performance solar cells and solar modules manufacturer in China. With the recovery of Wuxi Suntech's operation, the Group expects to achieve a total manufacturing capacity of 2.2GW of solar cell and 2.4GW of solar modules in 2014.

And given the Group has transformed from an upstream solar products manufacturer into an integrated solar enterprise owning downstream solar power generation assets. The Group has a future plan in place to diversify its business to energy storage and other forms of renewable or clean energy. The Group has the ambition to become a leading renewable and clean energy enterprise. To fully reflect the Group's fully integrated photovoltaic business model and the future development strategy to become a leading and distinctive renewable and clean energy enterprise, the Company is proposing to change the name of the Company from "Shunfeng Photovoltaic International Limited" to "Shunfeng International Clean Energy Limited".

These important achievements in the first half of 2014 lay a solid foundation for the business of the Group and further consolidate its leading position in China's solar power market. The Group will target to become a leading renewable and clean energy provider, manufacturer and operator, focusing on the improvement of the future energy supply structure in China and the world. The Group will develop itself into a new energy enterprise mainly engaging in solar power plant business with an integrated photovoltaic industry chain and will strive to become a leading enterprise in global photovoltaic industry."

Source: Shunfeng Photovoltaic International Limited

Copyright 2014 ACN Newswire. All rights reserved.

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