China Yuchai International Limited (CYD)

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China Yuchai International Limited (CYD)

Q4 2012 Earnings Call

February 27, 2013 8:00 am ET


Kevin Theiss – Investor Relations-Grayling

Benny H Goh – President

Kok Ho Leong – Chief Financial Officer


Alexander E. Potter – Piper Jaffray, Inc.

Sandy Mehta – Value Investment Principals Ltd.

David Raso – ISI Group

Gerwin Ho – Citigroup Global Markets Asia Ltd.

Andrew M. Casey – Wells Fargo Advisors LLC

Ravi Gill – Goldman Sachs



Ladies and gentlemen, thank you for standing by and welcome to the China Yuchai International Limited’s Fourth Quarter and Full Year 2012 Earnings Conference Call and Webcast. At this point in time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advice you that this conference is being recorded today Wednesday 27 of February 2013.

I would now like to hand the conference over to Mr. Kevin Theiss. Thank you, sir. Please go ahead.

Kevin Theiss

Thank you for joining us today, and welcome to China Yuchai International Limited’s fourth quarter and full-year 2012 earnings conference call and webcast. My name is Kevin Theiss, and I am with Grayling, China Yuchai’s U.S. Investor Relations Advisor. Joining us today are Mr. Benny H. Goh, and Mr. Kok Ho Leong, President and Chief Financial Officer of CYI respectively.

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, intend, aim, will or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical facts are statements that may be deemed forward-looking statements.

These forward-looking statements are based on current expectations or beliefs, included, but not limited to, statements concerning the Company’s operations, financial performance and condition. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including those discussed in the Company’s reports filed with the Securities and Exchange Commission from time to time.

The Company specifically disclaims any obligation to maintain or update the forward-looking information, whether of the nature contained in this release or otherwise in the future.

Investor should note that the Company has not finalized its consolidated financial results for fiscal year 2012; the financial information of the Company presented about is unaudited and may differ materially from the audited financial statements of the Company for fiscal year 2012 to be released when it is available.

Mr. Goh will provide a brief overview and summary and then Mr. Leong will review the financial results for the fourth quarter of 2012 and for the full year ended December 31, 2013. Thereafter, we will conduct a question-and-answer session. For the purposes of today’s call, the financial results are unaudited and they will be presented in RMB and U.S. dollars.

Mr. Goh, please start your presentation.

Benny H Goh

Thank you, Kevin. I’m pleased to report our investments in research and development, R&D spending a full range of all diesel and gas engine products continue to pay off enabling us to capitalize on growth areas within the increasingly challenging automotive sector in China.

While the economic slowdown in China last year, had a severe impact on the automotive industry, there were areas of opportunity within the bus and natural oil gas engine markets. In 2012, the China Association of Automotive Manufacturers, CAAM reported a 9% decline in diesel-powered commercial vehicle sales, 10.3% decrease in diesel truck sales and 28.6% decline in heavy-duty diesel trucks.

However, bus market sales increased 2.1% in 2012, compared with 2011. In the fourth quarter of 2012, CAAM reported that the heavy-duty diesel vehicle market continued to be weak; in large bus and heavy-duty truck sales, down over 18%, but mini and light-duty truck sales were up by 7.5% over the fourth quarter of 2011.

Sales of light bus and medium-duty truck sales were 14.5% and 16.5% ahead of last year’s quarter respectively.

While sales of diesel trucks continue to be driven by the transport of goods as growth in the construction industry has slowed, the rapidly expending transportation needs of China’s many cities, changes in school bus requirements, and the rapidly expending highway system it all created sales opportunities in the bus segments.

As the leading supplier of engines in the bus markets we had a number of important developments in 2012. First due to the low emission and high horsepower our natural gas engines are well suited for large buses, and have been widely installed in metro bus markets in China’s first tier cities such as Shanghai, and Beijing. These buses travel locally a return to the home base, natural gas engines are ideal within the metro area were refueling is easily accomplished, after refueling infrastructure continues to be expanded along highways between cities and natural gas engines are expected to become more appealing for longer distance bus travel.

One of our natural gas engines becomes it seems to define for operations in buses at high altitudes in 2012. This is especially significant in our effort position Yuchai to operate in the North-West China region. Our natural gas engines have been penetrating the key Shaanxi Province markets in North-West China with increasing demands from municipal bus, tour coach and school bus operators in various Shaanxi municipalities including Yulin, Baoji, Yan’an, Tongchuan and Hanzhong. Some of these municipalities are first time purchases of our natural gas engines. Our new Euro V compliant natural gas engine is powering 33 new buses used by the Hangzhou Public Transport Corporation and the Nanning Public Transport Corporation selects one of our diesel engine models to power 100 of these new double-decker buses.

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