Investment Rating - The report recommends a "Buy" rating for Wuling Motors, with a target price set at 0.81 HKD, indicating a potential upside of over 100% from the current price [26][54]. Core Insights - Wuling Motors is accelerating its expansion into the electric vehicle (EV) sector, with a projected revenue compound annual growth rate (CAGR) of 6.0% from FY23A to FY26F. The operating profit margin is expected to improve from 0.7% in FY23A to 2.3% in FY26F, with pre-tax profit and attributable profit to shareholders expected to grow at CAGRs of 54.3% and 83.9%, respectively [3][6][54]. - The company has established a strong customer base in the EV market, including major players like BYD, Chery, Geely, Great Wall, and Foton, focusing on the lower-tier market with over 10 EV models under its brand [5][11]. - Wuling Motors is a key supplier of components for its subsidiary, Wuling New Energy, which is positioned to benefit from the growing demand for EVs and is expected to achieve profitability within 36 months due to its existing production capacity and market support [12][13][41]. Revenue and Profitability Forecast - The report forecasts that Wuling Motors' automotive power systems and components revenue will grow at CAGRs of 10.4% and 7.2%, respectively, from FY23A to FY26F. The overall revenue CAGR for the same period is projected at 6.0% [45]. - The gross margins for the automotive power systems and components segments are expected to improve, with overall gross margin projected to reach 10.6% by FY26F, up from 9.9% in FY23A [45]. - The report estimates that the pre-tax profit margin will increase significantly, with pre-tax profit expected to grow at a CAGR of 53.9% from FY23A to FY26F [45]. Market Dynamics - The report highlights that the decline in EV prices and down payment requirements is expected to stimulate sales growth in the EV market, benefiting Wuling Motors as a major supplier of EV components [51]. - The anticipated increase in total vehicle sales in China, projected to exceed 31 million units in 2024, will further drive demand for Wuling Motors' products, particularly as its key customers set ambitious sales targets for their EV models [43][51]. Strategic Positioning - Wuling Motors has a diversified production capacity across multiple bases, allowing it to respond quickly to customer demands and reduce logistics costs. Its production facilities are strategically located near major clients [32]. - The company is also investing in R&D and technology partnerships to enhance its capabilities in the EV supply chain, including collaborations with universities in Hong Kong [15][41].

Summary of Wuling Motors Conference Call Industry and Company Overview - **Company**: Wuling Motors - **Industry**: New Energy Vehicles (NEV) Key Points and Arguments 1. **Investment in New Energy Vehicle Components**: Wuling Motors has significantly invested in NEV components, particularly in electric drive axles and powertrains, aiming for 50% of its component sales to come from NEV parts by the end of 2025, up from 40% in the previous year [2][2][2] 2. **Focus on NEV Commercial Vehicles**: The company has concentrated its efforts on developing NEV commercial vehicles, with a range of products including micro-vans and light trucks across three platform sizes (3m to 6m) [3][3][3] 3. **International Expansion Plans**: Wuling Motors is actively pursuing international markets, particularly in Southeast Asia, Central Asia, Russia, South America, and Europe, with a goal of achieving a 1:1 ratio of domestic to international sales [4][8][15] 4. **Export Activities**: The company has successfully exported vehicles to developed markets, including the USA and France, and has plans to increase exports to countries like South Korea and Egypt [6][7][19] 5. **Client Base**: Besides SAIC-GM-Wuling, the company serves major domestic manufacturers such as Great Wall Motors, Geely, Chery, BYD, and others, with a balanced client structure in the power system segment [11][12][12] 6. **Market Demand**: There is a growing demand for Wuling's NEV products in both developed and emerging markets, with plans to enhance product offerings to meet diverse regional needs [19][20][20] 7. **Future Product Development**: The company is developing new models, including micro-vans and multi-purpose vehicles, tailored for both domestic and international markets [16][16][17] 8. **Production Facilities**: Wuling has established production facilities in Indonesia and India, and is exploring further expansion of its overseas component manufacturing capabilities [18][18][18] 9. **Market Strategy**: The company aims to increase its market presence by developing both left-hand and right-hand drive vehicles to cater to different international markets [15][20][20] Additional Important Information - **No Current Plans for Stock Market Changes**: Wuling Motors has no immediate plans to delist from the Hong Kong stock market or return to the A-share market, but is monitoring the situation [10][10][10] - **Performance Guidance**: The company has not provided specific performance guidance for the first half of the year, advising stakeholders to refer to the upcoming semi-annual report for detailed information [13][13][13]

Financial Performance - Total annual revenue for 2023 was RMB 10,483,933,000, a decrease of 16.8% compared to the previous year[3] - Gross profit for the year under review was RMB 1,036,999,000, representing a 14.1% improvement compared to the previous year, with the gross profit margin improving to 9.9% from 7.2%[119] - The Group reported a net profit of RMB 69,456,000 for the year ended December 31, 2023, a 73.5% increase compared to the previous year, with profit attributable to the owners of the Company improving to RMB 23,477,000, a 3.8% increase[122] - Basic earnings per share for the year ended December 31, 2023, was RMB 0.71 cent, marking a continuous improvement compared to the previous year's RMB 0.69 cent[122] - Net profit for the year ended December 31, 2023, was RMB 69,456,000, a 73.5% increase compared to the previous year's net profit of RMB 40,038,000[123] - Profit attributable to owners of the company improved to RMB 23,477,000, a 3.8% increase from the previous year's RMB 22,611,000[123] - Other income for the year ended December 31, 2023, totaled RMB 214,407,000, maintaining a similar level to the previous year[124] - Net profit attributable to joint ventures for the year ended December 31, 2023, was a total net loss of RMB 3,116,000[126] - Gross profit for the year ended December 31, 2023, was RMB 1,036,999,000, a significant increase of 14.1% compared to the previous year[138] - Basic earnings per share for the year ended December 31, 2023, were RMB 0.71 cents, an improvement from the previous year's RMB 0.69 cents[139] Revenue by Division - Automotive components division achieved revenue of approximately RMB 6,129,795,000 in 2023, representing a slight increase of 1.4% compared to the previous year[7] - Vehicles' power supply systems division achieved revenue of approximately RMB 2,479,958,000 in 2023, a decrease of 14.4% compared to the previous year[20] - Total revenue of the automotive components and other industrial services division reached RMB 6,129,795,000, a slight increase of 1.4% compared to the previous year, driven by growth from new customers despite a challenging competitive environment[30] - The commercial vehicles assembly division's revenue decreased significantly by 49.2% to RMB 1,838,271,000 in 2023, with vehicle sales dropping 50.0% to 33,800 units due to unfavorable economic conditions and strategic repositioning[50] - Wuling New Energy achieved total revenue of RMB785,475,000 in 2023, representing a 63.6% increase compared to the previous year[69] - The joint venture Weixiang registered total revenue of RMB504,721,000 in 2023, a 16% year-on-year decrease, with net operating profit down 33.6% to RMB8,393,000[72] - FL Seating's total revenue decreased by 10.9% to RMB 275.562 million in 2023, with an operating loss of RMB 36.489 million, of which RMB 18.245 million was attributable to the Group[85] - FL Emission's total revenue decreased by 16.6% to RMB 384.273 million in 2023, but net operating profit increased by 105% to RMB 4.798 million, with RMB 2.399 million attributable to the Group[90] - Guangxi Weixiang Machinery's total revenue decreased by 16% to RMB 504.721 million in 2023, with net operating profit decreasing by 33.6% to RMB 8.393 million, of which RMB 4.196 million was attributable to the Group[99] - Wuling New Energy achieved total revenue of RMB 785,475,000, a 63.6% increase compared to the previous year, but recorded a net operating loss of RMB 298,110,000, with the Group's share of the loss at RMB 79,774,000[105] - FL Interior, a joint venture with Faurecia Group, recorded total revenue of RMB 369,991,000, a slight increase of 1% compared to the previous year, and net operating profit surged by 121% to RMB 42,368,000, with the Group's share of profit at RMB 21,184,000[114] Sales Performance - Engine sales volume reached 246,000 units in 2023, an increase of 7.0% year-on-year[20] - Casting parts sales reached 940,000 units in 2023, exceeding the original budget and increasing by approximately 35% compared to the previous year[20] - Sales to other customers (including engines and engine block components) increased moderately to approximately RMB 1,137,432,000, accounting for about 45.9% of the division's total revenue[23] - Sales to core customer SAIC-GM-Wuling amounted to approximately RMB 1,342,526,000, a decrease of about 25.3% compared to the previous year[24] - The engine sales, including those for hybrid systems, reached approximately 246,000 units, a 7.0% increase year-on-year, primarily driven by new engines for fuel vehicles[38] - The casting parts sales grew by 35% to 940,000 units in 2023, supported by the launch of a new 600,000 cylinder head blank production line[40] - Wuling New Energy sold over 10,000 new energy vehicles in 2023, primarily from the G100 model series[67] Strategic Initiatives and Future Plans - The Group aims to exceed 50% of its business from the new energy vehicle segment in the future[13] - The Group successfully obtained business from South Korea's Hyundai Motor, leading to steady increases in business volume[7] - The Group launched the first domestic ultra-high-strength steel pipe hot air inflation molding production line, which started commercialization in 2023[7] - The Group has established production facilities in Jingmen, Hubei, with over 50% of products sold in 2023 supporting new energy vehicle models, indicating strong future business potential[32] - The Group has a comprehensive annual production capacity of over 2 million sets of automotive components, with factories in Guangxi, Shandong, Chongqing, and Hubei[31] - The automotive components division is focusing on medium- and high-end vehicle transformation and new energy vehicles, optimizing customer structure and product quality[45] - The Group has developed new commercial vehicle models, including electric logistics vehicles and refrigerated trucks, to meet market demand and regulatory standards[34] - The Group is actively expanding overseas business and improving global operating capabilities, aiming to enhance core competitiveness and market valuation[41] - The Group's commercial vehicles assembly division plans to focus on market segmentation, specialization, and developing high-value products to enhance profitability[75] - The Group plans to deepen cost control measures, optimize supplier and manufacturing systems, and implement strategies to reduce costs and increase efficiency, aiming for greater profit margins[107] - The Group aims to enhance its core competitiveness, accelerate the development of new productive forces, expand overseas business, and improve global operational capabilities in 2024[118] Overseas Operations - The Group's overseas production plant in Indonesia generated profitable results in 2023, benefiting from growing customer demand[56] - The Group's production plant in India maintained profitability in 2023, despite a smaller scale of operation[56] - The Group's exposure to exchange rate fluctuations is considered reasonable, with ongoing monitoring of foreign exchange risks[175] Joint Ventures and Subsidiaries - The joint venture Weixiang registered total revenue of RMB504,721,000 in 2023, a 16% year-on-year decrease, with net operating profit down 33.6% to RMB8,393,000[72] - Wuling New Energy launched several new models in 2023, including the G050 electric logistic vehicle and the Lingshi Gold Card plug-in hybrid small card[67] - Wuling New Energy incurred a net operating loss of RMB298,110,000 in 2023, with a loss attributable to the Group of RMB79,774,000[69] - Wuling New Energy completed a fundraising exercise totaling RMB 390 million in January 2024, with RMB 360 million contributed by third-party investors and RMB 30 million by the company[82][83] - FL Seating's total revenue decreased by 10.9% to RMB 275.562 million in 2023, with an operating loss of RMB 36.489 million, of which RMB 18.245 million was attributable to the Group[85] - FL Emission's total revenue decreased by 16.6% to RMB 384.273 million in 2023, but net operating profit increased by 105% to RMB 4.798 million, with RMB 2.399 million attributable to the Group[90] - Guangxi Weixiang Machinery's total revenue decreased by 16% to RMB 504.721 million in 2023, with net operating profit decreasing by 33.6% to RMB 8.393 million, of which RMB 4.196 million was attributable to the Group[99] - FL Interior, a joint venture with Faurecia Group, recorded total revenue of RMB 369,991,000, a slight increase of 1% compared to the previous year, and net operating profit surged by 121% to RMB 42,368,000, with the Group's share of profit at RMB 21,184,000[114] - The joint venture with American Axle & Manufacturing, Meiqiao, recorded a net operating loss of RMB 6,474,000, with the Group's share of the loss at RMB 3,237,000, and discussions are ongoing for restructuring plans[116] Operational Costs and Expenses - General and administrative expenses for the year ended December 31, 2023, were RMB 498,263,000, a moderate increase of 2.1% compared to the previous year[127] - Research and development expenses for the year ended December 31, 2023, amounted to RMB 306,556,000, a decrease of 4.0% compared to the previous year[127] - Finance costs for the year ended December 31, 2023, were RMB 120,508,000, an increase of 3.1% compared to the previous year[127] - Selling and distribution costs increased by 20.0% to RMB139,653,000 for the year ended 31 December 2023, driven by higher warranty expenses from new product launches[143] Financial Position and Liabilities - Total assets and total liabilities as of December 31, 2023, stood at RMB 15,050,774,000 and RMB 12,100,067,000, respectively[127] - Current liabilities amounted to RMB11,025,659,000, including trade and other payables of RMB6,169,357,000 and bank borrowings due within one year of RMB1,276,201,000[146] - Net current liabilities decreased to RMB477,071,000 as of 31 December 2023 from RMB932,681,000 in 2022, primarily due to raising long-term bank borrowings[146] - Non-current liabilities amounted to RMB1,074,408,000, mainly comprising bank borrowings of RMB1,034,598,000[146] - Total equity attributable to shareholders was RMB1,934,858,000 as of 31 December 2023, with a net asset value per share of approximately RMB58.7 cents[149] - The Group had no contingent liabilities as of 31 December 2023[151] - The Group has outstanding commitments for the acquisition of property, plant, and equipment amounting to RMB 174,987,000 as of December 31, 2023, compared to RMB 222,832,000 in 2022[159][160] - The Group holds bank loans and payables equivalent to RMB 79,544,000 in HKD and USD, and bank deposits and receivables equivalent to RMB 94,616,000 in HKD, USD, and IDR as of December 31, 2023[158] - The Group has no contingent liabilities as of December 31, 2023, compared to none in 2022[159][160] - The Group's cash at bank balances (including pledged bank deposits) increased by 21.8% to RMB 3,145,792,000 as of December 31, 2023, compared to the previous year[177] - Total bank borrowings amounted to RMB 2,310,799,000 as of December 31, 2023, with RMB 1,034,598,000 having repayment terms of more than one year[177] - The Group discounted total bills receivables amounting to approximately RMB 6,864,858,000 during the year to fund daily operations, with RMB 226,255,000 discounted to Guangxi Automobile[177] - Bank deposits and bills receivable discounted with recourse pledged to banks and Guangxi Automobile amounted to RMB 528,997,000 and RMB 3,263,321,000, respectively, as of December 31, 2023[180] - The Group's total equity attributable to owners of the Company was RMB 1,934,858,000 as of December 31, 2023, with a net asset value per share of approximately RMB 0.587[178] - The Group maintained Hong Kong dollar, United States dollar, and Indonesian rupiah bank deposits and receivables equivalent to RMB 79,544,000 and RMB 94,616,000, respectively, as of December 31, 2023[175] - The Group's outstanding advances drawn on bills receivable discounted with recourse decreased moderately to RMB 3,274,069,000 as of December 31, 2023[177] - The Group's financial strategy focuses on maintaining a healthy financial position, including monitoring liquidity, foreign exchange exposures, and market conditions[174] - The Group's net current liabilities and gearing ratio are managed to sustain a financially healthy position amidst industry risks[174] Management and Leadership - Mr. Song, aged 38, was appointed as the chief executive officer of the Company on 29 March 2023[192] - Mr. Li Zheng, aged 80, was appointed as a Non-executive Director on 24 August 2022 and has over 50 years of experience in physics, biomedical engineering, and international finance[197] - Mr. Ye, aged 60, was appointed as an Independent Non-executive Director on 10 October 2008 and has more than 20 years of experience in the monetary and finance industry[198]

Financial Performance - Total revenue for the year ended December 31, 2023, was RMB 10,483,933 thousand, a decrease of 16.8% compared to RMB 12,595,607 thousand in 2022[13] - Gross profit increased by 14.1% to RMB 1,036,999 thousand from RMB 908,488 thousand year-on-year[13] - Net profit for the year rose significantly by 73.5% to RMB 69,456 thousand, compared to RMB 40,038 thousand in the previous year[13] - Profit attributable to owners of the company increased by 3.8% to RMB 23,477 thousand from RMB 22,611 thousand[13] - Basic and diluted earnings per share improved by 2.9% to RMB 0.71 from RMB 0.69[13] - The final dividend was increased by 66.7% to 0.5 HK cents from 0.3 HK cents[13] - Adjusted EBIT for the year was RMB 77,461 thousand, compared to RMB 46,597 thousand in the previous year[6] - The company reported a total comprehensive income of RMB 80,458 thousand for the year, up from RMB 52,488 thousand in 2022[6] Revenue Breakdown - Total revenue for 2023 was RMB 10,483,933 thousand, a decrease of 16.7% compared to RMB 12,595,607 thousand in 2022[22] - Sales of engines and related components amounted to RMB 2,479,958 thousand, down from RMB 2,896,038 thousand in the previous year[22] - Sales of vehicles, including new energy vehicles, reached RMB 5,246,576 thousand, showing an increase from RMB 5,122,212 thousand in 2022[22] - The total revenue from external customers in the automotive parts segment was RMB 10,483,933 thousand, with a breakdown of RMB 2,479,958 thousand from one segment and RMB 6,129,795 thousand from another[43] - The total revenue of the automotive power systems segment for the year ending December 31, 2023, was RMB 2,479,958,000, showing a slight decrease compared to the previous year[173] - The total revenue of Faurecia (Liuzhou) Automotive Seating Co., Ltd. decreased by 10.9% to RMB 275,562,000, compared to RMB 309,412,000 in the previous year[199] - Faurecia (Liuzhou) Automotive Interior Systems Co., Ltd. maintained total revenue of RMB 369,991,000, a slight increase of 1% from RMB 367,590,000 in the previous year, with a significant net profit increase of 121% to RMB 42,368,000[200] Assets and Liabilities - The company's net assets increased to RMB 2,950,707 thousand in 2023, compared to RMB 2,879,881 thousand in 2022[17] - Cash and cash equivalents rose to RMB 2,616,795 thousand, up from RMB 1,974,617 thousand in the previous year[16] - The company reported a decrease in inventory to RMB 806,403 thousand from RMB 1,250,225 thousand in 2022, reflecting a reduction of 35.5%[16] - The total non-current liabilities decreased to RMB 1,074,408 thousand from RMB 894,108 thousand in 2022, indicating a rise of 20.1%[17] - The total liabilities decreased to RMB 11,025,659 thousand from RMB 11,771,427 thousand, a reduction of 6.3%[16] - As of December 31, 2023, the company's current liabilities exceeded current assets by approximately RMB 477 million, compared to RMB 933 million as of December 31, 2022[34] Operational Highlights - The company plans to expand its market presence in the automotive sector, focusing on manufacturing and trading automotive power systems and components[18] - The company has invested in new technologies and product development to enhance its competitive edge in the market[18] - The adjusted EBIT for the automotive parts segment was RMB 207,884 thousand, reflecting the profitability of the segment[43] - The company has sufficient financial resources to meet its obligations in the foreseeable future, supported by internal cash generation and available bank financing[34] - The company is positioning itself as a multi-faceted automotive power system supplier, integrating traditional and new energy power technologies[176] Research and Development - Research and development expenses accrued were RMB 148,287,000, up from RMB 104,004,000, reflecting an increase of 42.5%[105] - The company has launched multiple upgraded non-road vehicle models, such as sightseeing buses and golf carts, which received positive feedback from overseas markets[163] - The company is actively optimizing product and customer structure to capture the trend of automotive transformation towards new energy[185] - The introduction of advanced and efficient hybrid power systems is expected to contribute to the segment's profitability in the coming years[181] Market and Sales Performance - The automotive power systems division sold approximately 246,000 engines in the year, a slight increase of about 7.0% compared to last year[143] - Sales to core customer SAIC-GM-Wuling amounted to approximately RMB 1,342,526,000, a decrease of about 25.3% year-on-year, primarily driven by the launch of the M20B high-efficiency engine[144] - Sales to other customers increased slightly to approximately RMB 1,137,432,000, accounting for about 45.9% of the division's total revenue, driven by the successful launch of new products[145] - The division successfully developed and launched the M20B high-efficiency engine in 2023, which is expected to contribute positively to business performance in the coming years[148] - The new energy vehicle segment is expected to benefit from the successful launch of new models in both domestic and international markets starting in the second half of 2023[196] Strategic Initiatives - The company has implemented measures to control operating costs and expenses in response to a challenging and competitive business environment[174] - The company believes that the automotive power systems division will strengthen its profitability in the coming years, driven by the trends in the automotive industry[150] - The company aims to maintain a significant market share in existing popular vehicle models while exploring future growth opportunities[163] - The company completed a fundraising activity totaling RMB 390,000,000, with RMB 360,000,000 contributed by independent third-party investors[172]

Share Options and Equity - The company granted a total of 86,425,300 share options, representing approximately 2.26% of the issued share capital, with an exercise price of HK$1.93 per share[5] - The total number of share options granted is 83,473,600, with varying vesting periods and contractual lives[67] - The fair value of services received in return for share options granted is measured using a binomial lattice model, incorporating expectations of early exercise and the contractual life of the share options[74] - The Group's share option plan, adopted on November 10, 2021, aims to reward and recognize participants' contributions, encourage performance, and establish a shared interest and risk mechanism between shareholders, the Company, and participants[79] Trade and Payables - Trade and bills payables increased to RMB 6,373,157,000 as of 30 June 2023, compared to RMB 6,173,450,000 at the end of 2022[7] - The company's total trade and other payables amounted to RMB 6,802,171,000 as of 30 June 2023, up from RMB 6,659,530,000 at the end of 2022[7] - Bills payable aged 0 to 90 days increased to RMB 2,230,805,000 as of 30 June 2023, compared to RMB 1,773,920,000 at the end of 2022[10] - Trade payables increased slightly from RMB 2,347,911,000 at the end of 2022 to RMB 2,480,154,000 as of June 30, 2023, with the majority (RMB 2,480,154,000) due within 90 days[30] Borrowings and Financial Liabilities - The company's total borrowings and advances drawn on bills receivable discounted with recourse were RMB 11,782,000 as of 30 June 2023, unchanged from the end of 2022[16] - Bank borrowings decreased from RMB 2,248,780,000 at the end of 2022 to RMB 2,173,184,000 as of June 30, 2023, with secured borrowings increasing to RMB 415,860,000[46] - The company's other borrowings as of June 30, 2023, amounted to RMB 8,479,000, owed to Guangxi Automobile, with a variable interest rate of LPR1Y-65BP per annum[46] - The company's bank borrowings as of June 30, 2023, were secured by bank deposits of RMB 58,834,000, up from RMB 38,558,000 at the end of 2022[46] - The company's total secured borrowings, including bills receivable discounted with recourse, amounted to RMB 3,462,994,000 as of June 30, 2023[46] - Total bank and other borrowings as of 30 June 2023 were RMB2,181,663,000, slightly decreased from RMB2,248,780,000 as of 31 December 2022[162][163] Bills Receivable - Bills receivable decreased from RMB 4,508,147,000 at the end of 2022 to RMB 4,247,242,000 as of June 30, 2023, with a significant portion from SGMW (RMB 623,972,000) and third parties (RMB 144,937,000)[21] - Bills receivable discounted with recourse decreased from RMB 1,123,540,000 at the end of 2022 to RMB 788,646,000 as of June 30, 2023[21] - The fair value of bills receivable at FVTOCI as of 30 June 2023 is RMB 4,247,242 thousand, a decrease from RMB 4,508,147 thousand as of 31 December 2022[51] - The Group discounted total bills receivables amounting to approximately RMB4,343,226,000 during the period, with RMB226,255,000 discounted to Guangxi Automobile[162][163] Warranty and Provisions - The company's warranty provision is estimated based on sales volumes and past experience of repairs and returns, with the estimation basis reviewed and revised as appropriate[12] - Warranty provision increased from RMB 87,152,000 at the end of 2022 to RMB 89,968,000 as of June 30, 2023, with additional provisions of RMB 20,264,000 during the period[34] Research and Development - The company's accrued research and development expenses were RMB 105,779,000 as of 30 June 2023, slightly up from RMB 104,004,000 at the end of 2022[7] - R&D expenses for the six months ended 30 June 2023 were RMB 124,035,000, a decrease of 35.1% compared to the same period in 2022, partly due to the completion of the restructuring of the new energy vehicle business[156] Overseas Operations - The Group's overseas production plants in Indonesia and India delivered satisfactory results in the first half of 2023, benefiting from growing customer demand[58] - The Group is optimistic about the business potential for the automobile industry in Indonesia, considering its economic development and population size[58] - The Group's subsidiary in Indonesia successfully achieved turnaround during the period[109] - The Indonesian subsidiary achieved sales revenue of RMB26,502,000 and a net profit of RMB3,792,000 in the first half of 2023[197] Financial Performance - The Group's total revenue for the six months ended 30 June 2023 was RMB 5,089,499,000, a decrease of 18.9% compared to the same period in 2022, mainly due to a decrease in the business volume of the vehicles' power supply system division and the automotive components division[144] - Gross profit for the period was RMB 410,589,000, an increase of 10.3% compared to the same period in 2022, with the gross profit margin improving to 8.1% from 5.9%[145] - The Group recorded a net profit of RMB 12,260,000 for the first half of 2023, a significant improvement from the net loss of RMB 138,587,000 in the same period in 2022, with the profit attributable to the owners of the company being RMB 1,521,000[147] - Total revenue for the twelve months ended 30 June 2023 was RMB11,395,962,000, a decrease from RMB13,490,873,000 in the same period in 2022[165] New Energy and Electric Vehicles - The Group is focusing on the development and production of electric motor control systems and related components for new energy vehicles[54] - The Group is confident in the future profitability of its vehicles' power supply systems division, driven by the "New Four Modernization" trend in the automotive industry[55] - The Group aims to achieve a 50% share of new energy business in the future[115] - The Group aims to achieve a 50% proportion share in the new energy business in the future, focusing on transitioning existing businesses to new energy sources[174] - The HEV hybrid solution launched by the Vehicles' Power Supply Systems division has shown fuel consumption savings of more than 30% compared to traditional fuel engine vehicles with the same capacity[189] - The Group is developing and collaborating on 12 vehicle models with different automakers in Guangxi, focusing on electrification and technological innovation[194] Production and Sales - The Group's main production bases are located in Liuzhou, Qingdao, Chongqing, Jingmen, and Nanning in China, as well as in other Asian countries such as Indonesia and India[89] - The Group's new high-efficiency Atkinson engine has entered mass production, further consolidating its market position with a comprehensive product range covering 1.0L to 2.0L[103] - Wuling New Energy sold approximately 4,700 G model new energy logistics vehicles domestically during the period[106] - The Group's production capacity of new rear axles is expected to increase rapidly in the second half of the year[106] - The Group delivered a batch of new rear axles for Great Wall Motor's high-end plug-in hybrid off-road SUVs in June[106] - Wuling Motors sold approximately 4,700 new energy vehicles in the period, primarily contributed by the G100 series, with expectations of a significant sales increase in the second half of 2023 due to the successful launch of new models like G050 and Ling Shi Gold Card[139] Joint Ventures and Subsidiaries - FL Seating, a joint venture with Faurecia Group, reported a 34.4% decrease in revenue to RMB 80,041,000 and a net operating loss of RMB 7,037,000 for the period[140] - Faurecia Exhaust Control Technology Co., Ltd. saw a 29.0% decrease in revenue to RMB 149,388,000 and a net operating loss of RMB 1,172,000, with the Group's share of the loss being RMB 586,000[142] - AAM JV, a joint venture with American Axle & Manufacturing, incurred an operating loss of RMB 4,998,000, with the Group's share being RMB 2,499,000, and discussions are ongoing for a restructuring plan[143] Cost Control and Efficiency - The Group significantly reduced labor costs in the first half of 2023 through strengthened cost control and lean management[198] - The Group completed the disposal of non-performing receivables, inventories, and inefficient fixed assets in the first half of 2023, improving fine management efficiency[198] - The Group's target for 2023 is to reduce the loss ratio and loss amount by more than 10% compared to 2022, with the Indonesian subsidiary successfully turning a profit[196] - The Group's annual target loss ratio and loss amount for 2023 were cut by more than 10% from a year earlier[109] Market and Customer Diversification - The Group is actively diversifying its market and optimizing product and customer structure, with initial responses from projects like Hozon Motor's EV components and Great Wall Motor's frame supply[57] - The Group provides high-value component products to nearly 20 automobile manufacturers, power systems to over 10 million end-user customers, and vehicles and travel services to more than 1 million customer users[89] - Sales to other customers decreased by 8.6% to approximately RMB545,936,000, accounting for 46.2% of the division's total revenue[128] Dividends and Remuneration - The Group declared a final dividend of HK$0.3 cents per share for the previous financial year, amounting to HK$9,894,000 (equivalent to RMB 9,176,000)[63] - The Group's remuneration policy is reviewed annually in line with current applicable legislation, market conditions, and the performance of the Company and individuals[78] Fair Value and Assets - The fair value of unlisted equity securities as of 30 June 2023 is RMB 42,765 thousand, down from RMB 44,707 thousand as of 31 December 2022[51] - The Group's policy is to recognize transfers between levels of the fair value hierarchy as at the end of the reporting period in which they occur[84] - Total assets and total liabilities of the Group as of 30 June 2023 stood at RMB 15,771,604,000 and RMB 12,871,025,000 respectively[155] - Current liabilities amounted to RMB 11,206,503,000, mainly comprising trade and other payables of RMB 6,802,171,000 and advances drawn on bills receivable discounted with recourse of RMB 3,462,994,000[159] Vehicles' Power Supply Systems Division - The Vehicles' Power Supply Systems division reported revenue of RMB1,180,571,000 for the six months ended 30 June 2023, a decrease of 9.7% compared to the same period in 2022[181] - Sales to SGMW, the core customer, amounted to approximately RMB634,635,000, representing a decrease of 10.7% compared to the corresponding period in 2022[182] - The Vehicles' Power Supply Systems division recorded an operating profit of RMB7,298,000 for the first half of 2023, compared to an operating loss of RMB63,013,000 in the corresponding period in 2022[184][186] Automotive Components and Industrial Services - The automotive components and other industrial services division reported revenue of RMB2,543,831,000 for the six months ended 30 June 2023, a decrease of 10.7% compared to the same period in 2022[193] - FL Interior's total revenue decreased by 12.4% to RMB151,505,000 compared to the same period in 2022[113] - FL Interior achieved a net operating profit of RMB11,121,000, slightly increased from RMB10,608,000 in the corresponding period in 2022[113] Commercial Vehicle Division - The commercial vehicle division achieved sales revenue of RMB 1,351,533,000 in the first half of 2023, a year-on-year decrease of 35.2%, mainly due to the restructuring of the new energy vehicle business[104] Innovation and Market Position - The Group's first commercialised coaxial axle in China drew widespread attention at Auto Shanghai 2023[106] - The Group has been recognized as one of the top 100 global automobile parts suppliers[89]

Financial Performance - For the six months ended June 30, 2023, total revenue was RMB 5,075,935, a decrease of 18.7% compared to RMB 6,243,241 for the same period in 2022[4] - Gross profit for the period was RMB 410,589, representing a gross margin of approximately 8.1%, compared to RMB 372,333 in the previous year[4] - The net profit for the period was RMB 12,260, a significant recovery from a net loss of RMB 138,587 in the same period last year[6] - Basic and diluted earnings per share for the period were RMB 0.05, compared to a loss per share of RMB (2.44) in the previous year[6] - The company reported a loss before tax of RMB 137,701 for the period, compared to a loss of RMB 80,545 in the same period of 2022[35] - The company reported a significant decrease in receivables over 365 days, from RMB 8,624,000 on December 31, 2022, to RMB 27,806,000 on June 30, 2023, representing an increase of 222.5%[76] - The company recorded a substantial improvement in attributable profit, amounting to RMB 1,521,000, compared to a loss of RMB 80,545,000 in the same period of 2022[121] Revenue Breakdown - Total revenue for the six months ended June 30, 2023, was RMB 5,089,499 thousand, a decrease from RMB 6,274,686 thousand in the same period of 2022, representing a decline of approximately 18.98%[28] - Revenue from automotive parts and accessories was RMB 2,162,702 thousand, down from RMB 2,406,726 thousand in 2022, reflecting a decrease of about 10.15%[28] - Sales of specialized vehicles generated RMB 1,351,533 thousand, a significant drop from RMB 2,085,759 thousand in the previous year, indicating a decline of approximately 35.16%[28] - Revenue from the mainland China market was RMB 5,002,760 thousand, compared to RMB 6,217,010 thousand in 2022, marking a decrease of around 19.55%[28] - The automotive power system sales reached 126,000 units in the first half of 2023, with sales revenue of RMB 1,180,571,000, representing a 9.7% decrease year-on-year, mainly due to a drop in engine component sales[152] - The commercial vehicle segment achieved sales revenue of RMB 1,351,533,000 in the first half of 2023, down 35.2% year-on-year, largely impacted by the restructuring of the new energy vehicle business[155] Cost Management - Research and development expenses for the period were RMB 213,534, compared to RMB 275,028 in the previous year, indicating a focus on cost management[4] - The total employee costs for the six months ended June 30, 2023, were RMB 358,110, down from RMB 552,270 in the same period of 2022, representing a decrease of approximately 35%[37] - The company has implemented measures to reduce operating expenses, positively impacting its financial performance during the reporting period[121] - The company continues to focus on cost reduction and efficiency improvement, implementing strict budget management and cost control measures to enhance operational performance[162] Market Strategy and Expansion - The company plans to enhance its market expansion strategies and invest in new product development to drive future growth[2] - The company is exploring potential mergers and acquisitions to strengthen its market position and expand its product offerings[2] - The company is actively expanding its overseas market presence, securing orders from Thailand and Australia, and participating in international exhibitions to enhance brand visibility[126] - The company aims to strengthen its existing customer base while exploring high-value segments in the commercial vehicle market, particularly in specialized modifications[134] - The company is committed to improving operational efficiency and effectiveness through management reforms and optimizing internal resource allocation[130] Asset and Liability Management - The company reported a decrease in total assets to RMB 4,594,181 from RMB 4,706,670 as of December 31, 2022[10] - Current liabilities exceeded current assets by approximately RMB 29,080,000, an improvement from RMB 932,681,000 as of December 31, 2022[12] - Total non-current liabilities as of June 30, 2023, amounted to RMB 1,664,522 thousand, compared to RMB 894,108 thousand at the end of 2022, showing an increase of approximately 86.25%[21] - The total amount of payables and other payables as of June 30, 2023, was RMB 6,802,171,000, compared to RMB 6,659,530,000 on December 31, 2022, reflecting an increase of 2.1%[81] Product Development and Innovation - The company is focusing on high-end components for mid-to-high-end passenger vehicles and new energy vehicles, aiming to expand the variety of new energy parts and enhance the integration of different products[134] - The new engine M20B, launched in 2023, has seen rapid sales growth, contributing to the company's focus on high-efficiency engines and hybrid power systems[124] - The company has established a new production capacity line for 600,000 cylinder head castings, which has commenced mass supply since June 2023[124] - The company has developed and put into production electric drive axles for micro commercial vehicles, light commercial vehicles, and passenger cars, receiving recognition from major customers such as SAIC-GM-Wuling[178] Future Outlook - The company expects higher product demand in the second half of the year, consistent with industry trends, particularly due to promotional activities in September and October[35] - The automotive power system segment is expected to recover its profitability in the near term, driven by the evolving automotive industry trends and the company's established market position[170] - The company aims for its new energy business to account for 50% of its total business in the future, focusing on the transformation and upgrading of existing automotive power systems and parts[192]

Production Capacity and Facilities - The Group completed the restructuring and capital increase for Wuling New Energy, which now has a production capacity of 200,000 units per year and occupies an area of approximately 550,000 square meters[5] - The Group's production facilities in Liuzhou, Qingdao, and Chongqing have a combined annual production capacity exceeding 2 million sets/units of automotive components[14] - The Group's production plant in India maintained profitability in 2022, focusing on automotive component business for a renowned PRC car manufacturer[13] - The Group's new energy vehicle business segment is supported by advanced automated production lines for welding, painting, and final assembly[5] - The company's overseas production facilities in Indonesia and India achieved satisfactory performance in 2022, with the Indonesian plant continuing to profit due to local demand growth[40] - The company's main production facilities are located in Liuzhou, Qingdao, Chongqing, India, and Indonesia[127] Financial Performance - The vehicles' power supply systems division recorded a revenue increase to RMB 2,896,038,000 and an operating profit of RMB 30,155,000 in 2022[10] - Total revenue of the automotive components and other industrial services division for the year ended 31 December 2022 was RMB6,047,688,000, representing a decrease of approximately 15.0% compared to the previous year[39] - Revenue for 2022 was approximately RMB 12,595,607,000, representing a decline of approximately 12.6% compared to the previous year[99] - Net profit for 2022 was RMB 40,038,000, with profit attributable to owners of the company at RMB 22,611,000[99] - Revenue for 2022 was RMB 12,595,607 thousand, a decrease from RMB 14,408,507 thousand in 2021[160] - Profit before tax for 2022 was RMB 46,597 thousand, compared to a loss of RMB 45,914 thousand in 2021[160] - Net profit attributable to the owner of the company for 2022 was RMB 22,611 thousand, compared to a loss of RMB 24,148 thousand in 2021[160] - Total assets as of 31 December 2022 were RMB 15,545,416 thousand, an increase from RMB 15,021,524 thousand in 2021[160] - Net assets attributable to the owner of the company as of 31 December 2022 were RMB 1,913,112 thousand, compared to RMB 1,880,635 thousand in 2021[160] - The fair value of investment properties decreased by RMB 1,745 thousand in 2022, compared to a decrease of RMB 12,543 thousand in 2021[161] Cost Control and Operational Efficiency - The Group aims to optimize cost control, enhance operational efficiency, and implement measures to reduce procurement and manufacturing costs[9] - The company developed and released a series of industrial software to enhance operational efficiency and management effectiveness[105] Product Development and Market Expansion - The Group has diversified its product portfolio by developing motors and electronic controls for external markets, including SAIC Maxus, Dongfeng Motor, and Changan Automobile[10] - The Group aims to accelerate product transformation and upgrading through deepening cooperation with world-renowned enterprises, focusing on lightweight, electrification, and intelligent development, and advancing into the high-end passenger vehicle supporting field[81] - The Group plans to promote the launch of new energy electric logistics vehicle series, including models G200 and G105, to create market opportunities[81] - The Group has developed higher quality and more functional commercial vehicles, such as side-opening micro-vans, electric logistics vehicles, and refrigerated trucks, to meet market demand and enhance regulatory standards[97] - The company successfully entered the US and Japanese markets with its new energy light logistics vehicles, becoming the first Chinese company to export such vehicles to the US[103] - The company plans to accelerate the transformation and upgrade of its products towards lightweight, electric, and intelligent solutions[111] - The company aims to enter the high-end component and part supply market through the development of high-tech flagship products[111] - The company is accelerating the launch and promotion of new energy electric logistics vehicle models, such as G200 and G105[111] - Wuling Motors Holdings has sold over 20,000 electric logistic vehicles since 2020 and expanded its distribution network to over 130 dealerships nationwide[149] - The company has extended its products to overseas markets, including Japan and the United States, with expected growth in sales volume in the coming years[149] - The new energy vehicle segment achieved significant breakthroughs, selling over 20,000 electric logistics vehicles since 2020 and establishing a nationwide dealer network with over 130 dealers[194] ESG and Corporate Governance - The Group's ESG report discloses the gender ratio in the workforce as of 31 December 2022, with no specific targets set for gender diversity[32] - The Group's internal control and risk management systems were reviewed, with no significant control failures or deficiencies identified[28] - The Group's nomination committee held two meetings in 2022 to review board appointments and recommend candidates based on meritocracy[21][19] - The company has established a Board Diversity Policy, aiming to appoint a female director with suitable skills and experience by the end of 2024[57] - The company is currently developing relevant recruitment and selection procedures, expected to be implemented within the year[57] - The company's internal audit department reviewed and approved the audit scope and plan for the year ended 31 December 2022, focusing on higher potential risk areas[52] - The company has implemented management measures for supervision, employee discipline, and anti-corruption to strictly manage the behaviors of directors and employees[53] - The Board is responsible for maintaining an adequate internal control and risk management system to safeguard shareholder investments and the Group's assets, reviewing its effectiveness annually with the participation of the Audit Committee[69] - The Group's dividend policy outlines the principles and guidelines for distributing dividends to shareholders, ensuring alignment with the Company's financial health and strategic goals[74] - The Group has established written guidelines and policies for securities transactions by employees likely to possess unpublished price-sensitive information, ensuring compliance with the Model Code[67][68] Financial Transactions and Capital Management - The company's external auditor, KPMG, received remuneration for audit and non-audit services provided to the Group for the year ended 31 December 2022[51] - The company successfully placed 223,000,000 shares at HK$2.47 per share, representing approximately 6.76% of the issued share capital[145] - Wuling Motors Holdings completed a capital reorganization, consolidating 1,521,400,000 convertible preference shares into 380,350,000 ordinary shares[136] - The company's substantial shareholders, including Wuling Motors (Hong Kong) Holdings Limited, hold 56.54% of the issued share capital[142] - Wuling Motors Holdings adopted a share option scheme on 10 November 2021 to incentivize employees and align interests with long-term development[150] - The company's net proceeds from the share placement and subscription were used to strengthen its financial position and support future growth[148] - The net proceeds from the Subscription amounted to approximately HK$537.8 million, with HK$300 million (55.8%) allocated for R&D projects of new model electric logistic vehicles, HK$95 million (17.7%) for repayment of short-term borrowings, and HK$142.8 million (26.5%) for future business development or investments[195] - The Company's net Subscription Price, after deducting commission, fees, costs, and expenses, was estimated to be approximately HK$2.41 per Subscription Share[195] R&D and Innovation - The company utilized HK$300.0 million of net proceeds for R&D projects of new model electric logistic vehicles as of 31 December 2022[167] - The related amount incurred by Wuling Industrial on the R&D Projects up to 31 December 2021 was RMB144.7 million (equivalent to approximately HK$174.8 million)[170] - The unutilised Net Proceeds of approximately HK$125.2 million will be fully utilised on the R&D Projects on or before 31 December 2022[170] - The Company intended to apply RMB55.6 million (equivalent to approximately HK$65.6 million) as part of its capital contribution to Wuling New Energy upon completion of the Capital Increase[187] - The Company plans to forge a new energy vehicle business segment by investing in Wuling New Energy, focusing on R&D, manufacture, and sale of new energy vehicles in the PRC[170] - The balances out of the Net Proceeds earmarked for R&D Projects and capital contribution to Wuling New Energy had been fully utilized as at 31 December 2022[170][187] Market and Industry Outlook - The company is optimistic about the potential of the automotive industry in Indonesia, given the country's large population and recent positive economic development[40] - The company expects continued pressure on production and operation in 2023 due to the post-COVID-19 pandemic era and global economic downturn[107] - Wuling Motors Holdings is ranked among the Global Top 100 Enterprises of Automotive Components Suppliers since 2018[127] - The Company's largest customer and supplier for the year ended 31 December 2022 was SAIC-GM-Wuling Automobile Co., Ltd., in which Guangxi Automobile Holdings Limited holds 5.8% of its registered capital[193] - The aggregate purchases attributable to the Group's largest supplier and the five (5) largest suppliers taken together accounted for respectively 21.4% (2021: 24.0%) and 35.4% (2021: 38.8%) of the Group's total purchases for the year[178] Employee and Workforce Management - The company's total employee-related expenses under continuous contracts for the year ended 31 December 2022 amounted to HKD83,138,200, with a net balance of HKD43,059,730 after deductions[37] - The internal audit department's scope of review and audit plan for the year ended December 31, 2022, focused on areas with relatively higher perceived risks and were approved by the Audit Committee in conjunction with Management[70] Financial Statements and Reporting - The Group's performance for the year ended December 31, 2022, is detailed in the "Consolidated Statement of Profit or Loss and Other Comprehensive Income" on pages 155-156 of the annual report[64] - The Group's reserves movement details for the year are set out in the "Consolidated Statement of Changes in Equity" on pages 159-160 of the annual report[92][93]

Revenue Performance - The total revenue for the commercial vehicle division was RMB 3,619,542,000, a significant decrease of approximately 19.4% compared to the previous year due to the restructuring of the new energy vehicle business [15]. - Total revenue for the year was RMB 12,595,607,000, a decrease of 12.6% compared to the previous year, mainly due to reduced income from the automotive parts and commercial vehicle segments [40]. - Revenue for the year ended December 31, 2022, was RMB 12,595,607,000, representing a decrease of 12.6% compared to RMB 14,408,507,000 in 2021 [104]. - Sales of specialized vehicles, including new energy vehicles, amounted to RMB 3,619,542,000, down 19.4% from RMB 4,489,599,000 in the previous year [142]. - Revenue from the sale of automotive parts and accessories decreased to RMB 5,122,212,000, a decline of 11.7% from RMB 5,802,732,000 in 2021 [142]. Profitability and Losses - The company recorded a total net loss of RMB 2,546,000 for the year ended December 31, 2022, primarily due to the operating losses from joint ventures, including Wuling New Energy and Liuzhou Zhenqu [29]. - The net profit for the year was RMB 40,038,000, a significant increase of 187% compared to a loss of RMB 45,860,000 in 2021 [104]. - The net profit attributable to the company's owners for 2022 was RMB 22,611,000, a decrease from RMB 24,148,000 in 2021, reflecting a decline of approximately 6.4% [108]. - The group reported a net loss before tax of RMB 826,000, compared to a profit of RMB 2,713,000 in the previous year [150]. Operating Performance - The division recorded an operating profit of RMB 30,155,000 for the year, compared to an operating loss of RMB 73,696,000 in 2021, indicating a turnaround in performance [5]. - The commercial vehicle division recorded an operating profit of RMB 21,950,000, compared to RMB 18,156,000 from the previous year, despite a decrease in business volume and impairment losses on receivables [17]. - The joint venture for automotive interior systems achieved total revenue of RMB 367,590,000, with operating profit increasing significantly to RMB 19,130,000 from RMB 3,388,000 last year [49]. Research and Development - Research and development expenses amounted to RMB 319,465,000, a decrease of 21.8% compared to last year, despite ongoing new product launches and technology upgrades [34]. - The company is focusing on research and development in electric vehicles, including shared and autonomous driving technologies, with positive initial responses from pilot projects [19]. - The company aims to strengthen its position in the new energy vehicle sector and has initiated a capital injection of RMB 305,600,000 into Wuling New Energy, with additional asset contributions totaling RMB 84,866,478.39 [21]. Market and Sales - The sales volume of different vehicle models was approximately 67,600 units, a substantial decrease of 31% from the previous year's reported sales of about 98,000 units [16]. - External customer sales in the first half of the year decreased by approximately 25.7% to RMB 1,084,553,000, accounting for about 37% of the division's total revenue [3]. - The company has sold over 20,000 electric logistics vehicles since its listing in 2020, achieving a historical high in sales [27]. Financial Position - The company reported a net current liability of RMB 932,681,000, a decrease from RMB 1,414,495,000 as of December 31, 2021, mainly due to raising long-term bank loans during the year [39]. - Current liabilities amounted to RMB 11,771,427,000, primarily consisting of accounts payable and other payables of RMB 6,659,530,000 [55]. - The total equity attributable to shareholders as of December 31, 2022, was RMB 1,913,112,000, with a net asset value per share of approximately RMB 58.0 cents [57]. Challenges and External Factors - The commercial vehicle division's business volume was adversely affected by COVID-19 measures, chip and battery supply shortages, and periodic closures of scenic areas [15]. - The company faced challenges due to a tightening chip supply and sporadic COVID-19 outbreaks in certain regions of China, impacting business performance [40]. Corporate Governance - The company has fully complied with the corporate governance code as per the listing rules, ensuring no concentration of power in a single individual [78]. - The Audit Committee has reviewed the financial statements for the year ended December 31, 2022, and confirmed compliance with applicable accounting standards and listing rules [82]. Dividends and Shareholder Returns - The proposed final dividend for the year ended December 31, 2022, is HKD 0.3 per share, totaling approximately HKD 9,894,000 (equivalent to about RMB 8,451,000) [74]. - The company declared a final dividend of 0.3 HKD per share for the year, consistent with the previous year's dividend, indicating stable shareholder returns [181].

Financial Performance - Total revenue for the six months ended June 30, 2022, was RMB 6,274,686,000, representing a decrease of 12.4% compared to the same period in 2021[16]. - Gross profit for the period was RMB 372,333,000, a significant decrease of 24.5% compared to the corresponding period in 2021, with a gross profit margin of 5.9%, down approximately 100 basis points from 6.9% in 2021[17][19]. - The Group reported a net loss of RMB 138,587,000 for the first half of 2022, significantly increased from a net loss of RMB 45,226,000 in the same period in 2021[18][20]. - Loss attributable to the owners of the Company increased to RMB 80,545,000, compared to RMB 21,015,000 for the corresponding period in 2021[18][20]. - Basic loss per share for the six months ended June 30, 2022, was RMB 2.44 cents, significantly increased from RMB 0.64 cents in the corresponding period in 2021[194]. - Other income totaled RMB 85,158,000, representing a decrease of 7.7% compared to the corresponding period in 2021[195]. - Other gains and losses amounted to a net aggregate loss of RMB 16,432,000 for the six months ended June 30, 2022[196]. - The Group reported a total net loss of RMB 506,000 from associates for the six months ended June 30, 2022, primarily due to operating losses from FL Seating and FL Emission, impacted by semiconductor supply issues and COVID-19 outbreaks in certain regions of China[200]. - Selling and distribution costs amounted to RMB 46,837,000, representing a significant decrease of 44% compared to the same period in 2021, attributed to the reclassification of transportation expenses and reduced business volume[200]. - General and administrative expenses totaled RMB 275,028,000, a substantial decrease of 21.8% year-on-year, mainly due to a cost restructure that reclassified certain staff costs to research and development expenses[200]. Operational Challenges - The decline in performance was attributed to high raw material prices, semiconductor supply shortages, and the impact of COVID-19 outbreaks in certain regions of China[9][17]. - The Group is facing operational challenges due to the pandemic and semiconductor shortages, which have adversely affected business performance across various divisions[29]. - The overall automotive industry in China is facing a slowdown due to semiconductor supply constraints and sporadic Covid-19 outbreaks, impacting market performance[179]. - The sales decrease in the commercial vehicles assembly division is considered transitory, attributed to semiconductor and battery supply shortages and increased R&D costs during the transformation to new energy vehicles[157]. Business Strategy and Development - The Company emphasized proactive measures in market expansion and supply chain management to mitigate risks during challenging business conditions[11][13]. - The Group aims to enhance operational efficiency and reduce costs through optimized business processes and management practices[11]. - The Company continues to pursue new business development plans and corporate reorganization to adapt to the evolving automotive industry landscape[11][15]. - The Group is committed to technological upgrading and research and development of new products to navigate the transitional period in the automotive industry[25]. - The Group aims to maintain a significant market share of existing popular models while exploring future growth opportunities to improve profitability in the commercial vehicles assembly division[173]. - The Group is focusing on fine management to improve capital turnover efficiency and reduce non-performing receivables and inventories[59]. - Stringent control on spending and expenditures has been implemented to adapt to the challenging market conditions, ensuring funds are allocated to the most appropriate areas[61]. - The Group is actively pursuing development plans for market expansions and has initiated projects for electric vehicle products, including trials for car sharing and auto pilot[154]. Sales and Market Performance - In the first half of 2022, the automotive components and other industrial services division achieved sales revenue of RMB 2,849,638,000, representing a decrease of 6.7% year-on-year compared to the same period in 2021[24]. - The vehicles' power supply system division recorded sales revenue of RMB 1,307,844,000 in the first half of 2022, reflecting a decrease of 10.0% year-on-year compared to the corresponding period in 2021[29]. - A total of 49,000 units of the mainstream 1.8L engine were sold in the first half of 2022, showing significant growth during the period[31]. - Sales of 60,000 engines were recorded in the first half of 2022 for external markets, with major customers including SAIC Maxus, Dongfeng Motor, and Changan Automobile[29]. - The commercial vehicles assembly division achieved sales revenue of RMB 2,085,759,000 in the first half of 2022, a decrease of 20.0% year-on-year compared to the same period in 2021[34]. - The new energy vehicle business achieved a sales volume of 7,869 units in the domestic market in the first half of 2022, representing a 57% increase year-on-year[49]. - The sales volume of off-road vehicles was 1,974 units, with 113 units sold in the international market, representing a moderate year-on-year increase despite sluggish domestic demand[34]. - The sale volume of electric logistic vehicles increased to approximately 7,900 vehicles, up from 4,100 vehicles sold in the same period in 2021, indicating growth in this segment[146]. Investment and Expansion - The Group has invested in a new production base in Jingmen, Hubei, to deepen cooperation with Great Wall Motor and expand market opportunities[24]. - The new production base for new energy vehicles occupies approximately 550,000 square meters and is equipped with advanced automated production lines[40]. - The company plans to contribute RMB 305.6 million to Wuling New Energy as part of a Capital Increase Agreement to enhance its new energy vehicle business[37]. - The Capital Increase and Restructuring aims to integrate and restructure new energy vehicle-related assets and businesses to rapidly increase production capacity[39]. - The Group has established production facilities in Jingmen, Hubei province, set to start operations in the second half of 2022, primarily to supply components to Great Wall Motors[130]. - The division has a combined annual production capacity exceeding 2 million sets/units of automotive components, enhancing its ability to target sizable automobile manufacturers[129]. - The Group is optimistic about the business potential in Indonesia's automobile industry, considering it has the fourth largest population and recent economic development[135]. Research and Development - The Group aims to increase investment in research and development to enhance product lines and brand influence in the new energy power systems market[81]. - The Group is focusing on R&D and marketing of existing and new products applicable for new energy vehicles to maintain competitiveness in the market segment[114]. - The division has commenced scale operation of the LJP60 high-efficiency HEV hybrid assembly units in June 2022, marking a transition to a multi-dimensional vehicles' power system supplier[107]. - The HEV hybrid solution is expected to save more than 30% in fuel consumption compared to traditional fuel engine vehicles of the same capacity[107]. - Currently, 12 models of vehicles from various manufacturers are under development for hybrid power integration in collaboration with the division[108]. - The Group is actively developing various new energy automotive components, including electric rear axles, motors, and hybrid power systems, which are anticipated to directly benefit from the growth in the new energy vehicle segment[56]. Joint Ventures and Collaborations - The cooperation with Faurecia Group is expected to provide essential technical support to enhance business opportunities in automotive parts and components[179]. - The share of results from joint ventures showed an aggregate net loss of RMB 6,157,000 for the same period, mainly from AAMJV and Liuzhou Lingte, while Guangxi Weixiang remained profitable[200]. - AAM JV incurred a net operating loss of RMB 12,241,000, a 53.6% increase compared to the net operating loss of RMB 8,102,000 in the corresponding period in 2021[186].

Financial Performance - In 2021, the Group reported full-year revenue of RMB 14,408,507,000, representing a year-on-year decrease of 6.3%[15]. - The Group recorded a net loss of RMB 45,860,000 in 2021, an increase of 109.7% compared to the net loss of RMB 21,867,000 in 2020[15]. - Loss attributable to owners of the Company was RMB 24,148,000 in 2021, a decrease of 27.7% compared to the previous year due to a substantial reduction in finance costs[15]. - The Group's revenue from the automotive components business in 2021 was RMB 7,114,330,000, showing a slight decrease compared to 2020[25]. - Revenue from external markets, excluding SGMW, reached RMB 2,105,445,000, representing a significant year-on-year increase of 50.2%[25]. - The total revenue of the vehicles' power supply systems division for the year ended December 31, 2021, was RMB 2,759,012,000, representing a decrease of 11.4% compared to the previous year due to a slowdown in engine set sales[64]. - Total revenue for the automotive components and other industrial services division was RMB 7,114,330,000, representing a slight decrease of 0.5% compared to the previous year[89]. - Total revenue for the commercial vehicles assembly division was RMB 4,489,599,000, a decrease of 11.9% compared to the previous year, primarily due to semiconductor supply issues[120]. - FL Seating reported total revenue of RMB 265,607,000 for 2021, a decrease of 31.3% compared to the previous year[157]. - FL Interior experienced a total revenue of RMB 416,047,000, marking a substantial increase of 114.4% compared to the previous year[161]. - FL Emission reported total revenue of RMB 631,285,000 in 2021, a moderate decrease of 6.4% compared to the previous year[161]. - AAM JV recorded total revenue of RMB 58,092,000 in 2021, with an operating loss of RMB 16,859,000, an improvement from the previous year's loss of RMB 24,907,000[164]. - Gross profit for the year was RMB 1,085,847,000, a decrease of 10.2% from the previous year, with a gross profit margin of 7.5% down from 7.9%[168]. Challenges and Market Conditions - The Group faced challenges including high raw material prices and a shortage of chips, which affected production levels of major customers[14]. - The overall economic recovery in China since the second half of 2020 positively influenced market sentiment and growth momentum[20]. - The company faced adverse impacts from rising raw material costs and semiconductor supply constraints, affecting production schedules[167]. - The sales decrease in the commercial vehicles assembly division is viewed as transitory, primarily due to semiconductor supply shortages and increased R&D costs[137]. Strategic Focus and Development - The Group aims to leverage opportunities arising from "electrification, intelligence, networking, and sharing" in the automobile industry[14]. - The Group is committed to innovation-driven development and actively launching new businesses to ensure steady growth[14]. - The Group's strategic focus includes enhancing production safety and pandemic prevention measures[14]. - The Group plans to establish a new joint venture, Liuzhou Wuling New Energy Automobile Co., Ltd., to integrate and restructure its new energy vehicle-related assets and businesses[36]. - The Group aims to enhance innovation-driven development and optimize industrial structure in alignment with the national "14th Five-Year Plan" for high-quality growth[44]. - The Group aims to maintain a prominent market share of existing popular models while exploring future growth opportunities in the new energy vehicle segment[149]. Research and Development - The Group launched 810 product development projects in 2021, with 316 achieving Start of Production (SOP) status[43]. - Research and development expenses increased significantly due to the active implementation of new business projects, including new energy vehicle projects[169]. - The division is focusing on research and development of products applicable for new energy vehicles to maintain competitiveness in the market segment[84]. - The company plans to prudently continue research and development projects aligned with its strategic business opportunities[3]. Production and Capacity - The Group's main production facilities are located in Liuzhou, Qingdao, Chongqing, India, and Indonesia, focusing on both commercial and new energy vehicles[5]. - The division's production capacity exceeds 2 million sets/units of automotive components annually, enabling it to target business opportunities from sizable car manufacturers[105]. - The company has completed the construction of a new production line for mass production of electric motor control systems for new energy vehicles, aiming to capture opportunities in the fast-growing EV market in China[79]. - The production plant in Indonesia became profitable in 2021 after years of losses, benefiting from local demand growth in the automotive industry[110]. - The Indian production plant maintained profitability in 2021, focusing on automotive components for a renowned PRC car manufacturer[113]. Financial Management - The Group aims to maintain a financially healthy position amidst the dynamic business environment and risks associated with the automobile industry[194]. - The Group will continue to closely monitor its liquidity and financial position in response to the unprecedented adverse market conditions[196]. - The Group's financial strategy will be adjusted based on the monitoring of market conditions and financial market trends[196]. - The Group considers its exposure to fluctuations in exchange rates to be reasonable, given the relative size of its assets and liabilities denominated in RMB[200]. Customer and Market Expansion - The Group expanded its customer base by optimizing customer structure and entering new markets, including Great Wall Motor and overseas markets like Iran and Italy[25]. - The Group established a nationwide distribution network with over 120 dealerships, facilitating market expansion[139]. - The Group anticipates that the sales volume of overseas orders, including those from Japan and the United States, will gradually increase in 2022[139]. - Continuous efforts in market diversification have led to encouraging initial responses from projects with external customers, focusing on the new energy sector[99].