Guizhou Guihang Automotive Components Co., Ltd. Business Report FY ended Dec. 2021

Business Results

(CNY millions)

	FY ended Dec. 31, 2021	FY ended Dec. 31, 2020	Rate of change	Factors
Sales	2,394.31	2,236.11	7.08	-Decrease in orders due to shortage of semiconductors and rise in raw material prices.
Operating income	182.75	189.65	(3.64)
Ordinary income	179.08	184.31	(2.84)
Net income	161.08	161.89	(0.50)

Recent Development at a Subsidiary

-Henniges Automotive Holdings, Inc. (Henniges Automotive) announced that it has formed a strategic joint venture with Guizhou Guihang Automotive Components Co., Ltd. (Guizhou Guihang Automotive Components). This strategic joint venture will merge the current Chinese operations of Henniges Automotive with Guizhou Hongyang Sealing Parts Co., Ltd. and Shanghai Hongyang Sealing Parts Co., Ltd. which are the subsidiaries of Guizhou Hongyang Automotive Components. The new joint venture is named Henniges (China) Sealing Systems Co., Ltd., and Henniges Automotive is the dominant shareholder. (From various media sources dated March 1, 2022)

-The business registration of Hongyang Sealing Products Company, a branch of Guizhou Guihang Automotive Components Co., Ltd. was cancelled and then an announcement was made, stating that Guizhou Hongyang Sealing Products Co., Ltd. would be established in its place as a subsidiary. By becoming a subsidiary, the newly established company will be able to enhance its independence and competitiveness, in aiming to further grow its business. There will be no change in the location and scope of operations. The registered capital is CNY 10 million. Sales at Hongyang Branch for the year that ended on December 31, 2020 were CNY 300,510,800 and net income was CNY 350,800. (From a March 18, 2021 press release)

Orders

-Guiyang Wanjiang Aviation Electromechanical Co., Ltd. announced that on March 8, 2021, the Shanghai plant of SAIC-VW started installing its wiper systems on the new Lavida. In May 2020, the Changsha Plant also started installing the Company's wiper system on the Lavida. As a result of this order, the company has officially become a supplier of wipers for Lavida models. (From a March 12, 2021 press release)

-Yonghong Radiator Company, a subsidiary of Guizhou Guihang Automotive Components Co., Ltd., has received an order from SAIC-GM Wuling for an external, laminated, vacuum brazed transmission oil cooler. The oil cooler will be used in the GF6-CVT transmission that is installed in the RS5 SUV, which is powered by the 1.5L turbo from SAIC-GM-Wuling. It will also be used in models that use the Wuling 1.5T platform. (From a January 12, 2021 press release)

Forecast for the fiscal year ending December 31, 2022

-For the fiscal year ending in December 2022, the Group expects to achieve a sales turnover of CNY 2.1 billion and a gross profit of CNY 200 million.

R&D expenditure

(CNY millions)

	FY ended Dec. 31, 2021	FY ended Dec. 31, 2020	FY ended Dec. 31, 2019
R&D expenditure	102.54	88.62	90.51
R&D expenditure as a proportion of sales (%)	4.28	3.96	4.10