China Yuchai International Ltd. Q1 FY2025 earnings call

• Sales growth across light-duty, medium-duty, heavy-duty engines, new energy products, high horsepower engines, and solutions.
• Outperformed on-road market categories; truck and bus unit sales up 38% y-o-y vs. CAAM's decline.
• R&D expenses increased to RMB 551.7 million (USD 77.1 million) but still 4% of revenue.
• Strategic alliance with MTU Yuchai improved profits.
• Subsidiary in Thailand ramping up diesel engine production for ASEAN market.
• Paid cash dividend of USD 0.53 per ordinary share.

Revenue for the first half of 2025 was RMB 13.8 billion (USD 1.9 billion), a 34% year-over-year increase. Gross profit rose to RMB 1.8 billion (USD 257 million), up 30.3% y-o-y. Truck and bus unit sales grew 38% y-o-y despite CAAM's truck and bus market decline. Truck engines saw a 44.3% y-o-y increase, with heavy-duty truck engines up 40.7%. Bus engines had an 8.9% y-o-y growth. Off-road market unit sales increased 17.5% y-o-y, led by marine and power generation at 31.5% y-o-y. Industrial applications saw a 27.2% y-o-y rise.

Management does not provide formal guidance. Weng Ming Hoh stated the company does not provide guidance on full-year unit sales or data center generator unit sales.

• Component supply shortages limiting MTU Yuchai Power Venture capacity.
• Competitive market conditions affecting pricing.
• Uncertainties in global economic, political, and social conditions impacting business operations.

Q: On capacity plans for JV with MTU and GYMCL?

A: Kelvin Lai mentioned component supply is the bottleneck for MTU JV, and Yuchai has extension plans with 30% capacity increase by end of year.

Q: Guidance for full year unit sales?

A: Weng Ming Hoh stated they don't provide guidance.

Q: Does Yuchai have 10% or higher market share in long-bore engines for data centers?

A: Kelvin Lai said market share is well ahead of 10% globally and can be maintained.

Q: When will net return surpass 5% of sales?

A: Weng Ming Hoh said no target date can be announced as it depends on multiple factors and they don't provide guidance.

Q: Color on ASP increase for data center engines?

A: Weng Ming Hoh said engine price has gone up slightly in the first half, but OEMs determine final product price.

Q: Plan to expand from engine making to generator making?

A: Weng Ming Hoh said they prefer not to compete with OEMs and will only do gensets if customers specifically request.

Q: Reason for strong market share in on-highway engines?

A: Kelvin Lai cited new customers from Tier 1/2 OEMs, introduction of new gas engines, and export as reasons.

Q: Capital operation plans or higher shareholder return initiatives?

A: Choon Sen Loo said cash will be deployed in CapEx and R&D, but no specific plans announced.

Q: Capacity of diesel engines and bottlenecks?

A: Weng Ming Hoh said 2,000 capacity for high horsepower engines, constraint is machining capacity; MTU JV's bottleneck is component supply from Germany.

Q: Overseas expansion plans for data center markets?

A: Tak Chuen Lai said they work through OEMs for both domestic and overseas markets, with some direct orders from major Chinese Internet players.