Dongfeng Electronic Technology Co., Ltd. (DETC) Business Report FY ended Dec. 2022

Financial Overview

(CNY millions)

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	Rate of Change (%)	Factors
Sales	6,850.32	7,861.18	4.47	-The downturn in the commercial-vehicle market in China and the increase in raw material prices impacted the Company’s sales, which decreased.
Operating income	337.77	480.47	18.80
Ordinary income	332.54	483.49	53.25
Net income	288.67	435.17	56.22

Invested in subsidiary

-The company announced that Dongfeng Electric Drive Systems Co., Ltd., a Dongfeng Technology wholly-owned subsidiary, intends to increase its investment in Dongfeng (Wuhan) Electric Drive Systems Co., Ltd. (Wuhan Electric Drive), its wholly-owned subsidiary, by CNY 87 million in cash. Additionally, Zhanjiang Deni Vehicle Parts Co., Ltd., a Dongfeng Technology holding subsidiary, intends to increase its investment in Guangzhou Deni Auto Parts Co., Ltd. (Guangzhou Deni), its wholly-owned subsidiary, by CNY 100 million in cash. The investment increases are aimed at meeting the production and operation capital needs of Wuhan Electric Drive and Guangzhou Deni. (From Dongfeng Technology SSE announcements 1/2 dated December 21, 2022)

Opened R&D center in Shanghai

-The company announced that it has openinaugurated an R&D center in Shanghai. Formerly known as tThe Dongfeng Technology R&D Ccenter, it will focuses on the development of basic software and hardware, as well as the creation of new technologies and product platforms. DETC currently ownshas 72 workers who play differentengaged in responsibilitiesroles such as conducting research, managing projects, or running tests. DETC’s software achieves CMMI (Capability Maturity Model Integration) level 3 certification, and it. DETC has also set up an EMC (electromagnetic compatibility) test center accredited by CNAS (China National Accreditation Service). (From a press release dated March 29, 2023)

Business plan

-The company forecasts sales of CNY 7.1 billion in 2023.

R&D Expenditure

(CNY millions)

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	FY ended Dec. 31, 2020
R&D Expenditure	277.12	245.74	226.27
Ratio of R&D expenses to sales (%)	4.05	3.13	3.28%

-As of Dec. 31, 2022, the Company has 610 R&D staff, accounting for 13.4% of all staff.

R&D Activities

-Dongfeng Technology Center and Dongfeng Electric Drive Systems Co., Ltd., which develops drive system components, have developed the D760 intelligent cockpit, the D600 electric drive system, the G59 intelligent cockpit domain controller and BSG motor for Dongfeng Commercial Vehicles and Dongfeng Passenger Vehicles, and started in-depth research on technologies related to ADAS sensing system, while undertaking instrumentation development projects for new models of Shaanxi Heavy Duty Automobile, Beiqi Foton and SAIC Hongyan.

-Donfeng Yanfang, a joint venture with Yanfeng Automotive Trim Systems Co., Ltd., a major automotive interior parts company, and Zhanjiang DENI Vehicle Parts Co., Ltd., which develops and manufactures carburetors, have established trim parts and casting technologies for supply to Dongfeng Commercial Vehicles, Dongfeng Passenger Vehicles, and Voyah Automobile as well as Nissan, Honda, Toyota, and other OEMs.

-In terms of new energy business expansion, the company has explored customers such as XPeng Motors and Voyah Automobile. It has completed the localized production of e-POWER electric drive systems, conducted R&D of related die-casting products, enhanced production capacity and started production.