Ming Yang in Flurry of Headlines 明阳风电的一系列头条新闻
Wind power equipment maker Ming Yang (NYSE: MY) has become a tiny company over the past year as chilly sentiment towards new energy firms has caused its shares to plummet; but that hasn’t stopped it from making a steady stream of headlines these past 2 weeks for what look like relatively large deals. This series of deals seems a bit strange for a player of that size, and the only explanation I can see is that observers believe that Ming Yang, with access to funds via its Chinese government links, could become a potential consolidator and driver of new growth for the struggling global wind power industry.
Despite having a market cap of just $154 million, Ming Yang was in the headlines earlier this week when rumors surfaced that it was in talks to buy larger Danish rival Vestas (Copenhagen: VWS) Something about the deal didn’t seem right, since Ming Yang was much smaller than Vestas in terms of market cap, with Vestas’ current market value at around $900 million.
Of course, Ming Yang’s own market cap was much closer to the $1 billion level itself just a year ago before a major sell-off began for solar and wind power companies that are now grappling with their worst-ever downturn amid a huge supply glut. Ming Yang later came out and denied the rumors (English article); but based on my past experience I’m guessing at least some form of talks took place, even if they never became very advanced, meaning that Ming Yang must have believed it had the resources to do such a deal, which media said would be worth $2.5 billion.
A few days after those rumors, Ming Yang is now officially announcing another deal, this time a joint venture with fellow Chinese firm Huaneng Renewables (HKEx: 958), to develop wind power. (company announcement) The deal, which has yet to be finalized, would see the new joint venture identify sites for new solar and wind power projects, and then build them.
Ming Yang shares got a nice boost from the news, rising 5 percent. Investors appear to like the deal because Huaneng would be the major partner in the joint venture, presumably providing most of the funds to build new wind plants that would probably purchase their equipment from Ming Yang.
This latest joint venture comes just a week after Ming Yang announced another strategic tie-up with Reliance, which would see Ming Yang take a stake in and form a joint venture with the Indian conglomerate’s wind unit. The pair would then collaborate to build more wind farms in India. (company announcement)
Both of these deals, together with the Vestas rumors, indicate that Ming Yang appears to have access to a big supply of cash, which it would need to build all these new wind power plants and also to make major M&A like the Vestas deal. If that’s true, it’s possible we could see Ming Yang, despite its tiny size, become an interesting engine in helping return the struggling wind power sector to health, both acting as consolidator and also providing access to funds for new construction of wind farms.
Bottom line: A recent flurry of deals by Ming Yang indicate the company has access to cash that could make it an important engine to jump-start growth for the struggling wind power industry.
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