Bohai Automotive Systems Co., Ltd. (Formerly Shandong Binzhou Piston Co., Ltd.) Business Report FY ended Dec. 2016
Financial overview |
(in million yuan) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | Rate of change | Factors | |
| Sales | 1,768.75 | 1,471.15 | 20.23% | -The Company's sales volume increased in 2016, thus, annual sales increased in 2016. |
| Operating profit | 226.61 | 46.49 | 387.44% | - |
| Ordinary profit | 154.77 | 57.04 | 171.34% | |
| Net profit | 142.59 | 51.31 | 177.90% |
New Company
-The Company said on May 4, 2017, that it will establish a new subsidiary, Binzhou Bohai Piston Co., Ltd., investing Chinese yuan (CNY) 900 million. The new company will be set up in Binzhou, Shandong, with a registered capital of CNY 900 million. It will manufacture and sell pistons and other components for automobiles, internal combustion engines, and compressors. Once the new company is established, Shandong Binzhou Bohai Piston will transfer all its assets and liabilities in its piston business to the new company. (From a corporate announcement on May 4, 2017)
-In February 2017, two new joint ventures between Johnson Controls Inc. and the Company held an opening ceremony at the Binzhou Industrial Park. The joint ventures are Johnson Bohai Battery (Binzhou) Co., Ltd. and Bohai Johnson Automotive Battery Co., Ltd. USD 250 million was invested in these facilities that are located on approximately 133,000 square meters of land, and trial production is scheduled to begin in April 2018. Annual production capacity is expected to reach 7.5 million batteries, which include 3 million traditional SLI lead-acid batteries as well as 4.5 million Absorbent Glass Mat batteries for automatic engine stop-start systems. The joint ventures are expected to create 737 jobs, and to generate CNY 2.55 billion in sales and CNY 292 million in profit per year. (From news releases issued by multiple sources on February 9, 2017)
-The Company and Korea-based Hanon Systems agreed to establish a joint venture in August 2016. The new company will be called Beijing Hainachuan Hanon Automotive Parts Co., Ltd. It will be capitalized at CNY 33 million, of which 51% will be invested by the Company and 49% will be invested by Hanon Systems. The joint venture will mainly produce air conditioning units for Beijing Benz’ MFA2 (development code). Mass production is scheduled to begin at the end of February 2018. The initial investment will exceed Chinese yuan (CNY) 70 million. The joint company will make air-conditioning units for luxury vehicles, first of all for the Beijing Benz model developed under the code name of MFA2. (From a press release on August 15, 2016) (From an announcement by the company on August 15 and 16, 2016)
-Johnson Controls is forming a joint venture with the Company, an auto parts affiliate of Beijing Automotive Industry Group Co., Ltd. (BAIC Group), to build its fourth Chinese automotive battery manufacturing plant in Binzhou, Shandong Province. At full capacity, the more than USD 200 million plant will employ 650 people who will manufacture conventional flooded batteries and absorbent glass mat (AGM) batteries, which power start-stop systems. Construction of the state-of-the-art facility is expected to begin in 2017, with production starting two years later. Once up and running, the plant will be able to produce 7.5 million batteries per year. (From a press release on June 9, 2016)
-The Company announced that the company and Johnson Controls Europe Holding Co., Ltd. will jointly establish Bohai Johnson Automotive Battery Co., Ltd. Thereafter, this new joint venture and Johnson Controls Europe Holding will jointly form Johnson Bohai Battery Co., Ltd. These two new companies will produce and sell batteries for engine stop-start systems and conventional flooded batteries. Johnson Controls Europe Holding is a subsidiary of U.S.-based Johnson Controls Inc. and is registered in Hong Kong. Bohai Johnson Automotive Battery is capitalized at USD 52.58 million, of which 51% will be provided by Shandong Binzhou Bohai Piston and 49% will be provided by Johnson Controls. Johnson Bohai Battery is capitalized at USD 63.77 million, of which 51% will be invested by Johnson Controls and 49% will be invested by Bohai Johnson Automotive Battery. (From an announcement by the company on June 6, 2016)
Contract
-The Company announced that it has received a contract to supply 2 types and 70 sets each of aluminum pistons to Deutz of Germany. Assembly of these products has already begun. In addition, the company is developing forged steel pistons for Deutz, planning to begin mass production in 2018. (From news releases issued by multiple sources on March 31, 2016)
Acquisition
-The Company announced that it will invest CNY 208 million in Beijing New Energy Vehicle Co., Ltd. from its own fund of CNY 532.48 million. Beijing New Energy Vehicle was established in 2009. It produces and sells power modules for EVs, HVs, and new energy vehicles. Beijing New Energy Vehicle is inviting investments, aiming to increase its capital to CNY 3,200 million from the current CNY 2,000 million. After the transactions, Shandong Binzhou Bohai Piston will hold a 6.5% share in Beijing New Energy Vehicle. (From an announcement by the company on March 8, 2016)
-The Company announced that it will invest a total of CNY 2,321 million to acquire 100% of Hainachuan (Binzhou) Engine Parts Co., Ltd., which is affiliated with Beijing Hainachuan Automotive Parts Co., Ltd., and 49% of Taian Qicheng Wheel Manufacturing Co., Ltd. The company will do so by issuing 219 million new shares (worth CNY 9 per share) to raise its capital. The amount will be added to CNY 348 million to be spent in cash. Prior to this acquisition, Beijing Hainachuan transfered the 51% share it has in Taian Qicheng Wheel Manufacturing, 40% share in Inergy Automotive Systems (Beijing) Co., Ltd., 20% in Hanon, 35% share in Tenneco (Beijing) Ride Control System Co., Ltd., and 49% share in Tenneco (Beijing) Exhaust System Co., Ltd. to Hainachuan (Binzhou) for free. Subsequently, Beijing Hainachuan will acquire the new Hainachuan (Binzhou) to expand its business. (From a press release on February 5, 2016)
Strategic Cooperation
-The Company announced that Binzhou Bohai Precision Machinery Co., Ltd., which is its wholly owned subsidiary, has agreed to form a strategic partnership with Liebherr-Gear Technology. The two companies will collaborate on providing automation solutions and after-sales services by leveraging their areas of expertise. Three forms of partnership are being discussed: 1) Liebherr will be the contractor; 2) Binzhou Bohai will be the contractor; and 3) each company will provide product documents, spare parts, and related services for specialized project areas. (From an announcement by the company on November 23, 2016)
Awards
-In 2016, the Company got "Excellent Supplier" from Weichai Power, China National Heavy Duty Truck, FAW Wuxi Diesel Engine Works， Yuchai Group and so on. (From the Company's 2016 annual report)
-The Company received the "Win-win Corporation Award" from Beiqi Foton Motor. (From a press release on December 26, 2016)
-The Company received Haima Automobile's Quality Award 2016. This is the first time that the company was awarded by Haima. (From a press release on December 26, 2016)
R&D facility
-The Company owns a national level technical center for developing pistons. The Company established only one national technology center, National Recognized Testing Laboratory and enterprise postdoctoral working station. With the synchronized R&D, test and evaluation, the Company's many invention patents and new products reached advanced international level.
R&D Expenditure
| FY ended Dec. 31, 2016 (million CNY) |
FY ended Dec. 31, 2015 (million CNY) |
FY ended Dec. 31, 2014 (million CNY) |
|
| R&D Expenditure | 65.54 | 50.84 | 59.60 |
| Ratio of R&D expenses to operating income | 3.71% | 4.96% | 5.06% |
Capital Investment Projects for FY2016 |
(in million CNY) |
| Project | Planned amount of investment | Investment in 2016 | Project progress |
| Annual output of 8 million pistons construction project for luxury cars | 392.41 | 80.82 | 97.17% |
| Annual output of 400,000 high reinforced steel forged pistons construction project for cars | 273.66 | 32.02 | 33.30% |
| Annual output of 250,000 engine cylinder head crankshaft project | 1,379.41 | 600.82 | 44.00% |
| Annual output of 2 million pistons construction project for aluminum high-power diesel engine | 298.39 | 47.78 | 76.77% |