China Yuchai International Ltd (NYSE:CYD) Q2 2019 Earnings Conference Call - Final Transcript

Aug 15, 2019 • 08:00 am ET


China Yuchai International Ltd (NYSE:CYD) Q2 2019 Earnings Conference Call - Final Transcript


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Thomas Khong Fock Phung

provinces and Tier 1 city, representing the launch of National VI week ahead of the mandatory implementation date.

According to the data reported by the China Association of Automobile Manufacturers, CAAM, in the second quarter of 2019, unit sales of the commercial vehicle, excluding gasoline powered and electric powered vehicle decreased by 13.9%. The truck market unit sales declined by 14.1% led by a 36.5% decrease in the medium-duty truck sale. The bus market decreased by 12.0% with a significant decline in both medium and light-duty bus sales. The rate of EV bus sales continued to negatively affect bus sales powered by internal combustion engines.

However, while the bus sales declined on a year-over-year basis, second quarter bus sales increased in the heavy, medium and light-duty segment, compared with the first quarter of 2019. The government decreasing incentive for electrical buses may have helped -- helping to increase internal combustion engine sales in this -- in some bus market in -- within China.

In contrast to the decline in the overall market, our total engine sales increased by 9.3% year-over-year, led by a 19.3% increase in truck sales and a 8.2% increase in off-road engine sales. This 9.3% growth reflect an increase in the total number of engines sold to 110,059 unit in the second quarter of 2019. Higher heavy and light-duty truck engine sales will primarily generate the -- of the -- on-road unit sales increase.

Our reported off-road segment experienced year-over-year growth led by double-digit growth in industry engine sales. Off-road engine sales are a growing contributor to our sales mix. Total number of engines sold in the first six months of 2019 were 211,359 units compared with 210,788 units in the same period last year.

Net revenue for the second quarter of 2019 increased by 15.6% to RMB4.9 billion, US$707.2 million, compared with RMB4.2 billion in the second quarter of 2018. Other operating income increased to RMB98.8 million US$14.4 million mainly because of higher government grants in the second quarter of 2019.

Our operating profit increased by 6.5% year-over-year to RMB292.2 million, US$42.5 million, with a margin -- with a 6% margin. Our net profit attributed to China Yuchai's shareholder rose to RMB147.0 million, US$21.4 million compared with RMB132.1 million in the second quarter of 2018, with basic and diluted earning per share of RMB3.60, US$0.52.

In May 2019, we reported that 600 buses manufactured by Anhui Ankai Automobile Company Limited and propelled by Yuchai engines have been delivered to Saudi Arabia. This order was the largest single spot order for Chinese buses in 2019 up to that time. Hafil Transportation Company took delivery of the 12-meter buses, all equipped with Yuchai's VI - YC6L engine. Of the approximately -- approximate 12,000 buses in their fleet, Hafil has nearly 8,000 buses powered by Yuchai engine.

In the second quarter of 2019, total R&D expenditure including capitalized costs was RMB176.7 million, US$25.7 million, and it represent 3.6% of net revenue compared with 3.7% in the second quarter of