China Auto Electronics Group Limited (THB Group) Business Report FY ended Dec. 2012

Business Highlights

Financial Overview

(in million yuan)
FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 Rate of change (%) Factors
Sales 1,558.55 1,536.90 1.41 1)
Operating profit  279.83 275.58 1.54 -
Profit before tax 10.75 3.27 228.75
Profit after tax 4.19 (4.97) -

1) Sales

-In 2012, Company sales increased 1.41% to approximately RMB 1.6 billion. The Company also recorded a net profit after tax of RMB 4.2 million in FY 2012 compared with a net loss of RMB 5.0 million in FY 2011. Due to improved material prices and production efficiency, the overall gross profit margin remained the same at approximately 18%. The Company's gross profit increased 1.54% to RMB 279.8 million in 2012. (From the Company's 2012 annual report)

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China Operations

-In 2012, the Company's China operations earned RMB 1.3 billion in revenue, which was approximately the same amount that was earned in 2011. The strong recovery in China's economic and consumption activities in the second half of 2012 helped the Company to match its revenue level from the previous year. Furthermore, the gross profit margin of the Company's China operations increased from 20% to 21% in FY 2012. The improvement in gross profit margin was due to improved material prices and production efficiency. (From the Company's 2012 annual report)

Operations Outside China

-The Company's overseas operations recorded a 15% increase in revenue to approximately RMB 286.2 million in 2012. This was mainly attributable to higher sales in USA and Europe despite the challenging economic climate. The gross profit margin of the Company's overseas operations decreased from 7% to 2% in FY 2012 primarily due to higher production costs. (From the Company's 2012 annual report)


-The Electronic Business Division of the Company passed a product screening conducted by Valeo's SQA Division in France and the procurement division in Asia. This gave China Auto Electronics the qualification to supply its headlight controllers to Volvo vehicles. (From a press release, August 13, 2012)

-The Company's wholly-owned subsidiary, Henan THB Electric Co., Ltd., entered a sale and purchase agreement with Liu Zhou Tianhai Electric Co., Ltd. to purchase 50% of Liu Zhou's equity interest in Liu Zhou Tianhai Mengli Electric Co., Ltd. It also signed a sale and purchase agreement with Shenzhen Mengli Tong Xin Co., Ltd. to purchase 1% of its equity interest in Liu Zhou Tianhai Mengli Electric. Upon completion of the purchase, Henan THB Electric would own a 51% equity interest in Liu Zhou Tianhai Mengli Electric while Shenzhen Mengli Tong Xin would own 49%. (From the Company's announcement on January 9,2012)


-In September 2012, the Company sold its entire 51% stake in Kunchan Tianhai Jiexing Co., Ltd. (Kunshan Jiexing) for a consideration of RMB 234,000 to Kunshan Jiexing Mould Co., Ltd. Kunshan Jiexing Mould was the former minority interest share holder of Kunshan Jiexing. (From the Company's 2012 annual report)

-The discussions between the Company and Shenzhen Deren Electronic Co., Ltd. regarding the transfer of the Company's automotive connector and harness business to Shenzhen Deren Electronic were automatically cancelled. Discussions were cancelled due to the fact that the companies were unable to finalize a contract within 180 days after signing a basic agreement. In February 2012, the companies signed a basic agreement under which the Company would transfer all assets of its automotive connector and harness business, including a 100 percent stake in its subsidiary, Henan THB, to Shenzhen Deren. The planned sale and purchase transaction was subject to the terms and conditions of the agreement and the approvals by the shareholders of the Company and Deren Electronic. (From news releases issued by multiple sources on August 8, 2012)


R&D Structure

-The Company has a total of six engineering research centers. These centers include its research institute, which is a national-level technology center, the Henan Province automotive electrical engineering technology research center and the Henan Province automotive electronics engineering technology research center. The Company conducts R&D activities on connectors, wiring harnesses, auto electronics, harness equipment and parts for clean-energy vehicles.

R&D Subsidiaries 

Name Main business Shareholding ratio Location Year 

Tianhai Technologies Co., Ltd.

Develop and produce automotive electronics

100% Hebi, Henan 2006

Tianhai Snow-city Auto Electric R&D(Shanghai) Co., Ltd

Develop automotive electronics

100% Shanghai 2007

Zhengzhou Tianhai Xinke Auto Electronic Co., Ltd.

Develop motor drive and control systems for new energy vehicles.

65% Hebi, Henan 2009

Hebi Tianhai Huanqiu Electric Co., Ltd.

Develop and produce automotive wiring harnesses

100% Hebi, Henan 2007

R&D expenses

-The Company believes in contributing to a clean and sustainable living environment. As such, the Company has invested RMB 5 million each year into developing products that are more environmentally friendly.

Investment Activities

Capital investment

(in million yuan)
  Construction period Budget Production capacity after completion
Motor drives and control systems for new energy vehicles
Jun. 2010 to Mar. 2012 148.00 50,000 sets annually

-The Group invested 148 million yuan to build a new plant. Construction started in June 2010 and completed in March 2012. The plant has a construction area of 27,100 square meters. Annually, the plant produces 50,000 sets of motor drives and control systems for new energy vehicles and generates 506 million yuan in sales.