Xuchang Yuandong Drive Shaft Co., Ltd. Business Report FY ended Dec. 2020

Financial Overview

(CNY millions)

	FY ended Dec. 31, 2020	FY ended Dec. 31, 2019	Rate of change (%)	Factors
Sales	2,165.33	1,754.20	2.01	-In the fiscal year ended December 31, 2020, demand in the commercial vehicle market was strong, with production and sales growth rates increasing significantly throughout the year.
Operating profit	378.20	315.87	2.46
Ordinary profit	370.74	314.70	2.50
Net profit	324.43	272.68	0.46

New products

-Aluminium alloy drive shafts have been successfully tested and are now available for mass production. The company says that the use of aluminium has enabled it to reduce weight and expand its business in new material areas. (From the release dated 11 October 2020)

Orders

Production base	Main customers
The company	Zhengzhou Yutong Heavy Industry Co., Ltd. Zhengzhou Nissan Automobile Co., Ltd. Zhengzhou Yutong Bus Co., Ltd. Zoomlion Heavy Industries Co., Ltd. Sany Heavy Industry Co., Ltd. Sany Special Purpose Vehicle Co., Ltd. Sany Auto Lifting Machinery Co., Ltd. Shaanxi Heavy Duty Vehicle Co., Ltd. Jiangling Motors Co., Ltd. / Jiangxi Isuzu Motors Co., Ltd. Xuzhou Xugong Materials & Supplies Co., Ltd. Shandong Lingong Construction Machinery Co., Ltd. Hebei Zhongxing Automobile Manufacturing Co., Ltd. (Hebei Zhongzing Automobile Co., Ltd.) Caterpillar (Qingzhou) Co., Ltd. Sichuan Jianghuai Automobile Co., Ltd. Geely Sichuan Commercial Vehicle Co., Ltd. Others
Beijing Beiqi Yuandong Transmission Co., Ltd.	BAIC Foton Daimler Co., Ltd.
Liuzhou Yuhang Drive Shaft Co., Ltd. Liuzhou Yuanteng Transmission Parts Co., Ltd.	SAIC-GM-Wuling Automobile Co., Ltd. Guangxi Liugong Machinery Co., Ltd. Dongfeng Liuzhou Motor Co., Ltd.
Weifang Yuandong Drive Shaft Co., Ltd.	BAIC Heibao (Weihai) Automobile Co., Ltd. Zhejiang Feidie Automobile Manufacturing Co., Ltd. Wuzheng Branch OVOL Construction Machinery Group Co. Ltd. Linyi Lingong Heavy Duty Machinery Co., Ltd. Shandong Branch of Anhui Jianghuai Automobile Group Co., Ltd. Lingong Group Jinan Heavy Machinery Co., Ltd. Yingxuan Heavy Industries Co., Ltd. Shandong Automobile Manufacturing Co., Ltd.
Baotou Yuandong Drive Shaft Co., Ltd.	Beiben Trucks Group Co., Ltd.
Hefei Yuandong Drive Shaft Co., Ltd.	Light Commercial Vehicle Branch of Anhui Jianghuai Automobile Group Co., Ltd. C&C Trucks Co., Ltd. Heavy Duty Vehicle Branch of Anhui Jianghuai Automobile Group Co., Ltd. JAC Fuyang Heavy Duty Truck Anhui Hualing Automobile Co., Ltd.
Chongqing Heavy Automobile Yuandong Drive Shaft Co., Ltd.	SAIC-Iveco Hongyan Commercial Vehicle Co., Ltd. Sinotruk Chengdu Wangpai Commercial Vehicle Co., Ltd.

-In the last three years, the Company has won more than 90% of the orders from the Sany Heavy Industries Group and has received all orders from the Xuzhou Xugong Materials & Supplies Co., Ltd. and the Guangxi Liugong Group. In 2019, the Company's annual sales to the Sany Heavy Industries Group increased by 82.43% year-over-year (y/y). Annual sales to FAW and the Sinotruk Group combined reached nearly CNY 400 million, with y/y sales growth of 20.32% and 21.66% respectively in 2019. The Company's share of the heavy-duty truck market is increasing year by year. (From a release dated February 28, 2020)

-The Company announced that it obtained the first orders from the GAZ Group of Russia. The orders will result in annual sales of CNY 30 million. The total sales are expected to reach CNY 100 million in the coming two or three years. The GAZ Group is Russia’s second largest and world’s seventh largest commercial vehicle manufacturer. (From a Xuchang Yuandong Drive Shaft press release dated February 24, 2020)

R&D structure

-The Company has a National Authorized Enterprise Technology Center, National Postdoctoral Research Station, Henan Province Drive Shaft Engineering Technology Research Center, Henan Province Postdoctoral Research and Development Base, Henan Province Laboratory of High Performance Lightweight Drive Shaft, and Henan Province Automotive Components Intelligent Heat Treatment Technology Workstation.

R&D Expenditure

(in million CNY)

Year	FY ended Dec. 31, 2020	FY ended Dec. 31, 2019	FY ended Dec. 31, 2018
R&D expenditure	108.97	87.68	73.33
Ratio of R&D expenses to sales	5.03%	5.00%	4.26%

-By the end of 2020, the Company had 222 R&D staff members, accounting for 10.59% of the total employees.

Patents and Certifications

-As of the end of 2020, the company has 276 patents (28 invention patents, 24 exterior design patents, 224 utility model-type patents) and 4 software copyrights.

-The Company has received IATF16949:2016 quality management system certification, GB / T24001-2016 / ISO14001:2015 environmental management system certification, ISO5001:2018 energy management system cetification, and ISO45001:2018 occupational health and safety management system certification.

Awards

-In 2020, the Company was awarded the "Excellent Supplier" and "Excellent Quality” awards by customers including Sany Heavy Industries Group, China National Heavy Duty Truck Group, Shaanxi Automobile Heavy Truck, Shandong (Volvo) Lingong, Foton Motor, and Caterpillar.