Half Year 2026 China Yuchai International Ltd Earnings Call

August 7, 2026

Speaker #1: Shen. To answer questions during the session, you need to press star 1 and 1 on your telephone. You can also submit your questions on webcast via the Ask a Question tab at the top of your webcast player.

Speaker #1: Please be advised that today's conference is being recorded. I would now like to turn the call over to your first speaker today, Kelvin Theiss.

Speaker #1: Please go ahead.

Speaker #2: Thank you for joining us today, and welcome to China Yuchai International Ltd's conference call and webcast for the 2026 first half-year ended on June 30, 2026.

Speaker #2: Joining us today are Mr. Wei Meng Ho, and Mr. Chun Loo, the president and chief financial officer of China Yuchai International, respectively. In addition, we also have in attendance Mr. Kelvin Lai, general manager of operations of China Yuchai International.

Speaker #2: Before we begin, I would like to remind 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," "targets," "optimistic," "confident that," "continue to," "predict," "intend," "aim," "will," or similar expressions are intended to identify forward-looking statements.

Speaker #2: All statements other than statements of historical fact are statements that may be deemed forward-looking statements. These 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.

Speaker #2: The company cautions that these statements by their nature involve risk and uncertainties in actual results may differ materially depending upon a variety of important factors such as government and stock exchange regulations, competition, political-economic and social conditions around the world, and in China.

Speaker #2: Including those discussed in the company's Form 20F under this heading's risk factors, results of operations, and business overview, and in other reports filed with the Securities and Exchange Commission from time to time.

Speaker #2: All forward-looking statements are applicable only as of the date they are made, and the company specifically disclaims any obligation to maintain or update the forward-looking information.

Speaker #2: Whether of the nature contained in the press release, made on today's call, or otherwise in the future. Mr. Ho will provide a brief overview and summary.

Speaker #2: Then Mr. Loo will provide the financial results for the first half-year ended June 30, 2026. Thereafter, we will conduct a question-and-answer session. For the purposes of today's call, the first half-year numbers for 2026 and 2025 are unaudited financial results are presented in RMB and US dollars.

Speaker #2: All the financial information presented is reported using IFRS accounting standards as issued by the International Accounting Standards Board. Mr. Ho, please begin your prepared remarks.

Speaker #3: Thank you, Kelvin. We are pleased to report continuing growth in sales and profits in the first half of 2026. Revenue increased by 30.9% year-over-year, with a 10.9% year-over-year gain in unit sales.

Speaker #3: Our gross profit rose by 36.5% year-over-year, to a RMB 2.5 billion, or US dollars 368.7 million, with gross profit margin increasing to 17.1%. Operating profit was 58.9% higher at RMB 988.2 million, or US dollars 145.1 million.

Speaker #3: Profit attributable to our shareholders rose by 53.2% year-over-year to RMB 560.6 million, or US dollars 82.3 million. With diluted earnings per share of RMB 14.81, or US dollars 2.17, in the first half of 2026.

Speaker #3: Higher sales of our larger engines enhanced both our average selling price and profitability compared with the same period last year. Total truck engine unit sales were up 20.4% year-over-year, led by a heavy-duty truck engine unit sales increase of 47.3% year-over-year.

Speaker #3: Engine unit sales to off-road markets increased by 7.7% year-over-year, in the first half of 2026, primarily driven by strong demand in marine and power generation markets.

Speaker #3: Where engine unit sales increased by 42% year-over-year. Our joint ventures and associates produced a 56.2% year-over-year growth in profits in the first half of 2026, propelled by higher sales and profits, mainly from MTU Yuchai.

Speaker #3: Order demand for high horsepower engines continues to be strong, the combined production capacity for high horsepower engines across the MTU, JV, and Yuchai currently stands at approximately 5,000 units.

Speaker #3: Sales to AI data centers by MTU, JV, and Yuchai's own brand grew to approximately 1,800 units in the first half of 2026. With increased engine technology content advancing performance, and environmental impacts, we increased total R&D expenditures including capitalized costs by almost 13% to RMB 622.5 million, or US dollars 91.4 million, in the first half of 2026.

Speaker #3: In addition to enhancing the quality and performance of our current products, we have introduced new innovative products in the first half of 2026. Commercial minibuses equipped with Yuchai's YCY 24-65 kW flywheel range extender system, of YCFRS, were launched in the heavily congested Hong Kong vehicle market.

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Operator: 13% to RMB 622.5 million, or US$91.4 million in H1 2026. In addition to enhancing the quality and performance of our current products, we have introduced new innovative products in H1 2026. Commercial minibuses equipped with Yuchai's YCY24-65kW Flywheel Range Extender Systems, or YC-FRS, were launched in the heavily congested Hong Kong vehicle market. This new technology reduces the need for fixed charging infrastructure.

Weng Ming Hoh: 13% to RMB 622.5 million, or US$91.4 million in H1 2026. In addition to enhancing the quality and performance of our current products, we have introduced new innovative products in H1 2026. Commercial minibuses equipped with Yuchai's YCY24-65kW Flywheel Range Extender Systems, or YC-FRS, were launched in the heavily congested Hong Kong vehicle market. This new technology reduces the need for fixed charging infrastructure.

Speaker #2: So this is the fan to R&B 622.5 million, all US dollars, 91.4 million, in the first half of 2026. In addition to enhancing the quality and performance of our current products, we have introduced new innovative products in the first half of 2026.

Speaker #3: This new technology reduces the need for fixed charging infrastructure. We also created a breakthrough in our alternative fuel program with our first high-pressure direct injection internal combustion engine capable of operating entirely on ammonia.

Speaker #2: Commercial minibuses equipped with HI's YCY 24-65 kW flywheel range extender systems of YCFRS, were launched in the heavily congested Hong Kong vehicle market. This new technology reduces the need for fixed charging infrastructure.

Speaker #3: We acquired a 27.97% equity interest of Nanyue Fuel Injection System, or NYDK in short, it was previously known as Nanyue Tiankong Kenyang Industrial Technology Company Limited.

Speaker #3: This transaction strengthens our technology capabilities, access to new powertrain products, and supply chain resilience. Since April 1, 2026, NYDK's financial results have been consolidated following Yuchai's acquisition of control over NYDK on March 31, 2026.

Speaker #2: We also created a breakthrough in our alternative-fuel program with our first high-pressure direct injection internal combustion engine capable of operating entirely on ammonia. We acquired a 27.97% equity in terms of non-UF fuel injection system, or NYDK in short, that was previously known as non-UF Tiankong Hengyang Industrial Technology Company Limited.

Operator: We also created a breakthrough in our alternative fuels program with our first high-pressure direct injection internal combustion engines, capable of operating entirely on ammonia. We acquired a 37.97% equity interest of Nanyue Fuel Injection System, or NYDK in short. It was previously known as Nanyue Diankong (Hengyang) Industrial Technology Company Limited. This transaction strengthens our technology capabilities, access to new powertrain products, and supply chain resilience.

Weng Ming Hoh: We also created a breakthrough in our alternative fuels program with our first high-pressure direct injection internal combustion engines, capable of operating entirely on ammonia. We acquired a 37.97% equity interest of Nanyue Fuel Injection System, or NYDK in short. It was previously known as Nanyue Diankong (Hengyang) Industrial Technology Company Limited. This transaction strengthens our technology capabilities, access to new powertrain products, and supply chain resilience.

Speaker #3: Our subsidiary, Guangxi Yuchai Machinery and GenSet Power Company Limited, continues the process for its IPO application with the Hong Kong stock exchange. Upon completion, the listing is expected to provide the subsidiary with more resources to accelerate its growth while we remain we will remain the controlling shareholder of this subsidiary.

Speaker #2: This transaction strengthens our technology capabilities, access to new powertrain products, and supply chain resilience. Since April 1, 2026, NYDK's financial results have been consolidated following HI's acquisition of control over NYDK on March 31, 2026.

Weng Ming Hoh: Since 1 April 2026, NYDK's financial results have been consolidated following Yuchai's acquisition of control over NYDK on 31 March 2026. Our subsidiary, Guangxi Yuchai Marine and Genset Power Co. Ltd., continues the process for its IPO application with the Hong Kong Stock Exchange. Upon completion, the listing is expected to provide the subsidiary with more resources to accelerate its growth, while we will remain the controlling shareholder of this subsidiary.

Speaker #3: This will enable us to continue to benefit from the subsidiary's long-term development while focusing on additional resources on our other operations. To further support our strategy of identifying and participating in emerging growth opportunities, we invested in and became a limited partner in Guangxi Yuchai Double Growth Fund, a private equity fund that invests in businesses focusing on innovative technologies.

Speaker #2: Our subsidiary, Guangxi HI Machinery and GenSet Power Company Limited, continues the process for its IPO application with the Hong Kong Stock Exchange. Upon completion, the listing is expected to provide the subsidiary with more resources to accelerate its growth, while we will remain the controlling shareholder of this subsidiary.

Speaker #3: At the end of June 2026, our cash management and cash flow from operations provided higher cash and bank balances totaling approximately 1.2 billion US dollars, with lower borrowings.

Speaker #2: This will enable us to continue to benefit from the subsidiary's long-term development while focusing additional resources on our other operations. To further support our strategy of identifying and participating in emerging growth opportunities, we invested in and became a limited partner in Guangxi HI Double Growth Fund, a private equity fund that invests in businesses focusing on innovative technologies.

Weng Ming Hoh: This will enable us to continue to benefit from the subsidiary's long-term development while focusing additional resources on our other operations. To further support our strategy of identifying and participating in emerging growth opportunities, we invested in and became a limited partner in Guangxi Yuchai Double Growth Fund, a private equity fund that invests in businesses focusing on innovative technologies.

Speaker #3: Reflecting our commitment to delivering value to shareholders, a cash dividend of 87 US cents per ordinary share for 2025 was paid in July 2026, compared with 53 US cents per ordinary share for 2024, paid in 2025.

Speaker #2: At the end of June 2026, our cash management and cash flow from operations provided higher cash and bank balances totaling approximately $1.2 billion, with lower borrowings.

Weng Ming Hoh: At the end of June 2026, our cash management and cash flow from operations provided higher cash and bank balances totaling approximately $1.2 billion, with lower borrowings. Reflecting our commitment to delivering value to shareholders, a cash dividend of $0.87 per ordinary share for 2025 was paid in July 2026, compared with $0.53 per ordinary share for 2024 paid in 2025.

Speaker #3: Our strong financial position empowers Yuchai's ongoing investment in product upgrade and new product development, which furthers the establishment of our growing presence in selected international markets to support future growth.

Speaker #2: Reflecting our commitment to delivering value to shareholders, a cash dividend of 87 US cents per ordinary share for 2025 was paid in July 2026, compared with 53 US cents per ordinary share for 2024, paid in 2025.

Speaker #3: Our strategy remains to be sell into multiple and multiple end markets with a growing and diverse product portfolio. With that, I would now like to turn the call over to Mr. Chun Sing Lu, our Chief Financial Officer, who will provide more details on the financial results.

Speaker #2: Our strong financial position empowers HI's ongoing investment in product upgrades and new product development, which furthers the establishment of our growing presence in selected international markets to support future growth.

Weng Ming Hoh: Our strong financial position empowers Yuchai's ongoing investment in product upgrades and new product development, which furthers the establishment of our growing presence in selected international markets to support future growth. Our strategy remains to sell into multiple end markets with a growing and diverse product portfolio. With that, I would now like to turn the call over to Mr. Choon Sen Loo, our Chief Financial Officer, who will provide more details on the financial results. Choon Sen, you may begin your remarks.

Speaker #3: Chun Singh, you may begin your remarks.

Speaker #2: Thank you, Weng Ming. Now let me review our audited 2026 first six months results and the June 30th, 2026 revenue was RMB 14.7 billion, or US dollars 2.2 billion, compared with RMB 12.9 billion in the first half of 2025.

Speaker #2: Our strategy remains to be sell into multiple and multiple end markets with a growing and diverse product portfolio. With that, I would now like to turn the call over to Mr. Chunsei Lu, our Chief Financial Officer, who will provide more details on the financial results.

Speaker #2: A 13.9% year-over-year growth. Engine sales reached 277,684 units in the first half of 2026 and increased of 10.9% compared with 250,396 units in the first half of 2025.

Speaker #2: Chunsei, you may begin your remarks.

Speaker #3: Thank you, Wing Ming. Now, let me review our unaudited results for the first six months ended June 30, 2026. Revenue was RMB 14.7 billion, or $2.2 billion, compared with RMB 12.9 billion in the first half of 2025.

Choon Sen Loo: Thank you, Weng. Now let me review our unaudited 2026 H1 results ended 30 June 2026. Revenue was RMB 14.7 billion, or $2.2 billion, compared with RMB 12.9 billion in H1 2025. A 13.9% year-over-year growth. Engine sales reached 277,684 units in H1 2026, an increase of 10.9% compared with 250,396 units in H1 2025. This growth was driven by stronger performance in the truck segment as well as in off-road applications, particularly construction machinery and Marine and Power Generation.

Speaker #2: This growth was driven by stronger performance in the truck segment, as well as in offload applications particularly construction machinery and marine and power generation.

Speaker #3: A 13.9% year-over-year growth. Engine sales reached 277,684 units in the first half of 2026, an increase of 10.9% compared with 250,396 units in the first half of 2025.

Speaker #2: Older truck engine unit sales were up 20.4% year-over-year in the first half of 2026, outperforming the 5.8% year-over-year growth in overall commercial truck excluding gasoline and electric vehicles.

Speaker #3: This growth was driven by stronger performance in the truck segment, as well as in off-road applications, particularly construction machinery, marine, and power generation.

Speaker #2: Sales reported by the China Association of Automobile Manufacturers CAAM in the same period. Heavy-duty truck engine unit sales increased by 47.3% year-over-year compared with the 13.1% year-over-year growth in heavy-duty truck sales reported by CAAM.

Speaker #3: For the truck engine unit, sales were up 20.4% year-over-year in the first half of 2026, outperforming the 5.8% year-over-year growth in overall commercial trucks, excluding gasoline and electric vehicles.

Choon Sen Loo: Although truck engine unit sales were up 20.4% year-over-year in H1 2026, outperforming the 5.8% year-over-year growth in overall commercial truck, excluding gasoline and electric vehicles sales reported by the China Association of Automobile Manufacturers, CAAM, in the same period. Heavy-duty truck engine unit sales increased by 47.3% year-over-year compared with the 13.1% year-over-year growth in heavy-duty truck sales reported by CAAM.

Speaker #2: Light-duty truck engine unit sales rose by 23.6% contrasted with a decline in light-duty truck sales according to CAAM. Medium-duty truck engine unit sales also grew 7.9% year-over-year.

Speaker #3: Sales reported by the China Association of Automobile Manufacturers (CAAM) in the same period. Heavy-duty truck engine unit sales increased by 47.3% year-over-year, compared with the 13.1% year-over-year growth in heavy-duty truck sales reported by CAAM.

Speaker #2: Engine unit sales to offload markets increased by 7.7% year-over-year in the first half of 2026. The growth was primarily driven by strong demand in the marine and power generation markets where engine unit sales increased by 42% year-over-year.

Speaker #3: Light-duty truck engine unit sales rose by 23.6%, contrasted with a decline in light-duty truck sales, according to CAAM. Medium-duty truck engine unit sales also grew 7.9% year-over-year.

Choon Sen Loo: Light-duty truck engine unit sales rose by 23.6%, contrasted with a decline in light-duty truck sales according to CAAM. Medium-duty truck engine unit sales also grew 7.9% year-over-year. Engine unit sales to off-road markets increased by 7.7% year-over-year in H1 2026. The growth was primarily driven by strong demand in the Marine and Power Generation markets, where engine unit sales increased by 42% year-over-year. Sales for industrial applications rose by 15.8% year-over-year, while engine sales for agricultural machinery declined by 18.9% in the same period. Gross profit increased by 36.5% to RMB 2.5 billion or $368.7 million from RMB 1.8 billion in H1 2025. The increase was mainly due to higher sales volume, better sales mix, and reduced warranty expenses. Overall, gross margin was 17.1% in H1 2026, compared with 14.3% in H1 2025.

Speaker #2: Sales for industrial applications rose by 15.8% year-over-year while engine sales for agricultural machinery declined by 18.9% in the same period. Gross profit increased by 36.5% to RMB 2.5 billion, or US dollars 368.7 million, from RMB 1.8 billion in the first half of 2025.

Speaker #3: Engine unit sales to offload markets increased by 7.7% year-over-year in the first half of 2026. The growth was primarily driven by strong demand in the marine and power generation markets where engine unit sales increased by 42% year-over-year.

Choon Sen Loo: The growth was primarily driven by strong demand in the Marine and Power Generation markets, where engine unit sales increased by 42% year-over-year. Sales for industrial applications rose by 15.8% year-over-year, while engine sales for agricultural machinery declined by 18.9% in the same period. Gross profit increased by 36.5% to RMB 2.5 billion or $368.7 million from RMB 1.8 billion in H1 2025. The increase was mainly due to higher sales volume, better sales mix, and reduced warranty expenses. Overall, gross margin was 17.1% in H1 2026, compared with 14.3% in H1 2025.

Speaker #2: The increase was mainly due to higher sales volume, better sales mix, and reduced warranty expenses. Overall gross margin was 17.1% in the first half of 2026 compared with 14.3% in the first half of 2025.

Speaker #3: Sales for industrial applications rose by 15.8% year-over-year, while engine sales for agricultural machinery declined by 18.9% in the same period. Gross profit increased by 36.5% to RMB 2.5 billion, or $368.7 million, from RMB 1.8 billion in the first half of 2025.

Speaker #2: Increased sales of larger engines enhanced the gross profit margin in the first half of 2026 year-over-year. Other operating income net decreased by 32.2% to RMB 150.2 million, or US dollars 22.1 million, compared with RMB 221.4 million in the first half of 2025.

Speaker #3: The increase was mainly due to higher sales volume, better sales mix, and reduced warranty expenses. Overall gross margin was 17.1% in the first half of 2026 compared with 14.3% in the first half of 2025.

Speaker #2: The decrease was mainly attributable to lower government grants and the absence of technology licensing fees income in the first half of 2026, as compared with that of the first half of 2025.

Speaker #3: Increased sales of larger engines enhanced the gross profit margin in the first half of 2026 year-over-year. Other operating income net decreased by 32.2% to RMB 150.2 million, or US dollars 22.1 million, compared with RMB 221.4 million in the first half of 2025.

Choon Sen Loo: Increased sales of larger engines enhanced the gross profit margin in H1 2026 year-over-year. Other operating income net decreased by 32.2% to RMB 150.2 million or $22.1 million, compared with RMB 221.4 million in H1 2025. The decrease was mainly attributable to lower government grants and the absence of technology licensing fees income in H1 2026 as compared with that of H1 2025. Research and development R&D expenses increased by 24.5% to RMB 583.4 million or $87.1 million, compared with RMB 476.7 million in H1 2025. Due to higher experimental and personnel costs and the lower level of capitalized project costs. Total R&D expenditures including capitalized costs were RMB 622.5 million or $91.4 million, representing 4.2% of revenue in H1 2025, compared to RMB 551.7 million and 4.3% of revenue in H1 2025.

Speaker #2: Research and development R&D expenses increased by 24.5% to RMB 583.4 million, or US dollars 87.1 million, compared with RMB 476.7 million, in the first half of 2025.

Speaker #3: The decrease was mainly attributable to lower government grants and the absence of technology licensing fees income in the first half of 2026, as compared with that of the first half of 2025.

Speaker #2: Due to higher experimental and personnel costs, and the lower level of capitalized project costs. Total R&D expenditures including capitalized costs were RMB 622.5 million, or US dollars 91.4 million, representing 4.2% of revenue in the first half of 2025, compared to 5 RMB 551.7 million, and 4.3% of revenue in the first half of 2025.

Speaker #3: Research and development (R&D) expenses increased by 24.5% to RMB 583.4 million, or $87.1 million, compared with RMB 476.7 million in the first half of 2025.

Choon Sen Loo: Research and development R&D expenses increased by 24.5% to RMB 583.4 million or $87.1 million, compared with RMB 476.7 million in H1 2025. Due to higher experimental and personnel costs and the lower level of capitalized project costs. Total R&D expenditures including capitalized costs were RMB 622.5 million or $91.4 million, representing 4.2% of revenue in H1 2025, compared to RMB 551.7 million and 4.3% of revenue in H1 2025.

Speaker #3: Due to higher experimental and personnel costs, and the lower level of capitalized project costs. Total R&D expenditures, including capitalized costs, were RMB 622.5 million, or $91.4 million, representing 4.2% of revenue in the first half of 2025, compared to RMB 551.7 million, or 4.3% of revenue, in the first half of 2024.

Speaker #2: Selling general and administrative SG&A expenses increased by 12.2% to RMB 1.1 billion, or US dollars 158.5 million, from RMB 962.5 million, in the first half of 2025.

Speaker #2: This increase was driven by higher personnel expenses and leader professional and consultancy fees compared with the first half of 2025. SG&A expenses represented 7.4% of revenue for the first half of 2025, compared with 7.5% of revenue in the first half of 2025.

Speaker #3: Selling, general, and administrative (SG&A) expenses increased by 12.2% to RMB 1.1 billion, or $158.5 million, from RMB 962.5 million in the first half of 2025.

Choon Sen Loo: Selling, general and administrative SG&A expenses increased by 12.2% to RMB 1.1 billion or $158.5 million from RMB 962.5 million in H1 2025. This increase was driven by higher personnel expenses and legal, professional, and consultancy fees compared with H1 2025. SG&A expenses represented 7.4% of revenue for H1 2025, compared with 7.5% of revenue in H1 2025. Operating profit increased by 58.9% to RMB 988.2 million or $145.1 million, compared to RMB 621.7 million in H1 2025. The operating margin increased to 6.7%, in contrast with 4.8% in H1 2025. Higher operating profit and operating margin were achieved by increased sales and gross margin, combined with controlled growth in operating expenses. Finance costs decreased by 16% to RMB 27 million or $4 million, compared with RMB 32.2 million in H1 2025, primarily due to reduced term loans during the period.

Speaker #2: Operating profit increased by 58.9% to RMB 988.2 million, or US dollars 145.1 million, compared to RMB 621.7 million, in the first half of 2025.

Speaker #3: This increase was driven by higher personnel expenses and leader professional and consultancy fees compared with the first half of 2025. SG&A expenses represented 7.4% of revenue for the first half of 2025 compared with 7.5% of revenue in the first half of 2025.

Speaker #2: The operating margin increased to 6.7% in contrast with 4.8% in the first half of 2025. Higher operating profit and operating margin were achieved by increased sales and gross margin combined with controlled growth in operating expenses.

Speaker #3: Operating profit increased by 58.9% to RMB 988.2 million (US$145.1 million), compared to RMB 621.7 million in the first half of 2025.

Speaker #2: Finance costs decreased by 16% to RMB 27 million, or US dollars 4 million, compared with RMB 32.2 million in the first half of 2025, primarily due to reduced term loans during the period.

Speaker #3: The operating margin increased to 6.7%, in contrast with 4.8% in the first half of 2025. Higher operating profit and operating margin were achieved through increased sales and gross margin, combined with controlled growth in operating expenses.

Choon Sen Loo: The operating margin increased to 6.7%, in contrast with 4.8% in H1 2025. Higher operating profit and operating margin were achieved by increased sales and gross margin, combined with controlled growth in operating expenses. Finance costs decreased by 16% to RMB 27 million or $4 million, compared with RMB 32.2 million in H1 2025, primarily due to reduced term loans during the period.

Speaker #2: The share of financial results of the associates and joint ventures grew by 56.2% to a profit of RMB 95.9 million, or US dollars 14.1 million, compared with RMB 61.4 million, in the first half of 2025.

Speaker #3: Finance costs decreased by 16% to RMB 27 million, or US $4 million, compared with RMB 32.2 million in the first half of 2025, primarily due to reduced term loans during the period.

Speaker #2: The increase was mainly driven by higher profits at MTU Yichai Power Company Limited. Income tax expense increased by 85.3% to RMB 215.3 million, or US dollars 31.6 million, compared with RMB 116.2 million, in the first half of 2025, primarily due to higher profits and the utilization of different tax assets.

Speaker #3: The share of financial results of the associates and joint ventures grew by 56.2% to a profit of RMB 95.9 million, or $14.1 million, compared with RMB 61.4 million in the first half of 2025.

Choon Sen Loo: The share of financial results of the associates and joint ventures grew by 56.2% to a profit of RMB 95.9 million or US$14.1 million, compared with RMB 61.4 million in H1 2025. The increase was mainly driven by higher profits at MTU Yuchai Power Company Limited. Income tax expense increased by 85.3% to RMB 215.3 million or US$31.6 million, compared with RMB 116.2 million in H1 2025, primarily due to higher profits and the utilization of deferred tax assets. The effective income tax rate increased to 20.4%, compared with 17.8% in H1 2025. Net profit attributable to equity holders of the company increased by 53.2% to RMB 560.6 million or US$82.3 million, compared with RMB 365.8 million in H1 2025. Basic earnings per share were RMB 14.94, US$2.19, compared with RMB 9.75 in H1 2025, both based on a weighted average of 37,518,332 shares.

Speaker #2: The effective income tax rate increased to 20.4% compared with 17.8% in the first half of 2025. Net profit attributable to equity holders of the company increased by 53.2% to RMB 560.6 million, or US dollars 82.3 million, compared with RMB 365.8 million, in the first half of 2025.

Speaker #3: The increase was mainly driven by higher profits at MTU Eachai Power Company Limited. Income tax expense increased by 85.3% to RMB 215.3 million, or US dollars 31.6 million, compared with RMB 116.2 million, in the first half of 2025, primarily due to higher profits and the utilization of different tax assets.

Speaker #3: The effective income tax rate increased to 20.4%, compared with 17.8% in the first half of 2025. Net profit attributable to equity holders of the company increased by 53.2% to RMB 560.6 million, or $82.3 million, compared with RMB 365.8 million in the first half of 2025.

Choon Sen Loo: The effective income tax rate increased to 20.4%, compared with 17.8% in H1 2025. Net profit attributable to equity holders of the company increased by 53.2% to RMB 560.6 million or US$82.3 million, compared with RMB 365.8 million in H1 2025. Basic earnings per share were RMB 14.94, US$2.19, compared with RMB 9.75 in H1 2025, both based on a weighted average of 37,518,332 shares.

Speaker #2: Basic earnings per share were RMB 14.94, US dollars 2.19, compared with RMB 9.75, in the first half of 2025, both based on a weighted average of 37,518,332 shares.

Speaker #2: Directed earnings per share were RMB 14.8, or US dollars 2.17, based on a weighted average of 37,845,508 shares, compared with RMB 9.75, based on a weighted average of 37,518,080,322 shares, in the first half of 2025.

Speaker #3: Basic earnings per share were RMB 14.94, US dollars 2.19, compared with RMB 9.75, in the first half of 2025, both based on a weighted average of 37,518,332 shares.

Speaker #2: The company adopted the China Yuchai International Limited 2025 equity incentive plan with a duration of 10 years and granted share options in August 2025, and December 2025, respectively.

Speaker #3: Diluted earnings per share were RMB 14.8, or $2.17, based on a weighted average of 37,845,508 shares, compared with RMB 9.75, based on a weighted average of 37,518,080,322 shares, in the first half of 2025.

Choon Sen Loo: Diluted earnings per share were RMB 14.8 or US$2.17, based on a weighted average of 37,845,508 shares, compared with RMB 9.75 based on a weighted average of 37,518,080,322 shares in H1 2025. The company adopted the China Yuchai International Limited 2025 Equity Incentive Plan with a duration of 10 years and granted share options in August 2025 and December 2025 respectively, with a total of 820,000 share options granted as of 31 December 2025. No comparable shares options were granted in H1 2025 and H1 2026. Now we will go through some balance sheet highlights as of 30 June 2026. Cash and bank balances were RMB 8.1 billion, or US$1.2 billion, compared with RMB 7.9 billion at the end of 2025. Trade and bills receivables were RMB 14.1 billion, or US$2.1 billion, compared with RMB 11 billion at the end of 2025.

Speaker #2: With a total of 820,000 share options granted as of December 31, 2025. No competible shares options were granted in the first half, 2025, and first half of 2026.

Speaker #3: The company adopted the China Yuchai International Limited 2025 Equity Incentive Plan with a duration of 10 years, and granted share options in August 2025 and December 2025, respectively.

Speaker #2: Now we will go through some balance sheet highlights as of June 30, 2026. Cash and bank balances were RMB 8.1 billion, or US dollars 1.2 billion, compared with RMB 7.9 billion at the end of 2025.

Speaker #3: With a total of 820,000 share options granted as of December 31, 2025. No competible shares options were granted in the first half. 2025 and first half 2026.

Speaker #2: Trade and bills receivables were RMB 14.1 billion, or US dollars 2.1 billion, compared with RMB 11 billion at the end of 2025. Inventories were RMB 5.8 billion, or US dollars 844.5 million, compared with RMB 5.6 billion at the end of 2025.

Choon Sen Loo: No comparable shares options were granted in H1 2025 and H1 2026. Now we will go through some balance sheet highlights as of 30 June 2026. Cash and bank balances were RMB 8.1 billion, or US$1.2 billion, compared with RMB 7.9 billion at the end of 2025. Trade and bills receivables were RMB 14.1 billion, or US$2.1 billion, compared with RMB 11 billion at the end of 2025.

Speaker #3: Now we will go through some balance sheet highlights as of June 30, 2026. Cash and bank balances were RMB 8.1 billion, or US$1.2 billion, compared with RMB 7.9 billion at the end of 2025.

Speaker #2: Trade and bills payables were RMB 13.2 billion, or US dollars 1.9 billion, compared with RMB 11.6 billion at the end of 2025. Short-term and long-term loans and borrowings were RMB 1.4 billion, or US dollars 210.1 million, compared with RMB 2 billion at the end of 2025.

Speaker #3: Trade and bills receivables were RMB 14.1 billion, or US dollars 2.1 billion, compared with RMB 11 billion at the end of 2025. Inventories were RMB 5.8 billion, or US dollars 844.5 million, compared with RMB 5.6 billion at the end of 2025.

Choon Sen Loo: Inventories were RMB 5.8 billion, or US$844.5 million, compared with RMB 5.6 billion at the end of 2025. Trade and bills payables were RMB 13.2 billion, or US$1.9 billion, compared with RMB 11.6 billion at the end of 2025. Short-term and long-term loans and borrowings were RMB 1.4 billion, or US$210.1 million, compared with RMB 2 billion at the end of 2025. I will now turn the call over to Kevin for comments for Q&A session. Kevin, please.

Speaker #2: I will now turn the call over to Kelvin for a comment for Q&A section. Kelvin, please.

Speaker #3: Trade and bills payables were RMB 13.2 billion, or $1.9 billion, compared with RMB 11.6 billion at the end of 2025. Short-term and long-term loans and borrowings were RMB 1.4 billion, or $210.1 million, compared with RMB 2.0 billion at the end of 2025.

Speaker #3: Okay.

Speaker #2: Kelvin, please.

Speaker #3: Okay. Yes. All right. So please note some officers of China Yuchai are remotely calling into the conference. This may result in a slight delay in providing an answer to some questions.

Speaker #3: I will now turn the call over to Kevin for a comment for Q&A section. Kevin, please.

Speaker #3: We apologize for any inconvenience, and thank you for your patience. If you would like to ask a question in Chinese, please kindly translate your own question to English before turning to the management for answers.

Speaker #1: Okay.

Kevin Theiss: Okay.

Speaker #3: Now, operator, we are ready for questions.

Speaker #1: Thank you. As a reminder, if you would like to ask questions via the phone, please press star 1 and 1 on your telephone, and wait for a name to be announced.

Speaker #3: Kevin, please.

Choon Sen Loo: Kevin Theiss?

Speaker #1: Okay, yes, all right. Please note that some officers of China Yuchai are remotely calling into the conference. This may result in a slight delay in providing answers to some questions.

Kevin Theiss: Okay. Yes. All right. Please note some officers of China Yuchai are remotely calling into the conference. This may result in a slight delay in providing answers to some questions. We apologize for any inconvenience, and thank you for your patience. If you would like to ask a question in Chinese, please kindly translate your own question to English before turning to the management for answers. Now, operator, we are ready for questions.

Speaker #1: You can also submit your questions on the webcast via the Ask Questions tab at the top of your webcast player. Please hold while we compile the Q&A roster.

Speaker #1: We apologize for any inconvenience, and thank you for your patience. If you would like to ask a question in Chinese, please kindly translate your question into English before turning to the management for answers.

Speaker #1: Now, operator, we are ready for questions.

Speaker #1: For the first question. Our first question comes from the line of Wei Shen from UBS. Your line is open. Please go ahead.

Speaker #2: Thank you. As a reminder, if you would like to ask questions via the phone, please press star 1-1 on your telephone and wait for your name to be announced.

Operator: Thank you. As a reminder, if you'd like to ask questions via the phone, please press star one and one on your telephone and wait for your name to be announced. You can also submit your questions on the webcast via the Ask Question tab at the top of your webcast player. Please hold while we compile the Q&A roster. For the first question. Our first question comes from the line of Wei Shen from UBS. Your line is open. Please go ahead.

Speaker #2: You can also submit your questions on the webcast via the Ask Questions tab at the top of your webcast player. Please hold while we compile the Q&A roster.

Speaker #4: First, thank you for taking my question. First, congratulations on a strong result. My question is about the AIDC kind of volume guidance. So we have achieved like 1,800.

Speaker #2: For the first question. Our first question comes from the line of Wei Shen from UBS. Your line is open. Please go ahead.

Speaker #4: And I think at the beginning of the year, we are targeting like 2,600. So any color into the second half of this year? This is the first question I might second question is about the dividend.

Wei Shen: Thank you for taking my question. First, congratulations on strong results. My question is about the AIDC kind of volume guidance. We have achieved like 1,800, and I think at the beginning of the year, we are targeting like 2,600. Any color into the H2 of this year? This is first question. My second question is about the dividends. I noticed that the company announced the 2025 dividends, but the payout ratio seems to be lower than 2024. I'm wondering, any color on this? Thank you.

Speaker #4: First, thank you for taking my question. Also, congratulations on a strong result. My question is about the AIDC volume guidance. So, we have achieved roughly 1,800 units, and I think at the beginning of the year, we were targeting about 2,600.

Speaker #4: I noticed that the company announced 2025 dividend, but the payout ratio seems to be lower than 2024. So I'm wondering any color on this.

Speaker #4: Thank you.

Speaker #2: Okay. I'll take the questions on dividend, and I'll let Kelvin take the question on the AIDC. No, there's no particular reasons. I think the payout ratio, if you look at our payout ratios in the past 10 years, it ranges from about 30 to 40 percent, sometimes a little bit higher, sometimes a little bit lower.

Speaker #4: So any color into the second half of this year? This is the first question I might second question is about the dividend. I noticed that the company announced 2025 dividend, but the payout ratio seems to be lower than 2024.

Speaker #2: So it's still within that range. So that hasn't changed. So yeah, there's not so no anything untowards that.

Speaker #4: So, I'm wondering if you could provide any color on this. Thank you.

Speaker #3: Okay, I'll take the questions on dividend, and I'll let Kevin take the question on the AIDC. No, there's no particular reason. I think the payout ratio, if you look at our payout ratios in the past 10 years, ranges from about 30 to 40 percent—sometimes a little bit higher, sometimes a little bit lower.

Choon Sen Loo: Okay. I'll take the questions on dividend, and I'll let Kevin take the question on the AIDC. No, there's no particular reason. I think the payout ratio, if you look at our payout ratios in the past 10 years, it ranges from about 30% to 40%, sometimes a little bit higher, sometimes a little bit lower. It's still within that range. That hasn't changed. Yeah, there's no anything towards that.

Speaker #5: Morning. Mr. Shen and the let me and then the pay through regarding on the volume of the AIDC and so in the first half and then the total volume of the AIDC from both the Yuchai and past the MQ joint venture is 1,800 units.

Speaker #3: So it's still within that range, so that hasn't changed. So, yeah, there's not anything untoward there.

Speaker #5: So that is for the AIDC only. And for the second half and then the we will expect the whole year, and then we'll

Weng Ming Hoh: Morning, Mr. Shen. Let me be full regarding on the volume of the AIDC engine. In H1, the total volume of the AIDC from both the Yuchai and Pasty, two joint venture, is at 1,800 units. That is for the AIDC only. For H2, we will expect the whole year will be around about 3,500 and more. This is, we had adjust the production and also the sales volume of the whole year of 2026. It means that there will be quite a significant growth compared to the year of 2025. Thank you.

Speaker #1: Around about 3500 or more . So this is how , where we adjust the the the production and also the sales form of the whole year of the 2026 and the it means that there will be quite a significant growth .

Speaker #5: Morning. Mr. Shen and the. Let me and then the take you through regarding on the volume of the AIDC and so in the first half and then the total volume of the AIDC from both the Yuchai and past the MQ joint venture is 1,800 units.

Speaker #1: And in compared to the year of 2025 . Thank you . Yeah .

Speaker #2: Thank you . Very clear

Speaker #5: So, that is for the AIDC only. And for the second half, we would expect the whole year number to be around about 3,500 or more.

Speaker #3: So for our next question The next question comes from the line of Fiona Leung of Bank of America . Your line is open .

Speaker #5: So this is we had adjust the production and also the sales volume. Of the whole year of the 2026. And the it means that there will be quite a significant growth and then in compared to the year of 2025.

Speaker #3: Please go ahead .

Speaker #4: Hello This is Fiona from Bank of America . I have a question about our gross margin profile . So in the first half , we see that the blended gross margin improved quite a lot Could you explain more about the factors behind whether is is due to the product mix change or our improving cost efficiency ?

Speaker #5: Thank you.

Speaker #4: Thank you. Very clear.

Wei Shen: Thank you. Very clear.

Operator: Hold for our next question. The next question comes from the line of Fiona Lim of Bank of America. Your line is open. Please go ahead.

Speaker #2: We'll move to our next question. The next question comes from the line of Fiona Liang of Bank of America. Your line is open. Please go ahead.

Speaker #4: And next , I also want to ask the gross margin or the net margin on you . M2 so for the first half , the our share of profit from associate and JB improved a lot So what's the margin profile for UHI ?

Fiona Lim: Hello, management. This is Fiona from Bank of America. I have a question about our gross margin profile. In H1, we see that the blended gross margin improved quite a lot. Could you explain more about the factors behind, whether is this due to the product mix change or our improving cost efficiency? Lastly, I also want to ask the gross margin or the net margin on Yuchai MTU. For H1, our share of profit from associate and JV improved a lot. What's the margin profile for Yuchai MTU currently?

Speaker #6: How management? This is Fiona from Bank of America. I have a question about our gross margin profile. So in the first half, we see that the blended gross margin improved quite a lot.

Speaker #6: Could you explain more about the factors behind? Whether is it due to the product mix change or our improving cost efficiency? And nextly, I also want to ask the gross margin or the net margin on Yuchai MTU.

Speaker #4: M2 currently ?

Speaker #5: Okay . Hey , hey yeah yeah . So I'll take the first question . All right . Regarding the gross margin expansion or improvement .

Speaker #5: Right . You know , from 14% to 17.1% . So yeah , I think you mentioned earlier on that , you know , the first thing first is that the product mix , right ?

Speaker #6: So for the first half, our share of profit from associate and JV improved a lot. So what's the margin profile for Yuchai MTU currently?

Speaker #5: The product mix actually drove the , the margin up in particularly , you know , in the last engine or house power engine , right ?

Speaker #3: Okay, thank you, Fiona. Yeah, did you say? Yeah. So I'll take the first question. All right. Regarding the gross margin, expansion or improvement, right?

Choon Sen Loo: Thank you, Fiona. This is Choon Sen. I will take the first question. Regarding the gross margin expansion or improvement from 14.0% to 17.1%. I think you mentioned early on that the first thing first, that the product mix actually drove the margin up, in particularly in the large engine or horsepower engine. That give us a nice uptick for the margin. That's number one. We also mentioned that our heavy duty engine unit sales has increased as well. That also give us some favorable margin increase in that aspect. Of course, the third point is that I think you also mentioned that we have continued to enhance our operational efficiency. That actually will help our cost rationalization in H1. Of course, our H1, we also been affected by some unfavorable pressure metal price increase.

Speaker #5: So , so that , that gives us a nice uptick for the margin , right ? So that's number one . Okay . And then we also mentioned that our heavy duty , you know , engine unit sales has has increased as well .

Speaker #3: You know, from 14% to 17.1%. So yeah, I think you mentioned earlier on that, you know, the first thing first that the product mix, all right, the product mix actually drove the margin up.

Speaker #5: So that also gives us some flavor , you know , favorable margin increase , you know , in that aspect . Okay . Of course , you know , the third point is that I think you also mentioned that , you know , our we have continued to , to enhance our operational efficiency , right ?

Speaker #3: In particular, you know, in the large engine or high-horsepower engine, right? So that gives us a nice uptick for the margin, right? That's number one.

Speaker #5: That is actually will help our cost rationalization , right . In the first half , of course , our first half , we also , you know , being affected by some unfavorable , you know , pressure metal price increase .

Choon Sen Loo: That's number one. We also mentioned that our heavy duty engine unit sales has increased as well. That also give us some favorable margin increase in that aspect. Of course, the third point is that I think you also mentioned that we have continued to enhance our operational efficiency. That actually will help our cost rationalization in H1. Of course, our H1, we also been affected by some unfavorable pressure metal price increase.

Speaker #3: Okay. And then we also mentioned that our heavy-duty, you know, engine unit sales have increased as well. So that also gives us some flavor favorable margin increase, you know, in that aspect.

Speaker #5: So that is kind of being offset against the what we have been doing for the course improvement . Yeah . I hope that I address your first question , Fiona Okay .

Speaker #3: Okay. Of course, you know, the third point is that—I think you also mentioned that—we have continued to enhance our operational efficiency, right?

Speaker #5: Then the second question .

Speaker #1: Okay . I think the M2 questions So the actually in the this year , then 2020 . Six , the the GP of the M2 joint venture see said .

Speaker #3: That actually will help our cost rationalization, right, in the first half. Of course, in our first half, we were also affected by some unfavorable, you know, pressure—like the meta price increase.

Speaker #1: Reduced . And then mainly because of the cost of the engine and also the there's some pricing pressure and we had to offer further discount and then to go .

Speaker #3: So that is kind of being offset against the what we have been doing for the cost improvement. Yeah. I hope that address your first question, Fiona.

Choon Sen Loo: It's trying to being offset against what we have been doing for the cost improvement. Hope that addressed your first question, Fiona. The second question.

Speaker #1: And also partners and the , the overall , the sales of the first half and then increasing by over 40% . And so the , the revenue and also the , the net profit is also increased , but net profit percentage is not as good as the , the revenue growth .

Speaker #3: Okay. That's the second question.

Speaker #5: Okay. I'll take the MQ questions. So the actually the this year then 2026, the GP of the MQ joint venture, it's a little bit reduced.

Weng Ming Hoh: I take the MTU question. Actually, this year then 2026, the GP of the MTU joint ventures see a little bit reduced, mainly because of the cost of the engine and also there's some pricing pressure. We had to offer further discount to OEM and also our partners. The overall, the sales of H1 and then increasing by over 40%. The revenue and also the net profit is also increased. The net profit percentage is not as good as the revenue growth. We are still maintaining about over 30% GP of the OSS overall. This is still quite promising on the net profit. Thank you.

Speaker #1: But we are still maintaining about over 30% GP of the OSS . Overall . So this is few quite promising . And then on the on the net profit .

Speaker #5: And then mainly because of the cost of the engine and also the there's some pricing pressure. And we had to offer further discount and then to OEM and also our partners.

Speaker #1: Yeah Thank you

Speaker #5: And overall, the sales for the first half have increased by over 40%. So, the revenue and also the net profit have also increased.

Speaker #4: Thank you

Speaker #3: Our next question comes from the line of Yiming Liu of Guo Thai Tong Securities . Please go ahead

Speaker #5: But net profit percentages are not as good as the revenue growth. However, we are still maintaining over 30% gross profit for the OSS overall.

Speaker #6: Hi . Thank you very much for taking me . So congratulations for your strong H1 . So I've got two questions . Number one , could you describe any progress on your gas engine product ?

Speaker #5: So this is still quite promising. And then on the net profit—yeah. Thank you.

Speaker #6: Is there any chance that there could be used in the other data center business for Prime power , especially in North America ? And another question on fuel cells .

Speaker #6: Thank you.

Fiona Lim: Thank you.

Speaker #2: Our next question comes from the line of Yiming Liu of Guotai Haitong Securities. Please go ahead.

Operator: Our next question comes from the line of Yiming Liu of Guotai Junan Securities. Please go ahead.

Speaker #6: So could you describe any progress on your fuel cell business . Is there any chance that they could be used in data center in the future ?

Yiming Liu: Hi. Thank you very much for taking me. Congratulations for your strong H1. I've got two questions. Number one, could you describe any progress on your gas engine product? Is there any chance that they could be used in the data center business for prime power, especially in North America? Another question on fuel cell. Could you describe any progress on your fuel cell business? Is there any chance that they could be used in the data center in the future? Thanks.

Speaker #3: Hi, thank you very much for taking my question. Congratulations on your strong H1 results. I have two questions. Number one, could you describe any progress on your gas engine product?

Speaker #6: Thanks .

Speaker #1: Okay . Let me take the first part . You mean and the regarding on the gas engine So the gas engine actually the is a traditional engine product and then it's available in UK for many years .

Speaker #3: Is there any chance that they could be used in the data center business for prime power, especially in North America? And another question on fuel cells.

Speaker #1: So when we develop the diesel and the gas engine is also available . So it's it's a very available product and then ready for the market .

Speaker #3: Could you describe any progress on your fuel cell business? Is there any chance that they could be used in a data center in the future?

Speaker #1: But you mentioned about on the North American market and then the at the moment , our engine is still under the certification process So now is awaiting .

Speaker #3: Thanks.

Speaker #5: Okay. Let me take the first part, Yuming, and regarding on the gas engine. So the gas engine actually the is a traditional engine product and then it's available in Yuchai for many years.

Weng Ming Hoh: Okay, let me take the first part, Yiming, regarding on the gas engine. The gas engine, actually is a traditional engine product and then is available in Yuchai for many years. When we developed the diesel and then the gas engine is also available. It's a widely available product and then waiting for the market. You mentioning about on the North American market and at the moment, our engine is still under the certification process. Now it's waiting and then for all the testing can be fully done and then before we can release the engine and then for any other region. At this stage, we still are then using our existing product, the YC engine, and then that is up to 2.5 MW for diesel and about 3 MW for the railway application.

Speaker #1: And then for all the testing and can be fully done . And then before we can release the engine , and then for any other region .

Speaker #1: And at this stage , we still , in using our , our , our , our existing part of the engine . And that is up to , 2.5MW diesel and about three megawatt or for the for the for the rail application .

Speaker #5: So, when we developed the diesel, and then the gas engine is also available. So, it's a very available product and ready for the market.

Speaker #5: But you mentioning about on the North American market and then the at the moment our engine is still under the certification process. So now it's awaiting and then for all the testing and then can be fully done and then before we can release the engine and then for any other region.

Weng Ming Hoh: You mentioning about on the North American market and at the moment, our engine is still under the certification process. Now it's waiting and then for all the testing can be fully done and then before we can release the engine and then for any other region. At this stage, we still are then using our existing product, the YC engine, and then that is up to 2.5 MW for diesel and about 3 MW for the railway application.

Speaker #1: So in each , we don't have exact timing regarding how , when we can . I mean , we get into the US market Actuaries are doing everything we can .

Speaker #1: Yeah . Thank you

Speaker #5: And then at this stage, we are still using our existing part of the VC engine, and then that's just up to 2.5-megawatt diesel and about 3-megawatt for the Greenway application.

Speaker #5: Okay .

Speaker #1: Can you repeat your second question again on the fuel cell

Speaker #6: Yeah . So could you give us some introduction of your fuel cell business ? And is there any chance that they could use in the data center or power generation in the future ?

Speaker #5: So we don't have an exact time regarding when we can, I mean, get into the US market. Actually, we are doing everything we can.

Speaker #6: Thanks

Weng Ming Hoh: We don't have exact timing regarding when we can get into the US market. We are actually doing everything we can. Yeah. Thank you.

Speaker #1: Well , I mean , our fuel cell unit is still in progress . We have been developing products in the past . We have some products for that's been installed in the in the buses , especially in Beijing .

Speaker #5: Yeah. Thank you.

Speaker #3: Okay. Can you repeat your second question again on the fuel cell?

Choon Sen Loo: Can you repeat your second question again on the fuel cell?

Speaker #1: We haven't we we have not started working on the power generation side of it . So I guess at some point in the future , it is a possibility .

Speaker #5: Yeah. So could you

Yiming Liu: Yeah. Could you give us some introduction of your fuel cell business? Is there any chance that they could be used in the data center power generation in the future? Thanks.

Speaker #3: Could you give us some introduction to your fuel cell business, and is there any chance that they could be used in data center power generation in the future?

Speaker #1: But definitely not in the short term . We have not do not have a product in the short term for power generation , for fuel cell system as yet Okay

Speaker #3: Thanks. Okay. Well, I mean, our fuel cell unit is still sort of in progress. We have been developing products in the past. We have some products for.

Choon Sen Loo: Okay. Well, I mean, our fuel cell unit is still in progress. We have been developing products in the past. We have some products that's been installed in the bus, especially in Beijing. We have not started working on the power generation side of it. I guess at some point the future it is a possibility, but definitely not in the short term. We do not have a product in the short term for power generation for fuel cell system as yet.

Speaker #6: Okay I see . Thank you very much .

Speaker #3: Thank you for the questions . As a reminder to ask questions , you can press star one and one on your telephone and wait for your name to be announced At this time , there are no further .

Speaker #3: That's been installed in the buses, especially in Beijing. We haven't—we have not started working on the power generation side of it. So, I guess at some point in the future, it's a possibility.

Speaker #3: But definitely not in the short term. We do not have a product in the short term for power generation for fuel cells.

Speaker #3: I beg your pardon ? One moment . For our next question You have a few questions from the line of Natalie Ong from Cgsi .

Speaker #3: System as yet. Okay.

Yiming Liu: Okay. Okay, I see. Thank you very much.

Speaker #5: Okay. I see. Thank you very much.

Speaker #2: Thank you for the questions. As a reminder to ask question, you can press star one and one on your telephone and wait for a name to be announced.

Operator: Thank you for the questions. As a reminder, to ask questions, you can press star one and one on your telephone and wait for your name to be announced. At this time, there are no further. One moment for our next question. You have a new question from the line of Natalie Ong from CGSI. Your line is open. Please go ahead.

Speaker #3: Your line is open . Please go ahead

Speaker #7: Hi . Good afternoon . Evening , management . Can you hear me ?

Speaker #1: Yes .

Speaker #7: Hi . Okay . Hi . Team . Congratulations on this . Good set of results . I have some questions regarding your ADC capacity .

Speaker #2: At this time, there are no further— I beg your pardon. One moment for our next question. You have a new question from the line of Natalie Ong from CGSI.

Speaker #7: I'm not sure if I heard this wrongly earlier . At the start of the call , you mentioned that your current capacity for high horsepower engines slash DC engines is currently 5000 for 2026 .

Speaker #2: Your line is open. Please go ahead.

Speaker #7: Is that correct

Speaker #1: Yes , that's correct .

Natalie Ong: Hi. Good afternoon. Good evening, my end. Can you hear me?

Speaker #6: Hi. Good afternoon. It's evening management. Can you hear me?

Speaker #7: So does that mean that actually there has been an increase in capacity ? Because I think previously you were guiding about 4000 capacity for 2026 .

Speaker #3: Yes.

Weng Ming Hoh: Yes.

Speaker #6: Hi. Okay. Hi, this is me and my team. Congratulations on this good set of results. I have some questions regarding your AIDC capacity. I'm not sure if I heard this wrongly earlier at the start of the call.

Natalie Ong: Hi. Okay. Hi, Weng and team. Congratulations on this good set of results. I have some questions regarding your AIDC capacity. I'm not sure if I heard this wrongly earlier at the start of the call, you mentioned that your current capacity for high-horsepower AIDC engines is currently 5,000 for 2026. Is that correct?

Speaker #5: Okay .

Speaker #1: Let me check this . .

Speaker #6: Last year and then the our capacity for the high horsepower engine . I mean , the combined .

Speaker #6: You mentioned that your current capacity for high horsepower engines slash DC engines is currently 5,000 for 2026. Is that correct?

Speaker #1: The

Speaker #6: High local brand , the , the M2 JV brand , and then all together is about 3000 . Last year . And we had had the capacity expansion program in the at the end of the 2024 so that it was complete last year .

Speaker #3: Yes, that's correct.

Weng Ming Hoh: Yes, that's correct.

Speaker #6: So does that mean that actually there has been an increase in capacity? Because I think previously you were guiding about 4,000 capacity for 2026.

Natalie Ong: Does that mean that actually there has been an increase in capacity? Because I think previously you were guiding about 4,000 capacity for 2026.

Speaker #6: So the we had about increasing about 700 unit capacity for the for the high horsepower . But at the beginning of this year , and then we also .

Speaker #5: Okay. Let me take this question. Last year and then the our capacity for the high house power engine I mean, the combined the Yuchai local brand plus the MTU JV brand and then all add together is about 50,000 last year.

Weng Ming Hoh: Okay, let me take this question. Last year, Natalie, our capacity for the high-horsepower engine, I mean, the combined Yuchai local brand plus the MTU JV brand, and then all add together is about 3,000 last year. We had the capacity extension program at the end of 2024, so that it was complete last year. We had increasing about 700 unique capacity for the high-horsepower. At the beginning of this year, and then we also went and modified our internal process so that we had subcontract out some of the machining process and then to the external subcontractor. Through this practice, and then we can increasing another 1,000 unique capacity and then for machining. Now we have all add together, and then total is about 5,000. This is our current capacity for the high-horsepower engine.

Speaker #6: And then modify our internal process . So that we have subcontract out some of our machining process and to the external subcontractor for this practice .

Speaker #6: And then we can increasing another thousand unit capacity . And for machining . So now we have all act together . And then total is about five 5000 .

Speaker #5: And we had the capacity extension program in the at the end of the 2024. So that it was complete last year. So the we had about increasing about 700 unit capacity for the high house power.

Speaker #6: So this is our current capacity for the high horsepower engine . So the including and then for those ADC or on ADC application we are still in the in in the in the in the pending and the to further increase the capacity for next year .

Speaker #5: But at the beginning of this year and then we also and then modify our internal process so that we have subcontract out some of the machining process and then to the external subcontractor.

Weng Ming Hoh: At the beginning of this year, and then we also went and modified our internal process so that we had subcontract out some of the machining process and then to the external subcontractor. Through this practice, and then we can increasing another 1,000 unique capacity and then for machining. Now we have all add together, and then total is about 5,000. This is our current capacity for the high-horsepower engine.

Speaker #6: But I think that we can we are now not had a had a , had a final decision regarding what's the . The warrant will be .

Speaker #5: For this practice, and then we can increase another 1,000-unit capacity for machining. So now, if we add all together, the total is about 5,000.

Speaker #6: But we and then we be increasing the the forum . And then for for the next . And then the year on . Year .

Speaker #5: So this is our current capacity. For the high house power engine. So including and then for those AIDC or on AIDC application. We are still and then in the the to further increase the capacity for next year.

Speaker #6: Thank you . Yeah

Weng Ming Hoh: That including, and then for those AIDC or non-AIDC application. We are still, and then, in the planning and then to further increase the capacity for next year. I mean that we are now not had a final decision regarding what the volume will be.

Speaker #7: Okay . Thank you . So my understanding is that the capacity is increased due to outsourcing of certain machining requirements . That's correct

Speaker #5: But I mean, we can we are now not had a final decision regarding what's the volume will be. But we and then we'll increasing the production volume and then for the next and then the year on.

Speaker #6: Yeah . Yeah . We are some of the machining process in the past . And then we do all the machining in-house . But now and then we are using the external contractor .

Weng Ming Hoh: We'll be increasing the professional volume, and then for the next, and then the year on this. Thank you. Yeah.

Speaker #6: And then to do the some of the machining for us so that we can spare our and further capacity and then to build more engine

Speaker #5: Yes. Thank you. Yeah.

Speaker #6: Okay. Thank you. So my understanding is that the capacity is increased due to outsourcing of certain machining requirements. That's correct?

Natalie Ong: Okay. Thank you. My understanding is that the capacity has increased due to outsourcing of certain machining requirements. Is that correct?

Speaker #7: Okay . So does this mean that you're still guiding for 3500 ? I only ADC that means excluding those sold to non AI .

Speaker #6: That's is a is a is an AI . AI only . Yeah , yeah . 3500 . Yeah

Speaker #5: Yeah. Yeah. We squander out some of the machining process. In the past and then we do all the machining in-house. But now and then we are using the external contractor and then to do the some of the machining for us so that we can spare out and then further capacity and then to build more engine.

Weng Ming Hoh: Yeah. We contract out some of the machining process. In the past, and then we do all the machining in-house. Now, and then we are using the external contractor, and then to do some of the machining for us so that we can spare out and then further capacity and then to build more engine.

Speaker #7: So that means do you expect to sell all the capacity that we have , which is going to be 5000 for the year

Speaker #6: Yeah . Yeah . This is exactly yes . 5000 for the year

Speaker #7: And to be clear , the ESP for high loss power engines , be it sold to ADC customers or non ADC , the ASPs are actually similar .

Speaker #6: Okay. So does this mean that you're still guiding for 3,500 AI only AIDC? That means excluding those sold to non-AI.

Natalie Ong: Okay. Does this mean that you're still guiding for 3,500 only AIDC load? That means excluding those sold to non-AIDC.

Speaker #5: That is AI only. Yeah. Yeah. 3,500. Yeah.

Weng Ming Hoh: That is AIDC only, yeah. 3,500, yeah.

Speaker #6: Yeah . Correct . And the because the high horsepower engine is not only for application of AI , PCA , this is only for using the engine for the power generation .

Speaker #6: So that means, do you expect to sell all the capacity that we have, which is going to be 5,000 for the year?

Natalie Ong: That means we expect to sell all the capacity that we have, which is going to be 5,000 for the year.

Speaker #6: So the power generation can be using in the factory . You may be using in the in the in the in a commercial building .

Speaker #5: Yeah. Yeah. This is yeah. Exactly. Yes. 5,000 for the year.

Weng Ming Hoh: Yeah. This is 5,000 for the year.

Speaker #6: And to be clear, right, the ASPs for high house power engines, be it sold to AIDC customers or non-AIDC, the ASPs are actually similar.

Speaker #6: And then so there's quite a lot of ADC application . And then using the high horsepower engine as well

Natalie Ong: To be clear, the ASPs for high-horsepower engines, be it sold to AIDC customers or non-AIDC, the ASPs are actually similar.

Speaker #7: That's perfect . Can I also check ? I know some of your competitors have also been ramping up their manufacturing capacity . How has that affected your ability to command ?

Speaker #5: Yeah. Correct. And the because the high house power engines are not only for application of AIDC, this is only for using the engine and for the power generation.

Weng Ming Hoh: Yeah. Except, correct. Because the high-horsepower engine is not only for application of AIDC, this is only for using the engine for the power generation. The power generation can be using in the factory, you may be using in a commercial building. There's quite a lot of the non-AIDC application using the high-horsepower engine as well.

Speaker #7: You know , or maintain increase your average selling prices for these high horsepower ADC engines

Speaker #5: So, the power generation can be used in the factory. You may be using it in a commercial building, and then, so there's quite a lot of the non-AIDC applications, and then using the high horsepower engine as well.

Speaker #6: In fact , the I mean that because of the the surging demand of the A , B , C engine in the high horsepower engine market .

Speaker #6: Oh, that's perfect. Can I also check I know some of your competitors have also been ramping up their manufacturing capacity. How has that affected your ability to command or maintain increased your average selling prices for these high house power slash AIDC engines?

Natalie Ong: That's perfect. Can I also check, I know some of your competitors have also been ramping up their manufacturing capacity. How has that affected your ability to command or maintain, increase your average selling prices for these high-horsepower/AIDC engines?

Speaker #6: So not only use high , but I mean the . All other measurement refrigerators , they are also do the same thing . And then have the capacity extension program .

Speaker #6: And then since the beginning of the 2024 , 2025 , and this year , and then so , I mean , the , the market is still very competitive .

Speaker #6: And the HP engine supplier . And then they too , I mean , they had to do whatever they can and to win the order .

Speaker #5: In fact, the I mean, that because of the certain demand of the AIDC engine in the high house power engine market. So not only Yuchai or MTU, but I mean, that all other management refrigerator, they are also do the same thing and then check the capacity extension program.

Weng Ming Hoh: I mean that because of the certain demand of the AIDC engine in the high-horsepower engine market. Not only Yuchai or MTU, but all other engine manufacturer, they also do the same thing and then have the capacity extension program. Since the beginning of the 2024, 2025 and this year. The market is still very competitive and the engine supplier and then they too, they have to do whatever they can and to win the order. Otherwise, the extension program, and we will have to be, difficult then to get the return. The pricing-wise, and then the-

Speaker #6: Otherwise , you know , the extension program . And we will have to be I mean , the , I mean , difficult and to , to get the return .

Speaker #6: So the pricing wise and then the we haven't . And then have any . I mean , there are real price increase . And then compared to last year , except we have the cost increase .

Speaker #5: And then since the beginning of the 2024 or 2025 and this year and then so I mean, the market is still very competitive. And the engine supplier and then they to I mean, they had to do whatever they can to win the order.

Speaker #6: And then from our supply and by to the end user for all those additional costs engine itself and then still , I mean the , the quite stable pricing anyway .

Speaker #5: Otherwise, the extension program and then we will have to be I mean, the I mean, difficult to get the return. So the pricing-wise and then the we haven't and then had any I mean, there are real pricing increase and then in comparison to the last year except we had the cost increase and then from our supply and then starting by to the end user.

Speaker #6: Yeah . Thank you

Speaker #7: Thank you so much . Sorry . One last question . I know you mentioned that you have not firmed up your capacity available capacity for next year .

Weng Ming Hoh: we haven't had any, the real pricing increase compared to the last year except we had the cost increase and then from our supply and then we just coming by to the end user for all those additional costing. Engine itself and then still, I mean, they maintain quite a stable pricing anyway. Yeah. Thank you.

Speaker #7: So meaning to say that you could try to outsource more of these machining and maybe increase capacity . Or do you think that this will require expansion of lines and therefore more CapEx spending

Speaker #5: For all those additional costs—the engine itself—and then still, I mean, the pricing is quite stable anyway. Yeah, thank you.

Speaker #6: Actually , we will do in due way . I mean , one is I think we will further outsource some of the process , but we cannot outsource active process .

Speaker #6: Thank you so much. Sorry. I have one last question. I know you mentioned that you have not firmed up your capacity available capacity for next year.

Natalie Ong: Thank you so much. Sorry, one last question. I know you mentioned that you have not firmed up your available capacity for next year. You mean to say that you could try to outsource more of this machining and maybe increase capacity, or do you think that this will require expansion of lines and therefore more CapEx spending?

Speaker #6: I mean , from to the external suppliers because we can do the , what we call the , the , the first , the first machining , but the final machining we need to do in-house anyway .

Speaker #6: So, meaning to say that you could try to outsource more of this machining and maybe increase capacity, or do you think that this will require expansion of lines and therefore more CapEx spending?

Speaker #6: So we still have to , I mean , increasing some of the machinery . And then for the final machining process inside the factory .

Speaker #6: So we will have to do it both way and then first I said it also and then try to increase the subcontract processing .

Weng Ming Hoh: Actually, we will do in two ways. I mean, one is, we will further outsource some of the process. We cannot outsource every process, I mean, to the external supplier because we can do what we call the first machining, but the fine machining we need to do in-house anyway. We still had to, I mean, increase some of the machinery and then for the fine machining process inside the factory. We will have to do it both ways. First, also, try increasing the subcontract processing. Secondly, we still have to increase, I mean, to buy some more equipment and then for the internal process as well. We will do the same.

Speaker #5: Actually, we will do it in a phased way. I mean, the one is, and then we will further outsource some of the processes. But we cannot outsource the Epic process.

Speaker #6: And secondly , and then we still have to increase . I mean to buy some more equipment . And then for the internal process as well .

Speaker #5: I mean, from the external supplier, because we can do what we call the first machining, but the fine machining we need to do in-house anyway.

Speaker #6: So we will do the same . And the we already had some kind of planning regarding on the capacity of next year , but we need to finalize .

Speaker #5: So we still had to I mean, increasing some of the machinery and then for the fine machining process. Inside the factory. So we will have to do it both way and then first also and then try to increasing the subcontract processing and secondly and then we still have to increasing I mean, to buy some more equipment and then for the internal process as well.

Speaker #6: And then before we actually put it in the in the action . Yeah

Speaker #3: Thank you for the questions As a reminder , if you'd like to ask questions , please press star one and one and wait for our name to be announced Once again , if you would like to ask a question , you can press star one and one and wait for your name to be announced At this time , we do not have any further questions from the phone or webcast .

Speaker #5: So we will do the same. And the we already have some guy regarding on the capacity of next year, but we need to finalize and then before we actually put it in the action.

Weng Ming Hoh: We already have some guidelines or reasonable planning regarding the capacity of next year, but we need to finalize and then before we actually put it into action. Yeah.

Speaker #5: Yeah.

Speaker #3: Allow me to hand the call back to Mr. Ho for closing .

Speaker #2: Thank you for the questions. As a reminder, if you'd like to ask questions, please press star one and one and wait for our name to be announced.

Operator: Thank you for the questions. As a reminder, if you'd like to ask a question, please press star one and one and wait for your name to be announced. Once again, if you'd like to ask a question, you can press star one and one and wait for your name to be announced. At this time, we do not have any further questions from the phone or webcast. Allow me to hand the call back to Mr. Hoh for closing.

Speaker #1: Thank you all for participating in our conference call . We wish all of you good health and look forward to speaking with you again Thank you .

Speaker #1: Goodbye

Speaker #2: Once again, if you'd like to ask questions, you can press star one and one and wait for our name to be announced. At this time, we do not have any further questions from the phone or webcast.

Speaker #2: Allow me to hand the call back to Mr. Hoh for closing.

Weng Ming Hoh: Right. Thank you all for participating in our conference call. We wish all of you good health and look forward to speaking with you again. Thank you. Goodbye.

Speaker #5: Thank you all for participating in our conference call. We wish all of you good health and look forward to speaking with you again. Thank you.

Speaker #5: Goodbye.

Operator: This conference call. Thank you for your participation. You may now disconnect your lines.