FAWER Automotive Parts Limited Company Business Report FY ended Dec. 2023

Financial Overview

(CNY millions)

	FY ended Dec. 31, 2023	FY ended Dec. 31, 2022	Rate of change	Factors
Sales	15,842.63	12,570.52	26.03%	-The production and sales volumes of brake and transmission systems increased by 48.09% and 40.43% year-over-year respectively, mainly due to the increase in production of FAW Jiefang, a customer of the drive shaft division.
Operating income	701.98	447.22	56.97%
Ordinary income	717.76	457.62	56.85%
Net income	734.00	468.47	56.68%

Business status in 2023

-In 2023, in terms of its existing market, the company's products occupy a high market share with major customers such as Hongqi, Jiefang, Bestune, FAW-VW, and FAW-Toyota.

In terms of the development of the new energy market, the company's new energy-related orders in 2023 accounted for more than 60%, and orders were obtained from customers including BYD, Wenjie, NIO, and CATL.

In terms of overseas market development, the company relies on Fawer's U.S. company, European office, Fawer's Mexican company, and fasteners company in German to establish and acquire customers outside China, further expanding the scope of the international market, comprehensively deploying in overseas markets such as Russia, Europe, the United States, and Southeast Asia, and achieving balanced development of social foundation, spare parts, and overseas business.

In the field of commercial vehicles, orders from customers such as Scania and domestic Chinese new energy brand DeepWay have been obtained. The company continues to expand its market with customers such as Jinan Heavy Duty Truck, Dongfeng Commercial Vehicle, and Shaanxi Automobile.

In addition, the revenue scale in the Russian market has increased significantly, providing important support for the company's internationalization process.

Orders

-Major new orders in 2023 are as follows:

Customer	Products
BYD	Water pumps
Seres	Electronically controlled shock absorbers (CDC)
NIO	Welded automotive chassis assemblies
Zeekr	Air conditioning systems
Chery	Steering gear
Scania	Transmission shafts
Yutong	Leaf springs
Ural	Transmission shafts

R&D Facilities

The Company has 14 R&D centers across China. Ten of these are provincial class technology laboratories and nine are laboratories accredited by the Chinese Academy of Sciences. R&D centers have been established in Changchun, Liaoyuan, Jilin, Liaoyang, Dalian, Shanghai, Suzhou, and Wuhan. The Company established Fu-Ou Ji-Ren (Shanghai) Automotive Technology Co. It focuses on electronic control and software development, laying the foundation for developing electrification conversion of core components such as electric chasses, heat pump air conditioning and control systems, electric drive systems, and electric pumps.

-In 2023, the company signed strategic cooperation agreements with China Automotive Research Institute Automotive Inspection Center (Tianjin) Co., Ltd. and Changchun Automobile Testing Center Co., Ltd., and established a "Joint Laboratory for Automotive Parts Testing" with Changchun Automobile Testing Center Co., Ltd.
　

R&D expenditure

(CNY millions)

	FY ended Dec. 31, 2023	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021
R&D expenditure	570.76	443.33	380.02
Ratio of R&D expenses to Sales (%)	3.60	3.53	2.96

-As of Dec. 31, 2023, the Company has 1,157 R&D staff, accounting for 14.50% of the total staff.

R&D News

-In the area of "weight reduction", the low-pressure cast aluminum alloy chassis weight reduction project independently developed and invested in by the company will be put into mass production in 2023. The pump business division has implemented a lightweight layout in the field of hot blank processing, and established Fawer Dongzhen Precision Casting Co., Ltd. to achieve mass production.

-In the area of "electrification", the company independently developed integrated thermal management module products, invested in the establishment of a new integrated thermal management module company, and is expected to achieve mass production at the end of 2024. In addition, the company's suspension system product series has been fully upgraded. The shock absorber platform has achieved the technical upgrade from traditional shock absorbers to electronically controlled shock absorbers (CDC) through independent development, and the products have been mass-produced. At the same time, air spring products reached the trial production stage. The steering system has been fully transformed and upgraded to "electrification". FAW Koyo Steering Systems Co., Ltd. has achieved the transformation and upgrading of the entire series of electric steering products through joint development with FAWER Zhiyan Shanghai Automobile Technology Co., Ltd.

-In the area of "intelligent connected", the company’s subsidiary FulScience Automotive Electronics Co., Ltd. conducts business in the three major sectors of intelligent cockpit, intelligent driving and networked services, mainly producing display screens, cameras and other products.

Patent

-The Company currently holds 173 property rights to patents and utility models. Of these, 79 are patents for inventions. (From the Annual Report 2023)