Corporate Presentation
2009
1
Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act
of 1995: Any statements set forth in this presentation that are not
historical facts are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from
those in the forward-looking statements, which may include, but are not
limited to, such factors as unanticipated changes in product demand,
increased competition, downturns in the economy, failure to comply with
specific regulations pertaining to government projects, fluctuation of
revenue due to the nature of project lifecycles, and other information
detailed from time to time in the Company filings and future filings with
the United States Securities and Exchange Commission. The forward-
looking statements contained in this presentation are made only of this
date, and the Company is under no obligation to revise or update these
forward-looking statements.
2
Wind Power Economics Propel Our Business Model
Source: US Data; Citi Investment Research, Nov 2007
Source: National Development and Reform Committee
Significant technology advances have made wind
power one of the most attractive sources of energy in
the world
0.04-0.07
0.04-0.05
0.20-0.80
0.05-0.12
0.03-0.05
0.05-0.08
$/kWh
(China)
0.02-0.07
Geothermal
0.02-0.06
Nuclear
0.20-0.60
Solar PV
0.07-0.09
Biofuel
0.02-0.05
Coal
0.03-0.06
Wind
$/kWh (U.S)
Power Source
3
Forged Steel
Components
Where We Fit in Wind Power
Wind power is a promising, growing industry with strong potential
China is a world leader in the advancement of wind power
Wind turbines contain highly technical components that are creating a supply
bottleneck
China Wind has market advantage in making these forged wind-power
components
Demonstrated solid execution of our business plan to become a key supplier of
significant wind-power components
Fabrication
Assembly
Yaw Bearings, Blades,
Gearbox and Other Parts
Wind Turbine
Grid Connection
End User
Wind Farm
4
Interior of Wind Turbine Unit
Source: U.S. Department of Energy
% Cost Breakdown of A Windmill
Component
Percent
Blade
19%
Electrical Control System
16%
Gearbox
15%
Tower
9%
Generator
8%
Hub
7%
Yaw System
5%
Spare Parts
5%
Nacelle
4%
Main Shaft
4%
Central Monitoring/Control System
3%
General Assembly
3%
Hydraulic System
2%
Source: Morgan Stanley Research
*We supply forged products for wind power components
5
China Wind Power’s Rapid Growth Drives Our Business
China’s wind power installed capacity doubled in 2008,
reaching 12.2 GW
China joined US as the markets with the highest
installed wind power capacity, in 2008
Capacity growth rate averaged more than 46% per year
in the last ten years
Installed wind capacity expected to increase 64% in 2009
to 20 GW
In April 2009, China government more than tripled target
for installed capacity by 2020 to 100 GW from 30 GW
Government offers subsidies to manufacturers of wind
turbine components and builders of wind turbine
Source: China Wind Power Report 2007, China Environmental Science Press
Global Wind Energy Council
The 3 rd China (Shanghai) International Wind Energy Exhibition & Symposium
National Energy Administration
Center for Wind and Solar Energy Resource Assessment, China Meteorological Administration
5MW wind turbine by REpower
6
Industry Bottleneck Secures Our Opportunity
Government mandates that 70% of wind turbine components be manufactured
locally, encouraging domestic suppliers
In 2008, gearbox demand was 10,000 MW while supply was only 4,000 MW
Increases in wind turbine size will prolong this supply constraint
China Wind Systems’ primary strategic focus is to solve the bottleneck by
providing forged components, including forged rolled rings, gear rims, and shafts
used in gearboxes and yaw bearings
Sources: Renewable Energy World Magazine
“The wind power industry is experiencing such tremendous growth that the industry is facing a serious
shortage of various components. The component shortages mainly involve gearboxes and yaw
bearings. The component shortage has limited the industry’s overall growth rate and resulted in large
backorders for wind turbine and system manufacturers. At the end of 2006, wind farms developers had
to wait 12 months for turbines to be delivered and this delay may grow to 18 to 24 months. Demand in
2007 is expected to be 20 gigawatts and supply is only expected to be 17 gigawatts, resulting in a 3-
gigawatt shortage according to the Global Wind Energy Council.”
- Richard W. Asplund, “Profiting from Clean Energy”, pp 137 (Copyright 2008)
*Emphasis added
Unfinished shaft
7
Moving into the Wind Power Industry
22%
8,500 tons of rolled
rings
April 2007
None
Rolled rings up to 3
meters diameter
Original Facility
400 Gearbox
200 Yaw Bearings
40,000 tons of rolled rings,
flanges, shafts and gear rims
Design Capacity
Expansion Phase I
Expansion Phase II*
Products
Rolled rings up to 6.3 meters
diameter rolled rings, flanges,
shafts, and gear rims
Gearbox and yaw
bearings
Equipment Installation
Jan 08 - Nov 08
2009 – 2010
Production Start
Feb 2009
2011
Expected Gross
Margins
28%-34%
28% - 32%
*Subject to the Company securing sufficient financing
The Company shall reach 50% of design capacity in 2009
8
Leading metal fabricator of components for heavy machinery industries
State-of-the-art (108,000 SF) manufacturing facility
Time-tested innovative engineers and skilled technicians
Growth strategy is to be a leader in the fast growing $8.59 billion China
wind-power equipment market
Supply forged rolled rings used in yaw bearings and gearboxes since
April 2007
Rings = 3 meters in diameter, for use in wind turbine units = 3 MW
Began supplying and manufacturing forged rolled rings in April 2007 and
flanges, shafts and gear rims in February 2009
Rings =6.3 meters in diameter, for use in up to 5 MW wind turbine units
Shafts used in 1MW-3MW wind turbine units
Gear rims for use in gearbox
Flanges for tower
Added to the First Trust Global Wind Energy ETF, “FAN,” joining wind
industry leaders such as Nordex and Vestas Wind Systems among others
Company Overview
Gear Rim
Rolled rings
Source:
China Clean Energy Weekly, February 1-9, 2009
9
First Mover Advantage Keeps Us Ahead of the Curve
Competitive Advantages:
Scalable production capability to meet varied market
needs
Critical QAQC certification and capability to ensure
quality and safety
Internal innovation capability to lead new product
development
Track record of dealing with major SOE customers
Prime location in Jiangsu Province near major
transportation routes enables cost-savings
Strong management capability to accelerate company’s
leadership role in the industry
Majority of Chinese competitors rely on less effective
technology to produce forged rolled rings
10
Forging Process at Wuxi Facility
11
Leveraging Existing Wind Customer Base
Shafts
2009 New Customer
Shanghai Electric Co., Ltd
Shafts
2009 New Customer
Zhejiang Yunda Co., Ltd
Shafts
2009 New Customer
Dong Fang Electric Co., Ltd
Flanges
2009 New Customer
Gansu Keyao Electrical Manufacturing Co., Ltd
Gear rims
2009 New Customer
Hangzhou Advance Gearbox Group Co., Ltd
Rolled rings
2008 New Customer
Luoyang Zhuxin Zhoucheng Co. Ltd*
Shafts
Rolled Rings
Rolled rings
Rolled rings
Rolled rings
Rolled rings
Rolled rings
Product
2009 New Customer
Mingyang Wind Power Technology Co., Ltd
2009 New Customer
Wuxi Lida Gear Manufacturing Co., Ltd
2008 New Customer
2008 New Customer
2008 New Customer
2007 New Customer
2007 New Customer
Luoyang Huizhuo Zhoucheng Co. Ltd*
Luoyang Chengbang Zhoucheng Co. Ltd*
Luoyang UBT Bearing Co. Ltd*
Name of Company
Luoyang Shengia Zhoucheng Co Ltd*
Luoyang Heavy Zhoucheng Co. Ltd*
7 New Wind Customers Year-To-Date In 2009
* Subsidiaries of a large SOE
12
Strong Growth
Notes: $ figures in millions
Income tax rate: 33%, 2005-2007; 25%, 2008
2007 net income net income before and after-tax excluded, $6.7 MM in one-time tax benefit, Q3, 2007
2008 net income before and after tax net income adds back one-time non-cash charge of ($2.3M) related to amortization of debt discount to interest
expense and one-time non-cash charge of ($2.9) MM, related to deemed preferred dividend related to issuance of stock warrants upon conversion of
convertible debt to series A preferred stock
13
Revenue Breakdown
14
Experienced Executive Team
Mr. Jianhua Wu, Chairman / CEO
Mr. Wu is the Founder and CEO of the Huayang Companies and has more than 20 years of machinery manufacturing experience. He holds a certificate in Mechanical engineering and
is a founding member of China Wind Association.
Mr. Leo Wang, CFO
Mr Wang is the Founder and Principal of Cambridge Invest, an investment advisory firm. Previously, he was CFO of Renhuang Pharmaceuticals, Inc. and held senior positions at Global
Guardian Group (hedge fund), Fleet Boston Financial Corp (now merged with Bank of America) and Norwegian Ministry of Finance; Mr. Wang was a NSF scholar at Harvard University
and earned a MBA in finance from Massachusetts Institute of Technology and PhD in Economics from University of Oslo.
Mr. Adam Wasserman, CPA, Vice President of Financial Reporting
Mr. Wasserman is the CEO of CFO Oncall, Inc., an accounting consulting firm, 1999. Mr. Wasserman holds CFO titles for Transax International Ltd, since May 2005, Lotus
Pharmaceuticals, Inc. since October 2006, Gold Horse Intl. Inc. since July 2007, and Genesis Technology Group, Inc, from 2000 to September 2007. He earned a B.S. in Accounting
from the State University of New York, Albany.
Mr. Ryan Hua, VP / Operations
Mr. Hua was previously a Partner of Wuxi Zhong Qiang Heavy Machinery, Inc. Previously, he was a General Manager at Zhong Qiang Heavy Machinery Inc. and Assistant Electrical
Engineer at Huayang Companies. Mr Hua holds a B.S. from Nanjing University of Science and Technology.
Mr. Chen Yao Hong, Chief Engineer
Mr Hong has previous experience in optical Instrument design and radar design and holds a certificate of Mechanical Engineering and a BS in Mechanical Design.
Mr. Bo Xiong Shen, Director / Business Development
Mr. Shen has 28 years experience with progressive responsibilities including Technician Technology Innovation Manager, Director of External Economic Affairs, General Manager of
Import and Export at Nanjing Machine Tools Corp.; in-depth experience in manufacturing large size mechanical bearings and gearbox; He holds a certificate of Sr. Mechanical
Engineer, B.S. Beijing University of Mechanical Technology.
Drew Bernstein, Independent Director
Mr Bernstein serves as Chairman of the Audit Committee of China Wind Systems. He is co-founded Bernstein & Pinchuk LLP (B&P) in 1983. His early recognition of the global
marketplace and his extensive travel in the People's Republic of China (“PRC”) resulted in the aggressive expansion of the firm’s services to the PRC. Mr. Bernstein received his BS
degree from the University of Maryland Business School, is licensed in the State of New York, Connecticut, California, Texas and Maryland and is a member of the AICPA, the
NYSSCPA and the NSA.
15
Mature industrial equipment business
manufacturing textile & electrical power equipment
that will continue to generate profitable sales
Redeploying technical expertise to produce high
precision wind power components
Transforming into a leading supplier of wind power
components to address shortages in the industry
Solid financial performance to date and
expectations for majority of growth to be generated
from wind energy segment, including higher margin
wind turbine components
New state-of-the-art manufacturing facility in Wuxi
City ensures cost-efficient product delivery
Experienced management team with successful
track record to build CSWI into a world-class
organization
Investment Highlights
Hydraulic press
wind turbine
16
Contact
Company Contact:
China Wind Systems, Inc
Leo Wang, Chief Financial Officer
No. 9 Yanyu Middle Road
Quinzhou Village, Huishan District,
Wuxi City, Jiangsu Province, PRC
Tel:1 (917) 455-7735
E-mail: leo.wang@chinawindsystems.com
Investor Relations:
CCG Investor Relations, Inc
Crocker Coulson, President
1325 Avenue of Americas
Suite 2800
New York, NY 10019
Tel: 1 (646) 213-1915
E-mail: crocker.coulson@ccgir.com
Legal Contact:
Asher S. Levitsky P.C.
Sichenzia Ross Friedman Ference LLP
61 Broadway
New York, New York 10006
Telephone: 1 (212) 981-6767
E-mail: ALevitsky@srff.com
External Auditors:
Sherb & Company, LLP
1900 NW Corporate Boulevard
Suite E210
Boca Raton, FL 33431
Tel: 1 (561) 886-4200
17
Appendix I: Equity Snapshot
Ticker (OTC BB): CWSI
Price (05/11/09): $0.85
Market Cap: $38.0 mil
Revenues (ttm): $42.3 mil
Net Income (ttm): $5.8* mil
Diluted Shares Outstanding, 12/31/08: 63.6** mil
EPS (ttm): $0.09*
P/E (ttm): 9.4x*
P/S (ttm): 0.9x
* Net income, EPS, P/E, non-GAAP: add back non-cash interest expense related to debt issuance ($2.3M) and
preferred dividend related to issuance of stock warrants upon conversion of convertible debt to series A preferred
stock ($2.9M)
**63,621,211 weighted average diluted shares outstanding, December 31, 2008; ttm 12/31/08
18
Appendix II: Corporate Structure
CWSI.OB
Fulland Ltd.
Green Power Environmental
Technologies Co., Ltd
(“Green Power”)
Wuxi Fulland Wind Energy
Equipment Co., Ltd
(“Wind Power”)
100%
100%
100%
Wuxi Huayang Dye
Machine Co., Ltd.
(“Huayang Dye
Machine”)
Contractual
Arrangement
WFOE
WFOE
Wuxi Huayang
Electrical Power
Equipment Co., Ltd
(Huayang Electrical
Power Equipment)
Contractual
Arrangement
19
14,028,189
Common shares issuable upon conversion of series A
preferred stock at $0.37
Share Type
Number of Shares
Common shares issued and outstanding*
44,895,546
Shares issuable upon exercise of warrants at $0.40**
6,501,077
Shares issuable upon exercise of warrants at $0.50**
400,000
Shares issuable upon exercise of warrants at $0.567**
9,232,424
Total, fully diluted shares:
75,057,236
*As of March 25, 2009
**As of December 31, 2008
Appendix III: Capitalization Structure
20
Appendix IV: Summary Balance Sheet
($ in thousands) 12/31/08 12/31/07
(Audited) (Audited)
Cash and Cash Equivalents $329 $5,025
Current Assets 7,586 10,430
Total Assets 37,332 28,496
Current Debt 1,021 4,081
Total Liabilities 4,406 7,245
Total Stockholders’ Equity 32,925 21,251
21
Appendix V: Summary Income Statement
Source: Company’s SEC filings
* Net income, EPS exclude $2.3 million in non-cash interest expenses, amortization of debt issuance cost and $2.9 million deemed
preferred dividend
** Net income, EPS exclude one-time income net of $6.7 million related to forgiveness of VAT and income taxes, Q3, 2007
($ in thousands, except per share data) FYE, Dec 31
(audited)
Q4 08 Q4 07 YoY% 2008 2007 YoY%
Revenues $10,885 $7,829 39.0% $42,285 $24,418 73.2%
Gross Profit 2,654 2,294 15.7% 10,545 7,052 49.5%
Operating Income 2,081 1,678 24.0% 8,063 5,662 42.4%
Net Income 1,460 903 61.7% 5,829* 3,603 ** 61.8%
Diluted EPS $0.02 $0.02 $0.09* $0.09^*
Gross Margin 24.4% 29.3% 24.9% 28.9%
Operating Margin 19.1% 21.4% 19.1% 23.2%
22
Appendix 6: Non-GAAP Reconciliation Data
23
Net Income
Diluted
EPS
Net Income
Diluted
EPS
Adjusted Amount of Net Income available to Common Shareholders
5,828,551
$
0.09
$
3,602,730
$
0.10
$
Adjustment
Interest expenses related to amortization of convertion of
convertible debt to common stock (1)
2,324,859
0.04
-
-
Amortization of debt issuance costs (2)
21,429
0.00
-
-
Deemed preferred dividend (3)
2,884,062
0.05
-
-
Other income from forgiveness of VAT and income taxes (4)
(6,710,011)
(0.17)
Amount per consolidated statement of operations
598,201
$
0.01
$
10,312,741
$
0.27
$
(1) One-time, non-cash interest expenses related to amortization of debt discount to interest expense, Q1 2008
(2) Amortization related to debt issuance
(3) One-time non-cash deemed preferred dividend related to issuance of stock warrants upon conversion of
convertible debt to series A preferred stock
For the Twelve Months Ended December 31,
2008
2007
