TSX: HE

VANCOUVER, June 24 /CNW/ - Hanwei Energy Services Corp. ("Hanwei" or the

"Company") is pleased to announce that it has signed a non-binding letter of

intent ("LOI") with the Xilinguole Prefecture Administration Bureau, Inner

Mongolia Autonomous Region of China ("Xilinguole Bureau") contemplating the

supply of wind power turbines and blades for up to 3,000 MW of wind resources

located in the area administered by the Xilinguole Bureau. This is the second

LOI Hanwei has entered into to participate in the development of wind power

resources in the Inner Mongolia Autonomous Region (see press release dated

April 22, 2009). In addition, Hanwei is also pleased to provide an update on

Hanwei's business operations, which follows in the second part of this press

release.

Under the non-binding LOI, it is contemplated that the parties will

cooperate to develop a 3,000 MW wind resource under certain terms and

conditions including the following:

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- It is contemplated that Hanwei will establish a wind power subsidiary

in Xilinguole and the subsidiary will build a manufacturing facility

in the Xilinguole region with an initial capacity of at least 200

turbines and blade sets per annum; and that Hanwei will use its best

efforts to complete construction of the facility before the end of

2010.

- It is provided that the Xilinguole Bureau will facilitate all

government approvals for the wind farm and manufacturing facility;

and that Xilinguole Bureau will exclusively promote the use of wind

power equipment manufactured by Hanwei.

- It is further provided that Hanwei and Xilinguole Bureau will

cooperate to identify investors and operators for the Xilinguole wind

resource.

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Hanwei and the Xilinguole Bureau are currently engaged in discussions to

settle the terms for a binding agreement and the timeline for construction of

the wind power facility and delivery of the turbines and blade sets. Hanwei

does not expect the LOI or the binding agreement (if one is concluded) to have

a material impact on its funding needs for 2009 or its financial performance

for 2009 as presented with the release of its 2008 financial results. If

Hanwei and the Xilinguole Bureau settle the terms for a binding agreement,

Hanwei will need to secure significant working capital to support the

construction of the new facility and the production of turbines and blade

sets.

"Xilinguole is being developed as an energy centre for China with its

large wind and coal resources. The Chinese government is investing in the

Xilinguole energy industry by expanding and improving the electric grid

infrastructure to support growing energy exports to other parts of China,"

said Mr. Fulai Lang, CEO of Hanwei. "This LOI, combined with the LOI we

recently signed for Boatou, represent our efforts to attempt to secure

additional customers for our wind power business. However, Hanwei faces

significant challenges to progress these LOI's to formal contracts and start

delivering wind power equipment."

Hanwei is pleased to provide an update of its business operations as

follows.

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Wind Power Equipment

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Hanwei has secured the supply chain and funding to deliver 118 MW of wind

power equipment to Daqing Ruihao Energy Technology Co., Ltd. ("Ruihao") under

its agreement to supply 1,200 MW wind power equipment products. The wind power

equipment is to be supplied to three subsidiaries of Ruihao, including Daqing

Longjiang Wind Power Co. Ltd. ("Longjiang"), with the majority of deliveries

expected in the second half of 2009 and in early 2010. Longjiang owns and

operates the wind farm in Du Meng County, Heilongjiang Province, where it is

installing the initial 40 wind turbines supplied by Hanwei. Ruihao is

developing two other wind farms in Heilongjiang Province that will be supplied

under the agreement with Hanwei.

Longjiang is currently installing the balance of the 40 turbines

delivered by Hanwei to date. The installed turbines are performing well and

Hanwei expects the mandated 500-hour testing process to start in July.

Hanwei's research and development team are working to improve the current 1.5

MW turbines, focusing on the quality and cost of the supply chain and

improving performance under regional weather conditions. In addition, Hanwei

is working on a development plan for 2.0 MW and 2.5 MW technologies, including

the consideration of licensing or joint development programs. Hanwei is

continuing to recruit appropriate technical expertise to strengthen its

internal research and development capability.

In addition to the LOI's set out in the preceding section of the news

release, Hanwei is actively marketing its turbines and blades in China. Hanwei

sales and marketing efforts are primarily focused on orders for delivery in

2010 and beyond.

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FRP Pipe

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Hanwei expects sales to oil pipe customers to be flat or down in 2009

compared to 2008 due to delays in oil field development caused by lower oil

prices. However, FRP pipe sales are expected to grow in 2009 due to sales to

new industries in China, such as salt mining and water transport, and sales to

new international oil pipe customers. Hanwei has been successful in

diversifying its FRP pipe business and reducing its reliance on a few large

customers, by investing in product development of larger diameter pipe and new

joint methods and expanding its international sales and marketing team.

With the economic downturn and after further analysis, Hanwei believes

that it can add FRP pipe capacity in China at lower cost and risk; therefore,

Hanwei has determined that the development of a plant in Kazakhstan be delayed

for the foreseeable future. In addition, gross margin in Kazakhstan has

improved significantly, decreasing the urgency to reduce shipping costs.

Currently, Hanwei has sufficient FRP pipe capacity at Daqing for 2009;

however, the Company will need to add capacity to have the flexibility to grow

the business in 2010. Hanwei is planning to increase capacity in China by

adding production lines to the Tianjin facility. The Company expects that the

new lines could be added at a very low capital cost, and within the 2009

capital expenditure budget since the Tianjin infrastructure is already in

place.

FGD

The Hanwei Ershigs JV is progressing as well as expected with technology

transfer, production training and business development. However, China's big

five coal power companies have all delayed new coal plants in 2009 due to the

reduced demand for new capacity in China with the economic slow down. These

projects are delayed, but are expected to proceed, since in the medium and

long term, demand for new coal fired energy capacity in China is expected to

be very strong.

Spray header sales are still expected to grow due to the continuation of

retrofitting FGD installations in 2009. The retrofit market includes the

opportunity for chimney liners, which are currently being protected from

corrosion by cheaper less reliable materials. In the USA, FRP dominates the

market for chimney liners because it delivers the best value. The Company

understands that in over 30 years Ershigs has not had one failure. In China,

some of the cheaper materials used for chimney liners are failing after one or

two years. The potential revenue from retrofitting chimneys is significant and

may be more than 10 times the size of the China market for spray headers.

The Hanwei Ershigs JV is working with industry and government agencies to

promote the use of FRP, including a joint study with the technology division

of one of China's big five power companies.

Outlook

The Company's outlook is marginally lower with that disclosed in the 2008

year end press release due to flat sales in the oil pipe sector and the

potential for some wind power deliveries to be delayed to early 2010. As the

Company's customers primarily operate in the energy sector in China where

strong growth is still expected, the Company expects that the impact on the

demand for its products from the current economic downturn will be manageable.

Hanwei expects revenue growth of between 30 to 50 percent (reduced from the

Company's previous expectation of 40 and 60 percent) in 2009 compared to 2008.

The wind power and pipe businesses are expected to account for more than 90

percent of revenues in 2009, with an initial order for 100 MW of wind power

equipment for delivery in 2009 and early 2010. Net margins are expected to be

consistent with 2008 or will improve due to improved gross margin, economies

of scale and lower tax rates for the wind power equipment business. EPS is

expected to grow due to revenue growth, improved net margin, and Hanwei's

acquisition of China National Petroleum Corporation's 9 percent minority

interest in Harvest, which operates Hanwei's FRP pipe business. In addition,

the Company plans to fund its growth in 2009 with cash on hand, cash flow from

operations and debt, and limit shareholder dilution by controlling the

issuance of additional shares.

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FORWARD-LOOKING INFORMATION

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Certain information in this press release is forward-looking within the

meaning of certain securities laws, and is subject to important risks,

uncertainties and assumptions. This forward-looking information includes,

among other things, information with respect to the entering into a binding

agreement with Xilinguole Bureau, the establishment of a wind power subsidiary

in Xilinguole, the development of a manufacturing facility in Xilinguole and

the capacity of such a facility, the government approvals for the Xilinguole

manufacturing facility, the impact of the Xilinguole agreement on Hanwei's

funding needs, the need to secure required funding, the supply of wind power

equipment to the Ruihao subsidiaries and their delivery dates, the

installation of turbines and the timing of their testing process, the sales

forecast for FRP pipe, the additional FRP pipe capacity in China, the demand

for new coal fired energy capacity, the timing of new coal plants in 2009, the

growth of the FGD retrofit installations and the potential revenue from such

growth, and the Company's financial outlook. The forward-looking information

is based on certain assumptions, which could change materially in the future,

including the assumption that a binding agreement will be entered into between

Hanwei and Xilinguole, that a subsidiary in Xilinguole and a manufacturing

facility in the Xilinguole region will be established, that government

approvals for the Xilinguole manufacturing facility will be obtained, that the

Xilinguole transaction will not have a material impact on Hanwei's funding

needs for 2009, that any required working capital will be secured, that Hanwei

will be able to supply the wind power equipment to the Ruihao subsidiaries,

that the testing of the turbines will proceed as scheduled, that FRP pipe

sales will depend on the economy and the economy will perform as forecasted,

that additional capacity at the Tianjin FRP pipe facility will be increased,

that the new coal plants will proceed in the medium and long term and the

demand for new coal fired energy capacity in China will be very strong, that

the retrofitting FGD installations will continue to grow and the revenue from

such installations will be significant, and that the factors impacting sales,

revenues and earning growth are as set out in the Company's financial outlook.

The forward-looking information in this press release describes the Company's

expectations as of the date of this press release. The results or events

anticipated or predicted in such forward-looking information may differ

materially from actual results or events. Material factors or risks which

could cause actual results or events to differ materially from a conclusion in

such forward-looking information include the risks that the discussions

subsequent to the LOI may not result in a binding agreement, the Company may

not be able to execute on its expectations to deliver products in accordance

with the LOI or any resulting binding agreement, the Company is unable to

establish a subsidiary or manufacturing facility in Xilinguole, the Company

will be able to secure additional working capital to support such growth, the

necessary government approvals may be delayed or may not be obtained at all,

the Company may not be able to supply the wind power equipment to the Ruihao

subsidiaries, the Tianjin FRP pipe facility capacity may not be increased, the

demand for new coal fired energy capacity in China may not materialize and no

new coal plants may proceed in the medium and long term, retrofitting FGD

installations may not continue to grow and the revenues from such

installations may not be significant, and the economy may not recover or

worsen, as well as the risks set out in the risk factors section of the

Company's Annual Information Form dated March 31, 2009 for the year ended

December 31, 2008 as filed with Canadian securities regulators and available

on SEDAR at www.sedar.com.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE PRESENTS

THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS RELEASE AND,

ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE

UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS

INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, THE COMPANY

DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME, EXCEPT

AS REQUIRED BY APPLICABLE SECURITIES LEGISLATION.

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/For further information: Kim Oishi, SVP of Finance and Business

Development, (416) 804-9228, koishi@hanweienergy.com; Kevin O'Connor, Investor

Relations, (416) 962-3300, ko@spinnakercmi.com/