Ningbo Huaxiang Electronic Co., Ltd. Business Report FY ended Dec. 2022

Overview

(CNY millions)

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	Change (%)	Factors
Sales	19,626.12	17,587.82	11.59	-Although the company's sales increased due to increased sales of New Energy Vehicles such as Tesla, profits decreased due to the transfer of the production capacity of the North American business of its subsidiary, Ningbo Laolunsi Automotive Interior Co., Ltd., to Mexico.
Operating income	1,506.14	1,684.61	(10.59)
Ordinary income	1,500.04	1,693.52	(11.42)
Net income	1,338.39	1,520.97	(12.00)

Orders

OEMs	Models
VW	Tayron, Sagitar, Bora, New Passat, Golf, Lavida, T-Roc, Tiguan L, Lamando, Magotan, Phideon, Teramont, New Jetta, ID.4, ID.6, ID.3
Audi	Q5, Q3, Q2, A7, A6, A4, A3, e-tron A+SUV
Benz	E-Class, C-Class, A-Class, GLB, GLC, V-Class, EQ Series
BMW	Neue Klasse, 5 Series, 3 Series, 2 Series, 1 Series, X5, X3, X2, X1
Toyota	RAV4、Camry、Corolla、Levin、Avalon、Highlander, C-SUV, C-HR, Yaris, IZOA
Hongqi	HS7, HS5, HS3, H9, H7, H5, L7, L5
Volvo	S90, S60、XC60、XC40、Polestar2、Polesta3
GM	Cadillac XT4, XT5, XT6, CT4, CT5, CT6, Chevrolet, Buick GL8, Envision
Tesla	Model-3, Model-Y, Highland
NIO	ES6, ES7, ES8, EC6, EV7, ET7
XPeng	P7i, G3, P5
Li Auto	ONE, L9, D-SUV
BYD	Yangwang, E1, E2, Tang, Song PRO, Yuan PRO, Han, Ocean series
Lynk/Zeekr	Lynk 01/02/03/05/09, Zeekr 009, Smart 1#
SAIC IM Motor /SAIC Rising Motor	IM LS7、R R7、R Marvel R

Subsidiary spin-off

-The company announced that the Board of Directors authorized the management layer to initiate preliminary preparations for spinning off Changchun Huaxiang Automobile Metal Parts Co., Ltd. (Changchun Huaxiang) for listing on a stock exchange in China. Founded in December 1991, Changchun Huaxiang is mainly engaged in such businesses as thermoformed vehicle body products, large welding assemblies for bodies-in-white, and New Energy battery housings. (From a Ningbo Huaxiang SZSE press release dated June 13, 2023)

New project

-According to multiple press releases, the groundbreaking ceremony for the Huaxiang New Energy Vehicle (NEV) Parts Industrial Park Project was recently held in Tiexi District, Shenyang, Liaoning. The Project, invested and built by the Company, is a modern NEV parts industrial park integrating R&D, production, and sales, with a total investment of about CNY 1.5 billion. With a total floor area of about 120,000 square meters, the park will mainly manufacture such products for BMW Brilliance NEVs as chassis, interior and exterior trims, and battery housings, and conduct upstream and downstream businesses related to the automotive parts industry upon completion. It is planned to be completed and commissioned in May 2024, and is expected to add an annual output value of CNY 1.8 billion upon commissioning. (From multiple press releases dated May 29, 2023)

Orders

-The company announced that its subsidiary, Changchun Huaxiang Automobile Metal Parts Co., Ltd., has become a supplier of battery cases for a New Energy Vehicle model under a Chinese leading automaker. The supply period is expected to be 7 years, starting from 2025. The average annual sales will be approximately CNY 100 million. (From a press release dated February 15, 2023)

Partnership with Marelli

-Marelli announced that it signed a memorandum of strategic cooperation in Ningbo. The two companies will deeply cooperate in suspension systems. By making use of their respective strengths, both parties will explore the possibilities regarding automotive suspension systems. They will pool their resources in terms of technology and customer channels to jointly develop the suspension product business in the Chinese market. (From a press release dated September 22, 2022)

-Marelli announced that it signed a tripartite strategic cooperation framework agreement with Jiangnan Mould & Plastic Technology Co., Ltd. (JMPT) and the company. According to the agreement, the three parties will cooperate in the field of smart car exteriors. By leveraging their respective technical advantages and client channels in fields such as smart illuminated grilles and bumpers, they will work together to explore business possibilities regarding customized exterior parts. (From a press release dated July 25, 2022)

-Marelli announced that it signed a memorandum of strategic cooperation with the company and its subsidiary Ningbo FengMei Vision Electronic Co., Ltd. (FengMei Vision). All parties are willing to cooperate in developing smart cockpits, focusing on products and businesses where they have advantages and synergies. (From a press release dated June 21, 2022)

Corporate policy on research and development

Research and development at Ningbo Huaxiang is proceeding according to the following guidelines.

Based on the human-centered concept in the cockpit module, and based on existing interior products (rearview mirrors, doors, roof, main and auxiliary dashboards, decorative strips, etc.), the Company will provide touch voice sensors, ambient lighting, fragrance systems, floating giant screens and other features to create a more technological and personalized driving space.
In chassis modules, the Company seeks to develop the front and rear subframes of the chassis through "self research and development+joint venture and acquisition", establishing the core components of the shock absorption system, and gradually achieving comprehensive functions such as automatic lifting and active safety.

Research projects

Projects	Details	Progress
Smart Surface (Phase 1)	Through integrated development of optical and electronic control systems, complete preliminary research of smart surface products based on capacitor film and PCBA hardware technology.	The design of the product is completed, and the A sample is being built.
Study on hot formability of 2000 MPa next-generation ultra-high-strength steel	Over 10% weight reduction compared to 1500MPa material	Completed development; making samples.
Development of integrated door ring	Reduced the number of parts from 3 to 5 types to 1, reducing product weight by approximately 30%.	Completed development; making samples.
Thermoformed high-strength steel battery pack housing	Compared to aluminum battery packs, the cost is reduced by more than 20% and the weight increase is within 15%.	Completed development; making samples.

R&D Expenses

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	FY ended Dec. 31, 2020
R&D expense (CNY millions)	690.07	640.42	528.06
Proportion of R&D to Sales (%)	3.52	3.64	3.13

-As of the end of 2022, the Company had 1,536 R&D staff, 8.15% of total employees.

Overseas business

-Ningbo Huaxiang started to optimize its overseas business in 2020. The NBHX Trim GmbH (HSB) plant in Germany has been closed, and the remaining HIB Trim Part Solutions GmbH (HIB) plant in Germany and Northern Automotive Systems Ltd. (NAS) plant in the UK will also be relocated to the Romanian site. To reduce operating costs in 2022, the company transferred its North American production capacity to its Mexico plant, which is currently in the batch production stage.