Zhejiang Asia-Pacific Mechanical & Electronic Co., Ltd. Business Report FY ended Dec. 2016

Financial Overview

(million CNY)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 Rate of change Factors
Sales 3,418.96 3,059.48 11.75% -Develop new business and new market to achieve sales growth.
Operating profit 148.82 157.48 (5.50%)

-As the equity investment projects had not been fully put into operation, R&D investment, labour cost and depreciation cost increase, lead to the Company's sales increase lower than the overall auto market growth.

Ordinary profit 176.02 170.08 3.49%
Net profit 151.58 148.69 1.94%



New Company

-Guangzhou Asia-Pacific Chassis Systems Co., Ltd., which is a joint venture established between the Company and Guangzhou Automobile Group Component Co., Ltd., said that it completed the procedure to register itself with the State Administration for Industry & Commerce (SAIC) of the People’s Republic of China. The joint company is owned 51% or Chinese yuan (CNY) 42.84 million by Zhejiang Asia-pacific Mechanical & Electronic and 49% or CNY 41.16 million by Guangzhou Automobile Group Component. (From a corporate announcement on May 25, 2017)

-The Company and Jilin Longshan Silicone Co., Ltd. established a joint company in Jilin city. The new company is called "Jilin Aisa-Pacific Automotive Chassis Co., Ltd." Capitalized at CNY 10 million, the joint company is owned 51% by the Company and 49% by Elaphe. The new company is manily engaged in development, manufacture and sales of automotive chassis modules. (From a corporate announcement on April 6, 2017)

-Zhejiang Asia-Pacific Mechanical & Electronic Co., Ltd. Shanghai Branch completed industrial and commercial registration. The new company is located at Jiading District, Shanghai, mainly engaged in development, sales, technical services and import and export business of automotive and rail vehicle brake systems, automotive chassis systems, automotive electronics and audio entertainment system. (From an announcement by the company on March 24, 2017)

-The Company announced that it will establish a joint venture with Elaphe Propulsion Technologies Ltd., its affiliated company. The new company will be called Hangzhou Asia-Pacific Elaphe Power Technologies Co., Ltd., and will be located in Hangzhou City, Zhejiang Province. It will be capitalized at EUR 5 million, of which 51% (EUR 2.55 million) will be invested by Zhejiang Asia-Pacific and 49% (EUR 2.45 million) will be invested by Elaphe. The new company will mainly produce in-wheel motors. (From an announcement by the company on April 26, 2016)

-The Company announced that the company and Zonve Auto Exhibition will establish a joint venture. The new company will be called Chongqing Asia-Pacific Chassis Systems Co., Ltd. Zhejiang Asia-Pacific will invest CNY 40 million and will hold an 80% ownership, while Zonve Auto Exhibition will invest CNY 10 million and will hold a 20% ownership of the new company. Zhejiang Asia-Pacific is planning to transfer the operations of Chongqing Jinrong Asia-Pacific Automotive Co., Ltd., its subsidiary, to the new joint venture in steps. (From an annuouncment by the company on March 15, 2016)


-Wuhan ZA Automotive Chassis System Co., Ltd., the Company's subsidiary, completed industry and commerce registration. The new company is capitalized at CNY 10 million, mainly engaed in manufacture and sales of automotive brake systems, automotive chassis systems, automotive electronics and audio entertainment systems. (From an announcement by the company on March 21, 2016)

Liquidation

-The Company announced that it will deregister its Wuhan Branch. The Wuhan Branch was established on May 27, 2015. It develops, manufactures, and sells (including import/export) brake and chassis systems for automobiles and railroad vehicles, automotive electronic components, and audio systems. All employees working at the Wuhan Branch will be transferred to Zhejiang Asia-Pacific Mechanical & Electronic. (From an announcement by the company on February 6, 2016)

Contract

-FAW-Volkswagen designated the Company as an official supplier of F17M BC316 DY0260 brakes. (From a corporate announcement on May 20, 2017)

-The Company announced that it will form a joint venture in Guangzhou, China with Guangzhou Automobile Group Component Co., Ltd. The new company will be called Guangzhou Asia-Pacific Chassis Systems Co., Ltd. It will be capitalized at CNY 84 million, of which 51% (CNY 42.84 million) will be invested by Zhejiang Asia-Pacific and 49% (CNY 41.16 million) will be invested by Guangzhou Automobile Group Component. Guangzhou Asia-Pacific Chassis Systems will develop, produce, and sell brake and chassis systems for automobiles. (From an announcement by the company on December 30, 2016)

-Asia-pacific Machine & Electric Group Corp, which is the largest shareholder of the Company, announced that it will acquire a 100% stake in France-based GMD. GMD is an automotive body and chassis manufacturer with manufacturing facilities in countries including China. The company is valued at approximately EUR 300 million. It mainly produces diecast parts, injection molded plastics, gaskets, and stamped components for automakers like PSA, Renault, Mercedes-Benz, and Volkswagen, as well as parts suppliers like ZF. In fiscal year 2015, GMD generated approximately EUR 688 million in sales and approximately EUR 61.9 million in operating profit before amortization. (From an announcement by the company on December 2, 2016)

-The Company announced that it has been chosen by Great Wall Motor Company as a developer and manufacturer of front brake caliper assemblies and front brake discs for the new Haval H6. (From an announcement by the company on November 29, 2016)

-The Company and FAW-VW have signed an agreement to jointly develop brake-by-wire systems for autonomous vehicles. The brake-by-wire system is expected to serve as the core technology that supports autonomous vehicles. (From an announcement by the company on November 15, 2016)

-The Company announced that it has been chosen as an exclusive supplier of rear brake products for General Motors’ GEM platform. The GEM platform is targeted at markets including China, Mexico, and Brazil. The contract period is 2019-2027 for the Chinese market, and 2020-2032 for the Mexican and Brazilian markets. (From an announcement by the company on October 24, 2016)

-The Company announced that it has been chosen by Chongqing Changan Automobile’s commercial vehicle division as a developer and supplier of front and rear brake corner modules for Changan's new model (development code: R111). (From an announcement by the company on October 11, 2016)

-The Company announced that it has been approved by Qiantu Motor (Suzhou) Company Limited as a designated developer and supplier, and will develop electric parking brake (EPB) modules for a new model (development code: HG11). (From an announcement by the Company on September 28, 2016)

-The Company announced that it has received an invitation from Sichuan Hyundai Motor Company to develop ABS hydraulic control units for the automaker's new model (development code: QTc). (From an announcement by the Company on September 24, 2016)

-The Company announced that it has been awarded a contract to supply components for Dongfeng-Peugeot-Citroen's new models. The company will provide 11 products including hydraulic clutch release master cylinders and hydraulic clutch release cylinders for PF2 (BZ3 and B73 models) and BVH1 (M3, M4, A94 and M44 models). These components will be made from new composite materials. (From an announcement by the company on May 6, 2016)

-The Company announced that it has been awarded a contract from FAW-VW to supply front disc brakes for the Audi X55 and A-MAIN-SUV, as well as rear disc brakes for the Audi X55, NSC NF, and A-MAIN-SUV. The company will supply 80% of these brake products required for the models. (From an announcement by the company on April 21, 2016)

-The Company announced that it has received a contract to supply chassis modules for Dongfeng Tourist Bus Co., Ltd.'s new-energy vehicles. Zhejiang Asia-Pacific will support new product development and will provide samples to the bus manufacturer when required. (From an announcement by the company on January 22, 2016)

-The Company announced that it will develop and supply new front- and rear- brake caliper assemblies for Guangzhou Automobile Group Motor Co. Ltd.’s new model (development code: A5H). (From an announcement by the company on January 21, 2016)

Business Plan for Next Year

-In 2017, the Company plans to reach CNY 3.5 billion sales, CNY 180 million ordinary profits and CNY 153 million net profits. (From the Company's 2016 annual report)

R&D Facility

-The Company established a technical center in 1996, which is identified as the only one state-level enterprise technology center in China's brake industry in 2005.

R&D Expenses

(in million CNY)
Year FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 FY ended Dec. 31, 2014
R&D Expense 142.52 110.63 93.90
Percentage in sales revenue (%) 4.17% 3.62% 2.86



R&D Cooperation

-On March 1, 2017, the Company and the China Automotive Technology and Research Center (CATARC) jointly established a research center to develop connected vehicle standards in Xiaoshan District, Hangzhou. The new center will perform research activities to develop basic technology, evaluation methods, and standards related to connected vehicles. (From news releases issued by multiple sources on March 2, 2017)

-The Company announced that the company and Chery New Energy Automobile Technology Co., Ltd. will sign a memorandum of agreement to collaborate on the development of new energy vehicle technologies. Chery New Energy Automobile Technology is asking Zhejiang Asia-Pacific to construct a new plant in Wuhu to promote cooperation between the two companies. Chery New Energy Automobile was established in April 2010. The company specializes in research and development of clean energy cars such as hybrids and alternative-fuel vehicles. (From an announcement by the company on May 30, 2016)

-The Company announced that the company and DFSK Motor Co., Ltd. signed an agreement to collaborate on intelligent driving technologies. Their area of cooperation will include R&D and testing of brake systems and control modules for autonomous vehicles. (From an announcement by the company on March 28, 2016)

-The Company announced that the company and Zhejiang Hezhong New Energy Automobile Co., Ltd. have signed an agreement to collaborate on autonomous driving technologies. Their collaborations will include the development and testing of brake systems and control modules for autonomous vehicles. Zhejiang Hezhong New Energy Automobile is a high-tech company located in Tongxiang, Zhejiang. It develops, produces, and sells new energy vehicles. (From an announcement by the company on March 17, 2016)

-The Company announced that it has signed a strategic partnership agreement with Beijing Automotive Technology Center and Beijing Asia-Pacific Chassis Co., Ltd. to collaborate on the development of connected vehicles. Under the agreement, the three companies will produce a prototype of intelligent network EVs. Beijing Asia-Pacific Chassis is a joint venture between Zhejiang Asia-Pacific, which owns 49%, and Beijing Hainachuan Automotive Parts Co., Ltd., which owns 51%. (From an announcement by the Company on February 15, 2016)

-The Company and Chery Automobile have signed an agreement to collaborate in the field of intelligent driving technology. Zhejiang Asia-Pacific will develop and produce braking systems and control modules for Chery's vehicles, and will also offer installation and technical services related to these products. (From an article in the Nikkan Jidosha Shimbun on January 25, 2016)

Patents

-As of December 31, 2016, the Company has obtained 127 patents, including 18 invention patents, 107 utility model patents and 2 design patents.

Investment

(in million CNY)
Project Budget Investment in 2016 Project progress
Project of annual output of 120,000 tons of key automotive parts casting 657.40 221.16 60%
Project of annual output of 400,000 sets of electronic integrated rear brake caliper assembly with EPB technological transformatio 151.87 31.52 85%
Project of annual output of 4 million sets of automotive disc brakes construction 333.20 8.84 80%
Chongqing Aisa-pacific plant construction 170.00 16.00 10%
Plant and ancillary projects construction in Anji 136.00 1.28 75%



Investment in China

-The Company announced that the company and Suzhou Anzhi Auto Parts have signed an agreement under which Zhejiang Asia-Pacific will acquire new Suzhou Anzhi shares. Zhejiang Asia-Pacific will pay CNY 5 million to acquire the 10% shares in Suzhou Anzhi. Suzhou Anzhi, established in January 2015, develops and sells driver assistance systems and active safety systems. As of December 31, 2015, it generates approximately CNY 200,000 in sales and has CNY 14.5 million in total assets. Funds procured through the capital increase will be spent on development of electronic brake systems and advanced driver assist systems. (From an announcement by the company on January 26, 2016)