China Yuchai International Limited

Good day, and thank you for standing by. Welcome to the China-UChai International Limited first half 2024 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1, 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1, 1 again. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link anytime during the conference. Please be advised that today's conference is being recorded. I would like to now turn the conference over to Kevin Thies. Please go ahead, sir.

Thank you for joining us today and welcome to China Yuchai International Limited's conference call and webcast for the first six months of 2024. ended on June 30th, 2024. Joining us today are Mr. Wei-Ming Hou and Mr. Chun-Shen Liu, President and Chief Financial Officer of CYI, respectively. In addition, we also have in attendance Mr. Kelvin Lai, General Manager of Operations of CYI. Before we begin, I will 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. 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 operation and financial performance and condition and are based on current expectations, beliefs, and assumptions which are subject to change at any time. The company cautions that these statements by their nature involve risk and uncertainties and actual results may differ materially depending on a variety of important factors such as government and stock exchange regulations, competition, political and economic and social conditions around the world and in China, including those discussed in the company's Form 20-S under the headings Risk Factors, Results of Operations, and Business Overview, and in other reports filed with the Securities and Exchange Commission from time to time. 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 whether of the nature contained in the press release, made towards 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 first half into June 30, 2024. Thereafter, we will conduct a question and answer session. For the purposes of today's call, the 2024 and 2023 first half year financial numbers are unaudited, and they will be presented in RMB and U.S. dollars. 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.

Thank you, Kevin. We are pleased to report higher revenues, operating profits, and higher earnings were shared in the first half of 2024 compared with the same period last year. Sales grew by 12.4% on a 16.3% increase in unit sales on a year-over-year basis. We achieved engine unit sales growth in every market category except pickup, which is a small portion of our sales. Combined unit sales of our engines in the truck and bus market rose by 32.8% year-over-year, compared with data from China Association of automobile manufacturers, CAM, showing truck and bus vehicle sales growth of 4.4% year-over-year. Our unit sales in the important truck engine market grew by 35.6% year-over-year, compared to an increase of 3.7% for truck vehicle sales, according to CAM data. Our heavy-duty truck engine sales grew by 32.9% year-over-year, compared with a 0.3% increase in CAM heavy truck vehicle sales in the first half of 2024. And our medium-duty truck engine sales grew faster than CAM medium-duty truck vehicle sales, with a year-over-year increase of 33.1% compared to 17.4%. likewise our light duty truck engines also sales also exceeded the caam vehicle sales growth growing by 45.6 percent compared to 5.4 percent year-over-year in the first half of 2024 Similarly, our bus engine sales in the heavy, medium, light, and light duty market segments witnessed a year-over-year growth of 40.3%, 32%, and 28.2% respectively in the first half of 2024. Our engine sales in the off-road markets exceeded 104,000 units for the first half of 2024, representing a 6.4% year-over-year growth. These sales were led by a 13.1% increase in engine sales in the industrial segment compared to the same period last year. Marine and generator engine unit sales increased by 5.3%, with higher demand from data centers. New energy product unit sales grew by 19.9% year-over-year from a small base from these emerging products. These notable results were achieved despite slower economic growth in China. According to the National Bureau of Industry, GDP increased by 5% year-over-year in the first six months of 2024. However, 2024's 10-quarter GDP growth declined to 47.7%, compared with an estimate of 5.1% growth, and down from the 5.3% growth in the first quarter of 2024. While the Chinese economy grew in the first half of 2024, growth was uneven in different market segments. Equipment manufacturing increased by 7.8%, and high-tech manufacturing increased by 8.7% for a select segment of industrial enterprises. The total value of export rose by 6.9% year-on-year for the first half of 2024. However, property investment fell 10.1%, and home sales by floor area fell 19% in the first half of 2024 from the year-earlier similar period. In the first half of 2024, our total RMB expenditures, including capitalized cost, were RMB $463.2 million, or US $65 million, compared to RMB $465.2 million in the first half of 2023. We continue to improve the quality and performance of our national 6 and tier 4 engines even as we have initiated the development of the next generation emission standard engine for on-road and off-road engine markets. In addition, the continuing development of new energy products including products using alternative fuels remains as a high priority. We have established a track record of introducing new energy powertrains including two hydrogen-fired engines with using renewable hydrogen, an off-gas power generation system and a production plant which utilizes off-gas dischargers to generate power and eliminate greenhouse gas emissions, and the new model YCA-07N hybrid engine which was chosen to power 10-meter gas electric hybrid buses in Atlantic. In the first half of 2024, new energy applications include the first 50 Suzhou Qinglong 12-meter buses using our hydrogen fuel cell commands of commercial operations and the launch of QT700-10 turbine fan-made shaft to improve wind power performance to reduce carbon emissions. As a result of this innovative achievement, Wansi Yichai Machinery Company Limited , our main operating subsidiary in China, was appointed as a committee member of the Neo Hydrogen Combustion Engine Innovation Consortium Division of the China Internal Combustion Engine Society. The consortium will lead the development of hydrogen combustion engines for applications in the automobile, power generation, marine, and industrial and agricultural industries, among other applications. To encourage improved performance, equity incentive plans have been implemented by our subsidiaries. Selected senior men are leaders and key employees of ECHI and its subsidiaries acquire indirectly their respective portions of the enlarged with the interest of WAUSEA, ECHI Marine, and Genset Power Company Limited . to better align their interests with the success of this organization. These incentives for selected participants are important to motivate them for their continued contributions, dedication, and loyalty for long-term growth. In early June, the company adopted a share buyback plan whereby the company may repurchase its ordinary shares up to $20 million in dollar amount or $4 million in the number, whichever occurs first. China Uchi may repurchase shares on the open market at prevailing market prices in privately negotiated transactions or by other legally permissible means. Shared repurchases will be financed through operating cash flow and existing cash balances. In addition, the company has declared a cash dividend of US$0.38 for ordinary share for shareholders of record as of the close of business on August 19, 2024 to be paid on August 28, 2024. These share purchases and dividend distribution rewards demonstrate our commitment to shareholder value. With that, I would now like to turn the call over to Chun-Seng Lu, our Chief Financial Officer, who will provide more details on the financial results. Chun-Seng, you may begin your advice.