China Yuchai International Limited

Good day and thank you for standing by. Welcome to China Yuchai International Limited second half and full year 2024 financial results conference call and webcast. 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 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'd like now to turn the conference over to Kevin Tiss. Please go ahead, sir.

Thank you for joining us today, and welcome to China Yuchai International Limited's conference call and webcast for the second half and fiscal year of 2024 ended on December 31, 2024. Joining us today are Mr. Wei-Ming Ho and Mr. Chun-Sin 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 and Chairman of MTU Yuchai Power Company Limited, MTU Power Company. Before we begin, I will remind all listeners that throughout this call, we may make statements that may contain forward-looking statements within the Private Securities Litigation Reform Act of 1995. The words believe, expect, anticipate, project, target, 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 operations and financial performance and condition and are based on current expectations, beliefs, and assumptions, which are subject to change at any time. The company cautions that these statements by their nature involve 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, economic, and social conditions around the world and in China, including those discussed in the company Form 20F 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 during today's call, or otherwise in the future. Mr. Howell will provide a brief overview and summary. Then Mr. Liu will provide the financial results for the second half and full year ended December 31, 2024. Thereafter, we will conduct a question and answer session. For purposes of today's call, the 2024 results are unaudited and the 2023 financial numbers are audited. And they will be presented in RMB and U.S. dollars. All 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 that our unit sales outperformed the Chinese stock and bus legal markets in the second half and for the full year 2024. According to data from China Association of Automobile Manufacturers , compared with a 9.9% year-over-year decline in truck and bus vehicle sales in the second half of 2024, our truck and bus engine sales were up by 1.6% year-over-year. For the full year 2024, our truck and bus engine sales rose by 17.2% year-over-year. compared with a 2.6% year-over-year decline in truck and bus vehicle sales. Our off-road engine sales rose by 12.6% year-over-year in second half 2024, and by 9.1% year-over-year for 2024 full year. Agricultural engine sales were flat in 2024, while industrial engine sales were up by 11% year-over-year. marine and genset engine sales increased by 25.5% year-over-year. Revenue in two-halves 2024 was flat compared with the same period last year. Revenue in 2024 rose by 6.6% year-over-year to RMB $19.1 billion or $2.7 billion. Gross profit increased faster than revenue rising by 14.3% year-over-year in second half 2024 and 10.8% year-over-year in full year 2024 to RMB 2.8 billion or USD 392.1 million compared with RMB 2.5 billion in FY2023. Gross margin increased to 14.7% compared with 14.1% in FY2023. The increase in gross margin was mainly attributable to higher revenue and continuing cost reduction initiatives. Although our operating profit decreased slightly in FY2024, our investment in associated companies and ventures delivered higher profit, growing by 80.2% year-over-year in second half 2024 and by 63.6% year-over-year for full year 2024. Our 50-50 joint venture MTU Each High Power, which sells large power generator engines, achieved higher profit than the previous year. Our YSC Engines and PMG Each High Businesses achieved profitability in FY2024 compared to losses last year. Generator engine sales remain robust, Additionally, ECHI's marine and genset power subsidiary and Rolls-Royce power system division have entered into a second phase cooperation and development for MTU ECHI power venture. As part of this development, production and sales of MTU Series 4000 oil and gas engines is expected to begin shipment in late 2025. Manufacturing capabilities will be enhanced accordingly to cater to the expanded engine product portfolio. In 2024, H-I Machinery Power Systems Thailand Company or H-I Thailand commenced production operations. H-I Thailand will mainly produce a range of diesel engines and other products for on- and off-road applications. We have additionally, we entered into a comprehensive strategic cooperation agreement with Kim Long Moto a subsidiary of Vietnam's FUTA Group. This strategic cooperation consists of the grant and provision of technology licenses, component supply and related support, and services for the construction of a factory in Tim Lung Motu's designated site in Vietnam. Tim Lung Motu obtained technology licensing rights from certain HHI engine models to be manufactured primarily for trucks buses and other commercial vehicles. Imlong will have exclusive right, sales rights for the license engines in the Vietnam market, along with priority sales rights in other ASEAN countries and South Korea. These licenses are valid for 15 years with total licensing fee of US$28 million. So operating in China was challenging in 2024. According to the National Bureau of Statistics, Chinese GDP increased by about 5% year-on-year in 2024. The total value of our stock rose to US$3.6 trillion, both of goods and services, creating a trade surplus of almost $1 trillion last year for 2024. However, property investment continued to decline in 2024. In the second half of 2024, Our R&D, total R&D expenditures, including capitalized costs, increased by 21.2% to RMB $726 million, or US dollars, $101 million, representing 8.2% of revenue in second half 2024, as compared to RMB $599.2 million, representing $6.8 million of revenue in second half 2023. For FY2024, total RMB expenditures including capitalized costs were RMB 1.2 billion or USD 165.4 million representing 6.2% of revenue compared with RMB 1.1 billion representing 5.9% of revenue in FY2023. We continue to improve the efficiency and performance of our National 6 and Tier 4 engines and initiated the development of the next-generation emission-standard engines for the on-road and off-road engine market. We continue the development of new energy products, including products using alternative fuels such as hydrogen technologies. Our innovative new energy powertrains include two hydrogen-powered combustion engines, an off-gas power generation system, and a production plant which utilizes of gas discharges to generate power and eliminate greenhouse gas emissions. The Model YCA07N hybrid engine, which was chosen to power 10-meter gas-electric hybrid buses in Nanjing. The first 50 Suzhou Jinglong buses using our hydrogen fuel cells have commenced commercial operations in Beijing. And most recently, a new foray into enhancing wind power with the launch of the high-strength QT700-10 turbine fan main shaft to improve wind turbine performance. In recognition of our innovative achievements with Weld, which utilizes hydrogen, Guangxi China Engineering Company Limited, our main operating subsidiary in China, was appointed as a committee member of the new Hydrogen Combustion Energy Innovation Consortium Division of China Internal Combustion Engine Society. To encourage improved performance, selected senior leaders and key employees of each high-end subsidiary have participated in equity incentive plans beginning in 2024. The plans are both a reward and an incentive to motivate these senior leaders with key talents for their continued contribution. and their dedication and loyalty to enhance long-term growth of the company. In early June, we adopted our first share buyback plan, whereby we repurchased a total of 3.3 million shares, amounting to a total cost of US$39.8 million. In addition, the company paid a cash dividend of 0.38 US cents for ordinary shares on August 28, 2024. These share repurchases and dividend distribution demonstrate the company's confidence in our future revenue, profit, and cash flow generation, and to show our commitment to building shareholder value. Despite the shares repurchase and cash dividends, our cash and bank balances were RMB $6.4 billion $895 million as at 31st December 2024. With that, I would now like to turn the call over to Mr Chun Seng Lu, our Chief Financial Officer, who will provide more details on the financial results. Chun Seng, you may begin your remarks.