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5. CITIC Dicastal Co., Ltd. Business Report FY ended Dec. 2016

CITIC Dicastal Co., Ltd. Business Report FY ended Dec. 2016

Recent Development

-On November 5, 2016, CITIC Dicastal Co., Ltd. broke ground for CITIC South Intelligent Manufacturing Industrial Park in the Wangcheng National Economic and Technical Development Zone in Changsha, Hunan Province. The company is investing CNY 5 billion in this facility, which will be built on approximately 467,000 square meters of land. The industrial park will have lines to produce 12 million aluminum wheels per year and 40,000 tons of aluminum casting parts. It will also produce high-end equipment and dies. The plant’s annual output is expected to reach CNY 15 billion. (From news releases issued by multiple sources on November 7, 2016)

Put into producton

-On January 3, 2017, Dicastal KSM Chengdu Auto Parts Co., Ltd., which is a wholly owned subsidiary of CITIC Dicastal Co., Ltd., commenced production at its new factory in the Tianfu New Area in Chengdu, Sichuan Province after completing the first phase of its construction project. The subsidiary joined the Tianfu New Area project in January 2015, and started plant construction in March 2016. CNY 2 billion was invested in the first phase of the estimated CNY 3 billion project, which consists of two phases. The plant was built on approximately130,000 square meters of land, and is capable of producing 20,000 tons of automotive casting components per year. When the second phase is completed, the plant’s annual production capacity is expected to increase to 40,000 tons and its output is predicted to reach CNY 2 billion. (From news releases issued by multiple sources on January 5, 2017)

-On October 29, 2016, Wuxi Dicastal Wheel Manufacturing Co., Ltd., a subsidiary of Citic Dicastal Co., Ltd., began producing lightweight wheels at its new plant. The wheel plant is the first phase of the company’s CNY 2.2 billion project, and CNY 600 million was invested in the facility. The plant is China’s first intelligent wheel factory, and is expected to produce 2.4 million lightweight wheels per year. Its annual output is expected to reach CNY 2.5 billion at full capacity. In the second phase of the project, the company will invest CNY 1.6 billion to set up an additional plant, which will produce 40,000 tons of lightweight precision components for automobiles per year. (From news releases issued by multiple sources on October 31, 2016)

-On April 19, 2016, MX Dicastal Wheel Manufacturing Co., Ltd., a subsidiary of CITIC Dicastal Co., Ltd., broke ground for its new plant that will produce 4 million lightweight aluminum alloy wheels per year. CNY 1,333 million will be invested in the first phase of this construction project, which is scheduled to be completed in one year. Robots and robot arms will be introduced at the plant in order to automate various operations. The company expects a CNY 1 billion increase in sales per year after the plant begins full-scale production. (From news releases issued by multiple sources on April 21, 2016)

Off the Line

-The Company completed the construction of machining lines and painting lines at its new plant in Michigan, U.S. The Michigan facility is capable of producing 3 million aluminum wheels per year, and began production on February 1. This project is the largest investment in the U.S. made by a Chinese auto parts supplier. (From a press release on February 4, 2016)

Strategic Alliance

-The Company announced that it held a signing ceremony for its new strategic alliance with Siemens in January, 2015. Siemens will be CITIC Dicastal's strategic partner in carrying out its intelligent technology project. With the support of the global engineering company, CITIC Dicastal will work on introducing digitalized systems in auto parts development, production, and lifecycle management. (From a press release on January 20, 2015)

R&D Structure

-The Company conducts development activities at its technical center, which was established in February 1993. The technical center has been recognized as a national R&D center by the National Development and Reform Commission since October 2005.

-The Company has established overseas R&D centers in Europe and North America and a technical center in Japan. Due to its overseas technical centers, the Company is the first wheel manufacturer which can provide synchronous development together with global automakers. The Company's synchronous development projects have been extended to 2015.

-The Company's Wheel Testing Center is the largest one in Asia.

Patents

-Recently, the Company carried out more than 50 R&D activities with research institutions and universities and obtained more than 300 patents.

Investment in China

-The Company is constructing a new testing laboratory at its automotive wheel testing center located in the Qinhuangdao Economic & Technological Development Zone in January, 2015. The new laboratory will have a floor area of 12,050 square meters.It is expected to take 11 months to complete. The Company plans to invest CNY 22.44 million in this project.The new laboratory will test and inspect some major components such as steering knuckle brackets and steering linkage brackets. (From news releases issued by multiple sources on February 3, 2015)

Investment Outside China

-The Company announced that it is planning to establish a plant in Romania in order to boost production and establish a strong presence in the Central and East Europe. (From news releases issued by multiple sources on December 17, 2015)

Source: China Automotive Industry Yearbook (Issued every October)

Source: China Automotive Industry Yearbook (Issue every October)