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spk02: Good day and thank you for standing by. Welcome to the China QQI International Limited 2022 Unaudited Second Half and Full Year Financial Results Conference Hall. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star 1 1 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw your question, please press star 1 1 again. Alternatively, you can submit your question via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Kevin Saiz. Please go ahead.
spk05: Thank you for joining us today, and welcome to China-UChai International Limited's second half year and full year ended December 2022 conference call webcast. Joining us today are Mr. Wen Ho and Mr. Chun-Li. President and Chief Financial Officer of CYI, respectively. In addition, we also have an attendant, Mr. Calvary, VP of Operations of CYI. Before we begin, I will remind all listeners that throughout this call, we make statements that contain force. The Education Reform Act of 1995. The words believe, anticipate, project, optimistic, confident that continue to predict, intend, will, or similar expressions are all intended to provide forward-looking statements. All statements other than statements of historical fact or statements may be forward-looking. These forward-looking statements include but are not limited to statements concerning these operations and financial performance and conditions and are based on expectations, beliefs, and assumptions that are subject to change at any time. The company mentions that the nature involved in uncertainty and actual results may differ materially depending on a variety of important factors such as government and stock exchange regulations, competition, political, economic, and social conditions around the world, and those discussed in the company form 20 Fs under the names risk factors, results of operations, and business over. There are other reports filed with the Securities and Exchange Commission from time to time. If COVID-19 pandemic is not effectively controlled, our business operations and financial conditions may be materially and adversely affected due to a deteriorating market for automotive sales and economic slowdown and abroad, a potential weakening of financial conditions for customers, potential adverse impact on suppliers and supply chains, 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 disclaims any obligation to maintain or update forward-looking information, whether of the nature contained in the press release made during today's call or otherwise in the future. Mr. Hote will begin. We'll provide a brief overview and summary. Then Mr. Liu will review the financial results for the second half and full year in December 31, 2022. Thereafter, we will conduct a question and answer session. For the purposes of today's call, the 2022 and 2021 second half financial results and the 2022 year financial results are unaudited and they will be presented in RMB and US dollars. The 2021 year results are audited. All the financial information presented is reported using the international financial reporting standards as issued by the International Accounting Standards Board. Mr. Ho, please begin your prepared remarks.
spk06: Thank you, Kevin. Following the sluggish 2.5% GDP growth year-over-year in the first half of 2022, the Chinese economy continued a slow growth trend with 3.9% year-over-year growth for the third quarter of 2022 and 2.9% in the fourth quarter. Quarter-over-quarter economic growth between the third quarter and fourth quarter of 2022 was flat. For fiscal year 2022, Chinese economic growth was 3%, down sharply from 8.4% growth experienced in 2021. The total retail sales in China declined by 0.2% and investment in real estate development declined by 10% in fiscal 2022 year. According to data reported by China Association of Automobile Manufacturers, total industry unit sales of commercial vehicles excluded gasoline-powered and electric-powered vehicles for the second half of 2022 declined by 26.3%, year-over-year with truck and bus unit sales down by 27.5% and 18.4% respectively. For the fiscal year 2022, commercial vehicle unit sales are down by 41.4% year-over-year with truck unit sales 42.9% lower and bus unit sales down 37.1%. Food-related lockdowns and travel restrictions in China resulted in reduced demand for commercial vehicles as logistical activities declined, and there were fewer infrastructure and construction projects in 2022. The real estate market suffered from financial liquidity and uncertainty. In addition, the interruption of the supply chain also affected production schedules. In this uneasy Chinese commercial vehicle environment, our subsidiary from CE China Machinery Company Limited reported a combined truck and bus unit sales decline of 33% year-over-year in the second half of 2022. Truck sales were 33.2% lower and bus sales declined by 32.1%. However, GIMCL heavy-duty bus sales increased by 16.9% far exceeding that market growth. GIMCL's engine sales in the Upward segments experienced a more modest unit sales reduction of 5% year-over-year in the second half of 2022. Both industrial and agricultural engine unit sales rose in the second half of 2022 on year-over-year basis. On a more positive note, our new energy product segment has reported sales of over 5,300 units in the second half of 2022. For the 2022 fiscal year, UIMCL reported unit sales of trucks and buses down by 47.8% year-over-year. Truck sales declined by 49.6% and bus unit sales were down 33.2%. Off-road unit sales declined by 9.8% year-over-year. New energy product unit sales were over 6,300 units from a low base for this new product. Our revenue for the second half of 2022 RMB 7.5 billion or USD 1.1 billion, a 13.6% decline compared with RMB 8.6 billion in the same period of 2021. For fiscal year 2022, revenue was RMB 16 billion or USD 2.3 billion compared with RMB 21.3 billion in 2021. Gross profit was flat at RMB 1.3 billion or USD 182.4 billion in the second half of 2022 compared with the same period last year. However, the gross margin rose to 17% as compared with 60.4% in the second half of 2021. The increase in gross margin was mainly attributable to the change in revenue mix with higher offered revenue cost reductions, especially materials and production related expenses and lower sales rebates. For 2022 year, Gross profit decreased by 10.9% year-over-year to RMB 2.6 billion, or US dollars 377.7 million, and the gross margin increased to 16.4%, compared with 13.9% in 2021. We are especially pleased to report a 41.2% year-over-year increase in operating profit to RMB 231.3 million, or US dollars 33.2 million, and a higher operating margin in the second half of 2022, despite the lower sales. For 2022 operating profit was RMB 519.3 million or USD 74.6 million. As part of a cost savings initiating, selling general administrative expenses were reduced by approximately 8.2% year-over-year to RMB 1.6 billion or USD 231.4 million. And research and development expenditures decreased by 1.5% year-over-year RMB $836.4 million or USD $131.1 million . For the second half of 2022, a basic and diluted urge studying the share of RMB $3.06 or USD $44.10 increased by 565.2% above the RMB $0.46 in the same period last year. For the 2022 fiscal year basic and diluted earnings per share were RMB 5.35 or US $0.77. In summary, our financial results once again demonstrated the strong resilience of our businesses and our presence in diversified energy markets. On the sales front, we had some notable new orders in 2022. The city of Moscow ordered more than 600 new energy buses equipped with each high range extenders. which were fully delivered in 2022 and been operated by Macau's public transit services. UAMCL won an order for 100 heavy-duty truck engines from Chiang Mai, heavy-duty trucks consisting of YC6, YCK08, YCK11, and YCK12 engines. These engines are recognized for their low fuel consumption, low noise, and high reliability. The partnership with Chiang Mai heavy-duty truck has been extended to other CHI sectional state-compliant model engines. UYMTL's YC6GN 7.8-litre heavy duty natural gas engine became the explosive engine to power 800 anti-buses shipped to Monterey, Mexico, that country's third-largest city. The YC6GN provides a more environmentally friendly bus solution. Below are some progress in the new energy segment in 2022. YCHI's Model YC807N hybrid engines are propelling the 10-liter gas electric hybrid buses produced by the largest bus producer in China, Yicong Group, and delivered to a bus-operating customer in the city of Nanjing. YCHI Sinlan New Energy Power Technology Company Limited successfully integrated the 3.5-ton electric drive axle for the first time into an EV light bus from Kuala Lumpur to Shenzhen in the first quarter of 2022. Each High Seng Land 300kW high-power range extended power train system was integrated into Inner Mongolia EasyMove Technologies 200 metric tons Smart Mining Truck in the third quarter of 2022. The EM200 is China's First, it was made with 200 metric tons of smart mining trucks and features greatly improved payload management efficiency, low carbon emissions, and provides intelligent control. After introducing its first hydrogen engine for commercial vehicles in 2021, QYMTR introduced a new heavy duty hydrogen engine, the YTK16H engine in the second quarter of 2022. Each icing land has received a total of RMB 70 million capital from three new investors. These funds are targeted to expand working capital and to enhance development of high-power full-electric drive systems and for hybrid and range-extended drive systems for both on- and off-road applications. As of December 31, 2022, the cash and bank balances of RMB 4.9 billion or USD 696.5 million and we maintain a strong balance sheet. During a year, the Board of Directors declared a cash dividend of $0.40 USD for ordinary share for the year ended 31 December 2021, which was paid on July 15, 2022. We are cautiously optimistic for 2023. Recent policy changes in 2023 have related with new COVID-19 lockdowns and travel restrictions, which will improve the business and investment activities including the supply chain. Any new policies introduced will help improve the investment environment for both domestic and export markets will enhance the operating environment. With that, I would like to turn the call over to Chun Seng Lu, our Chief Financial Officer, who will provide more skills on the financial results.
spk07: Thank you, Wing Ming. Now, let me review our unobstructed six-month results ended December 31, 2022. Revenue was RMB 7.5 billion or USD 1.1 billion compared with RMB 8.6 billion in second half 2021. The total number of NGs sold by GMCL in second half 2022 declined by 18.1% to 140,345 units compared with 131,449 units in the second half of 2021. The decrease was mainly due to lower energy sales in the truck, bus, marine and power generation application market, partially offset by higher sales in agricultural and industrial engines. According to data reported by The China Association of Automobile Manufacturers , in the second half of 2022, commercial vehicle unit sales, excluding sales of gasoline-powered and electric-powered vehicles, decreased by 26.3% compared to the second half of 2021, as sales of trucks and buses declined by 27.5% and 18.4% respectively. reflecting demand in this market segment. Gross profit was RMB 1.3 billion or USD 182.4 million compared with the same amount of RMB 1.3 billion in second half 2021. Gross margin increased to 17% as compared with 15.4% in second half 2021. The increase in gross margin was mainly attributable to a change in revenue mix with an increase in off-look segment over the on-look segment, cost reduction and lower sales rebate. Other operating income increased by 22.9% to RMB 251.3 million or USD 36.1 million compared with RMB 204.5 million in second half 2021. The increase was mainly due to higher diamond grants. Research and development R&D expenses decreased by 19.7% to RMB 428 million or USD 61.4 million compared with RMB 533.1 million in second half of 2021 due to lower R&D expenses incurred in commercial vehicle engines that were partially offset by higher R&D expenses incurred in marine engines and power generation engines and new energy products. Further R&D expenditures including capitalized costs were R&D $540.8 million or US$77.6 million representing 7.3% of revenue in second half 2022 as compared to RMB RM712.2 million representing 8.3% of revenue in second half 2021. Selling General and Administrative expenses increased slightly to RMB $832.1 million or USD $123.8 million from RMB $835.9 million in second half 2021. The increase was mainly due to increased 1G expenses compared with the same period last year. SG&A expenses represented 11.6% of revenue for second half 2022 compared with 9.7% in second half 2021. Operating profit rose by 41.2% to RMB 231.3 million or USD 33.2 million from RMB 153.8 million in second half 2021. The operating margin was 3.1% compared with 1.9% in second half 2021. Finance cost decreased by 15.3% to RMB 40.2 million or USD 5.8 million from RMB 47.5 million in second half of 2021. The share of financial results of the associates and joint ventures was a profit of RMB 1.8 million, USD 0.3 million, compared with a loss of RMB 108.4 million in second half 2021. This gain was largely due to higher profit at the MTU Yuchai Power Company Limited and a share of lower losses at YMT Engines Company Limited. Income tax expense was RMB 2.6 million or USD 0.4 million, as compared with an income tax credit of 42.4 million in second half of 2021. The change was mainly due to the higher tax credit income in second half 2022. Net profit attributable to equity holders of a company was RMB 124.9 million or USD 17.9 million compared with RMB 90 million in second half 2021. Basic and diluted earnings per share were RMB USD 3.06 or USD 44 cents compared with IRB 0.46 in second half 2021. Basic and diluted earnings per share for second half 2022 and second half 2021 were based on the weighted average of 40,838,290 shares. Now we will review the unordered financial results for the 2022 fiscal year ended December 21, 2022. Revenue was R&D 16 billion or US dollar 2.3 billion compared with R&D 21.3 billion in full year 2021. The total number of engines sold by GMTL in financial year 2022 decreased by 29.7%. to 301,256 units compared with 456,791 units in financial year 2021. The decrease was mainly due to weakness in the truck and bus market and the market of marine and power generation engines. According to TAAN, commercial vehicle unit sales, including sales of gasoline power and electric power vehicles decreased by 41.4% in FY2022, as sales of trucks declined by 42.9%, while sales of buses declined by 27.1%. The impact of COVID-19 restrictions and related supply chain disruptions impacted market conditions in China and in foreign markets. Gross profit decreased by 10.9% to RMB 2.6 billion or USD 37.7 million compared with RMB 3 billion in FY2021. Gross margin increased to 16.4% compared with 13.9% in FY2021. The increase in gross margin was mainly attributable to a change in revenue mix with higher off-road revenue as a greater proportion of the total revenue and lower sales rebate. Other operating income increased by 6.5% through IRB $366.8 million or USD $48.4 million compared with IRB $316.2 million in FY2021. The increase was mainly due to higher government grants. IRB expenses decreased by 1.4% to RMB 836.4 million or USD 120.1 million compared with RMB 848.8 million in F1 2021. GIMCL continues with its initiatives to improve energy performances and the quality of its engines compliant with China's national six and tier four emission standards and to develop new energy products. FY2022 total R&D expenditures including capitalized costs were R&D $1,146.1 billion compared with R&D $1.2 billion in FY2021 representing 6.4% of the revenue compared with 5.5% in FY2021. SG&A expenses were R&D $1.6 billion US dollar $231.4 million representing 10.1% of the revenue compared with IMB $1.8 billion representing 8.3% of the revenue in full year 2021. This decrease was mainly due to low rate personnel and royalty expenses. Operating profit was IMB $519.3 million or USD $74.6 million down from RMB633.5 million in FY2021. The operating margin was 3.2% as compared with 3.1% in FY2021. Finance cost decreased by 13.6% to RMB95.5 million or USD13.7 million from RMB116.9 million in FY2021. The share of financial results of the Ethoship and Young Ventures was a loss of RMB RM39.1 million or USD RM4.2 million compared with a loss of RMB RM95.9 million in FY2021. The decreased loss was primarily attributable to higher profit at the NTU Yuchai Power Company Limited and the share of lower losses at YNT Engines Company Limited. Income tax expense was RMB 59.1 million or USD 8.5 million as compared with RMB 43.8 million in FY 2021. Net profit attributable to China-UChai shareholders was RMB 218.6 million or USD 31.4 million compared with RMB 272.7 million in FY 2021. Basic and Directed Earnings Per Share were RMB 5.35 or USD 0.77, compared with RMB 6.67 in FY 2021. Basic and Directed Earnings Per Share for FY 2022 and FY 2021 were based on the weighted average of 40,838,290 shares. Now let me walk you through our balance sheet highlights as of December 31, 2022. Cash and bank balances were RMB 4.9 billion, USD 636.5 million, compared with RMB 5.3 billion at the end of FY 2021. Trade and bills receivables were RMB 6.8 billion, USD 935.4 million, compared with RMB 6.8 billion at the end of financial year 2021. Event Tories were RMB $4.9 billion or USD $709 million compared with RMB $5.2 billion at the end of FY 2021. Trade and Use Tables were RMB $6.9 billion or USD $993.5 million compared with RMB $7.4 billion at the end of financial year 2021. Short-term and long-term bank borrowings were RMB $2.3 billion, or USD $236.3 billion, and RMB $2.2 billion at the end of financial year 2021. I will now turn the call over to Kevin for a comment before we begin our Q&A.
spk05: Thank you. Please note, some officers of China Yichai are remotely calling into the conference call. This may result in a slight delay in providing answers to some questions. We apologize for any inconvenience and thank you for your patience. With that operator, we are now ready to begin the Q&A session.
spk02: Thank you. As a reminder, to ask a question, you need to press star 11 on your telephone keypad and wait for a name to be announced. To withdraw your question, please press star 11 again. Alternatively, you can submit your questions via the webcast.
spk00: Please remember we'll compile the Q&A rules that this will take a few moments.
spk02: Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad.
spk00: You're more welcome also to submit any questions via the webcast. Dear speakers, there are no questions at this time. Please continue.
spk03: Okay, Leo.
spk05: Okay, thank you all for participating in our conference call. We wish each of you good health and please be safe during this pandemic. We look forward to speaking with you again. Goodbye.
spk02: That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.
spk01: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1. Thank you. Thank you. Thank you.
spk09: Thank you. music music
spk02: Good day and thank you for standing by. Welcome to the China QQI International Limited 2022 Unaudited Second Half and Full Year Financial Results Conference Hall. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star 11 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw your question, please press star 11 again. Alternatively, you can submit your question via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Kevin Saiz. Please go ahead.
spk05: Thank you for joining us today, and welcome to China-UChai International Limited's second half year and full year ended December 2022 conference call webcast. Joining us today are Wen Ho and Mr. Chun-Li. President and Chief Financial Officer of CYI, respectively. In addition, we also have an attendant, Mr. Calvin White, VP of Operations of CYI. Before we begin, I will remind all listeners that throughout this call, we make statements that contain force. The Education Reform Act of 1995. The words believe, anticipate, project, optimistic, confident that continue to predict, intend, will, or similar expressions are all intended to provide forward-looking statements. All statements other than statements of historical fact or statements may be forward-looking. These forward-looking statements include but are not limited to statements concerning these operations and financial performance and conditions and are based on expectations, beliefs, and assumptions that are subject to change at any time. The couple mentions that the nature involved in uncertainty and actual results may differ materially depending on a variety of important factors such as government and stock exchange regulations, competition, political, economic, and social conditions around the world, and those discussed in the company form 20 Fs under the names risk factors, results of operations, and business oaths. There are other reports filed with the Securities and Exchange Commission from time to time. If COVID-19 pandemic is not effectively controlled, our business operations and financial conditions may be materially and adversely affected due to a deteriorating market for automotive sales, an economic slowdown and abroad, a potential weakening of financial conditions for customers, potential adverse impact on suppliers and supply chains, 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 disclaims any obligation to maintain or update forward-looking information, whether of the nature contained in the press release made during today's call or otherwise in the future. Mr. Ho will provide a brief overview and summary. Then Mr. Liu will review the financial results for the second half and full year into December 31, 2022. Thereafter, we will conduct a question and answer session. For the purposes of today's call, the 2022 and 2021 second half financial results and the 2022 year financial results are unaudited and they will be presented in RMB and U.S. dollars. The 2021 year results are audited. All the financial information presented is reported using the international financial reporting standards as issued by the International Accounting Standards Board. Mr. Ho, please begin your prepared remarks.
spk06: Thank you, Kevin. Following the sluggish 2.5% GDP growth year-over-year in the first half of 2022, the Chinese economy continued a slow growth trend with 3.9% year-over-year growth for the third quarter of 2022 and 2.9% in the fourth quarter. Quarter-over-quarter economy growth between the third quarter and the fourth quarter of 2022 was flat. For fiscal year 2022, Chinese economy growth was 3%, down sharply from 8.4% growth experience in 2021. The total retail sales in China declined by 0.2%, and investment in real estate development declined by 10% in fiscal 2022 year. According to data reported by China Association of Automobile Manufacturers, total industrial unit sales of commercial vehicles excluded gasoline-powered and electric-powered vehicles for the second half of 2022 declined by 26.3%, year-over-year with truck and bus unit sales down by 27.5% and 18.4% respectively. For the fiscal year 2022, commercial vehicle unit sales are down by 41.4% year-over-year with truck unit sales 42.9% lower and bus unit sales down 37.1%. Food-related lockdowns and travel restrictions in China resulted in reduced demand for commercial vehicles as logistical activities declined, and there were fewer infrastructure and construction projects in 2022. The real estate market suffered from financial liquidity and uncertainty. In addition, the interruption of the supply chain also affected production schedules. In this uneasy Chinese commercial vehicle environment, our subsidiary from CE China Machinery Company Limited reported a combined truck and bus unit sales decline of 33% year-over-year in the second half of 2022. Truck sales were 33.2% lower and bus sales declined by 32.1%. However, GMCL heavy-duty bus sales increased by 16.9% far exceeding that market growth. GMCL's engine sales in the Off-road segments experienced a more modest unit sales reduction of 5% year-over-year in the second half of 2022. Both industrial and agricultural engine unit sales rose in the second half of 2022 on year-over-year basis. On a more positive note, our new energy product segment has reported sales of over 5,300 units in the second half of 2022. For the 2022 fiscal year, UIMCL reported unit sales of trucks and buses down by 47.8% year-over-year. Truck sales declined by 49.6% and bus unit sales were down 33.2%. Off-road unit sales declined by 9.8% year-over-year. New energy product unit sales were over 6,300 units from a low base for this new product. Our revenue for second half of 2022 was RMB 7.5 billion or USD 1.1 billion, a 13.6% decline compared with RMB 8.6 billion in the same period of 2021. For fiscal year 2022, revenue was RMB 16 billion or USD 2.3 billion compared with RMB 21.3 billion in 2021. Gross profit was flat at RMB 1.3 billion or USD 182.4 billion in the second half of 2022 compared with the same period last year. However, the gross margin rose to 17% as compared with 60.4% in the second half of 2021. The increase in gross margin was mainly attributable to the change in revenue mix with higher upward revenue cost reductions, especially materials and production-related expenses and lower sales rebates. For a 2022 year, Gross profit decreased by 10.9% year-over-year to RMB 2.6 billion, or US$377.7 million, and the gross margin increased to 16.4%, compared with 13.9% in 2021. We are especially pleased to report a 41.2% year-over-year increase in operating profit to RMB 231.3 million, or US$33.2 million, and a higher operating margin in the second half of 2022, despite the lower sales. For 2022 operating profit was RMB 519.3 million or USD 74.6 million. As part of a cost savings initiating, selling general administrative expenses were reduced by approximately 8.2% year-over-year to RMB 1.6 billion or USD 231.4 million. And research and development expenditures decreased by 1.5% year-over-year RMB $836.4 million or USD $131.1 million . For the second half of 2022, a basic and diluted urge studying per share of RMB $3.06 or USD $44.10 increased by 535.2% above the RMB $0.46 in the same period last year. For the 2022 fiscal year basic and diluted earnings per share were RMB 5.35 or US 77%. In summary, our financial results once again demonstrated the strong resilience of our businesses and our presence in diversified energy markets. On the sales front, we had some notable new orders in 2022. The city of Moscow ordered more than 600 new energy buses equipped with each high-range which were fully delivered in 2022 and been operated by Macau Public Transit. G1CL won an order for 100 heavy-duty truck engines from Chiang Mai, heavy-duty trucks consisting of YC6, YCK08, YCK11, and YCK12 engines. These engines are recognized for their low fuel consumption, low noise, and high reliability. The sub-partnership with Chiang's Y-Heavy Duty Truck has been extended to other CHI sectional state-compliant model engines. Fueled by MCL's YC6GN 7.8L heavy duty natural gas engines became the explosive engine to power 800 anti-buses shipped to Monterey, Mexico, that country's third-largest city. The YC6GN provides a more environmentally friendly bus solution. Below are some progress in the new energy segment in 2022. Yichai Model YCA07N hybrid engines are propelling the 10-liter gas electric hybrid buses produced by the largest bus producer in China, Yicong Group, and delivered to a bus property customer in the city of Nanjing. Yichai Singlan New Energy Power Technology Company Limited successfully integrated the 3.5-tonne electric drive axle for the first time into an EV light bus from Kwan Sih Shen Long in the first quarter of 2022. Each Isinglan 300kW high-power range extended power train system was integrated into Inner Mongolia EasyMove Technologies 200 metric tonne smart mining truck, the EM200, in the third quarter of 2022. The EM200 is China's first domestically-made 200 metric ton smart mining truck and features greatly improved payload management efficiency, low carbon emissions, and provides intelligent control. After introducing its first hydrogen engine for commercial vehicles in 2021, QYMTR introduced a new heavy-duty hydrogen engine, the YTK16H. engines in the second quarter of 2022. Each icing land has received a total of RMB 70 million capital from three new investors. These funds are targeted to expand working capital and to enhance development of high-power full-electric drive systems and for hybrid and range-extended drive systems for both on- and off-road applications. As of December 31, 2022, We have cash and bank balances of RMB $4.9 billion, or US dollars $696.5 million, and we maintain a strong balance sheet. During a year, the Board of Directors declared a cash dividend of $0.40 US for ordinary share for the year ended 31 December 2021, which was paid on July 15, 2022. We are cautiously optimistic for 2023. Recent policy changes in 2023 have really reduced COVID-19 lockdowns and travel restrictions, which will improve the business and investment activities including the supply chain. Any new policies introduced will help improve the investment environment for both domestic and export markets will enhance the operating environment. With that, I would like to turn the call over to Chun-Seng Lu, our Chief Financial Officer, who will provide more skills on the financial results. Chun-Seng, you may begin your remarks.
spk07: Thank you, Wing Ming. Now, let me review our unobstructed six-month results ended December 31, 2022. Revenue was RMB 7.5 billion or USD 1.1 billion compared with RMB 8.6 billion in second half 2021. The total number of NGs sold by GMCL in second half 2022 declined by 18.1% to 140,345 units compared with 171,449 units in the second half of 2021. The decrease was mainly due to lower engine sales in the truck, bus, marine and power generation application market, partially offset by higher sales in agricultural and industrial engines. According to data reported by The China Association of Automobile Manufacturers , in the second half of 2022, commercial vehicle unit sales, excluding sales of gasoline-powered and electric-powered vehicles, decreased by 26.3% compared to the second half of 2021, as sales of trucks and buses declined by 27.5% and 18.4% respectively. reflecting demand in this market segment. Gross profit was RMB1.3B or USD182.4M compared with the same amount of RMB1.3B in second half 2021. Gross margin increased to 17% as compared with 15.4% in second half 2021. The increase in gross margin was mainly attributable to a change in revenue mix with an increase in off-load segment over the on-load segment, cost reduction and lower sales rebate. Other operating income increased by 22.9% to RMB 251.3 million or USD 36.1 million compared with RMB $204.5 million in second half 2021. The increase was mainly due to higher diamond grants. Research and development R&D expenses decreased by 19.7% to RMB $428 million or USD $61.4 million compared with RMB $533.1 million in second half of 2021 due to lower R&D expenses incurred in commercial vehicle engines that were partially offset by higher R&D expenses incurred in marine engines and power generation engines and new energy products. Total R&D expenditures including capitalized costs were R&D 540.8 million or USD 77.6 million representing 7.3% of revenue in second half 2022 as compared to RMB RM712.2 million representing 8.3% of revenue in second half 2021. Selling General and Administrative expenses increased slightly to RMB $832.1 million or USD $123.8 million from RMB $835.9 million in second half 2021. The increase was mainly due to increased 1D expenses compared with the same period last year. SG&A expenses represented 11.6% of revenue for second half 2022 compared with 9.7% in second half 2021. Operating profit rose by 41.2% to RMB 231.3 million or USD 33.2 million from RMB 153.8 million in second half 2021. The operating margin was 3.1% compared with 1.9% in second half 2021. Finance cost decreased by 15.3% to RMB 40.2 million or USD 5.8 million from RMB 47.5 million in second half of 2021. The share of financial results of the associates and joint ventures was the profit of RMB 1.8 million, USD 0.3 million compared with a loss of RMB 108.4 million in second half 2021. This gain was largely due to higher profit at the MTU Yuchai Power Company Limited and the share of lower losses at YMT Engines Company Limited. Income tax expense was RMB 2.6 million or USD 0.4 million as compared with an income tax credit of 42.4 million in second half of 2021. The change was mainly due to the higher tax credit income in second half 2022. Net profit attributable to equity holders of a company was RMB 124.9 million or USD 17.9 million compared with RMB 90 million in second half 2021. Basic and dividend earnings per share were RMB 3.06 USD-USD 44 cents compared with R&D 0.46 in second half 2021. Basic and diluted earnings per share for second half 2022 and second half 2021 were based on the weighted average of 40,838,290 shares. Now we will review the unordered financial results for the 2022 fiscal year entered December 21, 2022. Revenue was RMB 16 billion or USD 2.3 billion compared with RMB 21.3 billion in full year 2021. The total number of engines sold by GMTL in financial year 2022 decreased by 29.7% to 301,256 units compared with 456,791 units in FY2021. The decrease was mainly due to weakness in the truck and bus market and the market of marine and power generation engines. According to TAAN, commercial vehicle unit sales, including sales of gasoline power and electric power vehicles, decreased by 41.4% in FY2022, as sales of Truck declined by 42.9% while sales of buses declined by 27.1%. The impact of COVID-19 restrictions and related supply chain disruptions impacted market conditions in China and in foreign markets. Gross profit decreased by 10.9% to RMB 2.6 billion or USD 37.7 million compared with RMB 3 billion in Q2021. Gross margin increased to 16.4% compared with 13.9% in F1 2021. The increase in gross margin was mainly attributable to a change in revenue mix with higher off-road revenue as a greater proportion of the total revenue and lower sales rebate. Other operating income increased by 6.5% to IRB $336.8 million or USD $48.4 million compared with IRB $316.2 million in FY 2021. The increase was mainly due to higher government grants. IRB expenses decreased by 1.4% to IRB $836.4 million or USD $120.1 million compared with IRB $848.8 million in FY 2021. GIMCL continued with its initiatives to improve energy performances and the crisis of its energy compliance with China's national six and tier four emission standards and to develop new energy products. In FY2022, total R&D expenditures including capitalized costs were R&D $1 billion $136.1 million compared with IMB $1.2 billion in FY2021 representing 6.4% of the revenue compared with 5.5% in FY2021 SG&A expenses were IMB $1.6 billion USD $231.4 million representing 10.1% of the revenue compared with IMB $1.8 billion representing 8.3% of the revenue in full year 2021. This decrease was mainly due to low trade personnel and growing expenses. Operating profit was IDR 519.3 million or USD 724.6 million down from IDR 633.5 million in financial year 2021. The operating margin was 3.2% as compared with 3.1% in F1 2021. Finance cost decreased by 17.6% to RMB 95.5 million or USD 13.7 million from RMB 116.9 million in F1 2021. The share of financial results of the Ecoship and Young Ventures was a loss of RMB 39.1 million or USD 4.2 million compared with a loss of RMB 95.9 million in FY 2021. The decreased loss was primarily attributable to higher profit at the NTU Yuchai Power Company Limited and the share of lower losses at YNT Engines Company Limited. Income tax expense was RMB 59.1 million or USD 8.5 million as compared with RMB 43.8 million in FY 2021. Net profit attributable to China UChai shareholders was RMB 218.6 million or USD 31.4 million compared with RMB 272.7 million in FY 2021. Basic and direct earnings per share were RMB 5.35 or USD compared with RMB 6.67 in FY2021. Basic and diluted earnings per share for FY2022 and FY2021 were based on the weighted average of 40,858,290 shares. Now let me walk you through our financial highlights as of December 31, 2022. Cash and bank balances were RMB 4.9 billion, USD 696.5 million, compared with RMB 5.3 billion at the end of FY 2021. Trick and abuse receivables were RMB 6.8 billion, USD 925.4 million, compared with RMB 6.8 billion at the end of FY 2021. Eventories were RMB 4.9 billion or USD 709 million compared with RMB 5.2 billion at the end of FY 2021. Trade and build tables were RMB 6.9 billion or USD 993.5 million compared with RMB 7.4 billion at the end of FY 2021. Short-term and long-term bank borrowing were RMB at the end of financial year 2021. I will now turn the call over to Kevin for a comment before we begin our Q&A.
spk05: Thank you. Please note some officers of China UChai are remotely calling into the conference call. This may result in a slight delay in providing answers to some questions. We apologize for any inconvenience and thank you for your patience. With that operator, we are now ready to begin the Q&A session.
spk02: Thank you. As a reminder, to ask a question, you need to press star 11 on your telephone keypad and wait for a name to be announced. To withdraw your question, please press star 11 again. Alternatively, you can submit your questions via the webcast. Please compile the Q&A.
spk00: This will take a few moments.
spk02: Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad.
spk00: You're more welcome also to submit any questions via the webcast. Dear speakers, there are no questions at this time. Please continue.
spk03: Okay, Leo. Go ahead.
spk05: Thank you all for participating in our conference call. We wish each of you good health and please be safe during this pandemic. We look forward to speaking with you again. Goodbye.
spk02: That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.
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