Harbin Dongan Auto Engine Co., Ltd. FY2008

Business Highlights

Financial Overview
In million yuan 2008 2007 Difference% Factors
Sales 1,754.33 1,852.54 (5.3%) Sales decreased year-on-year due to the following factors:
- A decline in sales of engines used in compact vehicles
- Falling product prices
Operating profit 158.64 145.63 8.9% Operating profit, ordinary profit, and net profit increased year-on-year because of a significant rise in equity method investment gain.
Ordinary profit 160.20 150.70 6.3%
Net profit 160.20 150.70 6.3%

Harbin Dongan Automotive Engine Manufacturing and Mitsubishi Motors sign technology licensing agreement on automatic transmissions
- In June, Mitsubishi Motors Corporation announced that it has signed a technology licensing agreement with its powertrain JV enterprise in China Harbin Dongan Automotive Engine Manufacturing Co., Ltd. (DAE) in Harbin, Heilongjang Province. A signing ceremony was held on the same day in Harbin. DAE began construction work on a new factory in March this year with a view to commence production in April 2010. Plans call for the new facility to have an annual production capacity of 150,000 units and to produce 50,000 units in its first year of operation. Production capacity will be raised to meet future increases in demand. DAE will produce 4- and 5-speed automatic transmissions on license, which will be mounted on the Galant and the Lancer manufactured by Soueast Motor in Fuzhou, Fujian Province, in which Mitsubishi Motors has a stake. The ATs will also be supplied to Chinese automakers. DAE has a capacity to produce 300,000 units of gasoline engines and 250,000 units of 5-speed manual transmissions a year.(From an article in the Daily Automotive News from Japan on June 27, 2008)

Investment Activities

Recent capital investment projects (as at the end of Dec. 2008) (in million yuan)
Items Planed amount of investment Amount invested in 2007 Percentage already invested out of the total planned investment Notes
Installing additional production equipment to manufacture DA2 multi valve electric control fuel injection engines 130.00 3.19 73.8% Mass production already began
Additional production lines to manufacture BS14R gears 21.00 1.85 36.5% Mass production already began
Additional production lines to manufacture crankshafts  160.00 71.75 50.4% The Company already installed new equipment and launched trial production