Guangxi Yuchai Machinery Group Co., Ltd. Business Report FY ended Dec. 2016

Recent Development

-In December 2016, Y&C Engine Co., Ltd., a subsidiary of Yuchai Machinery (Guangxi) Group Co., Ltd., produced its 15,000th 6K-brand high power engine (420 horsepower or more). The 6K engines were released in the summer of 2009, and have been supplied to automakers including Dongfeng Liuzhou, Jianghuai Heavy Duty Truck, and Dongfeng Tianlong. Sales target for Y&C's YC6K12 and YC6K13 engines are set at 12,000 units in 2017, 20,000 units in 2018, and 30,000 units in 2019. (From a press release on December 29, 2016)

-Yuchai Machinery (Guangxi) Group Co., Ltd.'s new casting line passed an inspection by the China Academy of Machinery Science & Technology (CAM) on May 12, 2016. The production line was constructed under a joint project with CAM to set up a computerized casting line for producing 600,000 cylinder heads/year for large engines. Construction began in 2013, and the new operation began in October 2015. The new line was constructed based on Yuchai Machinery Casting Center's second production line, and can produce 675,000 units of 20 types of engines per year. The advanced operation increases mold clamping force by 10%, and reduces materials cost and labor costs by more than 15% and 4%, respectively. (From news releases issued by multiple sources on May 13, 2016)

Contracts

-A hundred and forty units of hybrid buses that are equipped with Yuchai Machinery's YC6J210N-52 engines and meet the China V emissions standards were supplied to Huaian City Public Transportation Co., Ltd. These buses have already started operating. The delivery marks the first batch of the 500 hybrid engine contract that Yuchai Machinery received from Huaian City Public Transportation in the beginning of September 2016. (From news releases issued by multiple sources on October 9, 2016)

-The Company received a contract from the Beijing Public Transportation Group to supply 301 units of its Euro VI engines to the bus company. This volume accounts for two-thirds of all engines required by the company this time. One hundred units have already been supplied, and the remaining 201 units will be delivered soon. (From news releases issued by multiple sources on August 11, 2016)

-The Company announced that it has received a contract to supply diesel engines for 1,237 city buses destined for delivery to Lhasa in the Tibet Autonomous Region. The company's 4G and 4S diesel engines will be mounted on 648 Yutong buses, 270 Suzhou King Long buses, 164 Xiamen Golden Dragon buses, and 155 AUV buses that will be delivered to Lhasa in March 2016. (From a press release on January 6, 2016)

New Company

-The Company and Zhejiang Yinlun Machinery Co., Ltd. announced that they have signed an investment agreement and a land-use right transfer agreement for the Yuchai Industrial Park. In accordance with these agreements, Zhejiang Yinlun Machinery will invest CNY 60 million to form a wholly owned subsidiary in the industrial park. The new company will be called Yunlin Yinlun, and will produce oil coolers, oil cooler modules, exhaust-gas aftertreatment devices like selective catalytic reduction (SCR) systems and exhaust gas recirculation (EGR) systems, and exhaust heat recovery and cooling systems. (From an announcement by Zhejiang Yinlun Machinery Co., Ltd. on April 30, 2016)

Strategic Cooperation

-In December 2016, the Company signed a strategic partnership with Zhejiang Founder Motor Co., Ltd. Under the terms of the agreement, the two companies will collaborate on R&D on drive systems for new energy vehicles, as well as introduction and application of fuel control systems for gas engines. (From news releases issued by multiple sources on December 16, 2016)

-The Company and the Dayun Automobile Group have reached an agreement to collaborate in the areas of hybrid vehicles and pure electric vehicles. Prior to this agreement, discussions were held between the two companies from August 9 through 11, 2016. In accordance with the agreement, Yuchai Machinery will supply all series of its powertrain systems to Dayun Automobile. (From an announcement by the company on August 15, 2016)

-The Company announced that it has signed an agreement to jointly develop methanol-fueled large trucks with Beiben Trucks and Fuel Injection Technologies Co., Ltd. (FIT), which specializes in engine injection systems. The three companies plan to complete a prototype by the end of this year, aiming to release a new ethanol truck as soon as possible. (From an announcement by the company on July 20, 2016)

R&D facilities

Facility	Overview
Guangxi Yuchai Engineering Research Institute	-Established in 2007, this research institute conducts its development activities in four divisions: Product engineering division; Electronic control technology division; Test engineering division, and Technology management division. -The focus of its development activities is on engineering technology as practical business solutions to reduce emissions, and developing diesel engines for passenger vehicles.
Combustion engines Union testing Laboratory	-Established in 2009, the new testing laboratory is to conduct research and development on combustion technology for diesel engines; along with R&D activities on automotive noise, vibration, and harshness; and on intake systems.
R&D center	-Established in 2011, the center is to conduct joint research and development activities for large turbochargers used in vessels and automobiles.
Practice-Education center	-Established in 2011 with Huazhong University of Science & Technology (HUST).
Guangxi Diesel Engine Engineering Academy	-Established from 2012 to 2015, the Company is solely responsible for the construction.
Prototype production center of Guangxi Yuchai Machinery Co., Ltd.	-Established in 2014, covered 7,000 square meters of land. -For rapid manufaturing of new products, and the development, experiment and research of new materials, new processes, new technologies and new methods. -In addtion to the prototype production center, two more workshops are scheduled to be established: one for assembling and one for machining.

-The Company announced that its testing laboratory has passed screening performed by the China National Accreditation Service for Conformity Assessment (CNAS) and had its license renewed for the third time. All screening criteria were met including 11 items that were already approved in the past screening. The company also passed on-site tests for the GB/T 1859.1-2015, which had been revised, as well as for six new test items including the HJ689-2014, and was able to obtain its test reports immediately. (From a press release on January 9, 2017)

Patents

-As of Dec 31, 2016, the Company had more than 2,000 patents in total.

New Product

-In January 2016, the Company announced four new engines that meet the China V emissions standards: the YC4Y22-50 small diesel engine; the YC6K13-50 diesel engine; the YC6JN-60 natural gas engine; and a hybrid bus engine. The YC6K13-50 diesel engine for heavy-duty vehicles offers a maximum torque of 2,550 Nm and has the highest horsepower and torque. (From a press release on January 22, 2016)