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China Wind Power International Corp. (CNW: TSX-V) research and analysis

Contributed by eResearch

By eResearch

China Wind Power International Corp. is an Ontario-based company that indirectly holds the exclusive rights for wind energy development in the Du Mon County of Heilongjiang Province in China.

The Company is currently building a 546-megawatt (MW) wind farm in five phases, which it plans to complete by the fourth quarter of 2014. Phase 1 of the project consists of 34 turbines with a capacity of 49 MW, and began commercial production in December 2009. The approximate $71 million cost was financed with 26% equity and 74% debt.

Phase 2, with capacity of 49.5 MW, is expected to be completed by the end of the second quarter of 2010. China Wind Power’s longer-term goal is to expand its capacity to 1,150 MW.

Each phase is expected to run at approximately 60% capacity for its first year and to operate at full capacity in the second year. As a result, we expect that Phase 1 will operate at full capacity for all of 2011 while Phase 2 will reach that level for approximately half of the year.

The Company estimates, in its business plan, that a 49-MW phase of the project would produce the following average annual results over a 20-year period: (a) Revenue of US$10.3 million; (b) EBITDA of US$8.3 million; and (c) After-Tax Profit of US$3.2 million.

The Chinese government is committed to the expansion of the wind power industry. The country is currently fourth in the world in wind power use and is committed to becoming “number one” by 2020. Capacity at the end of 2010 is expected to be 30 gigawatts (GW), compared with 12.2 GW at the end of 2008. By 2020, the target is 100 GW. The rapid growth of the Chinese wind power industry over the past few years, and the government requirement that wind project developers locally source at least 70% of their equipment, have led to China becoming the largest producer of wind turbines in the world.

China Wind Power International Corp. is currently trading at 1.7 times book value. Over the next few years, as the Company adds capacity and becomes profitable, investors should become more familiar with the Company and recognize its inherent potential.

Additional information on China Wind Power International is provided in our eResearch StockPotentials report of April 12, 2010. You can view this report at the following link: http://www.eresearch.ca/_report/CNW_041210-SP.pdf.