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5. CITIC Dicastal Co., Ltd. Business Report FY ended Dec. 2017

CITIC Dicastal Co., Ltd. Business Report FY ended Dec. 2017

-The Company sold 51.28 million wheels, a 12% increase over 2016. Castings sales grew 4% to reach approximately 77,100 tonnes.

Put into Producton

-CITIC Dicastal Co., Ltd. celebrated the official launch of its new aluminum wheel plant, which recently completed in the first phase construction of the company's Sonolion Industrial Park project. At the same time, the company began production at its new light-weighted chassis part plant with an annual production capacity of 20,000 tons. The total cost of the project is Chinese yuan (CNY) 5 billion. The construction work began on February 19, 2017, based on the joint investment between CITIC Dicastal and SINOLION Investment Holdings Co., Ltd. The company is currently building seven facilities such as a high-performance aluminum wheel plant with an annual production capacity of 3 million wheels, a light-weighted chassis part plant with an annual production capacity of 20,000 tons and a new energy car motor housing plant. They are to be completed by the end of 2017. The total cost of the first phase construction of an aluminum wheel plant of 297,333 square meters is CNY 2.5 billion. It’s expected to generate sales of CNY 800 million and create new 500 jobs. (From some releases on October 20, 2017)

-CITIC Dicastal Co., Ltd. officially started the second phase construction of a new plant with an annual production capacity of 3 million wheels in the CITIC South Intelligent Manufacturing Industrial Park. The first phase construction of a facility with another yearly production capacity of 3 million wheels has already been completed and its operation has begun recently. The second phase construction is dedicated to the new plant and some buildings for workers. The total investment in the project is Chinese yuan (CNY) 5 billion and the new facilities will be built on a site of 466,667 square meters. It serves as a regional headquarters in South China and research and development center with a capacity to produce 12 million aluminum wheels and 40,000 tons of Dicastal KSM alloy components. When completed, its sales are expected to reach CNY 15 billion. The first phase construction began on January 3, 2017, with facility installment ended on August 1, 2017. The first-lot shipment took place on September 3, 2017. (From some releases on October 10, 2017)

-August 1, 2017, CITIC Dicastal Co., Ltd. began production at the CITIC South Intelligent Manufacturing Industrial Park. The facility was built in Changsha, Hunan, with an investment of Chinese yuan (CNY) 5 billion at a site of 467,000 square meters. It serves as a regional headquarters in South China and research and development center with a capacity to produce 12 million aluminum wheels and 20,000 tons of Dicastal KSM alloy components. The construction started on January 3, 2017. It produced the first lot of the mold base on July 3 and shipped the first piece of aluminum alloy wheel on August 1. (From some releases on August 3, 2017)

-On January 3, 2017, Dicastal KSM Chengdu Auto Parts Co., Ltd., which is a wholly owned subsidiary of CITIC Dicastal Co., Ltd., commenced production at its new factory in the Tianfu New Area in Chengdu, Sichuan Province after completing the first phase of its construction project. The subsidiary joined the Tianfu New Area project in January 2015, and started plant construction in March 2016. CNY 2 billion was invested in the first phase of the estimated CNY 3 billion project, which consists of two phases. The plant was built on approximately130,000 square meters of land, and is capable of producing 20,000 tons of automotive casting components per year. When the second phase is completed, the plant’s annual production capacity is expected to increase to 40,000 tons and its output is predicted to reach CNY 2 billion. (From news releases issued by multiple sources on January 5, 2017)

-On October 29, 2016, Wuxi Dicastal Wheel Manufacturing Co., Ltd., a subsidiary of Citic Dicastal Co., Ltd., began producing lightweight wheels at its new plant. The wheel plant is the first phase of the company’s CNY 2.2 billion project, and CNY 600 million was invested in the facility. The plant is China’s first intelligent wheel factory, and is expected to produce 2.4 million lightweight wheels per year. Its annual output is expected to reach CNY 2.5 billion at full capacity. In the second phase of the project, the company will invest CNY 1.6 billion to set up an additional plant, which will produce 40,000 tons of lightweight precision components for automobiles per year. (From news releases issued by multiple sources on October 31, 2016)

-On April 19, 2016, MX Dicastal Wheel Manufacturing Co., Ltd., a subsidiary of CITIC Dicastal Co., Ltd., broke ground for its new plant that will produce 4 million lightweight aluminum alloy wheels per year. CNY 1,333 million will be invested in the first phase of this construction project, which is scheduled to be completed in one year. Robots and robot arms will be introduced at the plant in order to automate various operations. The company expects a CNY 1 billion increase in sales per year after the plant begins full-scale production. (From news releases issued by multiple sources on April 21, 2016)

New Project

-On November 5, 2016, CITIC Dicastal Co., Ltd. broke ground for CITIC South Intelligent Manufacturing Industrial Park in the Wangcheng National Economic and Technical Development Zone in Changsha, Hunan Province. The company is investing CNY 5 billion in this facility, which will be built on approximately 467,000 square meters of land. The industrial park will have lines to produce 12 million aluminum wheels per year and 40,000 tons of aluminum casting parts. It will also produce high-end equipment and dies. The plant’s annual output is expected to reach CNY 15 billion. (From news releases issued by multiple sources on November 7, 2016)

Off the Line

-The Company completed the construction of machining lines and painting lines at its new plant in Michigan, U.S. The Michigan facility is capable of producing 3 million aluminum wheels per year, and began production on February 1. This project is the largest investment in the U.S. made by a Chinese auto parts supplier. (From a press release on February 4, 2016)

R&D Structure

-The Company conducts development activities at its technical center, which was established in February 1993. The technical center has been recognized as a national R&D center by the National Development and Reform Commission since October 2005.

-The Company has established overseas R&D centers in Europe and North America and a technical center in Japan. Due to its overseas technical centers, the Company is the first wheel manufacturer which can provide synchronous development together with global automakers.

-The Company's Wheel Testing Center is the largest one in Asia.

-The Company researches integrated solutions for aluminium wheels and cast components design and manufacturing at its CITIC Dicastal Engineering Technology Institute.

Patents

-Recently, the Company carried out more than 50 R&D activities with research institutions and universities and obtained more than 300 patents.

Investment Outside China

-On February 19, 2017, CITIC Dicastal Co., Ltd. and Qinhuangdao SINOLION Holdings held a ground-breaking ceremony for the SONOLION Industrial Park. A total of CNY 5 billion will be invested in the new plant, which will be built on CNY 706,000 square meters of land. Construction will be carried out in two phases. The first phase will include a factory to produce lightweight, high-performance aluminum wheels (annual capacity: 3 million units), a lightweight chassis production line No.1 (annual capacity: 20,000 tons), a factory to produce motor housing for new energy vehicles, a special vehicle plant, an automotive die plant, a smart factory, and an R&D center. By the time when the plant achieves its planned capacity level, it is expected to create over 3,000 jobs and contribute to a CNY 2.6 billion increase in sales. (From news releases issued by multiple sources on February 20, 2017)