Changchun Faway Automobile Components 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	11,992.48	9,863.62	21.58%	In 2015, sales increased as the following reasons: -Outstanding core business capabilities -Solid main markets -Strong manufacturing capacity
Operating profit	554.81	483.98	14.63%	-Raw material price increase led to reduced profitability.
Ordinary profit	566.02	484.03	16.94%
Net profit	525.40	456.39	15.12%

New Company

-The Comapny announced that it will establish a subsidiary in Tianjin to assemble tires for FAW-VW’s new plant in the same city. CNY 40.95 million will be invested in this plant, which will have a building area of 8,208 square meters. Operations are scheduled to begin in June 2018. The plant is expected to achieve its designed production capacity in 2019. Sales thereafter are forecast to reach CNY 16.9 million for a profit of CNY 4.14 million. (From an announcement by the company on November 24, 2016)

-The Company announced that Changchun Faway Tong Yang Plastics Products Co., Ltd., its subsidiary, will establish a new subsidiary in Tianjin to supply bumpers to FAW-VW’s new plant in the same city. CNY 195.92 million will be invested in the new company, which will lease a factory building (20,721 square meters) and manufacturing equipment from Changchun Faway’s new Tianjin facility. The plant is expected to reach its designed production capacity in 2019. Sales thereafter are expected to reach CNY 510.48 million for a profit of CNY 41.24 million. (From an announcement by the company on November 24, 2016)

-The Company announced that it will establish a plant in Tianjin to supply automotive parts to FAW-VW’s new plant in the same city. CNY 379.43 million will be invested in this project. The plant will have a building area of 66,973 square meters on 124,500 square meters of land. Construction will begin in February 2017 and is scheduled to be completed by the end of the same year. The plant is expected to achieve its designed production capacity in 2019. Sales thereafter are forecast to reach CNY 33.63 million for a profit of CNY 10.51 million. (From an announcement by the company on November 24, 2016)

Business Plan for Next Year

-In 2017, the Company plans to reach CNY 11,029.07 million sales.

Awards

-Chengdu FAW Faway Yanfeng Plastic Omnium Automotive Exterior Systems Co., Ltd., the Company's subsidiary, got "Supplier Award" from FAW-Volkswagen. (From a press release on January 19, 2017)

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	104.87	96.55	105.13
Ratio of R&D expenses to operating income	0.87%	0.98%	0.93%

R&D Structure

-As of 2016, The Company's accumulated R&D investment was up to CNY 47.77 million. It had a R&D team with about 148 staff.

R&D facilities

Name	Company
Wheel R&D Center	Changchun Faway Automobile Components Co., Ltd. Wheel Company
Faway-Johnson Technical Center	Changchun Faway-Johnson Controls Automotive Systems Co., Ltd.

-The Company has two provincal-level technical centers, involving the automotive wheels and the interior components.

-The technical centers have strengthened their development in the field of automotive exteriors and have the ability to simultaneously design 3 sets of bumpers.

-Changchun Faway Johnson Controls Automotive Electronics Co., Ltd. has the ability to research and develop software and hardware.

Investment activities in 2016

(in million CNY)

Project	Budget	Investment in 2016	Project progress
Qingdao exteriors project	117.90	35.64	20.03%
Chengdu automotive lamps project of Chengdu Faway Hella Automotive Lamps	357.31	40.49	34.91%
Second painted production line of G14 FYTZ1	149.95	44.14	29.44%
T181 front and rear bumper assembly	13.19	6.91	52.37%
Plastic mould of Changchun Faway Huawei Mould Co.,Ltd.	199.90	18.25	82.02%
Improve production capacity project	44.91	7.32	22.01%
T909 front and rear bumper assembly	3.00	2.56	85.47%
Phase II plant construction	14.97	1.54	10.26%
Tire automatic feeding device	0.67	-	85.47%
C7PA project for Audi	14.17	2.19	99.00%
T503 front and rear bumper assembly	0.30	0.26	85.47%