Company Performance - The London Company's Income Equity Portfolio declined 1.4% gross (-1.6% net) in Q4 2025, underperforming the Russell 1000 Value Index, which gained 3.8% [1] - For the full year, the portfolio delivered +14.4% gross (+13.5% net) versus +15.9% for the benchmark, aligning with long-term upside capture objectives despite a challenging environment for Quality, Yield, and Low Volatility factors [1] Market Context - U.S. equities continued to rally, with the Russell 3000 Index rising 2.4% and the S&P 500 posting similar gains, supported by strong earnings growth, additional Federal Reserve rate cuts, and easing trade tensions [1] - The market faced challenges from softening labor markets, scrutiny of AI investments, and a prolonged government shutdown [1] Stock Highlight: Cummins Inc. (NYSE:CMI) - Cummins Inc. reported strong results driven by Power Systems strength linked to data center demand, while the on-highway truck market remains weak [3] - The one-month return of Cummins Inc. was -7.30%, with shares trading between $260.02 and $617.98 over the last 52 weeks [2] - As of March 11, 2026, Cummins Inc. stock closed at approximately $556.14 per share, with a market capitalization of about $76.84 billion [2] - Cummins Inc. is one of the few global suppliers capable of supporting large-scale data center backup power requirements, with a diversified business mix and strong competitive positions across its portfolio [3]

Core Viewpoint - Weichai is demonstrating its commitment to community integration through sustainable public welfare projects, blending industrial operations with humanistic care [1] Group 1: Community Engagement Initiatives - In France, Weichai's subsidiary Baudouin repainted its engines pink for Breast Cancer Awareness Month and initiated a fundraising campaign, donating €500 for each pink engine sold to the Curie Institute for breast cancer research [1] - In Germany, Weichai's subsidiary LHY has incorporated public welfare into its corporate culture, organizing charity raffles and fundraising events, with proceeds supporting local charities [1] Group 2: Focus on Health Issues - In 2023, funds raised in Germany were allocated to hospice care in Aschaffenburg, providing companionship at the end of life [1] - In 2024, the focus shifted to mental health services, supporting telephone counseling in the Lower Main region, addressing pressing health concerns in German society [1] Group 3: Corporate Philosophy - Weichai embraces the "We are One" philosophy, embedding humanistic care into its global expansion efforts and positively impacting local communities [1]

Core Viewpoint - The push for U.S. datacenters to utilize their own power supply is expected to significantly increase demand for Wartsila's environmentally friendly products and lead to a "double-digit" percentage growth in hiring servicing staff over the next two years [1] Company Summary - Wartsila anticipates an 80% increase in delivery capacity for datacentre engines by 2028, driven by U.S. initiatives promoting energy and water-efficient technologies [1] - The company has secured contracts for approximately 1.2 gigawatts of power for datacentres, highlighting the importance of its technology in decision-making processes [1] - Wartsila's engine technology uses "up to 2,000 times less water" than comparable gas turbines and can reduce fuel costs by 20-35%, making it a competitive choice for datacentres [1] Industry Summary - The U.S. market accounts for about half of the world's datacentres, with expected growth as companies seek to enhance computing power, leading to increased competition for skilled workers [1] - The CEO emphasized the need for more vocational training in the U.S. to meet the rising demand for talent in the industry, as there is currently a tight supply of qualified personnel [1]

Core Insights - The company achieved a revenue growth of 28.9% for the full year, driven by increased unit sales across nearly all reporting categories, particularly in heavy-duty and high-horsepower engines [1] Revenue Growth - The data center market emerged as a critical growth engine, with combined sales of MTU Yuchai and Yuchai branded high-horsepower units increasing from 750 to over 2,000 units [1] Gross Margin and Cost Management - Gross margin expanded to 16.5%, attributed to a favorable shift in product mix towards high-margin heavy-duty engines and ongoing cost reduction initiatives [1] Market Share and Sales Performance - Market share gains in the truck and bus segments significantly outpaced industry averages, highlighted by a 146.1% year-over-year surge in heavy-duty truck engine sales during the second half [1] Strategic Globalization Efforts - Strategic globalization efforts were enhanced by new production partnerships in Vietnam and Thailand, alongside expanding bus engine deliveries in Mexico [1] Supply Chain and Technological Advancements - Management strengthened the supply chain and technological moat through a 27.97% equity acquisition in Nanyue Diankong, a leader in fuel injection systems [1] Research and Development Investment - R&D investment increased by 37.3% to support National VI and Tier 4 compliance while advancing alternative fuel technologies including hydrogen, methanol, and ammonia [1]

Core Insights - China Yuchai International reported significant growth in engine unit sales and financial performance for the second half of 2025, driven by strong demand for truck and bus engines, particularly heavy-duty models [4][7][9]. Sales Performance - Engine unit sales increased by 28.7% in the second half to 210,913 units, with truck and bus engines rising by 49.2% year over year [1][4]. - Truck engine unit sales surged by 59.4%, including a remarkable 100.61% increase in heavy-duty truck engines [1]. - Off-road engine unit sales grew by 7.5%, supported by over 22% growth in industrial and marine engines, although agricultural engine sales declined [1][9]. Financial Results - Second-half revenue rose by 33.5% year over year to RMB 11.8 billion (approximately $1.7 billion), while full-year revenue increased by 20.9% to RMB 24.7 billion (about $3.5 billion) [3][8]. - Gross profit for the second half increased by 50.4% to RMB 2.2 billion ($317 million), with gross margin expanding to 18.9% from 15.9% [3][8]. - Operating profit rose to RMB 469.2 million ($66.7 million), and basic and diluted earnings per share increased to RMB 4.57 ($0.65) from RMB 2.19 in the prior year [3][9]. Research and Development - R&D spending rose sharply, totaling approximately RMB 1.5 billion (about $217.1 million), representing 6.2% of revenue, as the company focuses on emissions compliance and new energy technologies [5][14]. - R&D expenses increased by 48% in the second half to RMB 884.9 million ($124.5 million) due to higher experimental costs and personnel expenses [14][15]. Market Trends - Demand for high-horsepower engines in data centers significantly increased, with sales jumping to over 2,000 units in 2025 from 750 units the previous year [6][10]. - Management highlighted data center demand as a "bright spot" for growth, although future revenue forecasts remain uncertain due to policy factors [11][10]. Joint Ventures and Strategic Moves - Profit contributions from joint ventures rose by 9.4% year over year, primarily driven by MTU Yuchai, which reported a net profit of about RMB 211 million in 2025, up 22% from 2024 [17]. - The company is enhancing its technology capabilities by acquiring a 27.97% equity interest in Nanyue Diankong Industrial Technology Company, focusing on fuel injection systems [18]. Financial Health - The company maintained a strong liquidity position with cash and bank balances of RMB 7.9 billion ($1.1 billion) as of December 31, 2025, up from RMB 6.4 billion at the end of 2024 [20]. - A cash dividend of $0.53 per ordinary share was paid in July 2025, reflecting the company's commitment to returning value to shareholders [20].

Financial Data and Key Metrics Changes - For the second half of 2025, revenue increased by 33.5% year-over-year to RMB 11.8 billion, or $1.7 billion, with gross profit rising by 58.4% to RMB 2.2 billion, or $317 million, and gross margin at 18.9% [8][9] - Operating profit surged by 993.1% year-over-year to RMB 469.2 million, or $66.7 million, with basic and diluted earnings per share improving by 108.7% to RMB 4.57, or $0.65 [8][9] - For the fiscal year 2025, revenue increased by 38.9% to RMB 34.7 billion, or $3.5 billion, with gross profit up by 44.3% to RMB 4.1 billion, or $578.7 million, and gross margin at 16.5% [9][26] Business Line Data and Key Metrics Changes - Off-road engine unit sales increased by 13% year-over-year, with marine and genset engines and industrial engines each recording unit sales growth of over 34% [10] - Truck and bus engine unit sales rose by 49.2%, with heavy-duty truck engine sales increasing by 100.61% year-over-year [17] - Total number of engines sold in FY 2025 increased by 29.4% year-over-year to 461,309 units, with truck and bus engine units rising by 42.8% [24] Market Data and Key Metrics Changes - Exports have become an important sales channel, with significant growth in international markets, including Vietnam and Mexico [11] - The company has expanded its international sales and service support offices to strengthen its global reach [11] Company Strategy and Development Direction - The company aims to enhance engine efficiency and performance, focusing on National VI and Tier 4 emission compliance engines, while also developing new energy products [12][28] - Strategic alliances and joint ventures have produced a 9.4% year-over-year growth in profit, driven by higher sales and profit, particularly from MTU Yuchai [12] - The company is investing in R&D for alternative fuel engines and has acquired a 27.97% equity interest in a fuel injection system technology company [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future revenue and profit growth, citing strong demand for backup generators and data center operations [10] - The outlook for 2026 remains uncertain due to reliance on government policies affecting sales, but there is optimism for continued growth in data center demand [60] Other Important Information - Cash and bank balances were over RMB 7.9 billion, or $1.1 billion, as of December 31, 2025, indicating strong liquidity [14][32] - The company paid a cash dividend of $0.53 per ordinary share in July 2025, reflecting its commitment to shareholder value [14] Q&A Session Summary Question: Can you share more on the higher expenses in the second half where the effective tax rate is about 44%? - Management explained that the effective tax rate is higher due to a net write-off of RMB 100 million in tax assets, which is a non-cash item, and the adjusted effective tax rate is around 20-21% [37][38][39] Question: What are the reasons for the decrease in other operating income and the outlook for 2026? - The reduction is mainly due to lower government grants, which were halved in 2025 compared to 2024, and the trend is expected to remain similar [41][46][47] Question: What is the profit growth for the MTU joint venture? - The joint venture generated net profits of RMB 211 million, increasing by 22% from 2024, with sales volume and revenue up by over 30% [48][52] Question: Can you elaborate on the reasons behind the improved gross profit margin? - The improvement is attributed to increased unit sales, particularly of high horsepower engines, and leveraging fixed costs due to higher volume [55][58][59] Question: What is the outlook for the domestic truck and bus industry sales in 2026? - Management expects continued growth in the heavy-duty truck segment, driven by partnerships with vehicle OEMs, barring unforeseen circumstances [73][77] Question: Is the backlog for data center engines getting larger? - The backlog remains stable, with delivery times between 3 to 4 months, and supply constraints are primarily affecting joint venture operations [80][83] Question: What is the outlook for the European business? - The export market accounts for a small percentage of Yuchai's operations, but there is growth potential, particularly in the joint venture segment [86][88]

Financial Data and Key Metrics Changes - For the second half of 2025, revenue increased by 33.5% year-over-year to RMB 11.8 billion, or $1.7 billion, with gross profit rising by 58.4% to RMB 2.2 billion, or $317 million, and gross margin at 18.9% [8][9] - Operating profit surged by 993.1% year-over-year to RMB 469.2 million, or $66.7 million, with basic and diluted earnings per share improving by 108.7% to RMB 4.57, or $0.65 [8][9] - For the fiscal year 2025, revenue increased by 38.9% to RMB 34.7 billion, or $3.5 billion, with gross profit up by 44.3% to RMB 4.1 billion, or $578.7 million, and gross margin at 16.5% [9][26] Business Line Data and Key Metrics Changes - Total number of engines sold in the second half of 2025 increased by 28.7% to 210,913 units, driven by a 49.2% rise in truck and bus engine unit sales [16][17] - Heavy-duty truck engine sales increased by 100.61% year-over-year, while off-road engine unit sales rose by 7.5% [17][25] - R&D expenses increased by 37.3% to RMB 1.4 billion, or $192.3 million, reflecting higher experimental costs and personnel expenses [11][27] Market Data and Key Metrics Changes - Exports became an important sales channel, with significant growth in international markets, including Vietnam and Mexico [11] - The demand for backup generators for data centers contributed to rapid growth, with combined sales of high-horsepower engines to data centers exceeding 2,000 units in 2025 [10][11] - The company noted a tightening of government incentives, which reduced government grants significantly in 2025 compared to 2024 [46] Company Strategy and Development Direction - The company aims to expand production capacity to meet the expected increase in demand for power-generating engines [10] - Strategic alliances and joint ventures contributed to a 9.4% year-over-year growth in profit, driven by higher sales and profit from MTU Yuchai [12] - The focus remains on enhancing engine efficiency and developing new energy products, including alternative fuel engines [12][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future revenue and profit growth, citing strong demand in data centers and the potential for continued growth in the truck and bus engine market [60][78] - The outlook for 2026 is uncertain due to reliance on government policies, but management expects double-digit growth in data center sales [60][61] - The company is preparing for potential National VII emission standards and continues to invest in R&D for new energy solutions [63] Other Important Information - The company acquired a 27.97% equity interest in Nanyue Diankong Industrial Technology Company, enhancing its technological capabilities [13] - Cash and bank balances were over RMB 7.9 billion, or $1.1 billion, as of December 31, 2025 [14][32] Q&A Session Summary Question: Higher expenses in the second half and effective tax rate - Management explained that the effective tax rate was higher due to a non-cash write-off of tax assets, with a normalized rate of 20-21% expected [38][39][40] Question: Decrease in other operating income - The reduction was attributed to lower government grants, which were significantly reduced in 2025 compared to 2024 [46][47] Question: Profit growth for the MTU joint venture - The joint venture generated net profits of RMB 211 million, a 22% increase from 2024, with sales volume and revenue up by over 30% [52] Question: Reasons for improved gross profit margin - The improvement was due to higher unit sales, particularly of high-horsepower engines, and leveraging fixed costs [55][58] Question: R&D expenses growth rate and focus areas - R&D expenses are expected to continue growing, focusing on new energy systems and compliance with upcoming emission standards [62][63] Question: Outlook for truck and bus industry sales - Management expects continued growth in the heavy-duty truck segment, supported by partnerships with vehicle OEMs [78] Question: Backlog and supply constraints for data center engines - The backlog remains stable, with no significant increase, while supply constraints exist for joint venture components [82][84] Question: European business outlook - The export market for high horsepower engines is growing, particularly in Asia, with a small percentage of overall sales [88][90]

Financial Data and Key Metrics Changes - For the second half of 2025, revenue increased by 33.5% year-over-year to RMB 11.8 billion, or $1.7 billion, with gross profit rising by 58.4% to RMB 2.2 billion, or $317 million, and gross margin at 18.9% [6][7] - Operating profit surged by 993.1% year-over-year to RMB 469.2 million, or $66.7 million, with basic and diluted earnings per share improving by 108.7% to RMB 4.57, or $0.65 [6][7] - For the fiscal year 2025, revenue increased by 38.9% to RMB 34.7 billion, or $3.5 billion, with gross profit up by 44.3% to RMB 4.1 billion, or $578.7 million, and gross margin at 16.5% [7][22] Business Line Data and Key Metrics Changes - Off-road engines unit sales increased by 13% year-over-year, with marine and genset engines and industrial engines each recording unit sales growth of over 34% [8] - Truck and bus engine unit sales rose by 49.2% year-over-year, with heavy-duty truck engine sales increasing by 80.1% [14][22] - Total number of engines sold in FY 2025 increased by 29.4% year-over-year to 461,309 units, with truck and bus engine units rising by 42.8% [21][22] Market Data and Key Metrics Changes - Exports have become an important sales channel, with significant growth in international markets, including Vietnam and Mexico [9] - The company has expanded its international sales and service support offices to strengthen its global reach [9] - The demand for backup generators for data centers has driven rapid growth, with combined sales of high-horsepower engines to data centers exceeding 2,000 units in 2025 [8] Company Strategy and Development Direction - The company aims to enhance engine efficiency and performance, focusing on National VI and Tier 4 emission compliance engines, while also developing new energy products [10][24] - Strategic alliances and joint ventures have produced a 9.4% year-over-year growth in profit, driven by higher sales and profit, particularly from MTU Yuchai [10] - The company is investing in technological capabilities and supply chain resilience, including acquiring a 27.97% equity interest in a fuel injection system company [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future revenue, profits, and cash flow generation, supported by a cash dividend paid in July 2025 [12] - The outlook for 2026 remains uncertain due to reliance on government policies affecting sales, but there is optimism for continued demand in data centers [56] - The company anticipates challenges in providing guidance due to the influence of government policies on sales [56] Other Important Information - R&D expenses increased by 37.3% to RMB 1.4 billion, or $192.3 million, driven by higher experimental costs and personnel expenses [23] - The company is preparing for potential National VII emission standards in the coming years, focusing on new energy systems [58] Q&A Session Summary Question: Higher expenses in the second half and effective tax rate - Management explained that the effective tax rate is higher due to a net write-off of RMB 100 million in tax assets, with a normalized rate of 20-21% expected [33][34] Question: Decrease in other operating income - The reduction was attributed to lower government grants, which were significantly reduced in 2025 compared to 2024 [41][42] Question: Profit growth for the MTU joint venture - The joint venture generated net profits of RMB 211 million, increasing by 22% from 2024, with sales volume and revenue up by over 30% [48] Question: Reasons for improved gross profit margin - The improvement was due to increased unit sales, particularly of high horsepower engines, and leveraging fixed costs [51][54] Question: Outlook for truck and bus industry sales in 2026 - Management expects continued growth in the heavy-duty truck segment, supported by partnerships with vehicle OEMs [72] Question: Backlog for data center business - The backlog remains stable, with no significant increase, and supply constraints are noted for joint ventures [78] Question: European business outlook - The export market accounts for a small percentage of total sales, with growth opportunities primarily in Asia [82]

Core Viewpoint - China Yuchai International Limited reported significant growth in engine sales and financial performance for the second half of 2025 and the full fiscal year 2025, driven by strong demand in the truck and bus segments, alongside strategic expansions in international markets [1][2]. Financial Highlights for 2H 2025 - Total number of engines sold increased by 28.7% to 210,913 units compared to 163,843 units in 2H 2024 [1]. - Basic and diluted earnings per share rose by 108.7% to RMB 4.57 (US$ 0.65) from RMB 2.19 in 2H 2024 [1]. - Profit for the period increased by 77.7% to RMB 275.7 million (US$ 39.2 million) compared to RMB 155.1 million in 2H 2024 [1]. - Operating profit grew by 193.1% to RMB 469.2 million (US$ 66.7 million) from RMB 160.1 million in 2H 2024 [1]. - Revenue increased by 33.5% to RMB 11.8 billion (US$ 1.7 billion) compared to RMB 8.8 billion in 2H 2024 [1]. Financial Highlights for FY 2025 - Total number of engines sold increased by 29.4% to 461,309 units compared to 356,586 units in FY 2024 [2]. - Basic and diluted earnings per share increased by 74.4% to RMB 14.32 (US$ 2.04) from RMB 8.21 in FY 2024 [2]. - Profit for the year increased by 64.8% to RMB 810.5 million (US$ 115.3 million) compared to RMB 491.7 million in FY 2024 [2]. - Operating profit increased by 82.7% to RMB 1.1 billion (US$ 155.2 million) compared to RMB 597.0 million in FY 2024 [2]. - Revenue grew by 28.9% to RMB 24.7 billion (US$ 3.5 billion) compared to RMB 19.1 billion in FY 2024 [2]. Sales Performance - Truck and bus engine unit sales rose by 42.8%, significantly outpacing the market sales growth of 4.5% for 2025 [2]. - Total truck engine unit sales rose by 50.7% YoY, compared to a 5.9% YoY increase in truck unit sales [2]. - Off-road engine unit sales increased by 13.0% YoY, with industrial and marine sales growth exceeding 24% YoY [2]. Research and Development - R&D expenses increased by 48.0% to RMB 874.9 million (US$ 124.5 million) compared to RMB 591.1 million in 2H 2024 [1]. - Total R&D expenditure, including capitalized costs, was RMB 974.2 million (US$ 138.6 million), representing 8.3% of revenue in 2H 2025 [1]. Balance Sheet Highlights as of December 31, 2025 - Short-term and long-term loans and borrowings were RMB 2.0 billion (US$ 287.4 million), down from RMB 2.5 billion at the end of FY 2024 [2]. - Trade and bills payables were RMB 11.1 billion (US$ 1.6 billion), compared to RMB 8.5 billion at the end of FY 2024 [2]. - Cash and bank balances were RMB 7.9 billion (US$ 1.1 billion), up from RMB 6.4 billion at the end of FY 2024 [2]. Strategic Developments - The company expanded its international presence with a strategic agreement in Vietnam and shipped products to Germany and Mexico [2]. - An indirect subsidiary filed for a potential listing on the Hong Kong Stock Exchange in January 2026 [2].

Group 1 - The company has made significant investments in a fuel-agnostic engine platform to align with its Destination Zero strategy and prepare for upcoming EPA regulations [1][2] - The company has launched three new engine platforms simultaneously, which is an unprecedented move in its history, indicating a strong commitment to the diesel engine market [2] - The company believes that diesel engines have a long runway and sees an opportunity to deliver effective technology and gain market share in this space [2]