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5. HUAYU Automotive Systems Company Limited Business Report FY ended Dec. 2018

HUAYU Automotive Systems Company Limited Business Report FY ended Dec. 2018

Share Acquisition

-On February 12, 2018, Huayu Automotive (Hong Kong) Co., Ltd., subsidiary of Huayu Automotive Systems (Shanghai) Co., Ltd. (hereinafter referred to as “Huayu Shanghai”), signed an equity transfer agreement with Shanghai Changhui. Huayu Shanghai planned to acquire 100% shares of H.A. Automotive Systems, Inc. from Shanghai Changhui. On November 7, 2018, the transaction was completed and H.A. Automotive became a wholly-owned subsidiary of Huayu Shanghai. (From the Company's 2018 annual report)

-On December 18, 2018, the Company announced that the company and TRW Asia Pacific Co., Ltd. signed a share purchase agreement. Huayu Automotive Systems will transfer a 50% stake in Shanghai TRW Automotive Safety Systems Co., Ltd. to TRW Asia Pacific at CNY 80.71 million. After the share transfer, Huayu will have no stake in Shanghai TRW. In the eight months from January through August 2018, Shanghai TRW generated an operating income of CNY 767 million and net loss of CNY 8 million and its total asset was CNY 820 million. (From a press release on December 20, 2018)

-On December 18, 2018, the Company announced that it and ZF (China) Investment Co., Ltd. signed a share transfer agreement. Huayu is going to acquire a 50% stake in Shanghai Sachs Powertrain Components Systems Co., Ltd. at CNY 65.16 million. After the share transfer, Shanghai Sachs Powertrain Components Systems is going to be a wholly-owned subsidiary of Huayu Automotive Systems. In the eight months from January through August 2018, Shanghai Sachs Powertrain Components Systems generated an operating income of CNY 323 million and a net loss of CNY 3 million and its total assets were CNY 414 million. (From a press release on December 20, 2018)

-HUAYU Automotive Systems Company Limited announced on March 29, 2018, that it completed a 50%-share acquisition in Shanghai Koito Automotive Lamp Co., Ltd., and made it a wholly-owned subsidiary, renaming it Huayu Vision Technology (Shanghai) Co., Ltd. Huayu Vision Technology (Shanghai) has been included in HUAYU Automotive Systems’ consolidated statement as of March 1, 2018. It plans to upgrade its business framework from existing automotive lighting products to automotive lighting information systems and visual perception systems. (From a corporate announcement on March 29, 2018)


Strategic Cooperation
-HUAYU Automotive Systems Company Limited has reached an agreement with the government of Baoshan District, Shanghai, to work together intensively on the development of the new energy vehicle industry and signed a memorandum regarding the strategic alliance on April 4, 2018. The two parties are to join hands to launch two projects, the constructions of a Huayu Magna E drive system plant and a Huayu drive motor plant, ahead of its original plan, in the Bashan Industrial Park. (From some releases on April 4, 2018)

New Companies

-On December 25, 2018, Yanfeng Automotive Trim Systems Co., Ltd. announced that it and a Canadian holding company, the Woodbridge Group, have set up and launched a new joint company. The new company is named Yanfeng Woodbridge Lightweight Composite Materials Co., Ltd. It produces expanded polypropylene (EPP) for automotive use as well as other foamed styrol products for seat frames, automotive trunks, handles, doors, bumpers as well as shock-absorbing blocks and wrapping and packing materials. The joint company will first build a new plant in Jintan, Changzhou, Jiangsu, aiming to launch its operation in the middle of 2019. After the production launch, it’s going to supply product solution programs for many major OEMs and parts suppliers. (From a press release on December 25, 2018)

Come into Operation

-KS HUAYU AluTech GmbH announced that it is extending the Neckarsulm production capacities with a new 5,000 square meter production shop for structural parts in aluminum. The move is mainly in response to current orders in the new-product and driveline segments. At the new production facility, KS HUAYU covers the complete process chain from aluminum smelting via die-casting and heat treatment down to CNC finishing and final inspection. The new shop currently employs a workforce of 120 which together with the total 1,100 employees, means that the castings manufacturer now generates annual sales of EUR 320 million at the Neckarsulm location. The extension of the Neckarsulm production capacities costs around EUR 35 million and is required by additional orders for non-I.C.-engine components including mountings for shock absorbers and suspension struts as well as cross members in aluminum. The company is also manufacturing battery trays for electric vehicles currently entering production. (From a press release on January 28, 2019)

-Rheinmetall Automotive announced that it has opened yet another production location in China with joint venture partner HUAYU Automotive Systems (HASCO). Around 16,000 square meters, the new plant of HASCO KSPG (Guangde) Nonferrous Components Co. Ltd. is situated in Guangde, northwest of Shanghai. The plant will be the first within the joint ventures to use the sophisticated and premium-grade low-pressure casting technique for the production of electric housings for electric vehicles. The new Guangde plant will increase its workforce to 450 by the end of 2018. Initially, the plant will generate sales of RMB 560 million. Over the next five years, annual cylinder head production is scheduled to almost double. (From a press release on December 18, 2018)

Business Plan for Next Year

-In 2019, the Company plans to achieve consolidated operating income of 160 billion yuan. (From the Company's 2018 annual report)

R&D Facility

-As of the end of 2018, the Company has 355 R&D, manufacturing and service bases. It has 93 manufacturing (including R&D) bases in the United States, Germany, Thailand, Russia, Australia, the Czech Republic, Slovakia, India, Mexico, Canada, South Africa, Japan, Spain, Italy, Brazil and other countries.

-In 2018, the Company's Technology Center and Electronic Branch began batch supply of 24 GHz backward millimeter wave radars. It was the first supplier in China to independently develop and realize mass production of millimeter wave radars. (From the Company's 2018 annual report)