Full Year 2025 China Yuchai International Ltd Earnings Call

February 24, 2026

Speaker #2: Good day, and thank you for standing by. Welcome to China Yuchai International Ltd. second half 2025 financial results. At this time, all participants are in listen-only mode.

Operator: Good day. Thank you for standing by. Welcome to China Yuchai International Limited Second Half 2025 Financial Results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 and 1 on your telephone. You will hear an automated message advising your hand is raised. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Kevin Theiss. Please go ahead, sir.

Speaker #2: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 1 and 1 on your telephone.

Speaker #2: You will then hear an automated message advising your hand is raised. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Kevin Theiss.

Speaker #2: Please go ahead, sir.

Speaker #3: Thank you for joining us today and welcome to China Yuchai International Ltd conference call and webcast for the 2025 second half and year ended on December 31, 2025.

Kevin Theiss: Thank you for joining us today. Welcome to China Yuchai International Limited conference call and webcast for the 2025 second half and year ended on 31 December 2025. Joining us today are Mr. Weng Ming Hoh and Mr. Choon Sen Loo, President and Chief Financial Officer of CYD, respectively. In addition, we have in attendance Mr. Kelvin Lai, General Manager of Operations of CYD and the Chairman of MTU Yuchai Power Company Limited, MTU Yuchai Power. Before we begin, I will remind all listeners that throughout this call, we may make statements that may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words believe, expect, anticipate, project, targets, optimistic, confident that, continue to, predict, intend, aim, will, or similar expressions are intended to identify forward-looking statements.

Speaker #3: Joining us today are Mr. Wei Ming Ho and Mr. Choon Loo, President and Chief Financial Officer of CYI, respectively. In addition, we have in attendance Mr. Calvin Lai, General Manager of Operations of CYI, and the Chairman of MTU Yuchai Power Company Ltd. MTU Yuchai Power.

Speaker #3: Before we begin, I will remind all listeners that throughout this call, we may make statements that may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker #3: The words "believe," "expect," "anticipate," "project," "target," "optimistic," "confident that," "continue to," "predict," "intend," "aim," "will," or similar expressions are intended to identify forward-looking statements.

Speaker #3: All statements other than statements of historical fact are statements that may be deemed forward-looking statements. These forward-looking statements include but are not limited to statements concerning the company's operations, its financial performance, and condition, and are based on current expectations beliefs and assumptions which are subject to change at any time.

Kevin Theiss: All statements other than statements of historical fact are statements that may be deemed forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the company's operations and its financial performance and condition, and are based on current expectations, beliefs, and assumptions, which are subject to change at any time. The company cautions that these statements, by their nature, involve risk and uncertainties, and actual results may differ materially depending on a variety of important factors, such as government and stock exchange regulations, competition, political, economic, and social conditions around the world and in China, including those discussed in the company's Form 20-F and under the headings Risk Factors, Results of Operations, and Business Overview, and in other reports filed with the Securities and Exchange Commission from time to time.

Speaker #3: The company cautions that these statements by their nature involve risk and uncertainties, and the actual actual results may differ materially depending on a variety of important factors such as government and stock exchange regulations, competition, political, economic, and social conditions around the world and in China, including those discussed in the company's form 20Fs and under the headings risk factors, results of operations, and business overview.

Speaker #3: And in other reports, file with the Securities and Exchange Commission from time to time. All forward-looking statements are applicable only as of the date they are made, and the company specifically disclaims any obligation to maintain, or update, the forward-looking information.

Kevin Theiss: All forward-looking statements are applicable only as of the date they are made. The company specifically disclaims any obligation to maintain or update the forward-looking information, whether of the nature contained in a press release, made today or today's conference call, or otherwise in the future. Mr. Ho will provide a brief overview and summary. Then Mr. Loo will review the financial results for the second half and fiscal year ending 31 December 2025. Thereafter, we will conduct a question and answer session. For the purposes of today's call, the 2025 second half for fiscal year numbers are unaudited, the 2024 second half year are unaudited, and the 2024 fiscal year financial results are audited. Financial results are presented in RMB and USD.

Speaker #3: Whether of the nature contained in a press release made today, or today's conference call, or otherwise in the future, Mr. Ho will provide a brief overview and summary, and then Mr. Loo will review the financial results for the second half and fiscal year ended December 31, 2025.

Speaker #3: Thereafter, we will conduct a question-and-answer session. For the purposes of today's call, the 2025 second half and fiscal year numbers are unaudited. The 2024 second half year are unaudited, and the 2024 fiscal year financial results are audited.

Speaker #3: Financial results are presented in RMB and U.S. dollars. All the financial information presented is reported using the IFRS accounting standards, as issued by the International Accounting Standards Board.

Kevin Theiss: All the financial information presented is reported using the IFRS accounting standards as issued by the International Accounting Standards Board. With that, Mr. Ho, please begin your prepared remarks.

Speaker #3: With that, Mr. Ho, please begin your prepared remarks.

Speaker #4: Thank you, Kevin. We are pleased to report a strong sales and profit growth in the second half and full year of 2025. For the second half of 2025, our revenue in the second half increased by 33.5% year over year.

Weng Ming Hoh: Thank you, Kevin Theiss. We are pleased to report a strong sales and profit growth in second half and full year of 2025. For second half 2025, our revenue in the second half increased by 33.5% year-over-year to RMB 11.8 billion, or $1.7 billion. Our gross profit increased by 58.4% year-over-year to RMB 2.2 billion, or $317 million, and our gross margin rose to 18.9%. Our operating profit increased by 993.1% year-over-year to RMB 469.2 million, or $66.7 million. Basic and diluted earnings per share improved by RMB 108.7 million year-over-year to RMB 4.57, or $0.65.

Speaker #4: Through RMB, $11.8 billion, $1.7 billion. Our gross profit increased by 58.4% year over year. Through RMB, $2.2 billion, $317 million.

Speaker #4: And our gross margin rose to 18.9%. Our operating profit increased by 193.1% year over year, to RMB 469.2 million (US$66.7 million). Basic and diluted earnings per share improved by RMB 108.7 million year over year.

Speaker #4: Through RMB, 4.57 or 65 cents. For fiscal year of 2025, revenue increased by 28.9% to RMB 24.7 billion or US dollars, 3.5 billion. Gross profit increased by 44.3% year over year to 4.1 billion RMB or US dollars, 578.7 million.

Weng Ming Hoh: For fiscal year 2025, revenue increased by 28.9% to RMB 24.7 billion or $3.5 billion. Gross profit increased by 44.3% year-over-year to RMB 4.1 billion or $578.7 billion. Gross margin rose to 16.5%. Operating profit improved by 82.7% to RMB 1.1 billion or $155.2 million. Basic and diluted earnings per share increased by 34.4% to RMB 14.32 or $2.4. Our revenue growth in 2025 second half and year was generated by higher unit sales in nearly every reporting category.

Speaker #4: US dollars. And gross margin rose to 16.5%. Operating profit improved by 87.82.7% to RMB, 1.1 billion US dollars, 155.2 million. Basic and diluted earnings per share increased by 74.4% to RMB, 14.32 or US dollars, 2.04.

Speaker #4: Our revenue growth is 2025 second half and year was generated by higher unit sales in nearly every reporting category. Gross profit and margin were enhanced by the increased unit sales volume, especially for heavy duty and high horsepower engines.

Weng Ming Hoh: Gross profit and margin were enhanced by the increased unit sales volume, especially for heavy duty and high horsepower engines. Our off-road engines unit sales in 2025 increased by 13% year-over-year, with marine and genset engines, and industrial engines, each recording unit sales growth of over 34% year-over-year. The fast growing demand for backup generators to provide reliable electric power for data center operations created rapid growth for our engines. Combined sales of MTU, Yuchai Power, and Yuchai branded HH high horsepower engines to data centers exceeded 2,000 units in 2025, up from 750 units in the prior year. To meet the expected increase in demand for our power generating engines, production capacity expansion is well underway. Exports were an important sales channel as our globalization has been increasing.

Speaker #4: Our off-road engines unit sales in 2025 increased by 13% year over year with marine and genset engines and industrial engines each recording unit sales growth of over 24% year over year.

Speaker #4: The fast-growing demand for backup generators to provide reliable electric power for data center operations created rapid growth for our engines. Combined sales of MTU Yuchai Power and Yuchai-branded high-horsepower engines to data centers exceeded 2,000 units in 2025, up from 750 units in the prior year.

Speaker #4: To meet the expected increase in demand for our power-generating engines, production capacity expansion is well underway. Exports were an important sales channel as our globalization has been increasing.

Speaker #4: Our agreement in Vietnam includes Yuchai support for construction of our partners' production facilities, which complements our Thailand production operations. Buses powered by Yuchai natural gas engines were delivered in Mexico, bringing the total Yuchai engine count to 2,400 units, powering buses in Nuevo Leon region of Mexico.

Weng Ming Hoh: Our agreement in Vietnam includes Yuchai support for construction of our partner's production facility, which complements our pilot production operations. Buses powered by Yuchai natural gas engines were delivered in Mexico, bringing the total Yuchai engine count to 2,400 units, powering buses in the Nuevo León region of Mexico. Our foundry began batch delivery of advanced casting to Germany, demonstrating the acceptance of our casting product quality by the customer. We are expanding our international sales and service support offices, as we believe potential new international partnerships will strengthen our global reach. Our strategy remains to sell into multiple end markets with a growing and diverse product portfolio. R&D expenses increased by 37.3% to RMB 1.4 billion, or $192.3 million.

Speaker #4: Our foundry began batch delivery of advanced castings to Germany, demonstrating the acceptance of our casting product quality by the customer. We are expanding our international sales and service support offices, as we believe potential new international partnerships will strengthen our global reach.

Speaker #4: Our strategy remains to sell into multiple end markets, with a growing and diverse product portfolio. R&D expenses increased by 37.3% to RMB 1.4 billion or US dollars, 192.3 million.

Speaker #4: In the fiscal year of 2025, Yuchai continued to enhance engine efficiency and performance of its national six and tier four emission compliant engines, and power generation engines.

Weng Ming Hoh: In the fiscal year of 2025, Yuchai continues to enhance engine efficiency and performance of its National VI and Tier 4 emission compliant engines and power generation engines. Progress continue by developing new energy products, including alternative fuel engines, using hydrogen, methanol, and ammonia combustion technologies. Total R&D expenditure, including capitalized costs, was RMB 1.5 billion, or $270.1 million. Our strategic alliances and joint ventures produced a 9.4% year-over-year growth in profit in 2025, propelled by a higher sales and profit, mainly by MTU Yuchai. Recently, we took proactive steps to strengthen our technological capabilities and supply chain resilience by improving access to key components and advancing our participation in critical technology development.

Speaker #4: Progress continued on developing new energy products, including alternative fuel engines, using hydrogen methanol and ammonia combustion technologies. Total R&D expenditure including capitalized costs was RMB 1.5 billion or US dollars, 217.1 million.

Speaker #4: Our strategic alliances and joint ventures produced a 9.4% year over year growth in profit in 2025. Propelled by a higher sales and profit mainly by MTU Yuchai.

Speaker #4: Recently, we took proactive steps to strengthen our technological capabilities and supply chain resilience by improving access to key components and advancing our participation in critical technology development.

Weng Ming Hoh: We have acquired a 27.97% equity interest in Nanyue Diankong (Hengyang) Industrial Technology Company Limited, which is a national high-tech industrial leader specializing in fuel injection system, including common rail system, unit pump, and mechanical pumps. In addition, we became a limited partner in the Guangxi Yuchai Double Growth Fund, a private equity fund focused on investing in emerging and in innovative technologies. Our indirect subsidiary, Guangxi Yuchai Marine and Genset Power Co. Ltd., filed an application for listing with the Hong Kong Stock Exchange in 26 January. The potential listing is subject to review and approval by the Hong Kong Stock Exchange and relevant regulatory authorities, and market conditions. We believe this action will provide more resources to enhance their operations growth.

Speaker #4: We have acquired a 27.97% equity interest in Nanyue Tiankong Hengyang Industrial Technology Company which is a national high-tech industrial leader specializing in injection systems, including common rail systems, uniform and mechanical pumps.

Speaker #4: In addition, we became a limited partner in the Guangxi Yuchai double growth fund, a private equity fund focused on investing in emerging and innovative technologies.

Speaker #4: Our indirect subsidiary Guangxi Yuchai Marine and Genset Power Company filed an application for listing with the Hong Kong Stock Exchange in January 2026. The potential listing is subject to review and approval by the Hong Kong Stock Exchange and relevant regulatory authorities and market conditions.

Speaker #4: We believe this action will provide more resources to enhance that operations growth. Highlighting the company's confidence in future revenue, profits, and cash flow generation, we paid a cash dividend of 0.53%, 0.53 cents per ordinary share in July 2025 to show our commitment to building shareholder value.

Weng Ming Hoh: Highlighting the company's confidence in future revenue, profits, and cash flow generation, we paid a cash dividend of $0.53 per ordinary share in July 2025, to show our commitment to building shareholder value. Cash and bank balances were over RMB 7.9 billion, or $1.1 billion, as at 31 December 2025. With that, I'd now like to turn the call over to Mr. Chenxing Lu, our Chief Financial Officer, who will provide more details on the financial results. Chenxing.

Speaker #4: Cash and bank balances were over RMB 7.9 billion, or US dollars 1.1 billion, as at December 31st, 2025. With that, I now would like to turn the call over to Mr. Choon Loo, our Chief Financial Officer, who will provide more details on the financial results.

Speaker #4: Chun Sing.

Speaker #3: Thank you, Wing Ming. Now, let me review our unpredicted six months and full year results entered December 31st, 2025. For the six months, our revenue increased by 33.5% to RMB 11.8 billion or US dollars, 1.7 billion, compared with RMB 8.8 billion in second half 2024.

Choon Sen Loo: Thank you, Weimin. Now, let me review our unaudited six months and full year results ended 31 December 2025.

Jun Sheng: For the six months, our revenue increased by 33.5% to RMB 11.8 billion, or $1.7 billion, compared with RMB 8.8 billion in second half 2024. Total number of engines sold increased by 28.7% to 210,913 units, compared with 163,843 units in second half 2024. The increase in the total number of engines sold in the second half 2025 was primarily driven by a 49.2% year-over-year rise in truck and bus engine unit sales, which significantly outpaced the 13% year-over-year growth in market shares of truck and bus vehicles, excluding gasoline and electric power vehicles, as reported by the China Association of Automobile Manufacturers, CAAM.

Speaker #3: Total number of engines sold increased by 28.7% to 210,913 units compared with 163,843 units in second half 2024. The increase in the total number of engines sold in second half 2025 was primarily driven by a 49.2% year-over-year rise in truck and bus engine unit sales.

Speaker #3: Which significantly outpaced the 13% year-over-year growth in market shares of truck and bus vehicles excluding gasoline and electric power vehicles as reported by the China Association of Automobile Manufacturers (CAAM).

Speaker #3: Truck engine unit sales in second half 2025 rose by 59.4%, led by a 1.61% year-over-year gain in heavy-duty truck engines. Off-road engine unit sales increased by 7.5% year-over-year, led by strong growth of more than 22% in both industrial and marine and genset unit sales offsetting lower agricultural engine unit sales.

Jun Sheng: Truck engine unit sales in second half 2025 rose by 59.4%, led by a 106.1% year-over-year gain in heavy-duty truck engines. Off-road engine unit sales increased by 7.5% year-over-year, led by strong growth of more than 22% in both industrial and marine genset unit sales, offsetting lower agricultural engine unit sales. Gross profit increased by 50.4% to RMB 2.2 billion, or $317 million, up from RMB 1.4 billion in second half 2024. Gross margin increased to 18.9% in second half 2025, compared with 15.9% in second half 2024.

Speaker #3: Gross profit increased by 58.4% to RMB 2.2 billion, or $317 million, up from RMB 1.4 billion in the second half of 2024. Gross margin increased to 18.9% in the second half of 2025, compared with 15.9% in the second half of 2024.

Speaker #3: The increase was mainly due to higher unit sales volume change of sales mix with higher unit sales of heavy-duty and high-horsepower engines and continuing cost reduction initiatives.

Jun Sheng: The increase was mainly due to higher unit sales volume, a change of sales mix with higher unit sales of heavy-duty and high horsepower engines, and continuing cost reduction initiatives. Other operating income decreased by 44.1% to RMB 224.5 million, or $31.9 million, compared with RMB 401.5 million in second half 2024. The decrease was mainly due to lower government grants. Research and development expenses increased by 48% to RMB 884.9 million, or $124.5 million, compared with RMB 581.1 million in second half 2024. Mainly driven by higher experimental costs, increased personnel expenses, higher mode costs, and impairments related to fuel cell development.

Speaker #3: Other operating income decreased by 44.1% to RMB 224.5 million, or $31.9 million, compared with RMB 401.5 million in the second half of 2024. The decrease was mainly due to lower government grants.

Speaker #3: Research and development expenses increased by 48% to RMB 824.9 million, or $124.5 million, compared with RMB 591.1 million in the second half of 2024, mainly driven by higher experimental costs, increased percentage expenses, higher model costs, and impairments related to fuel cell development.

Speaker #3: Total R&D expenditure, including capitalized costs, was RMB 974.2 million, or $138.6 million, representing 8.3% of revenue in the second half of 2025. As compared with RMB 726 million, or 8.2% of revenue in the second half of 2024, selling, general, and administrative (SG&A) expenses increased by 4.9% to RMB 1.1 billion, or $157.7 million, from RMB 1 billion in the second half of 2024.

Jun Sheng: Total IG expenditure, including capitalized costs, were RMB 984.2 billion, or $188.6 million, representing 8.3% of the revenue in second half 2025, as compared with RMB 726 million or 8.2% of the revenue in second half 2024. Selling, general, and administrative, SG&A, expenses increased by 4.9% to RMB 1.1 billion, or $157.7 million, from RMB 1 billion in second half 2024. This increase was mainly due to increased personnel expenses and higher consultancy fees, partially offset by lower accounts receivable provisions compared with the same period last year. SG&A expenses represented 9.4% of the revenue in second half 2025, compared with 12% for second half 2024.

Speaker #3: This increase was mainly due to increased percentage expenses and higher consultancy fees, partially offset by lower accounts receivable provisions compared with the same period last year.

Speaker #3: SG&A expenses represented 9.4% of the revenue in second half 2025 compared with 12% for second half 2024. Operating profit rose by 193.1% to RMB 469.2 million or US dollars, 66.7 million, from RMB 160.1 million in second half 2024.

Jun Sheng: Operating profit rose by 103.1% to RMB 469.2 million, or $66.7 million, from RMB 160.1 million in second half 2024. Operating margin was 4%, compared with 1.8% in second half 2024. The increase was generated by higher unit sales volume, a change of sales mix with higher unit sales of heavy-duty and high horsepower engines, and lower SG&A expense as percentage of the total revenue. Finance costs decreased by 20.2% to RMB 39.6 million, or $4.2 million, from RMB 37.1 million in second half 2024, primarily due to lower bank term loans and reduced bills discounting.

Speaker #3: Operating margin was 4% compared with 1.8% in second half 2024. The increase was generated by higher unit sales volume, a change of sales mix with higher unit sales of heavy-duty and high-horsepower engines, and lower SG&A expense percentage of the total revenue.

Speaker #3: Finance costs decreased by 20.2% to RMB 29.6 million, or $4.2 million, from RMB 37.1 million in the second half of 2024, primarily due to lower bank term loans and reduced bills discounting.

Speaker #3: The share of financial results of the associates and joint ventures decreased by 15.1% to RMB 49.7 million, or US$7.1 million, compared with RMB 58.1 million in the second half of 2024.

Jun Sheng: The share of financial results of the associates and joint ventures decreased by 15.1% to RMB 49.7 million, or $7.1 million, compared with RMB 5 million in second half 2024. The decrease was mainly due to reduced profits at YEC Engine Co Limited. Income tax expense was RMB 213.5 million, or $30.4 million, compared with RMB 26.4 million in second half 2024. The tax increase was due to higher profits in second half 2025 as compared with second half 2024 and higher deferred tax expenses.

Speaker #3: The decrease was mainly due to reduced profits at Y&C Engine Co., Ltd. Income tax expense was RMB 213.5 million or US dollars, 30.4 million, compared with RMB 26.4 million in second half 2024.

Speaker #3: The tax increase was due to higher profits in the second half of 2025 as compared with the second half of 2024, and higher deferred tax expenses. Net profits attributable to equity holders of the company increased by 107.4% to RMB 171.6 million, or $24.4 million, compared with RMB 82.7 million in the second half of 2024.

Jun Sheng: Net profits attributable to the equity holders of the company increased by 107.4% to RMB 101.6 million, or $24.4 million, compared with RMB 82.7 million in second half 2024. Basic and diluted earnings per share was RMB 4.57 or $0.65, compared with RMB 2.19 in second half 2024. Basic and diluted earnings per share for second half 2025 and second half 2024 were based on the weighted average of 37,515,322 shares and 37,609,694 shares, respectively. Now we'll review the unaudited financial results for the fiscal year ended 31 December 2025.

Speaker #3: Basic and diluted earnings per share was RMB 4.57 or USD 65 cents, compared with RMB 2.19 in second half 2024. Basic and diluted earnings per share for second half 2025 and second half 2024 were based on the weighted average of 37,518,322 shares and 37,809,894 shares respectively.

Speaker #3: Now we'll review the unaudited financial results for the fiscal year ended December 31st, 2025. Revenue increased by 28.9% to RMB 24.7 billion or US dollars, 3.5 billion, compared with RMB 19.1 billion in FY 2024.

Jun Sheng: Revenue increased by 20.9% to RMB 24.7 billion or $3.5 billion, compared with RMB 19.1 billion in FY 2024. The total number of engines sold in FY 2025 increased by 29.4% year-over-year to 461,309 units, compared with 356,586 units in FY 2024. Truck and bus engine units rose by 42.8% compared with CAAM data for vehicle market sales growth, excluding gasoline and electric powered vehicles of 4.5% for 2025. Total truck engine unit sales rose by 50.7% year-over-year, compared with a 5.9% year-over-year increase from CAAM data for truck unit sales.

Speaker #3: The total number of engines sold in FY 2025 increased by 29.4% year over year to 461,309 units, compared with 356,586 units in FY 2024.

Speaker #3: Truck and bus engine units rose by 42.8% compared with CAM data for weighted market sales growth, excluding gasoline and electric power vehicles, of 4.5% for 2025.

Speaker #3: Total truck engine unit sales rose by 50.7% year over year compared with a 5.9% year over year increase from CAM data for truck unit sales.

Speaker #3: Heavy-duty truck engine sales increased by 80.1% year over year in 2025, followed by a 34.2% year-over-year increase in medium-duty truck engines and a 67.6% year-over-year improvement in light-duty truck engine sales.

Jun Sheng: Heavy-duty truck engine sales increased by 80.1% year-over-year in 2025, followed by a 34.2% year-over-year increase in medium-duty truck engines, and a 67.6% year-over-year improvement in light-duty truck engine sales. Off-road engine unit sales increased by 13% year-over-year, with both industrial and marine and genset unit sales growth of more than 24% year-over-year, offsetting lower agricultural engine unit sales. Gross profit increased by 44.3% to RMB 4.1 billion, or $578.7 million, from RMB 2.8 billion in FY 2024. Gross margin increased to 16.5%, compared with 14.7% in FY 2024.

Speaker #3: Off-road engine unit sales increased by 13% year over year, with both industrial and marine engine set unit sales growth of more than 24% year over year, offsetting lower agriculture engine unit sales.

Speaker #3: Gross profit increased by 44.3% to RMB 4.1 billion or US dollars, 578.7 million, from RMB 2.8 billion in FY 2024. Gross margin increased to 16.5% compared with 14.7% in FY 2024.

Speaker #3: The increase was mainly due to higher unit sales volume, a change of sales mix with higher unit sales of heavy-duty and high-horsepower engines, and continuing cost reduction initiatives.

Jun Sheng: The increase was mainly due to higher unit sales volume, a change of sales mix with higher unit sales of heavy-duty and high horsepower engines, and continuing cost reduction initiatives. Other operating income decreased by 22.5% to RMB 445.9 million or $63.4 million, compared with RMB 575.7 million in FY 2024. This was primarily due to lower bank interest income and reduced government grants. R&D expenses increased by 37.3% to RMB 1.4 billion, or $192.3 million, compared with RMB 984.7 million in FY 2024. Primarily driven by higher experimental costs, increased personnel expenses, and impairments related to fuel cell developments.

Speaker #3: Other operating income decreased by 22.5% to RMB 444.59 million, or $63.4 million, compared with RMB 575.7 million in FY 2024. This was primarily due to lower bank interest income and reduced government grants.

Speaker #3: R&D expenses increased by 37.3% to RMB 1.4 billion or US dollars, 192.3 million, compared with RMB 984.7 million in FY 2024, primarily driven by higher experimental costs increased personal expenses and impairments related to fuel cell developments.

Speaker #3: Each side had continued with its initiatives to enhance the engine efficiency and performance of its National VI and Tier 4 emission standard compliant engines, as well as power generation engines for data centers and marine applications.

Jun Sheng: Yuchai had continued with its initiatives to enhance the engine efficiency and performance of its National VI and Tier 4 emission standard compliant engines and power generation engines for data centers and marine applications, while also advancing its new energy solutions. Total R&D expenditure, including capitalized costs, was RMB 1.5 billion, or $217.1 million, representing 6.2% of the revenue in FY 2025, compared with RMB 1.2 billion or 6.2% of the revenue in FY 2024.

Speaker #3: While also advancing its new energy solutions, total R&D expenditure, including capitalized costs, was R&D 1.5 billion or US dollars, 217.1 million, representing 6.2% of the revenue in FY 2025, compared with R&D 1.2 billion or 6.2% of the revenue in FY 2024.

Speaker #3: SG&A expenses increased by 14.3% to RMB 2.1 billion, or US dollars 294.7 million, representing 8.4% of the revenue in FY 2025. Compared with RMB 1.8 billion, or 9.5% of the revenue in FY 2024, this was mainly due to higher personnel expenses and consultancy fees, as well as increased after-sales and service expenses that partially offset lower accounts receivable provisions.

Jun Sheng: SG&A expenses increased by 14.3% to RMB 2.1 billion, or $294.7 million, representing 8.4 million of the revenue in FY 2025, compared with RMB 1.8 billion or 9.5% of the revenue in FY 2024. This was mainly due to higher personnel expenses and consultancy fees, as well as increased good sales and service expenses that partially offset lower accounts receivable provisions. Operating profit increased by 82.7% to RMB 1.1 billion, or $155.2 million, compared with RMB 597 million in FY 2024. The operating margin was 4.4%, up from 3.1% in FY 2024.

Speaker #3: Operating profit increased by 82.7% to R&B 1.1 billion or US dollars, 155.2 million, compared with R&B 597 million in FY 2024. The operating margin was 4.4% up from 3.1% in FY 2024.

Speaker #3: Finance costs decreased by 20.8% to RMB 61.8 million, or US$8.8 million, from RMB 78 million in FY 2024, primarily due to lower bank loans.

Jun Sheng: Finance cost decreased by 20.8% to RMB 61.8 million, or $8.8 million, from RMB 78 million in FY 2024, primarily due to lower bank term loans. The share of financial results of the associates and joint ventures increased by 9.4% to income of RMB 111.1 million, or $15.8 million, compared with income of RMB 101.5 million in FY 2024. The improvement was mainly driven by higher profits of 18.3% at MTU Yuchai Power Company Limited, and increased profits at Guangxi Program Yuchai Automotive Technology Company, partially offset lower profits at YEC Engine Co Limited.

Speaker #3: The share of financial results of the associates and joint ventures increased by 9.4% to income of RMB 111.1 million, or US$15.8 million, compared with income of RMB 101.5 million in FY 2024.

Speaker #3: The improvement was mainly driven by higher profits of 18.3% at MTU Yuchai Power Company Limited and increased profits at Guangxi Program Yuchai Automotive Technology Company, partially offset by lower profits at Y&C Engine Co., Ltd. Income tax expense increased by 106% to RMB 329.7 million, or $46.9 million, compared with RMB 128.8 million in FY 2024.

Jun Sheng: Income tax expense increased by 166% to RMB 329.7 million, or $46.9 million, compared with RMB 128.8 million in FY 2024. The tax increase was driven by higher profit in FY 2025 as compared with 2024, and higher deferred tax expenses. Net profit attributable to the company's shareholders increased by 66.3% to RMB 577.4 million, or $76.5 million, compared with RMB 323.1 million in FY 2024.

Speaker #3: The tax increase was driven by higher profits in FY 2025, as compared with 2024, and higher different tax expenses. Net profit attributable to the company's shareholders increased by 66.3% to RMB 537.4 million, or US$76.5 million, compared with RMB 323.1 million in FY 2024.

Speaker #3: Basic and direct earnings per share rose by 74.4% to R&B 14.32 or US dollars, 2 US dollars, and 4 cents, compared with R&B 8.21 in FY 2024.

Jun Sheng: Basic and diluted earnings per share rose by 34.4% to RMB 14.32 or $2.04, compared with RMB 8.21 in FY 2024. Basic and diluted earnings per share for FY 2025 and FY 2024 were based on the weighted average of 37,515,322 shares and 39,335,763 shares, respectively. Now we'll go through some balance sheet highlights as of 31 December 2025. Touch of bank balances were RMB 7.9 billion, or $1.1 billion, compared with RMB 6.4 billion at the end of financial year 2024.

Speaker #3: Basic and direct earnings per share for FY 2025 and FY 2024 were based on the weighted average of 37,518,322 shares and 39,335,763 shares, respectively.

Speaker #3: Now we'll go through some bench highlights as of December 31st, 2025. Tax and bank balances were R&B 7.9 billion or US dollars, 1.1 billion, compared with R&B 6.4 billion at the end of financial year 2024.

Speaker #3: Trade and bills receivables were RMB 10.4 billion, or $1.5 billion, compared with RMB 8.8 billion at the end of FY 2024. Inventories were RMB 5.6 billion, or $791.8 million, compared with RMB 4.7 billion at the end of FY 2024.

Jun Sheng: Trade and bills receivables were RMB 10.4 billion, or $1.5 billion, compared with RMB, what? 8.8 billion at the end of FY 2024. Inventories were RMB 5.6 billion, or $791.8 million, compared with RMB 4.7 billion at the end of FY 2024. Trade and bills payables were RMB 11.1 billion, or $1.6 billion, compared with RMB 8.5 billion at the end of FY 2024. Short-term and long-term loans and borrowings were RMB 2 billion or $287.4 million, compared with RMB 2.5 billion at the end of financial year 2024. I will now turn the call over to Kevin for a comment for Q&A session.

Speaker #3: Treat and bills payables were R&B 11.1 billion or US dollars, 1.6 billion, compared with R&B 8.5 billion at the end of FY 2024. Short-term and long-term loans and borrowings were R&B 2 billion or US dollars, 287.4 million, compared with R&B 2.5 billion at the end of financial year 2024.

Speaker #3: I will now turn the talk over to Kevin for a comment for the Q&A section.

Speaker #1: Okay, Mr. Liu. Please note some officers of China Yuchai are remotely calling into the conference call. This may result in a slight delay in providing answers to some questions.

Kevin Theiss: Thank you, Mr. Lu. Please note, some officers of China Yuchai are remotely calling into the conference call. This may result in a slight delay in providing answers to some questions. We apologize for any inconvenience and thank you for your patience. If you would like to ask a question in Chinese, please kindly translate your own question to English before turning to the management for answers. Before we start the Q&A, we would also like to announce that management will be attending the forthcoming Jefferies Conference on 19 March, the HSBC Conference on 14 April to 16 April, Bank of America Merrill Lynch Conference in Shenzhen on 13 May, JP Morgan Conference on 20 May to 22 May, and the UBS Conference in Hong Kong on 26 May to 29 May.

Speaker #1: We apologize for any inconvenience, and thank you for your patience. If you would like to ask a question in Chinese, please kindly translate your own question to English before turning to the management for answers.

Speaker #1: And before we start the Q&A, we would also like to announce that management will be attending the forthcoming Jeffries Conference on March 19th, the HSBC Conference on April 14th to the 16th, Bank of America Merrill Lynch Conference in the Shenzhen on May 13th, JPMorgan Conference on May 20th to 22nd, and the UBS Conference in Hong Kong on May 26th to 29th.

Speaker #1: If you are interested in a one-on-one or a small group meeting, please contact the salespeople at these banks. Given the tight meeting schedule and travel plans, we will not be able to accept meeting requests outside the conference venues.

Kevin Theiss: If you are interested in a one-on-one or a small group meeting, please contact the salespeople at these banks. Given the tight meeting schedule and travel plans, we will not be able to accept meeting requests outside the conference venues. Now, operator, we are ready for questions.

Speaker #1: No operator, we are ready for questions.

Speaker #2: Thank you. We will now begin the question-and-answer session. As a reminder to ask questions, please press star one and one on your telephone and wait for your name to be announced.

Operator: Thank you. We will now begin the question and answer session. As a reminder to ask question, please press star one and one on your telephone and wait for your name to be announced. To cancel a request, please press star one and one again. Question, please press star one and one. If you'd like to ask question, please press star one and one.

Speaker #2: To cancel a request, please press star one and one again. Question, please press star one and one. And if you'd like to ask questions, please press star one and one.

Speaker #2: Okay, operator, I've seen a question online. Okay, so I'll read the question. The question is: Thanks for the presentation, and congrats on the strong results year over year.

Jun Sheng: Okay, because I've seen the questions online. I'll read out the questions from Weiling Ben. The question is that, "Thanks for the information and congrats on the strong results by year-over-year. Can you potentially share more on much higher expenses in second half, where effective tax rate is about 44%?" I'm Jun Sheng, I'm CFO of CYD, I will take these questions. I think this question, the tax expense, we should look at the full year, right? From a full year basis, there's a 7% to 8% higher due to the deferred tax. On year-over-year basis, we wrote off about a net basis of RMB 100 million.

Speaker #2: Can you potentially share more on March higher expenses in second half where effective tax rate is about 44%? Okay. I'm Jun Seng, CFO of CY.

Speaker #2: So I will take these questions. So I think these questions, the tax expense we should look at the full year, right? So from a full-year basis, there's a 7% to 8% higher due to the different taxes.

Speaker #2: So on year-on-year basis, we wrote off about a net basis of 100 million. So that is actually non-cash item. That is also due to the penality of accounting that we look at the future profits for all the entities and eventually then we need to impair those different tax assets that should be shown to be assisted.

Jun Sheng: That is actually non-cash item. You know, that is also due to the clarity of accounting that, you know, we look at the future profits for all entities, and eventually then we need to impair those different types of assets that, you know, should be, should only be assets. The company has started to write off those different types of asset, reduce it to the level to sustain for the future profit. That's also part of the accounting requirements that we have done that. Yeah. If you exclude that, you know, you come down to about 20 to 21% effective tax rate on a year-on-year basis.

Speaker #2: So the company has started to write off those different tax assets, reducing to the level to sustain for the future profit. That's also part of the accounting requirements that we have done that.

Speaker #2: Yeah. So if you exclude that, we will come down to about a 20% to 21% effective tax rate on a year-on-year basis. So the changes will probably be only about 1% to 2% if you look at 2025 and 2024.

Jun Sheng: The changes is probably only about 2%, if you look at 2025 and 2024. Okay, I hope that answer your questions, Wei Lin.

Speaker #2: Okay. I hope that answers your questions. Thank you. We do have questions from the phone line. The first question comes from Weishen of UBS.

Operator: Thank you. We do have questions from the phone line. The first question comes from Wei Shen of UBS. Please go ahead.

Speaker #2: Please go ahead.

Wei Shen: Good morning and good evening. Thank you for taking my question. My question is about the other operating income. I found that in 2024, it decreased a lot. I'm wondering what's the reasons and what's the outlook in 2026? Thank you.

Speaker #3: Thank you for a good morning and good evening. Thank you for taking my question. My question is about the other operating income. I found that in 2024, it decreased a lot.

Speaker #3: And I'm wondering what's the reasons and what's the outlook in 2026. Thank you.

Jun Sheng: Okay, I'm Jun Sheng here. Your question is on the Wei Shen. The question is on the operating, other operating income, right? I just want to confirm your question.

Speaker #2: Okay. I'm Jun Seng here. So your question is on the Weishen. Your question is on the operating outlook income, right? I just want to confirm your question.

Jun Sheng: Okay, I'm Jun Sheng here. Your question is on the Wei Shen. The question is on the operating, other operating income, right? I just want to confirm your question.

Wei Shen: Yes.

Speaker #3: Yes.

Jun Sheng: Yes. Okay.

Speaker #2: Yes, okay. So that reduction is mainly due to the lower government grants. In 2025, probably a lot of people on the call may know that there has been quite a tightening of the incentive policy issued by the Chinese government.

Wei Shen: Yes.

Jun Sheng: That, the reduction is mainly due to the lower government grants. In 2025, probably, you know, a lot of people on the call may know that they are quite tighten up the incentive policy issued by the Chinese government. That has reduced substantially. It's actually half of the government grant that we have received in 2024, you know, in 2025, compared to 2024. If your question, next question is whether that will continue in this trend, right? That one, again, you know, we won't project that, you know, what will be the incentive from government.

Speaker #2: So that has reduced substantially. It's actually half of the government grant that we have received in 2024. In 2025 compared to 2024. So if your question, next question is that whether that would continue in this trend, right?

Speaker #2: That one again, we won't project that what will be the incentive from government. But for now, I would think that the trend probably will remain as 2025.

Jun Sheng: For now, you know, I would think that the trend is probably will remain as, 2025.

Speaker #3: Okay. Thank you. My next question is about the share of the joint venture. Had profit in 2025 because we only have the combined results?

Wei Shen: Okay, thank you. My next question is about the share of the joint venture kind of profit in 2025, because we only have the combined results, we don't have the details. Do you have the numbers for the MTU joint venture? What's the profit growth for the joint venture? Thank you.

Speaker #3: We don't have the details. Can do you have the numbers for the NTU joint venture? What's the profit growth for the joint venture? Thank you.

Operator: Sorry.

Speaker #2: Sorry.

Speaker #4: Oh, yeah. You go ahead. Yeah.

Kelvin Lai: Oh, yeah, you go ahead, yeah.

Speaker #2: Okay. Well, we let Kevin answer that he's the chairman of MTU. He can tell you all about it.

Jun Sheng: Okay. Well, we let Kelvin Lai answer that. He's the chairman of MTU. He can tell you all about it.

Kelvin Lai: Okay. Thank you. Thank you for the question. The joint venture last year, they generate the net profits, about 211 million RMB. They're increasing by 22% from the year 2024. The sales volume and also the revenue is much higher, about 30% plus increase. The reason why the profit not as good as the volume sales or the revenue generated, because of the product mix has been changed, and we sold less the 20-cylinder engine, and the profit and also the revenue it's a little bit lower than the other version, yeah.

Speaker #4: Okay. Yeah. Thank you, for the question. The joint venture last year, and then they generate the net profits about 211 million. RMB. So the increasing by 22% and then from the year 2024.

Speaker #4: But the sales volume and also the revenue is much higher, about 30% plus. Increase the reason why the profit not as good as the volume sales or the revenue generated because of the product mix has been changed.

Speaker #4: And we saw less of the 2020 cylinder engine. And the profit and also the revenue is a little bit lower than the other version. Yeah.

Speaker #3: Okay. Got it. Thank you.

Wei Shen: Okay. Got it. Thank you.

Speaker #2: Thank you for the questions. One moment for the next question. Our next questions, we have the line from Fiona Lim from Bank of America.

Operator: Thank you for the questions. One moment for the next question. Our next questions, we have the line from Fiona Lim from Bank of America. Please go ahead.

Speaker #2: Please go ahead.

Fiona Lim: Hi, good morning and good evening. This is Fiona from Bank of America. I also have two questions for the management team. The first one is that in the second half, in 2025, we see that the company's gross profit margin improved quite a lot year-over-year. Could you please elaborate more about the reasons behind? Is this because we have more delivery to the power generation clients so that we have a better product mix and hence the higher gross margin?

Speaker #5: Hi. Good morning and good evening. This is Fiona from Bank of America. So I also have two questions for the management team. The first one is that in the second half in 2025, we see that the companies' gross profit margin improved quite a lot year over year.

Speaker #5: So could you please elaborate more about the reasons behind? And is it because we have more delivery to the power generation clients so that we have a better product mix and hence the higher gross margin?

Jun Sheng: Okay.

Fiona Lim: That's the first question. Yeah.

Speaker #5: That's the first question. Yeah.

Fiona Lim: That's the first question. Yeah.

Jun Sheng: Okay, let me answer that question. Actually, if you look at the unit sales that we have disclosed in the announcement, the unit sales actually gone up by about 30%. That's one of the major reasons why the profits improved, is due to the increase in volume. Two, also because of a high horsepower engines we sold more than we did last year. I mean, again, statistically more. If you look at our numbers, again, in the announcement, gone up from 750 to 2,000. Those are two major contributions, contributors to the improved performance.

Speaker #2: Okay. Let me answer that question. Actually, if you look at the unit sales that we have disclosed in the announcement, the unit sales have actually gone up by about 30%.

Speaker #2: So that's one of the major reasons why the profits improved—due to the increase in volume. And two, also because of a high horsepower engine, we saw more than we did last year.

Speaker #2: I mean, again, statistically more. If you look at our numbers, again, in the announcement, gone up from 750 to 2,000. So those are two major contributions contributors to the improved performance.

Speaker #2: Of course, with a higher volume that we have, higher unit sales, that will kind of leverage the fixed cost, and that contributes to the better gross margin too.

Jun Sheng: Of course, with a higher volume that we have, higher unit sales, that will kind of leverage the fixed cost of that contributes to the better gross margin too.

Fiona Lim: Okay. I have a follow-up question. Given the better product mix in 2025, what's our guidance for 2026?

Speaker #5: Okay. So I have a follow-up question. So given the better product mix in 2025, so what's our guidance for 2026?

Fiona Lim: Okay. I have a follow-up question. Given the better product mix in 2025, what's our guidance for 2026?

Weng Ming Hoh: Well, it's gonna be quite challenging, difficult to provide good guidance in China. You know, in China, the sales, a lot of it is due to government policies, driven by government policies, right? We haven't seen much yet. The last year, one of the biggest reasons for the increase in revenue or unit sales is because of the government policy, the replacement policy, Qiu Huan Jing. That one has actually drive growth quite a fair bit of our vehicle sales, and also quite a bit of our non-vehicle sales as well, volume. Whether or not the government is going to continue with that and how strongly they're gonna push that next year is yet to be seen. That will also determine the impact on the overall unit sales growth plan.

Speaker #2: Well, it's going to be quite challenging, difficult to provide a good guidance in China. In China, the sales, a lot of it is due to government policies driven by government policies, right?

Speaker #2: So we haven't seen much yet. Last year, one of the biggest reasons for the increase in revenue or unit sales is because of the government policy.

Speaker #2: The replacement policy, Q1C. So that one has actually drived growth quite a fair bit of our vehicle sales and also quite a bit of our non-vehicle sales as well.

Speaker #2: Volume. So whether or not the government is going to continue with that and how strongly they're going to push that next year, it's yet to be seen.

Speaker #2: And that will also determine the impact on the overall unit sales growth. But however, the good there is a what's called bright spot. We see a lot of big demand in the data centers last year.

Weng Ming Hoh: However, there is a what you call bright spot. We see a lot of big demand in the data centers last year, and that has maintained, and we expect it to improve this year, but it's hard to give you a percentage of the growth. I think we expect that to improve by double digits this year for the data centers. Overall, I think this year's non data center sales is going to be more or less the same if the government continues with the, with the what you call policies from last year.

Speaker #2: And that has maintained, and we expect that to improve this year. But it's hard to give you a percentage of the growth. So I think we expect that to improve by double digit this year for the data centers.

Speaker #2: So overall, I think this year's non-data center sales is going to be more or less the same if the government continues with the what's called policies.

Speaker #2: Growth last year.

Fiona Lim: Oh, thank you. My second question is about our R&D expenses. In 2025, we see that the R&D expenses increased over 30%. Looking at 2026, what do you expect R&D expenses growth rate, and what's our key R&D focuses looking at 2026 and 2027?

Speaker #5: Oh, thank you. So my second question is about our R&D expenses. So in 2025, we see that the R&D expenses are increased over 30%.

Speaker #5: So looking at 2026, what do you expect R&D expenses growth rate? And what's our key R&D focuses looking at 2026 and 2027?

Speaker #2: Okay. R&D expenses for those growth by is around about 5% of revenue, right? So it goes tied up. That's two answers I would say tied to revenue.

Weng Ming Hoh: Okay. Our R&D expenses for this growth by, it's around about 5% of our revenue, right? It goes tied up, as I said, tied to revenue. The other one that we should talk about is that the what type of research we're working on. There are a few things we're working on. One of them is, of course, the new energy side of things. We are still developing and continue to develop on the new energy side, particularly in the range extender EV and try to get our system, which is already commercialized, to be stacked into or developed into our customers' vehicles.

Speaker #2: The other one that we should talk about is that what type of what's called research available. There are a few things that we're working on.

Speaker #2: One of them is, of course, the new energy side of things. We are still developing and continue to develop on the new energy side.

Speaker #2: Particularly in the range extender, EVs, and try to get our system, which is already commercialized to be specced into or developed into our customers.

Speaker #2: Vehicles. And other areas would be new kind of new areas, new energy systems, things like ammonia, methanol, and hydrogen power combustion engines, other than fuel cells, right?

Weng Ming Hoh: Other areas will be new, kind of, new areas, new energy systems, things like ammonia, methanol, and hydrogen power for commercial engines other than fuel cells, right? If you... Also, the Chinese government is now also considering introducing National VII emission standards in the coming two to three years. That, for that, we are also starting to do some R&D to get ourselves ready for that, for that emissions requirement. There are quite a few areas that we're working on, in addition to a continuous improvement on the product to make it more efficient and more fuel efficient as well. There are quite a few areas we're working on.

Speaker #2: So if you and also, the Chinese government is now also considering introducing national 7 emission standards. In the coming two to three years. So that for that, we are also starting to do some R&D to get ourselves ready for that emissions requirement.

Speaker #2: So there are quite a few areas that we're working on. In addition to continuous improvement on the product, getting it more efficient and more fuel efficient as well.

Speaker #2: So there are quite a few areas working on.

Speaker #5: Thank you. That's very clear. And that's all my questions.

Fiona Lim: Thank you. That's very clear. That's all my questions.

Speaker #2: Thank you.

Weng Ming Hoh: Thank you.

Speaker #3: For the questions, one moment for the next question. Our next question comes from Yingsi of CICC. Please go ahead.

Operator: For the questions, one moment for the next question. Our next question comes from Ying Si of CICC. Please go ahead.

Ying Si: Hey, thanks, and congratulations. I have two questions to ask. The first one is about the future business of the HPP engines. We noticed that Caterpillar has announced its reciprocating generators can be used as prime power for data centers. How does Yuchai view this industry trend? Do we have some existing natural gas engines, engine products and technologies to support this industry trend? This is my first question. Thank you.

Ying Su: Hey, thanks, and congratulations. I have two questions to ask. The first one is about the future business of the HPP engines. We noticed that Caterpillar has announced its reciprocating generators can be used as prime power for data centers. How does Yuchai view this industry trend? Do we have some existing natural gas engines, engine products and technologies to support this industry trend? This is my first question. Thank you.

Speaker #4: Hey. Thanks, and congratulations. So I have two questions to ask the first one is about the future business in of the HPP engines. We noticed that caterpillar has announced its reciprocating generators can be used as prime power for data centers.

Speaker #4: So how does Yuchai view this industry trend? And do we have some existing natural gas engine products and technologies to support this industry trend?

Speaker #4: This is my first question. Thank you.

Weng Ming Hoh: Kelly, would you like to...

Speaker #2: Kevin, would you like to?

Kelvin Lai: Yeah, let me take this question, yeah. The high horsepower engine business forecast still depends on the development of those internet service provider, and how fast they build the data center. We do expect there will be still a growth in the year 2026 when comparing to 2025. We don't have the exact figure because so far we don't receive, I mean, the order from the largest customer. Regarding on your question, regarding on the natural gas generator. From Yuchai, we do have our natural gas engine, and for the power generation.

Speaker #3: Yeah. Let me take this question. Yeah. The high-horsepower engine the business forecast and then the steel depends on the development of those internet service provider and then how fast and they build the data center.

Speaker #3: So we do expect there will be steel growth in the year 2026 when comparing to 2025. But we don't have the exact figure because and then so far and then we don't receive I mean, all the order and then from the wireless customer.

Speaker #3: Regarding on your question regarding on the natural gas generator and then the from Yuchai and then we do have our natural gas engine for the power generation.

Speaker #3: We have the technology and we have the right product as well. And our product, the natural gas engine, will be very similar to the diesel engine.

Kelvin Lai: We have the technology, and we have the right product as well. Our product, as the natural gas engine will be very similar to the diesel engine, and then they have the using our YC16VC engine, and then that will be I mean, about 2 megawatt for the power generation using natural gas. So far, the application of the natural gas for high horsepower is mainly on the industrial application at the moment.

Speaker #3: And then they have the using our 16VC engine and then that will be generate I mean, the about 2 megawatt for the power generation using natural gas.

Speaker #3: But so far and then the application of the natural gas for high-horsepowers is mainly on the industrial application at the moment. Because in the region of China or Asia and then I mean, the customer and then we will considering the cost of the engine and then they are not using the natural gas engine for the AI for the data center at this stage.

Kelvin Lai: In the region of China or Asia, and then the, I mean, the customer, and then we were considering the cost of the engine. They are not using the natural gas engine for the AI for the data center at this stage.

Speaker #3: Yeah.

Speaker #4: A very clear and thanks. So my second question is about our significant market share gain in truck and bus engines especially in 2025. So how do you view the 2026 outlook for domestic truck and bus industry sales and whether it has market share growth can be sustainable?

Ying Si: Very clear, and thanks. My second question is about our significant market share gain in truck and bus engines, especially in 2025. How do you view the 2026 outlook for domestic truck and bus industry sales? Whether, as market share growth can be sustainable? This is my second question. Thank you.

Ying Su: Very clear, and thanks. My second question is about our significant market share gain in truck and bus engines, especially in 2025. How do you view the 2026 outlook for domestic truck and bus industry sales? Whether, as market share growth can be sustainable? This is my second question. Thank you.

Speaker #4: This is my second question. Thank you.

Speaker #2: Okay. So you're talking about vehicle engines. The major vehicle for OEMs in the market some of them are using our engines. In particular, I think we have been working vehicle OEMs for quite a while.

Weng Ming Hoh: Okay. You're talking about vehicle engines. You know, the major vehicle OEMs in the market, some of them are start using our engines. In particular, I think, we have been working with major OEMs for quite a while to get our engines certified and designed into their vehicles. One of, two of them have already come to fruition last year. Excuse me.

Speaker #2: To get our engines certified and designed to the vehicles. And one or two of them have already come to fruition last year. Excuse me.

Ying Si: Thank you.

Ying Su: Thank you.

Weng Ming Hoh: One of first, yeah, one of two of them have already come to fruition last year. That's why we see a big sort of growth in our heavy-duty truck segment of market. Correct. With that, we expect that to continue into 2026, barring any unforeseen. Yeah, we do expect to see some continued growth in that area.

Speaker #2: So one of the first yeah, one or two of them have already come to fruition last year. So and that's why we see a big kind of growth in our heavy-duty truck segment of market.

Speaker #2: Right? So with that, we expect that to continue to 2026 barring any unforeseen. So yeah, we do expect to see some continued growth in that area.

Speaker #4: Got it. Thank you.

Ying Si: Got it. Thank you.

Ying Su: Got it. Thank you.

Speaker #3: Thank you for the questions. Just a reminder, if you'd like to ask questions, please press star 11. Our next question comes from Jimmy Liu of Guotai Hydro Securities.

Operator: Thank you for the questions. As a reminder, if you'd like to ask a question, please press star one one. Our next question comes from Jimmy Liu of Guotai Junan Securities. Please go ahead.

Speaker #3: Please go ahead.

Speaker #2: Hello. Good morning and good evening. Thank you very much for taking my question. So I've got two questions. The first one is about your backlog, especially for those associated with the data center business.

Jimmy Liu: Hello, good morning, and good evening. Thank you very much for taking my question. I've got two questions. First one is about your backlog, especially for those associated with the data center business. If we compare your backlog right now and like half a year ago, I'm just wondering, is that getting larger? Or if you look at the demand and supply, is the supply getting more and more constrained? It's getting more and more tight, tighter. Is that what is happening for those data center engines? Thank you.

Di Liu: Hello, good morning, and good evening. Thank you very much for taking my question. I've got two questions. First one is about your backlog, especially for those associated with the data center business. If we compare your backlog right now and like half a year ago, I'm just wondering, is that getting larger? Or if you look at the demand and supply, is the supply getting more and more constrained? It's getting more and more tight, tighter. Is that what is happening for those data center engines? Thank you.

Speaker #2: So, if we compare your backlog right now to half a year ago, I'm just wondering, is that getting larger? Or, if you look at the demand and supply—

Speaker #2: So is the supply getting more and more constrained? It's getting more and more tighter? Is that what is happening for those data center engines?

Speaker #2: Thank you. Kevin?

Weng Ming Hoh: Elliot?

Kelvin Lai: It has to be, I mean, separate the operation because for the Yuchai brand high horsepower engine, the most of the component supply, they are generally come from China. I mean, on the supply side, and then we didn't have much problem there. Because of they had the providing the most component to our engine assembly. The cost-wise, and then they had increasing the price this year, mainly because of the raw material increasing recently. That cost and then a cost mark-up.

Speaker #3: It has to be I mean, separate the operation because for the Yuchai brand high-horsepower engine, the most of the components supplied, they are generally come from China.

Speaker #3: So that the I mean, on the supply side and then we didn't have much problem there. And then because they had the providing the most component and for our engine assembly.

Speaker #3: But the cost-wise, and then they had increased the price this year, mainly because of the raw material increasing recently. And so that cost, and then a cost markup.

Kelvin Lai: For the joint venture side and the, we do have the bottleneck, and then regarding on the supply because of the supply chain from our partners and from Germany, and then they do have some constraint and causing the supply of the component, and the will be limited, and then for the operation in the Chinese joint venture.

Speaker #3: But for the joint venture side and the we do have the bottom leg and then regarding on the supply because of the supply chain from our partners and from Germany and then they do have some constraint and causing the supply of the component and then the will be limited.

Speaker #3: And then for the operation in the Chinese joint venture.

Speaker #2: All right. Thanks. But I guess I didn't get it clear. So I'm trying to ask about your backlog. I mean, the order that you receive from your customer.

Jimmy Liu: All right. Thanks. I guess I didn't get it clear. I'm trying to ask about your backlog, I mean, the order that you received from your customer. Is the size of that getting larger during the past few months?

Di Liu: All right. Thanks. I guess I didn't get it clear. I'm trying to ask about your backlog, I mean, the order that you received from your customer. Is the size of that getting larger during the past few months?

Speaker #2: So is that is the size of that getting larger during the past few months?

Kelvin Lai: No. I mean, we are still, and they're working very hard and then to fulfill those requirements. Yeah. I mean, the delivery and then so far are still about between 3 to 4 months anyway. Yeah.

Speaker #3: No. I mean, we are still a networking very hard and then to fulfill those requirements. Yeah. And I mean, the delivery and then so far still about between three to four months anyway.

Speaker #3: Yeah.

Speaker #2: All right. Okay. And my second question is about exports. So do you see any increase on your European business? And what is the detailed segment about that?

Jimmy Liu: All right. Okay. My second question is about exports. Do you see any, like, increase on your European business? What is the, like, the detailed segment about that? Is that about, like, a diesel engines or gas engines? I mean, what is the outlook of your European business? Thanks.

Di Liu: All right. Okay. My second question is about exports. Do you see any, like, increase on your European business? What is the, like, the detailed segment about that? Is that about, like, a diesel engines or gas engines? I mean, what is the outlook of your European business? Thanks.

Speaker #2: Is that about diesel engines or gas engines, or—I mean, what is the outlook of your European business? Thanks.

Speaker #3: Are you referring to high-horsepower engine or referring to the truck engine?

Kelvin Lai: Are you referring to high horsepower engine or referring to the truck engine?

Jimmy Liu: mostly about the high, the large horsepower engines.

Speaker #2: Mostly about the large horsepower engines.

Di Liu: mostly about the high, the large horsepower engines.

Speaker #3: Oh, okay. Yeah. For the export market, if we are referring to the Yuchai brand—I mean, the Yuchai brand operation—our export markets only account for a small percentage, about 10%.

Kelvin Lai: Okay. Yeah. For the export market, if we referring to the Yuchai brand, I mean, the Yuchai brand operation, our export markets only account for a small percentage, about 10%, mainly in Asia. For the engine joint venture side, there will be, I mean, they, because we sell through our OEM and those, and then we will have about over 20% or 25% of the export opportunity, and it's also on growing as well. Yeah.

Speaker #3: And mainly in Asia. But for the MTU joint venture side, there will be I mean, because we sell food, we sell food by our OEM and those and then we'll have about over 20% or 25% of the export opportunity.

Speaker #3: And it's also on growing as well. Yeah.

Weng Ming Hoh: Those export are to the Asian market.

Speaker #2: Are those exports to the Asia market?

Weng Ming Hoh: Those export are to the Asian market.

[Company Representative] (China Yuchai International Ltd): Yeah, Asian market as well. Yeah. All right, I see. Thank you very much.

Speaker #3: Yeah, Asia market as well. Yeah.

Speaker #2: All right. I see. Thank you very much.

Speaker #3: Thank you for the question. At this time, there are no further questions from the phone line. We have now reached the end of our Q&A session.

Operator: Thank you for the question. At this time, there are no further questions from the phone line. We have now reached the end of our Q&A session. I would like to turn the call back over to Mr. Hong.

Speaker #3: I would like to turn the call back over to Mr. Hoh.

Weng Ming Hoh: Well, thank you all for participating in our conference call. We wish each of you good health, and we look forward to speaking with you again. Thank you.

Speaker #2: Well, thank you all for participating in the conference call. We wish each of you good health and we look forward to speaking with you again.

Speaker #2: Thank you.

Operator: Good. Today's conference call, thank you for your participation. You may now disconnect the line.

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