Vestas (Buy)

Year of the Tiger a turning point for Vestas in China?

Senior Equity Analyst Christian Nagstrup y Jyske Bank 2011

BUY, Price target DKK 250

Strong order intake has reduced uncertainty Upside to Vestas 2011-guidance Vestas 2011 guidance We do not expect Vestas to issue new shares Low valuation: P/E (2011) 14.0X and P/E (2012) 9.8X
Fair 12 months value price target1 Weight Score4 Comment DCF 359 2 Relative 223 Sentiment 210 Price target 393 244 230 252 10% 40% 50% 100%

Price target

6.6

Reduced uncertainty

Agenda
1) The importance of China to Vestas (2 slides) 2) Energy and wind power development in China (5 slides) 3) The Chinese market structure (13 slides)
Legislation, Pricing, Customers etc.

4) Competive situation (23 slides) 5) M k t potential for Vestas / JB estimates (12 slides) Market t ti l f V t ti t lid ) 6) Valuation (5 slides)
3

Why do we focus on China?

Vestas order intake in China has quadroupled to a new record of 972 MW in 2010 Record-high Chinese exposure in 2010 (19% of volume) Vestas has invested EUR 400m in 1.6 GW of annual production capacity in China The 12th Five-year plan is due to come into effect in March 2011, 2011 and it will significantly impact the future of wind power in China and thereby Vestas future in China

Conclusion
We have been very positive on Vestas activities in China since Q1 2010 Our research has confirmed our positive view in the short p term 2011 has developed like 2010 so far We expect the central government to increase its wind power target f 2020 in March 2011 t t for i M h China will NOT add to growth for Vestas in the medium and long term, which has been a surprise

China is the worlds largest world s market for wind turbines

China and the US now account for 62% of the world market China will remain #1 during 2010-14 according to BTM Measured by accumulated installations the US is still no. 1, but this will change in 2011
70% 60% 50% % 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Jyske Bank and BTM Consult
6

The US and China s share of new global installed wind Chinas energy capacity (MW) 2000-2014E

China

USA

ENERGY AND WIND POWER DEVELOPMENT IN CHINA

( (5 SLIDES) )

Chinese Energy Consumption

Chinese energy consumption doubled from 2000 to 2007 Wind accounts for 0.4% of energy production China is still Coal Country
Energy consumption development in China 2000-2007 2000 2007
2,000,000
Energy use (kt of oil equivalen t nt)

1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 2000 2001 2002 2003 2004 2005 2006 2007

Distribution of Electricity Production in China 2005 2006 2007 Electricity production (GWh) 2,499,564 2,864,205 3,279,233 Sources of electricity production (% of total) Coal 78.9 80.4 81.0 Hydroelectric 15.9 15.2 14.8 Oil 2.4 1.8 1.0 Nuclear 2.1 1.9 1.9 Natural gas 0.5 0.5 0.9

Source: Jyske Bank and The World Bank Group

Promising future for wind in China

Cumulative- and annual installed capacity in China 2003 2014E
120,000 120 000 100,000 80,000 80 000
MW

60,000 40,000 40 000 20,000 0 2003 2004 2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E Cumulative Installed Capacity Annual Installed Capacity
9

Source: Jyske Bank, China Wind Power Center, and BTM Concult

Good wind conditions in remote areas

700-1200 GW wind power potential in China ~26 GW onshore wind installed end-2009 a d d 00 The best wind sites are located i remote areas of l t d in t f China (mostly in the North) but energy consumption is concentrated in Eastern China

Distribution of effective wind power density in China

Source: Wi d Power Monthly S Wind P M thl

10

Grid capacity is a bottleneck

No unified national grid
Map over the grid companies coverage

Very little inter-grid connectivity Grid not geared to large amounts of wind power Lack of incentive for grid companies to connect wind farms

Source: Wang (2009) Effective policies for renewable energy the example of Chinas wind power lessons for Chinas photovoltaic power
11

Offshore is developing
Offshore Projects Planned by Provinces Province Project Size Comment Heibei Tangshan 100 MW Shandong Changdao Weihai Jiangsu Guanyun Xiangshui Binhai Sheyang Dafeng g Dongtai Rudong Nantong Daishan Ningde 48 MW 1.5 1 5 GW 10 MW 1 GW First stage Long term First stage Long term

100 MW 200 MW 500 MW 100 MW 6 GW By 2020 600 MW In two projects of 300 MW 300 MW 300 MW 500 MW 200 MW 100-150 MW First stage 2 GW By 2020 48 MW For Pilot 50 MW
12

Zhejiang Fujian

Guangdong Nan'ao Zhanjiang

Source: Jyske Bank and Wind Power Monthly

CHINESE MARKET STRUCTURE

( (10 SLIDES) )

13

The Legal Environment

Energy Bureau of the National Development and Reform Commission Renewable Energy Law of ab gy a o the Peoples Republic of China (1 Jan 2006) was created to attract stakeholder interest but is in reality just a framework law with vague stipulations, i.e. g p , flexible
Renewable Energy Targets
10% Renewable Energy by 2010 and 15% by 2020 100 GW by 2020

Grid Companies

Project Developers
Mandatory requirements of non-hydro renewables Fixed feed in feed-in tariff

Wind Turbine Manufacturers

Mandatory Grid Connection of Wind Farms Mandatory purchase of electricity generated by wind farms Renewable energy surcharge levied on customers

R&D Support

Reduced tax rates

Reduced VAT on power generation Reduced income tax

Tax rebate on import of components 70% local content requirement

Source: Jyske Bank and CWPC

14

2007 was busy year for energy lawmakers in China

Medium and Long-term Development Plan for Renewable E R bl Energy i Chi in China (2007)
3% renewable energy target for large utilities by 2010 and 8% by 2020 (sourcing, not production)

Guidelines on Adjusting Import Taxes on HighVoltage Wind Turbines (2007)

Higher import tariffs on turbines below 2.5 MW

Approach of Grid Enterprises Purchasing Renewable Energy Electricity (2007)

Grid operators responsible for losses in connection with grid connectivity problems for renewable energy
15

Legal milestones 2006-10

Timeline of major legislative changes within the wind-power sector in China (2006-2010)
Fixed rate feed-in tariff system implemented for inland projects Domestic and Chinese controlled wind power companies are granted tax levies. Unofficial target revision: 150 GW by 2020

Wind power given priority rights on grids NDRC is responsible for projects > 50MW, provincial 50MW govenrment for < 50MW

Renewable Energy Law Amendment: Targets established:

-10% renewables by 2010 and 15% by 2020 -5GW wind by 2010 and 30 GW by 2020 Ban on turbines < 1MW in concessions -Renewable energy development plans shall include plans for grid improvement. -Minimum quotas on share of renewable energy.

Renewable Energy Law:

-Mandatory grid connection and purchase of electricit by p rchase electricity b grid companies. -Surcharges to be levied on consumers

VAT and import tariff rebate on bt certain wind turbine components

Target revision: Abolishment of the 70% 100 GW by local content requirement. 2020

2006

2007

2008

2009

2010

Source: Jyske Bank y

16

State vs. provincial wind projects

Projects above 50 MW must be approved by the central government More state control indicates less provincial projects
Development and expected tendency of wind power projects above and below 50 MW
100% 80% 60% 40% 20% 0% 2005 2006 2007 2008 Expected Tendency < 50 MW
17

> 50 MW
Source: Jyske Bank and CWPC

The Chinese wind turbine industry

Chinese wind power equipment based on European technology (licenses or joint development) Setup of government funds has supported development Small Chinese wind turbine manufacturers have low technological skills Chinese players have very different budget constraints relative to non-Chinese players p y

18

83 Chinese turbine manufacturers

Legislative action since 2007 has attracted many new players in the Chinese market Massive production overcapacity
90 80 70 60 50 40 30 20 10 0 2007 2008 2009 2010

19 Source: Jyske Bank and Wind Power Monthly, US National Foreign Trade Council, China Climate Change Info-Net, and Liao, Jochem, Zhang, and Farid Wind power development and policies in China

Time for consolidation

The central government has built up the local wind turbine industry in China and is now keen on consolidation China Machinery Industry Federation (government controlled trade organization) only sees need for 10 GW of annual production capacity Only the strongest turbine manufacturers will survive due to new requirements
New requirements for manufacturers to be eligible for tax breaks, land use and government loans Manufactures should be able to produce turbines of 2.5 MW or above b Annual capacity of at least 1 GW At least 500 MW total installed capacity Manufactures should have in-house R&D facilities in house
Source: Jyske Bank and Wind Power Monthly
20

Turbine prices under pressure

Turbine prices dropped as low as CNY 4,000/kW in 2010 Non-Chinese turbine manufacturers offer prices of CNY 5,000/kW 5 000/kW
Development of turbine prices in Chinese concession projects

Source: Jyske Bank and CWEA

21

Main wind developers in China

The Largest Wind Power Developers in China Company Market share 2009 Capacity Installed in 2009 Longyuan 18.8% 18 8% 2600.4 2600 4 MW Datang 12.6% 1739.9 MW Huaneng 11.9% 1644.8 MW Huadian 8.9% 8 9% 1230.1 1230 1 MW CGN wind 6.2% 854.5 MW BEIH 5.8% 797.5 MW Guohua 4.3% 590.3 MW
Source: Jyske Bank and CWEA

Top-3 installed 44% of all new capacity in 2009 Top-5 installed 59% of all new capacity in 2009 Many small developers with insignificant market share y p g 90% of Chinese wind capacity controlled by state-owned companies

22

Customer/supplier relationships
Based on research on wind farms built up to 2007 we have identified the following customer/supplier relationships:
Longyuan: Gamesa, Vestas, and Goldwind Datang: Vestas, Gamesa, and Suzlon Huaneng: Sinovel, Vestas, and Gamesa Huadian: Sinovel, Gamesa, Goldwind

Since then focus has however moved towards Chinese manufacturers

Source: Jyske Bank and CWPC
23

VESTAS COMPETITIVE SITUATION IN CHINA

( (23 SLIDES) )

24

Vestas in China
Entered Chinese market in 1986 First Chinese production facility announced July 2005 2.1 GW installed across 13 provinces 1.6 GW annual production capacity (JB estimate)
1 000 MW of 2 MW platform 1,000 600 MW of 850 kW platform (fully up and running in 2011)
Vestas and total market volume (MW) in China 2000R 2001R 2002R 2003R 2004R 2005R 2006R 2007R 2008R 2009R Vestas delivered MW in China 4 10 27 75 77 379 458 596 584 Growth y/y (%) n/a n/a n/a 170% 178% 3% 392% 21% 30% -2% Total Chinese market Growth y/y (%) Vestas market share China 84 n/a 4.8% 54 -36% 67 24% 98 46% 198 102% 498 1 334 3 287 6 246 13 750 1,334 3,287 6,246 13,750 152% 168% 146% 90% 120% 15.5% 28.4% 13.9% 9.5% 4.2%
25

0.0% 14.9% 27.6% 37.9%

Source: Jyske Bank and BTM Consult

Vestas in China
From 38% market share to 4% in 5 years
Market share development for Vestas in China 2003-2009
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% %

38% 25% 14% 28% 13% 9% 4%

2003 2004 2005 2006 2007 2008 2009 Vestas Chinese manufacturers
26

Source: Jyske Bank, Vestas and BTM Consult

Vestas has invested EUR 400m in China from 2005 to 2010

First round of Vestas' investments in China (2005-2006) Announced July 2005 Location Type Tianjin Blade factory Nacelle and hub Official capacity 600 (2MW) Operations Investment start Comment EUR 25m EUR 19m EUR 13m Q1 2006 Q1 2007 Mid 2007 240 employees before expansion 225 employees Expansion from 600 to 1,200 blades and from 240 to 400 employees 75 employed from the beginning

January 2006 Tianjin April 2006 Tianjin

350 nacelles and hubs h b (2MW) Expansion of blade factory 600 (2MW)

June 2006

Tianjin

Generator factory

350 generators (2MW)

EUR 8.5m

Q2 2007

Source: Jyske Bank and Vestas

27

Vestas took big investment decisions in 2008

Second round of Vestas' investments in China (2008-2010) Announced May 2008 Location Type Hohhot Factory Operations Official capacity Investment start Comment USD 90m Mid 2010 Manufacturing V52-850 kW and V60-850 kW turbines for the Chinese market Max. 40,000 tons n/a November Vestas is the only wind of castings 2009 turbine manufacturer in China with an in-house foundry (180 y employees) n/a CNY 1.8bn May 2009 Production of control panels, high power racks and cable p production for the V52 and V80 wind turbines. A 15,000 sqm. plant with approx. 250 local employees. n/a n/a Mid 2009 USD 90m n/a 100 employees in 2010 and over 200 in 2012
28

May 2008

Xuzhou

Foundry

June 2008

Tianjin

Addition of production of control systems and machined parts p

August 2008 g April 2009

Tianjin j Tianjin

Expansion of g p generator and machining factories Expansion of blade factory n/a R&D center

October 2010 Beijing

n/a

USD 50m October over 5 years 2010

Source: Jyske Bank and Vestas

Vestas kW-strategy is risky

53% 850 kW turbines sold since 2005 47% 1.8 or 2.0 MW turbines sold since 2005 18 20 t bi ld i Vestas has launched its custom made V60 850 kW turbine V60-850 for the Chinese market Surprisingly low order intake of the V60-850 kW turbine but V52-850 kW has continued its success but V52 850 Vestas kW-strategy can prove risky in the medium to long gy p y g term, as average turbine size is trending upwards
29

Most peers focus on multi MW multi-MW turbines

Domestic suppliers focus on the multi-MW segment Turbine sizes of 6 to 10 MW are now under development D Developers are building experience with multi-MW segment l b ildi i ith lti MW t
Installed capacity by end-2009 p y 0.75MW 0.85MW 1.25MW Company Sinovel Goldwind 813 Dongfang Electric United Power Mingyang XEMC Shanghai Electric 206 Vestas 387 Suzlon 125 REpower GE
Source: Jyske Bank and CWEA
30

1.5MW 3,426 1,904 2,036 768 749

2MW R&D

2.5MW 3 R&D

3MW 69 3 R&D R&D

3.6MW

5MW R&D R&D

168 323

R&D 454 68 222 R&D* 198 R&D*

Prototype R&D R&D R&D* R&D* R&D* R&D*

Total 3,495 2,722 2,036 768 749 454 274 609 293 198 323

Trend towards larger turbines

Average turbine size up from 850 kW in 2005 to 1.36 MW in 2009
Average wind turbine size of new installed capacity in China (2005-2009)
1,500 1 500
Ave erage turbine size (kW)

100%

Distribution of turbine sizes of new installed capacity in China in 2007 and 2009
5% 6% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 25% 7% 24% 3% 9% 12% 4% 2009 1250 kW 1500 kW 2000 kW
31

1,400 1,300 1,200 1,100 1,000 900 800 700 600 2005 2006 2007 2008 2009

40% 67%

2007 other 750 kW 850 kW

Source: Jyske Bank, CWEA and CWPC

New price system for wind energy

New wind energy price system introduced in November 2009 This will shift attention more towards quality than initial price
Feed-in P i F d i Price of Wind Power Projects According to Province f Wi d P P j A di P i Wind Benchmark Ressource Feed-in Price Specific Jurisdictions in Region Region (Yuan/kWh) Class I wind ressource region Class II wind ressource region 0.51 Inner Mongolia ( g (excluding) Chifeng, Tongliao, g) g, g , Xing'an Meng, Hulunbeir; Xinjiang's Urumqi, Yili, Changji, Klamayi, Shihezi. Heibei's Zhangjkou and Chengde; Inner Mongolia's Chifeng, Tongliao, Xing'an Meng, Hulunbeir; Gansu's Zhangye, Jiayuguan, and Jiuquan. Jinlin's Baicheng and Songyuan; Heilongjiang privince's Jixi, Shuangyashan, Qitaihe, Shuihua, Yichun, and Daxing'anling area; Gansu province (excluding Zhangye, Jiayuguan, and Jiuquan); Xinjiang privince (excluding Urumqi, Yili, Changji, Klamayi), and Shihezi; Ningxia Hui g Autonomous Region Those areas excluded in Class I, II, and III regions.
32

0.54 0 54

Class III wind ressource region

0.58

Class IV wind

0.61

Source: Jyske Bank and CWPC

Local suppliers have captured the Chinese market since 2007

Non-Chinese wind turbine manufacturers had a combined market share of 12.3% in 2009
Market share of Chinese vs. non-Chinese wind turbine manufacturers in China

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

73%

79%

72% 61% 49% 27% 12%

2003

2004

2005 Chinese

2006

2007

2008

2009

Non-Chinese

Source: Jyske Bank and BTM Consult

33

Non Chinese Non-Chinese wind turbine manufacturers peaked in 2004

Market share development of non Chinese wind turbine manufacturers in China non-Chinese

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2003 2004 2005 2006 Gamesa Nordex 2007 2008 2009

Vestas Acciona
Source: Jyske Bank and BTM Consult

GE Wind Suzlon
34

Market shares of accumulated installed capacity 2009

Vestas accumulated market share has been reduced from a level of 20% in 2004-2007 to 9% in 2009
Market share of accumulated installed wind energy capacity in China in 2009 (MW) Other NonChinese Sinovel 10% 21%
Other Chinese 19%

Gamesa 7% Vestas 9% Dongfang 14%

Goldwind 20%

Source: Jyske Bank and calculations based on BTM Consult

35

Market shares of new installed capacity in 2009

Top-3 accounted for 63% of the market in 2009 Vestas and Gamesa are largest non-Chinese suppliers
Market share of new installed wind energy capacity in China in 2009 (MW)

Other NonChinese Other 5% Chinese Gamesa 3% Hara XEMC 3% Mingyang 4% Vestas 4% United Power 7% 13%

Sinovel 25%

Goldwind 20% Dongfang 18%

36

Source: Jyske Bank and BTM Consult

Overview of Chinese competitors

Chinese Turbine Manufacturers Tier 1 Tier 2 Goldwind XEMC Sinovel Mingyang Dongfang Shanghai Electric United Power
Source: Jyske Bank

Tier 3 y g A very large number of small manufacturers

Tier 1: 800 MW+ annual output Tier 2: 100-800 MW annual output 100 800 Tier 3: >100 MW annual output

37

Sinovel: No. 1 in 2009

Sinovel market share development

Sinovel Global Market Share Chinese Market Share Installed Capacity 2009 Products: SL1500 series SL3000 series Just announced Under development

9.2% 25.0% 3,510 MW 1.5 MW 3.0 MW 5.0 MW 6.0 MW

90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2003 2004 2005 2006 2007 2008 2009 19% 22% 25%

Source: Jyske Bank BTM Consult and Sinovel Bank,

Sinovel

Non-Chinese manufacturers

38

Goldwind: No. 2 in 2009

Goldwind Global Market Share Chinese Market Share Products: 1.5 MW PMDD 2.5 2 5 MW PMDD GW300 Under development 600 kW 1.5 MW 2.5 2 5 MW 3.0 MW 5.0 MW
Goldwind market share development
90%

7.2% 19.5%

80% 70% 60% 50% 40% 30% 20% 10% 0% 2003 2004 2005 2006 2007 2008 2009 Goldwind Non-Chinese manufacturers 24% 20% 25% 31% 23% 18% 20%

Goldwind Key Figures in RMBm MW installed Revenue Growth y/y Profit before tax Growth y/y 2007 755 3,089 622 2008 1,373 1 373 6,417 108% 1,146 84% 2009 H1 2010 2,036 2 036 1,326 1 326 10,667 6,265 66% 1,991 994 74%

Source: Jyske Bank, BTM Consult and Goldwind

39

Dongfang: No. 3 in 2009

Dongfang g g Global Market Share 6.5% Chinese Market Share 17.7% Manufacturing Capacity 2009 1,804 MW Products: 1.0 MW 1.5 MW 2.0 MW 2.5 MW 5.0 MW
Dongfang market share development
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2003 2004 2005 2006 2007 2008 2009 Dongfang Non-Chinese manufacturers 6% 16% 18%

Under development

Dongfang Key Figures in RMBm Revenue, net Growth y/y EBIT Wind Power Business Revenues Growth y/y 2007 24,099 2,804 552 2008 27,717 15% 637 2,617 374% 2009 H1 2010 32,754 16,613 18% 1,980 1,218 6,279 140%

40

Source: Jyske Bank, BTM Consult and Dongfang

Chinese Tier 2 competitors (I)

China Guodian United Power
A unit of state-owned China Guodian Corporation, established 2007 Main product: 1.5 MW turbine developed with German based Aerodyn 15 Sees opportunities in the US

Mingyang
Privately owned, established 2006 Launched first 1.5 MW turbine in 2007, developed with Aerodyn h df b 200 d l d h d Product range: 1.5 MW-6.0 MW (under development) Set up operations in the US in May 2010

41

Chinese Tier 2 competitors (II)

Hara XEMC
One of the two leading suppliers of direct drive technology Launched a 2 0 MW turbine with direct drive with a license from 2.0 Japanese Harakosan Developing a 5.0 MW offshore turbine with direct drive Aqcuired Dutch based Darwind Estate in August 2009 Dutch-based

Shanghai Electric
Listed on the Hong-Kong stock exchange Hong Kong First wind turbine launched in 2007 Product range: 1.25, 1.5 MW as well as 3.6 MW and 5.0 MW (under development)

42

Gamesa: No. 8 in China in 2009

Gamesa market share development
Gamesa Key Figures in EURm 2006 2007 MW i Chi in China 246 518 Sales 2,401 3,070 Growth y/y 28% Mwe 2,250 3,289 Growth y/y 46% EBITDA 441 442 Growth y/y 0% 2008 499 3,834 25% 3,684 12% 530 20% 2009 H1 2010 472 3,113 963 -19% 3,145 1,001 -15% 430 138 -19%
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

36%

33% 15%

13%

16%

8%

3%

2003 2004 2005 2006 2007 2008 2009 Gamesa Chinese manufacturers

Source: Jyske Bank, BTM Consult and Gamesa

43

Suzlon
Suzlon Key Figures in INR Crore 2006/07 2007/08 2008/09 2009/10 MW in China 100 134 249 182 Revenue 8,082 13,947 26,531 20,849 Growth y/y 73% 90% -21% Revenue China 1,266 1,475 MW 1,456 2,311 2,790 1,460 Growth y/y 59% 21% -48% EBITDA 1,393 2,051 2,816 943
Source: Jyske Bank, BTM Consult and Suzlon

Suzlon market share development

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

6% 0%

3%

2003 2004 2005 2006 2007 2008 2009 Suzlon Chinese manufacturers

44

GE Energy
GE Energy Key Figures in USDm 2006 2007 Revenue 19,406 22,456 Growth y/y 16% EBIT* 2,918 3,835 EBIT-margin 15.0% 17.1%

GE market share development

2008 29,309 31% 4,880 16.7% 2009 H1 2010 31,028 18,195 6% 6,149 3,391 19.8% 18.6%
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Source: Jyske Bank BTM Consult and GE Bank,

21%

10%

7% 3%

2003 2004 2005 2006 2007 2008 2009 GE Chinese manufacturers

45

Nordex
Nordex Key Figures in EURm Total Revenue T t lR Growth y/y EBIT EBIT margin EBIT-margin MW sales in China Turbine production MW Of which in China 2006 552 17 3.0% 584 2007 807 46% 40 5.0% 45 800 65 2008 1189 47% 63 5.3% 155 1128 176 2009 H1 2010 1144 379 -4% 40 7 3.5% 1.9% 111 983 387 86 59

Source: Jyske Bank, BTM Consult and Nordex

From a market share of 3% in 2006 to less than 1% in 2009

46

Siemens Wind Power

Key figures Siemens in EURm (Renewable Energy division) 2006/07 2007/08 2008/09 1Q2010 2Q2010 3Q2010 Revenue 1,365 1 365 2,092 2 092 2,935 2 935 480 862 953 Growth y/y 53% 40% -33% 8% 25% Order intake 2,452 4,434 4,823 1,576 628 2,271 Profit before tax 134 242 382 29 107 129 PBT-margin 9.8% 11.6% 13.0% 6.0% 12.4% 13.5%
Source: Jyske Bank, BTM Consult and Siemens

No exposure to China until 2010 Opened its first Chinese production facility in November 2010 (components for 2.3 MW and 3.6 MW turbines) 600 MW annual capacity for China and export markets
47

JYSKE BANK ESTIMATES

(12 slides)

48

Total market volume estimates

Global wind turbine volume (MW) - reported figures and JB estimates 2006R 7,681 3,515 3,712 3 712 1,334 2007R 8,285
8%

Europe Growth y/y Americas Growth y/y South East Asia S th & E t A i - of which China - Growth y/y Growth y/y Other areas Growth y/y Total Growth y/y

2008R 2009R 2010E 9,179 10,738 10,500

11% 17% -2%

2011E 2012E 2013E 2014E 9,500 11,500 14,500 18,000

-10% 21% 26% 24%

5,815
65%

9,527
64%

11,433
20%

7,650
-33%

9,300
22%

10,800
16%

13,200
22%

15,500
17%

5,010 5 010 3,287

146% 35%

8,201 8 201 6,246

90% 64%

14,991 14 991 13,750

120% 83%

16,500 16 500 14,000

2% 10%

16,800 16 800 14,000

0% 2%

17,000 17 000 13,500

-4% 1%

17,500 17 500 13,500

0% 3%

18,000 18 000 13,500

0% 3%

109 15,017

683 1,284 942 1,900 2,500 3,000 3,600 4,500 527% 88% -27% 102% 32% 20% 20% 25% 19,791 28,190 38,104 36,550 38,100 42,300 48,800 56,000
32% 42% 35% -4% 4% 4% 11% 15% 15%

Source: Jyske Bank and BTM Consult

49

Total market volume estimate changes

JB estimates for global wind turbine volume (MW) including estimate changes 2010E 10,500
0

Europe Change in estimates (MW) Americas Change in estimates (MW) South & East Asia Change in estimates (MW) - of which China Change in estimates (MW) Other areas Change in estimates (MW) Total Change in estimates (MW)

2011E 2012E 2013E 2014E 9,500 11,500 14,500 18,000

0 -1000 -1500 -2000

7,650
-900

9,300
0

10,800
0

13,200
0

15,500
0

16,500
1500

16,800
-200

17,000
-1000

17,500
-2500

18,000
-4000

14,000
1000

14,000
-200

13,500
-1000

13,500
-2500

13,500
-4000

1,900 1 900
0

2,500 2 500
0

3,000 3 000
0

3,600 3 600
0

4,500 4 500
0

36,550
600

38,100
-200

42,300
-2000

48,800
-4000

56,000
-6000

Source: Jyske Bank and BTM Consult

50

We are not as optimistic as BTM Consult

Volume estimates China - BTM vs. JB MW deliveries (BTM) Growth y/y (%) MW deliveries (JB estimates) Growth y/y (%) Difference (%) JB vs. BTM
Source: Jyske Bank and BTM Consult

2007R 2008R 2009R 2010E 2011E 2012E 2013E 2014E 3,287 6,246 13,750 14,000 15,000 15,500 16,500 18,000 146% 90% 120% 2% 7% 3% 6% 9% 14,000 14,000 13,500 13,500 13,500 2% 0% -4% 0% 0% 0% -7% -13% -18% -25%

51

Historical order development for Vestas in China

Development of Vestas' order intake in China 2004-2010 Announced Announced Average order Year orders (MW) orders (no.) size (MW) 2004 100 1 100 2005 0 0 n/a 2006 383 2 192 2007 387 3 129 2008 766 9 85 2009 248 5 50 2010 972 16 61
Source: Jyske Bank and Vestas

Order intake quadroupled in 2010 Average order size has declined since 2007

52

Uannounced orders declining

Split of announced and unannounced orders in China li f d d d d i hi 2005R 2006R 2007R 2008R 2009R 2010E

Total Chinese market (BTM and JB estimates) Growth (y/y) Vestas volume in China (MW) Growth (y/y) Vestas order intake (MW) Growth (y/y) Vestas market share (BTM and JB estimates) Vestas' China exposure (Chinese volume/total volume) Delivered announced Vestas orders* D li d dV t d * Growth (y/y) Delivered unannounced Vestas orders (residual)* Growth (y/y) Share of announced orders Share of unannounced orders

498 152% 77 3% 0

1,334 168% 379 392% 383 n/a 28.4% 9% 363 n/a 16 -79% 96% 4%

3,287 146% 458 21% 387 1% 13.9% 10% 320 -12% 138 762% 70% 30%

6,246 13,750 14,000 90% 120% 2% 596 30% 766 98% 9.5% 11% 475 48% 121 -12% 80% 20% 584 -2% 248 -68% 4.2% 12% 577 21% 7 -94% 99% 1% 975 67% 972 292% 7.0% 19% 975 69% 0 -100% 100% 0%

15.5% 2% 0 77

0% 100%

Source: Vestas, BTM Consult and Jyske Bank Source: Jyske Bank of the Vestas *) Based on Jyske Bank estimates and timing of deliveries of announces orders from China.
53

Volume recognition 2004-10 (I)

Announced orders from China 2004-2011 Date 31-12-2004 30-03-2006 31-10-2006 Turbines V80-2,0 MW V52-850 kW V80-2,0 MW / V52-850 kW 02-02-2007 n/a V52-850 kW 10-04-2007 n/a V80-2,0 MW 03-08-2007 n/a V80-2,0 MW 04-01-2008 Inner Mongolia V52-850 kW 27-06-2008 Danianzi V80-2,0 27-06-2008 Bolike-II V80-2,0 24-07-2008 Chuandao V52-850 kW 04-08-2008 Shicheng V80-2,0 MW 21-08-2008 Sigeng V90-2,0 MW 16-10-2008 Suniteyou Wind Farm III V52-850 kW 29-12-2008 n/a V52-850 kW 31-12-2008 n/a V52-850 kW 24-04-2009 Zhaqi Phase I Wind Farm V52-850 kW 06-07-2009 Pingtan Aoqian V80-2,0 MW 10-07-2009 N/A V90-1,80 MW / V90-2,0 MW / V80-2,0 MW 17-12-2009 Keyqouqianqi V60-850 kW 28-12-2009 Zhaolitouzi (Liaoning Province) V90-2,0 MW 25-02-2010 Huitong Energys Zuozi Bayinxile V80-2,0 MW Wind Farm Wi d F 30-03-2010 n/a n/a 06-04-2010 n/a n/a 15-04-2010 n/a V52-850 kW Project n/a n/a n/a Expected revenue recognition MW total 2006 2007 2008 2009 Q110 Q210 Q310 Q410 2010 2011 100 100 238 238 145 25 120 187 100 100 197 50 50 85 40 48 98 98 100 50 34 75 100 100 87 100 138 30 30 50 40

59 20 20 35 48 98 98 100 50 34 15

10

15

35

60

49 40 48 50 50 49

20 10

20 20 30 25 25 20

9 10 18 25 25 29

49 40 48 50 50 49

54

Source: Jyske Bank and Vestas

Volume recognition 2004-10 (II)

Announced orders from China 2004-2011 Date Project 20-04-2010 Ningxia Hui Autonomous Region (NHAR) 22-04-2010 n/a 27-04-2010 n/a 17-06-2010 Dashuiboluo windfarm, Linxi, Inner Mongolia Autonomous Region g 21-06-2010 Alatan wind farm, Tongliao, Inner Mongolia Autonomous Region 24-06-2010 Putian County, Fujian Province 19 07 2010 19-07-2010 Huianbao, Ningxia Hui Autonomous Region 02-08-2010 n/a 13-08-2010 n/a 18-08-2010 Guangdong Province 15-12-2010 Huianbao Ningxia Hui Huianbao, Autonomous Region 29-12-2010 Jiaochekou wind farm, Hebei province 07-01-2011 Daqinghe Yanchang wind farm, Laoting County Total Turbines V90 n/a V52-850 kW / V90-2.0 MW V80-2,0 MW Expected revenue recognition MW total 2006 2007 2008 2009 Q110 Q210 Q310 Q410 2010 2011 49 20 29 49 49 198 50 20 30 20 29 90 30 49 150 50

30

48

V80-2,0 MW

50

20

30

50

V80-2,0 MW V90 1,80 V90-1,80 MW V80-2,0 MW V90-2,0 MW V52-850 kW V90-1,80 V90-1 80 MW V52-850 kW / V60-850 kW V90-2,0 MW

48 49 36 74 74 49 49 50

16 30 10

32 19 26 74 74

48 49 36 74 74 49 49 50

2,907

363

320

475

577

70

321

584

975

196

55

Source: Jyske Bank and Vestas

Zero volume growth beyond 2010

Vestas and total market volume (MW) in China 2005R 2006R 2007R 2008R 2009R Vestas delivered MW in China 77 379 458 596 584 Growth y/y (%) G h / 3% 392% 21% 30% -2% 2% Total Chinese market Growth y/y (%) Vestas market share China 2010E 975 67% 2011E 975 0% 2012E 975 0% 2013E 975 0% 2014E 975 0%

498 1,334 3,287 6,246 13,750 14,000 14,000 13,500 13,500 13,500 152% 168% 146% 90% 120% 2% 0% -4% 0% 0% 15.5% 28.4% 13.9% 9.5% 4.2% 7.0% 7.0% 7.2% 7.2% 7.2%

Source: Jyske Bank and Vestas

Stable market share around 7% Vestas will stay in the game because of quality products New legislation is the main risk

56

Vestas volume estimates

Vestas MW deliveries and market share by region 2006R 2,109
27.5%

Europe Market share Americas Market share South & East Asia Market share - of which China - market share China - share of total volume Other areas Market share Total Market share

2007R 2,087
25.2%

2008R 2,707
29.5%

2009R 2,772
25.8%

2010E 2,438
23.2%

2011E 2,280
24.0%

2012E 2,760
24.0%

2013E 3,480
24.0%

2014E 4,320
24.0%

1,070
30.4%

1,416
24.4%

1,719
18.0%

1,304
11.4%

1,220
15.9%

2,040
21.9%

2,410
22.3%

2,890
21.9%

3,375
21.8%

1,060
28.6%

999
19.9%

1,154
14.1%

683
4.6%

1,505
9.1%

1,405
7.5%

1,405
8.0%

1,485
9.0%

1,580
9.0%

379
28.4% 9%

458
13.9% 10%

596
9.5% 11%

584
4.2% 12%

975
7.0% 19%

975
7.0% 16%

975
7.2% 14%

975
7.2% 12%

975
7.2% 10%

0
0.0%

0
0.0%

0
0.0%

5
0.5%

0
0.0%

350
14.0%

300
10.0%

350
9.7%

400
8.9%

4,239
28.2% 28 2%

4,502
22.7% 22 7%

5,580
19.8% 19 8%

4,764
12.5% 12 5%

5,163
14.1% 14 1%

6,075
15.9% 15 9%

6,875
16.3% 16 3%

8,205
16.8% 16 8%

9,675
17.3% 17 3%

Source: Jyske Bank and BTM Consult

57

Vestas volume estimate changes

JB estimates for MW delivered by Vestas including estimate changes 2010E 2,438
0

Europe Change in estimates (MW) Americas Change in estimates (MW) South & East Asia Change in estimates (MW) - of which China Change in estimates (MW) Other areas Change in estimates (MW) Total Change in estimates (MW)

2011E 2,280
46

2012E 2,760
-240

2013E 3,480
-360

2014E 4,320
-480

1,220
0

2,040
0

2,410
0

2,890
0

3,375
0

1,505
0

1,405
20

1,405
-35

1,485
-315

1,580
-400

975
0

975
20

975
-35

975
-315

975
-400

350
0

300
0

350
0

400
0

5,163
0

6,075
66

6,875
-275

8,205
-675

9,675
-880

Source: Jyske Bank and BTM Consult

58

Record order intake in 2010

Vestas order intake 2007-2010

10000 9000 8000 7000 5613 6000 5000 4000 2432 3000 1708 2000 963 510 1000 0 Q1 Q2 Q3 Q4 FY 07 07 07 07 07

8673

6019

3400 1277 458 542

3072 1050 1022

648

646

3031 2278 2106 1258

Q1 Q2 Q3 Q4 FY 08 08 08 08 08

Q1 Q2 Q3 Q4 FY 09 09 09 09 09

Q1 Q2 Q3 Q4 FY 10 10 10 10 10

Source: Jyske Bank and BTM Consult

59

60-70% order coverage in 2011

We estimate that about 3.8 GW of Vestas announced orders will be recognised as revenue in 2011, assuming that half of the 1 5 GW EDPR framework agreeement will benefit 2011 1.5 Our estimate equals 63% of Vestas guidance of 6 GW We find it realistic that the residual of 2.2 GW will be covered by orders in 2011 (Vestas is guiding 7-8 GW for 2011) 7 8 Orders needed for Europe and Asia to reach our estimates p

60

VALUATION
( (5 slides) )

61

Estimate changes
Previous estimate New estimate 2010E 2011E 2012E 2010E 2011E 2012E 6,805 323 283 204 34.0% 4.8% 1.00 6,806 510 464 334 0.0% 7.5% 1.64 7,765 738 692 498 14.1% 9.5% 2.44 6,806 324 284 204 34.0% 4.8% 1.00 6,826 513 467 336 0.3% 7.5% 1.65 7,731 734 688 496 13.2% 9.5% 2.43 Change in % 2010E 2011E 0.0% 0.0% 0.0% 0.0% 0.0 p.p. 0.0 p.p. 0.0% 0.3% 0.5% 0.5% 0.5% 0.3 p.p. 0.0 p.p. 0.5%

(DKKm) Sales EBIT Profit before tax Net profit Sales growth EBIT margin EPS
Source: Jyske Bank

2012E -0.4% -0.4% -0.5% 0.5% -0.5% -0.9 p.p. 0.0 p.p. -0.5%

62

Vestas guidance
2011 guidance g Order intake Volume (produced and shipped) Revenue total Revenue service EBIT-margin total* EBIT-margin service Net financial items Tax rate Investments in fixed assets Investments in intangible assets Free cash flow Guarantee provisions (% of revenue)
Source: Jyske Bank and Vestas

New

Previous 7-8 GW 7-8 GW 6 GW 6 GW EUR 7 bn EUR 6.8bn EUR 700m ~7% ~7% ~15% EUR -60m 28% EUR 550m EUR 400m EUR 300m EUR 250m Positive Positive Below 3% Below 3%

Upside to 2011 EBIT-margin guidance (JB 7.7%)

63

EBIT margins will trend upwards

We W expect an improvement of the EBIT margin d t i t f th i due t to: 1) Higher capacity utilisation, partly offset by lower selling prices 2) An internal improvement of efficiency 3) Cost reductions in 1H 2011 resulting from 3,000 layoffs 3 000 ) p 4) Successful attempts to even out seasonal fluctuations over the year in order to improve the utilisation of the production capacity
64

Fair DCF value of DKK 359

2011E Sales growth EBITA-margin Tax rate Working capital as a % of sales CAPEX as a % of sales Sales EBITA FX and financial instruments Tax on EBITA NOPLAT Depreciation Amort. ex goodwill CF from operations Change in working capital CAPEX2 Frit cash flow 0.5% 7.7% 28.0% 8.6% 12.3% 6,958 536 0 -148 388 269 110 767 -255 856 166 2012E 11.1% 9.5% 28.0% 8.1% 10.1% 7,728 734 0 -204 530 290 140 959 28 782 149 2013E 19.7% 9.7% 28.0% 8.3% 9.5% 9,247 902 0 -251 651 320 165 1,136 148 879 109 2014E 17.9% 10.4% 28.0% 9.3% 8.2% 2015E 10.2% 10.1% 28.0% 9.0% 7.3% 2016E 10.2% 9.7% 28.0% 8.7% 7.1% 2017E 10.2% 9.4% 28.0% 8.5% 7.0% 2018E 9.3% 9.1% 28.0% 8.3% 7.0% 2019E 7.7% 9.1% 28.0% 8.1% 6.2% 2020E 6.2% 8.9% 28.0% 8.0% 5.8% 18,233 1,626 0 -455 1,171 448 317 1,936 66 1,064 805 Avg. budget g 10.3% 9.3% 28.0% 8.5% 8.1% 12,600 1,178 0 -329 850 352 221 1,423 61 950 411 Hist. avg. 5 years 1 y 17.0% 6.0% 48.6% 2.5% 10.1% 5,182 316 0 -122 194 134 56 385 62 549 -227

10,901 12,010 13,234 14,582 15,935 17,169 1,128 1,207 1,290 1,363 1,442 1,554 0 0 0 0 0 0 -315 -337 -360 -380 -402 -434 814 870 930 983 1,040 1,120 310 331 353 375 400 425 190 210 232 258 285 302 1,313 1,411 1,515 1,616 1,725 1,848 240 68 75 83 83 76 893 875 946 1,022 1,114 1,069 180 468 494 510 528 702

Current risk premium4 NPV of free cash flow 2,590 NPV of terminal value 7,899 Value of operations ex options 10,489 Existing employee options 0 Value of operations 10,489 Associated companies 4 Minority items 0 Other values 0 NV of interest-bearing net debt interest bearing -682 682 Shareholder value 9,811 Number of shares (million) 203.70 Fair value per share (EUR) 48 Fair value per share (DKK) 359

Historical risk premium5 2,646 8,764 11,410 0 11,410 4 0 0 -682 682 10,732 203.70 53 393

Risk-free interest rate Current risk premium Historical risk premium Beta Liquidity premium WACC (current risk premium) WACC (historical risk premium) CAP period3

3.8% 4.4% 4.0% 1.35 -0.3% 7.8% 7.4% 20 years

65

Relative valuation
VESTAS WINDSYSTEMS GAMESA CORPN.TEGC. NORDEX REPOWER SYSTEMS SUZLON ENERGY Average excl. Vestas A lV t Average weigthed by market cap Vestas premium vs. average Market cap (USDm) 6,610 1,928 582 1,509 1,774 PE (2011) 14.2 22.7 18.4 21.1 20.7 20 7 14.9 -31.5% PE (2012) 11.3 15.8 18.4 17.6 18.4 17.6 17 6 17.3 -35.6% EV/EBITDA EV/EBITDA EV/EBIT (2011) (2012) (2011) 6.3 5.3 10.6 5.5 4.5 13.3 5.9 5.5 9.0 9.0 7.9 12.7 18.6 8.6 40.2 9.8 98 6.6 66 18.8 18 8 10.5 6.8 20.9 -35.0% -20.5% -43.6% EV/EBIT (2012) 8.7 10.0 8.8 10.6 11.7 10.3 10 3 10.6 -15.6%

Source: Jyske Bank and Datastream

20 35% discount to peers 20-35% We expect Vestas to close the gap

66

THANK YOU

67