Weichai Heavy Machinery (SZ:000880)2025-08-15 12:45Important Notice, Table of Contents, and Definitions This section provides crucial disclaimers, the report's structure, and definitions of key terms used throughout the document Important Notice The company's board ensures the report's accuracy and completeness, announcing a 2025 interim profit distribution and capital reserve to share capital plan, while advising investors to consult official disclosures and risk factors - The company's board approved the 2025 interim profit distribution plan: based on the total share capital as of June 30, 2025, a cash dividend of CNY 0.90 per 10 shares (including tax) will be distributed, and 4 shares per 10 shares will be transferred from capital reserves to share capital5 Table of Contents The report's table of contents clearly lists nine major chapters, covering everything from important notices and company overview to management discussion and financial reports Definitions This chapter defines key company abbreviations and terms used in the report, such as "Weichai Heavy Machinery" and "Shandong Heavy Industry," and specifies the reporting period from January 1 to June 30, 2025 Company Profile and Key Financial Indicators This section presents the company's fundamental information and a summary of its key financial performance metrics Company Profile This chapter provides the company's basic information, including its stock ticker "Weichai Heavy Machinery," stock code "000880," and its full Chinese and English names, along with the legal representative Key Accounting Data and Financial Indicators The company achieved strong performance in the first half of 2025, with revenue increasing by 43.91% and net profit attributable to shareholders by 52.62%, indicating significant improvement in profitability and cash flow 2025 H1 Key Financial Indicators | Indicator | Current Period | Prior Year Period | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 2,746,363,246.88 | 1,908,434,150.32 | 43.91% | | Net Profit Attributable to Shareholders (CNY) | 143,667,942.17 | 94,135,274.71 | 52.62% | | Net Profit Attributable to Shareholders (Excl. Non-recurring Items) (CNY) | 128,649,375.44 | 91,734,682.39 | 40.24% | | Net Cash Flow from Operating Activities (CNY) | 163,326,691.02 | 50,359,915.91 | 224.32% | | Basic Earnings Per Share (CNY/share) | 0.43 | 0.28 | 52.62% | | Weighted Average Return on Net Assets | 6.80% | 4.73% | Increased by 2.07 percentage points | | Total Assets (CNY) | 7,051,508,285.87 | 6,279,690,766.70 | 12.29% (vs. end of prior year) | | Net Assets Attributable to Shareholders (CNY) | 2,149,069,218.68 | 2,060,208,014.27 | 4.31% (vs. end of prior year) | Non-recurring Gains and Losses and Amounts During the reporting period, the company's non-recurring gains and losses totaled CNY 15.02 million, primarily from government subsidies and disposal gains/losses of non-current assets 2025 H1 Non-recurring Gains and Losses | Item | Amount (CNY) | | :--- | :--- | | Disposal gains/losses of non-current assets | 6,004,272.85 | | Government subsidies recognized in current profit/loss | 11,122,255.12 | | Other non-operating income and expenses | 542,374.07 | | Less: Income tax impact | 2,650,335.31 | | Total | 15,018,566.73 | Management Discussion and Analysis This section provides an in-depth analysis of the company's operational performance, financial condition, and future outlook Principal Businesses During the Reporting Period The company's core businesses, marine power and power generation equipment, achieved record performance in the reporting period, driven by green transformation in inland navigation and data center market expansion - The company's business covers four areas: ocean-going, offshore, inland river, and power generation, with marine engines holding a leading position in inland river and offshore transport vessels and fishing boats, while generator sets are widely used in marine, telecommunications, and data center industries28 2025 H1 Operating Performance Highlights | Indicator | Value | YoY Growth | | :--- | :--- | :--- | | Operating Revenue | CNY 2.75 billion | 44% | | Net Profit Attributable to Shareholders | CNY 144 million | 53% | | Engine/Generator Set Sales | 12,100 units | 8% | | International Market Operating Revenue | - | 62% | - In marine power, the company capitalized on "equipment renewal" policies, significantly increasing LNG power product sales; in generator sets, it achieved major breakthroughs in the data center market, with substantial growth in sales and revenue, successfully entering the procurement lists of the three major operators, breaking the monopoly of imported brands2930 Analysis of Core Competitiveness The company's core competitiveness lies in its marine power and energy power business segments, excelling in alternative fuel engine development and generator set performance - The company has completed the development and application of natural gas engines and dual-fuel engines using various technical routes, including spark ignition, micro-pilot ignition, and high-pressure direct injection, and has laid out methanol engine product development, leading the industry in marine engine energy conservation and emission reduction34 Analysis of Principal Business During the reporting period, the company's principal business grew significantly, with operating revenue increasing by 43.91%, primarily due to increased sales of main products, especially generator sets Major Financial Data YoY Changes | Item | Current Period (CNY) | Prior Year Period (CNY) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 2,746,363,246.88 | 1,908,434,150.32 | 43.91% | | Operating Cost | 2,456,520,125.38 | 1,670,300,017.25 | 47.07% | | Net Cash Flow from Operating Activities | 163,326,691.02 | 50,359,915.91 | 224.32% | Operating Revenue Composition (by Product) | Product | Current Period Revenue (CNY) | % of Total Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Engines | 930,629,901.30 | 33.89% | 0.11% | | Generator Sets | 1,417,273,405.90 | 51.60% | 135.48% | | Parts and Processing Services | 198,571,021.10 | 7.23% | 10.73% | | Aftermarket and Others | 199,888,918.58 | 7.28% | 1.14% | Analysis of Assets and Liabilities As of the end of the reporting period, the company's total assets reached CNY 7.05 billion, an increase of 12.29% from the end of the previous year, driven by expanded investments and business scale Significant Changes in Asset Composition | Item | Amount at End of Current Period (CNY) | % of Total Assets | % Change from End of Prior Year | | :--- | :--- | :--- | :--- | | Monetary Funds | 2,375,048,903.41 | 33.68% | -8.69% | | Accounts Receivable | 649,375,677.02 | 9.21% | 2.55% | | Inventories | 1,185,619,339.21 | 16.81% | 3.75% | | Long-term Equity Investments | 1,022,971,214.18 | 14.51% | 2.53% | Analysis of Investment Status During the reporting period, the company's investment significantly increased, primarily due to a CNY 261 million capital injection into Shandong Heavy Industry Group Finance Co, Ltd, which is a major source of investment income from associates - The investment amount for the reporting period was CNY 292 million, a substantial increase of 1,302.24% compared to CNY 20.83 million in the same period last year43 - The company injected CNY 261 million into Shandong Heavy Industry Group Finance Co, Ltd, holding a 7.81% stake; investment income recognized in this period was CNY 12.40 million45 Analysis of Major Holding and Participating Companies Weichai Power Equipment Co, Ltd, a key subsidiary, performed well in the reporting period, with net profit of CNY 40.89 million, up 25.89% year-on-year, driven by increased operating revenue and gross profit Weichai Power Equipment Co, Ltd Key Financial Data | Indicator | Amount (CNY) | | :--- | :--- | | Total Assets | 2,080,261,188.41 | | Net Assets | 189,743,710.54 | | Operating Revenue | 1,567,370,196.42 | | Net Profit | 40,890,260.56 | Risks Faced by the Company and Countermeasures Looking ahead to H2 2025, the company acknowledges a complex global economic environment but sees ample domestic macroeconomic policy space, focusing on its dual core businesses and efficiency improvements - Marine engine business: Seize "vessel scrapping and renewal" opportunities to promote LNG and methanol products; expand overseas markets, especially in Russia and Southeast Asia; and deepen system integration and aftermarket TCO services5455 - Land-use generator set business: Continuously explore high-end markets such as data centers, telecommunications, oil and gas fields, and high-end manufacturing, to address increasingly fierce industry competition57 Corporate Governance, Environment, and Society This section details changes in the company's governance structure, its profit distribution plans, and its commitment to environmental and social responsibilities Changes in Directors, Supervisors, and Senior Management During the reporting period, the company's board of directors and senior management underwent several personnel changes, including the election of new directors and the appointment of new vice general managers and board secretaries 2025 H1 Changes in Directors, Supervisors, and Senior Management | Name | Position | Type | | :--- | :--- | :--- | | Wang Dehua | Director | Elected | | Li Jian | Director | Elected | | Mu Degang | Vice General Manager | Appointed | | Sheng Weining | Board Secretary | Appointed | | Zhang Quan | Director | Resigned | | Wang Xuewen | Director | Resigned | | Li Deming | Manufacturing Director | Resigned | | Wen Tao | Board Secretary | Resigned | Profit Distribution and Capital Reserve to Share Capital Plan The company proposed a 2025 interim profit distribution and capital reserve to share capital plan, intending to distribute a cash dividend of CNY 0.90 per 10 shares (including tax) and transfer 4 shares per 10 shares from capital reserves to all shareholders 2025 Interim Dividend and Capitalization Plan | Item | Value | | :--- | :--- | | Cash Dividend per 10 Shares (CNY) (incl. tax) | 0.90 | | Capitalization per 10 Shares (shares) | 4 | | Share Capital Base for Distribution Plan (shares) | 331,320,600 | | Cash Dividend Amount (CNY) (incl. tax) | 29,818,854.00 | Environmental Information Disclosure The company has been included in the list of enterprises required to disclose environmental information by law, demonstrating its commitment to environmental protection and responsibility Social Responsibility During the reporting period, the company actively fulfilled its social responsibilities by participating in public welfare, community care activities, and ecological protection initiatives, while also enhancing employee cohesion through diverse cultural events Significant Matters This section outlines major events and transactions that significantly impacted the company during the reporting period Significant Related Party Transactions The company engaged in significant related party transactions related to its daily operations, primarily involving the purchase and sale of engines and parts, and a joint capital increase in Shandong Heavy Industry Group Finance Co, Ltd Daily Related Party Transactions with Weichai Power and its Affiliates | Transaction Type | Related Party Transaction Content | Amount in Current Period (CNY million) | % of Similar Transaction Amount | | :--- | :--- | :--- | :--- | | Purchase of Goods/Acceptance of Services | Engines, parts, services, etc | 1,400.28 | 49.94% | | Sale of Goods/Provision of Services | Engines, parts, services, etc | 983.18 | 35.80% | - The company, along with Shandong Heavy Industry Group Co, Ltd, Weichai Power Co, Ltd, and other related parties, jointly increased capital in Shandong Heavy Industry Group Finance Co, Ltd79 - As of the end of the reporting period, the company's deposit balance with Shandong Heavy Industry Group Finance Co, Ltd was CNY 1.14 billion, with a total credit line of CNY 400 million81 Explanation of Other Significant Matters The company is planning a major equity acquisition and related party transaction, intending to acquire 100% of Changzhou Fiberglass Shipyard Co, Ltd - The company disclosed an announcement on August 7, 2025, regarding the acquisition of 100% equity in Changzhou Fiberglass Shipyard Co, Ltd, which constitutes a related party transaction91 Share Changes and Shareholder Information This section details any changes in the company's share capital and provides an overview of its shareholder structure Share Changes During the reporting period, the company's total share capital and share structure remained unchanged, with the total share capital maintained at 331.32 million shares Share Structure | Share Type | Quantity | Proportion | | :--- | :--- | :--- | | I. Restricted Shares | 169,158,600 | 51.06% | | II. Unrestricted Shares | 162,162,000 | 48.94% | | III. Total Shares | 331,320,600 | 100.00% | Number of Shareholders and Shareholding Status As of the end of the reporting period, the company had 38,156 common shareholders, with the top two shareholders, Weichai Holding Group Co, Ltd and Weifang City Investment Group Co, Ltd, holding over 51% combined Top Two Shareholders' Shareholding Status | Shareholder Name | Shareholder Nature | Shareholding Proportion | Number of Shares Held | | :--- | :--- | :--- | :--- | | Weichai Holding Group Co, Ltd | State-owned Legal Person | 30.59% | 101,358,600 | | Weifang City Investment Group Co, Ltd | State-owned Legal Person | 20.46% | 67,800,000 | Bond-Related Information This section provides details regarding any bonds issued or outstanding by the company Bond-Related Information During the reporting period, the company had no bond-related information Financial Report This section contains the company's audited financial statements and accompanying notes for the reporting period Audit Report This semi-annual financial report has been audited by Zhongqin Wanxin Certified Public Accountants (Special General Partnership), which issued a standard unqualified audit opinion - The audit firm issued a standard unqualified audit report (Qinxin Audit [2025] No. 3424)106 Financial Statements This section presents the company's consolidated and parent company financial statements for the first half of 2025, including the balance sheet, income statement, cash flow statement, and statement of changes in owners' equity Notes to Financial Statements The notes to the financial statements detail the company's basic information, basis of preparation, significant accounting policies and estimates, taxation, and provide detailed explanations for major items in the consolidated financial statements, along with disclosures of related party relationships and transactions, contingencies, and post-balance sheet events - Significant accounting policy change: In accordance with "Interpretation No. 18 of Accounting Standards for Business Enterprises," the company retrospectively adjusted the accounting treatment for guarantee-type quality assurance, reclassifying related expenses from "selling expenses" to "operating costs"308 - Tax incentives: The company and its subsidiary, Weichai Power Equipment Co, Ltd, as high-tech enterprises, enjoy a 15% corporate income tax preferential rate and can benefit from a 100% pre-tax deduction for R&D expenses322 - Post-balance sheet events: On August 6, 2025, the company signed an agreement to acquire 100% equity in Changzhou Fiberglass Shipyard Co, Ltd, held by related party Weichai Group, for CNY 491.67 million in cash529 Other Submitted Data This section includes additional data submitted by the company, such as investor relations activities and related party fund movements Investor Relations Activities During the Reporting Period During the reporting period, the company engaged in three public communication activities with investors through online platforms and on-site visits, primarily discussing operating performance, market conditions, and future plans Fund Movements with Controlling Shareholder and Other Related Parties This section discloses the company's operating fund movements with related parties, with the largest amount being deposit transactions with Shandong Heavy Industry Group Finance Co, Ltd, totaling CNY 1.14 billion at period-end