China Yuchai International Ltd (NYSE:CYD) Q4 2019 Earnings Conference Call - Final Transcript

Mar 30, 2020 • 08:00 am ET

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China Yuchai International Ltd (NYSE:CYD) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Your first question comes from the line of William Gregozeski from Greenridge Global. Please ask your question.

Analyst
William Gregozeski

Hi, guys. Great quarter. Can you talk about how you were able to get such high heavy-duty sales in the quarter and the year relative to the market?

Executive
HOH Weng Ming

Okay. Hi, Greg. This is Weng Ming here. I mean, the first -- there is -- I think, it has a lot to do with the gas engines. They were implemented in the later -- from 1 July 2019. So, a lot of the heavy-duty engines that we sold in the fourth quarter are actually gas engines.

Analyst
William Gregozeski

Okay. And is that -- are you expecting to see similar growth on that going forward?

Executive
HOH Weng Ming

Well, we will see sort of more gas engines being sold in this coming year. Now, that's partly because of the government's push to have a better environment. So, we do expect to see -- but again, a lot of it depends also on the oil prices as well.

Analyst
William Gregozeski

Okay. And it looked like you ended the quarter with a pretty good inventory balance. Have you had any interruptions in shipping or part availability or anything like that related to the lockdowns in different areas of China?

Executive
HOH Weng Ming

Well, okay. Now, we'll break it down into months now. In the month of January before Chinese New Year, there were no problems at all. After Chinese New Year, when the coronavirus or COVID-19 outbreak were at its peak, yes, we had problems getting components. But it has since improved now, now it's not very much. It seems improved and things are gradually getting back to normal in China. A lot of our suppliers are also now starting to gear up and beef up their production.

Analyst
William Gregozeski

Okay. And then what kind of impact have you -- I mean, have you seen any other direct impact from this? I presume first quarter sales are going to be quite a bit lower just because of the different shutdowns. I know you can't go too much into detail on that, but can you just kind of talk generally about the impact other than the part availability on the company?

Executive
HOH Weng Ming

Okay. Yes, sure. Now, the whole country was in a lockdown, especially the Hubei province, Wuhan, that's kind of Chicago of China. So, some of the critical components came from that region. Of course, not all our components are from Hubei. So, without certain critical components, we can't produce. We can only use up what inventories that we have in the warehouse, okay? And also, with the whole country in a lockdown, other parts of China too, the components from other part of China were affected.

So, for the month of February, I think generally it's not just for ourselves but for the general economy and most of -- many of the businesses. So, the supply chain has been barely affected. Does that answer your question?

Analyst
William Gregozeski

Okay. Yes. And you think that's pretty much back to normal, now