Half Year 2023 China Yuchai International Limited Earnings Call
Okay.
Good day, and thank you for standing by and welcome to the China.
I know you try international first half 2023 financial results at this time, all pretty tense are in a listen only mode.
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I would like now to turn the conference over to Kevin <unk>. Please go ahead Sir.
Thank you for joining us today.
And welcome to the China U.
Oh Limited's first half year.
32023 conference call and webcast.
Joining us today are Mr wavelength, Oh, it's not much.
As John said, Lou President and Chief Financial Officer.
Respectively.
Additionally, we have another child, that's Mr. Kelvin Lai VP of operations.
Before we begin I will read.
Mike all listeners that throughout this call. We may make statements that may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995. The words believe expect anticipate project target optimistic.
That continue to predict intend aim will or similar expressions are intended to identify forward looking statements. All statements other than statements of historical fact are statements that may be deemed forward looking statements. Each forward looking statements include but are not limited to.
Statements concerning the company's operations and financial performance and condition and are based on current expectations beliefs, and assumptions, which are subject to change at any time.
The company cautions that these statements by their nature involve risks and uncertainties and actual results may differ materially depending on a variety of important factors such as government and stock exchange regulations.
Petition.
The economic and social conditions around the world and in China, including those discussed in the company's form 20-F.
Under the headings risk factors.
Results of operations and business overview and other reports filed with Securities and Exchange Commission from time to time.
If COVID-19 pandemic is not effectively controlled our business operations and financial condition may be materially adversely affected due to a deteriorating market for automotive sales.
Economic slowdown in China and abroad.
Oftentimes a weakening of the financial condition of our customers.
Adverse impact of our suppliers that supply chain.
Or other factors that we cannot foresee.
All forward looking statements are applicable only as of the date they are made and the company specifically.
Claims any obligation to maintain or update the forward looking information.
Other of the nature contained in the press release made during today's call or otherwise in the future.
Mr. Hull will forget who will provide a brief overview and summary, then Mr. Lu will provide the financial results for the first half ended June 32023.
After we will conduct a question and answer answer session.
For the purposes of today's call the 'twenty to 'twenty three 2022 and first half financial results are unaudited and they will be presented in RMB and U S dollars. The financial information presented is reported using the international side.
Coding standards.
Issued by the International Accounting standards Board Mr Ho.
These began in your prepared remarks.
Thank you Kevin.
Economy showed signs of recovery in the FERC copper 30 33.
We have faced challenges from external factors the clinical official data the GDP growth rate for the first half of 'twenty three.
<unk>, 5% year over year with a six 3% increase in the quarter compared to fall by 5% in the first quarter.
However, this figure will influenced by the low base.
Effect of dependability induced lockdown initiated.
Thank you.
The export sector suffered a decline in the first half of the year as high inflation the medium market the geopolitical tensions reduced demand for Chinese goods.
The property sector also continues to experience a slowdown as property investment felt that fell by 9% year over year and property sales dropped by five 3%.
Lastly, in the first six months of credit history.
The real estate market loss affected by financial conditions, and uncertainties or demand for it.
Economy outlook for second half of the Detroit three remains uncertain.
Momentum has slowed down.
Overall demand is not met expectation.
According to data reported by China Association of automobile manufacturers.
Total industry unit sales of commercial vehicle.
Excluding gasoline powered and electric powered vehicles for the first half of the little three increased by 3% year on year with crop in it fills up by 6% a smaller box.
Bill.
So the eight 1%.
In this Chinese commercial vehicle environment are made for <unk>, while CE missionary company limited.
We reported a combined trucking, but it.
He didn't unit sales decline of one 5% year over year in the first half of 30 33.
Truck sales were 4% lower year on year.
With it but it's still it's a $5, 5% higher year over year.
Boston Gear sales were led by 149, 8% rise in heavy duty engine scale far exceeding the market growth.
From a spot market or a contributor to the strong.
<unk> is built in the off road market.
Peter.
Reduction of 33% year over year in the first half of greater than three industrial and marine and power generation unit field.
Year on year, partially offsetting reduced agricultural sales.
New energy product unit sales grew by 30.
Okay.
From a low base to 1319 units in the first half of 2033.
Revenue for the first half of 2033 grew by 12% to RMB nine two.
$2 billion $1 3 billion compared to RMB eight 6 billion is 120 to two and RMB seven 5 billion in second half two zero to two.
Our gross profit increased by 14, 1% outpacing our revenue growth to RMB, one 6 billion or USD 200.
14 point David.
Compared with RMB, one 4 billion in one half closer to two.
Our gross margin improved to 16, 9% in the first.
Hospitals are two to three thanks to more sales of larger engines across many of our diverse end use markets.
Operating profit rose by 34, 6%.
RMB $387 7 million or U S. Dollar, it's a treat by $7 million and the operating margin increased to four 2%.
The first half of the three basic and diluted earnings per share increased 19, 8%.
RMB four fleets that were all U S dollar.
67, compared with RMB two by Tonight in one half two zero to two.
We invest substantially in research and development to deliver engine and powertrain products.
Neat needs of our customers.
Our R&D spending including capitalized costs amounted to RMB 406, with $5 2 million.
<unk> thousand $64 4 million or five 1% of our revenue.
The first half of <unk>.
R&D aim is to improve the performance and efficiency of our diesel and gas engines.
We are also increasing our R&D focus on new products for the emerging energy markets.
We continue to develop engine for that for the new LNG markets that use alternative Phil.
Brookfield efficiency.
As emission production.
The development of engines.
Phil is another Avenue for development.
For instance, we.
We have developed a hydro guest buy in this they can run a clean and renewable energy.
I also committed to developing our innovative products.
The new in the market.
Hybrid systems have been well received among leading Chinese afirma, especially in the past.
Which segment.
One of our new products. The E Motor why is Europe and hybrid engine is powering a 10 meter.
Gas electric hybrid buses in 19 major city in China.
Buses were manufactured by a KOL group company.
Just a past producer in China, and one of our key customers.
Therefore, the more than 1000.
The buses equipped with each hub.
Our bus operator in Wuhan and other important cities in China.
This <unk> hybrid engine.
Also the <unk>.
600 kilowatt.
<unk> parallel hybrid power.
<unk>.
Groups, Chelsea Leadbetter Mitford truck.
<unk> growth is a leading global engineering machinery manufacturer.
This system features a proprietary control software.
Optimizing the performance of the engine electric model and automated mechanical transmission gearbox.
Routing and significant fuel savings.
To make our operations multiple cook, we continue to restructure our operations.
<unk> three <unk>.
Our mcl has restructured its marine and power generation businesses.
Hans.
Competitive not in this market.
Do you have.
That's established a new subsidiary <unk> Marine and power.
Sorry quantity each emirate and just a follow up limited, which has taken our new mcl Marine and power generation businesses. This new operation test incorporated the empty Youll series 4000 engine.
And other related products and services.
This move will enable <unk> to offer a more integrated and comprehensive quality and power generation solutions to its customers.
<unk> Mcl subsidiary E chasing land, new LNG power technology company with it.
New investments totaling RMB 13 million for all.
New unrelated investor credibility.
This new investment accelerate the research and development of new energy technologies and an answer.
Product development.
Also <unk> incorporated a new subsidiary, while singing cloud technology.
To focus on developing proprietary cloud based control system.
On the off road vehicles and missionaries singing cloud will also oversee IP operation and create intelligent network and processes for sale.
Good.
As of June 30 of 2023 cash and bank balances were RMB five 6 billion all your solid $777 2 million and we maintain a strong balance sheet.
With our financial strength the board of directors.
The test develop zero by two 8%.
Ordinary share for the year ended December 31, 2032, which was paid on August seven 2023.
Got it.
Looking to the second half of designated pre our dialogue with our portfolio remains a key driver of our growth and profitability and we continue to upgrade our engine product, which contributes to a lower emission is our political vehicle.
Customers leverage our technologies to enhance the operational performance with lower cost and participate in building a cleaner environment.
Low energy, sorry, lower emission power train.
<unk> systems.
We are also developing moh.
<unk> in our new <unk> products that align with our societies.
And environmental agenda.
I would now like to turn the call over to Jonathan Lu Our Chief Financial Officer, who will provide more details on our financial results you may begin.
Thank you Amy.
Now, let me review our unaudited six months results ended June 30.
2023 revenue was.
Renminbi, $9 2 billion or U S dollar $1 3 billion compared with RMB eight 6 billion in first half 2022.
The total number of engines sold by <unk> Mcl in first half 'twenty to retreat declined by eight 4% to 155793 units.
<unk>.
100, <unk> thousand 911 units in the first half 2022.
The decrease was mainly due to lower <unk>, the truck and agriculture application markets.
Offset by higher <unk> sales in the industrial and marine and power generation markets.
According to data reported by the China Association of automobile manufacturers in the first half 2023 commercial vehicle unit sales.
Brooding destiny powered and electric powered vehicles increased by eight 3% compared to first half 2022.
Truck and bus sales increased by 6% and 38, 1% respectively.
Gross profit increased by 14, 1% to renminbi, one 6 billion or <unk> dollars $214 8 million comparatively renminbi, one 4 billion in first half 2022.
Gross margin increased to 16, 9% as compared with 15, 9% in the first half of 'twenty two.
The increase in gross profit and gross margin was mainly attributed attributable to margin improvement across most market segments.
Greatest use of larger engines and contributions from ongoing cost reduction efforts.
Other operating income increased by 59, 3% to renminbi.
$56 2 million or U S dollar $15 8 million compared with renminbi.
$8 5 million in the first half 2022.
The increase was mainly due to higher drug government grants received and recognized.
Research and development R&D expenses decreased slightly to renminbi.
$6 million or U S dollar $56 2 million compared with RMB 408.
$8 5 million in the first half 'twenty to a to the.
Company continues to invest in research and development for <unk> in the commercial vehicle market.
Angie.
<unk> new energy products.
Total R&D expenditure, including capitalized costs were $465 2 million or U S. Dollar $55 4 million, representing five 1% of revenue in first half 2023, as compared to <unk> $476 9 million.
Five 6% revenue in first half 'twenty to 'twenty two.
Selling general administrative SG&A expenses increased by 19, 3% to let me be a kind of a default by <unk> 5 million or U S. Dollar $123 8 million from RMB 749, 6 million in first half.
2022.
The increase was mainly due to higher provision of personnel and other selling and administrative expenses compared with the same period last year.
SG&A expenses represented nine 8% of revenue for 2023, compared with eight 7% in first half 2020 to.
Operating profit rose by 44, 6% to renminbi, $387 7 million or U S. Dollar 53, 7 million from RMB 288 million in first half 2022.
The operating margin was four 2% compared with three 4% in first half 2022.
Finance costs declined by two 9% to let me be $53 6 million or U S dollars down <unk> 4 million from $5 2 million in first half 2022 the <unk>.
Our financial results of the associates and joint Ventures was a profit of Renminbi 39, 6 million or U S dollar $4 1 million compared with a loss of <unk>.
Let me be denied <unk> dollars 9 million in first half 2022 this improvement.
Primarily due to higher profits.
<unk> you try power company limited and a return to profitability at Y N C and GE company inhibitor.
Income tax expense was RMB, $110 6 million or U S dollar $15 3 million as compared with Renminbi 56 5 million in first half 2022.
The change was mainly due to the higher equity comp in first half 2023 and adjustment for under provision in the prior year.
Net profit attributable to equity holders or company was renminbi, $178 4 million or U S dollar $24 7 million compared with.
So maybe $93 7 million in first half 2022.
Basic and diluted earnings per share were renminbi all point.
<unk>.
You added 60, compared with Renminbi 229 in first half 2022 basic and diluted earnings per share for first half 'twenty to industry in first half two were based on a weighted average of $40 million.
Our third 290 <unk> sure.
Now, let me walk through through our balance sheet highlights as of June .
2023.
Cash and bank balances were $5 6 billion or U S. Dollar $777 2 million compared with renminbi $4 9 billion at the end of financial year, two zero to two.
And bills receivables were RMB 9 billion are U S. Dollar $1 3 billion compared with RMB six 8 billion at the end of financial year, two zero to two <unk>.
Inventories were $4 9 billion <unk> dollars, $682 4 million compared with $4 nine.
At the end of our furniture to zero to two.
And bills payable.
Our U S dollar $1 1 billion compared with.
$6 9 billion at the end of financial year, two zero to two.
Short term and long term loans and borrowings were RMB 3 billion or U S. Dollar $419 7 million compared with RMB, two 3 billion at the end of financial year, two zero to two.
I will now turn the call over to Kevin for a comment before we begin our Q&A.
Thank you. Please note some officers that Chinese UTI are remotely calling into the conference call. This may result in a slight delay in providing answers to some questions.
Caller, Josh for any inconvenience and thank you for your patience with that operator, we are ready to begin the Q&A session.
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Okay, Yes.
Paul.
Yes.
A question on the webcast.
Hey, Mr. Sanger is asked why has <unk>.
Decided to amend the corporate documents regarding.
Share repurchase.
Okay.
We took the opportunity of the AGM to mimic change so they view it as an option and you will provide the company with greater flexibility to utilize the share purchases in.
Any method that is permissible.
Permissible under the Bermuda companies.
And we of course.
Okay.
To comply with U S credit law for the feedback.
If there is any plan, we will make announcement.
To that effect.
Okay.
Okay. Mr. How would you please provide your closing comments.
Okay.
Alright. Thank you all for participating in our conference call. We wish each of you good health and we look forward to speaking with you again good luck.
This concludes today's conference call. Thank you for participating you may now disconnect.
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