China Shipbuilding Industry Group Power Co., Ltd.(Formerly Fengfan Co., Ltd.) Business Report FY ended Dec. 2020

Financial Overview

(CNY millions)

	FY ended Dec. 31, 2020	FY ended Dec. 31, 2019	Rate of Change (%)	Factors
Sales	27,014.19	29,691.24	(9.02)	Due to the spread of the COVID-19 pandemic, the Company’s major subsidiary located in Hubei Province ceased operations in Q1, so profit was lower.
Operating profit	480.44	1,041.16	(53.86)
Ordinary profit	662.77	1,179.44	(43.81)
Net profit	577.93	1,040.67	(44.47)

News

-The Company won a new order for starter batteries for delivery to FAW Toyota. The Company delivers 45% of BMW’s vehicle-content needs, and 100% of the content needs for the SAIC Audi Q4 and Q6 models. In addition, the Company received a new order for Jetta-brand vehicles. Furthermore, the Company won an exclusive contract to work on Changan Automobile’s platform project. (From the 2020 annual report)

-At the lithium-ion battery business, the 48V system mounted on Chery Automobile’s commercial vehicles passed performance tests conducted by third-party organizations. In addition, Chery’s and Geely’s commercial vehicles passed both winter and summer testing standards. (From the 2020 annual report)

-Based on the Company’s 14^th 5-year management plan that covers 2021 to 2025, the Company plans to develop passenger-car batteries that are more energy efficient, while focusing on 48V batteries. The Company is developing batteries, materials, and systems that enhance safety, product life, and energy performance, and is working to improve product quality based on making use of better inspection technology. (From the 2020 annual report)

-Fengfan Co.,Ltd., a subsidiary, manufactures and sells batteries and battery parts. In fiscal year 2020 sales at the major business segments were CNY 9.39 billion and operating profit was CNY 315 million. (From the 2020 annual report)

Recent R&D Activities

-Production started of the integrated, single-unit electric-power system developed for electric vehicles at 武漢船用電力推進装置研究所 (712 R&D Center). This system has a single-unit, integrated architecture. Some of its special highlights are high-energy density, high efficiency, lightweight, high reliability, low cost, maximum output of 79kW, and maximum torque of 220Nm. When fully charged and mounted on vehicles, the vehicles can go from 0km to 50km in 5.3 seconds. It achieves a hill-climbing ability of 30% and enables vehicles to travel more than 400km. (From a January 30, 2019 press release).

-712 R&D Center developed a 58kW fuel-cell battery engine. Equipped with a hydrogen/air proton exchange membrane fuel-cell stack, this engine achieves a rating of 58kW. It was developed for city buses. Compared to conventional fuel-cell engines, it is cleaner, more efficient, and safer. (From a May 24, 2019 press release.

R&D Facilities

-Speeding up construction of a production plant as part of a project being undertaken to produce 4 million lithium-ion batteries. (From the 2020 annual report)

R&D Expenditure

	FY ended Dec. 31, 2020 (CNY millions)	FY ended Dec. 31, 2019 (CNY millions)	FY ended Dec. 31, 2018 (CNY millions)
R&D Expenditure	135.51	1,104.95	773.35
Ratio of R&D expenses to operating income	5.46	3.72%	2.61%

-As of the end of 2020, the Company had 3,875 R&D staff, accounting for 17.42% of the total number of employees.

Patent Acquisitions

-China Shipbuilding Industry Group Power Co., Ltd. (China Shipbuilding Industry Group Power) announced that as of November 30, 2020, its subsidiaries China Shipbuilding Industry Corporation Diesel Engine Co., Ltd., Yichang Marine Diesel Engine Co., Ltd. and Dalian Marine Diesel Co., Ltd. have together filed for over 74 patents, of which 34 patents were granted by the China National Intellectual Property Administration, representing a year-over-year increase of 41.6%. China Shipbuilding Industry Group Power currently owns 124 patents in force, including 35 invention patents. (From a press release dated December 17, 2020)

R&D Facilities

-The Company has a state-level technical center and the Fengfan Technical Center. Under these, there is a starter-battery R&D center and a lithium-battery R&D center.

-Also, the Company has a new-energy, power-battery R&D center.