Located in Xiangyang, Hubei, Changyuan Donggu, after only three months of listing, has delivered a semi-annual report with a net profit of 154 million yuan, a year-on-year increase of 70.49%. The company also allocated 278 million yuan in cash for dividends to reward investors.

　　Revenue and profit both increased

　　278 million yuan for cash dividends

　　Changyuan Donggu, as a core component supplier for commercial vehicle engines, mainly engages in the research, development, production, and sales of diesel engine components. Its main products include cylinder blocks, cylinder heads, and connecting rods. It was listed on the Shanghai Stock Exchange on May 26, 2020. Only three months after listing, Changyuan Donggu released its semi-annual report and announced a large-scale dividend plan.

　　On August 10, Changyuan Donggu announced its semi-annual report. In the first half of the year, Changyuan Donggu achieved operating revenue of 753 million yuan, an increase of 32.56% year-on-year. Due to improved gross profit margin and reasonable control of period expenses, the net profit attributable to shareholders of the listed company reached 154 million yuan, an increase of 70.49% year-on-year.

　　On the same day, the company announced its 2020 semi-annual profit distribution plan. The profit available for distribution to shareholders of the parent company in the first half of 2020 was 375 million yuan. To meet the reasonable demands and returns of investors, the company plans to distribute cash dividends of 12 yuan (including tax) per 10 shares to all shareholders, totaling 278 million yuan in dividends. A shareholders' meeting will be held on August 25 to consider this dividend plan.

　　"The company's combined financial statements showed undistributed profits of nearly 600 million yuan at the end of 2019. The company did not distribute these profits to original shareholders before listing, accumulating significant dividend capacity. The company's clients are all high-quality clients, and capital flow is very smooth. Therefore, the company has comprehensively considered its development stage, operating performance, and future investment plans to formulate this dividend plan, allowing new and old shareholders after listing to share the dividends of the company's development." Changyuan Donggu's board secretary, Liu Wangcheng, said in an interview with a reporter from the Securities Daily.

　　Commercial vehicle production and sales increased in the first half of the year

　　Beneficial to parts manufacturers

　　Liu Wangcheng introduced that in the first half of this year, Changyuan Donggu's operating revenue and net profit increased significantly, and accounts receivable and inventory increased, but financial indicators such as accounts receivable turnover rate and inventory turnover rate remained relatively healthy. As of June 30, the company's accounts receivable totaled 537 million yuan, an increase of 32% compared to 407 million yuan at the end of last year, accounting for 14.17% of total assets, which is lower than the proportion in previous years before listing. Affected by the increase in accounts receivable due to increased sales, 7.1442 million yuan was set aside for bad debt provisions this period. Inventory was 189 million yuan, mainly due to stocking, a 20% increase compared to the end of last year, lower than the growth rate of operating revenue.

　　"Affected by the industry's prosperity, since our resumption of work in the first half of the year, the demand from our major clients has been strong. Our sales in the first half of the year increased by more than 30% year-on-year, far exceeding the average growth rate of the industry. Another important factor contributing to sales growth is the contribution from new clients such as Guangxi Yuchai, Shangfei Hong, and China National Heavy Duty Truck. Overall, with the steady progress of new clients and new projects, the company's major clients have been diversified in the first half of the year, and the proportion of revenue from the top five clients has decreased, and the company's customer structure has been continuously optimized." Liu Wangcheng said.

　　Zhang Xiang, a senior researcher at the New Energy and Intelligent Connected Vehicle Expert Think Tank, said in an interview with a reporter from the Securities Daily that although the automotive market in the first half of 2020 was impacted by the epidemic, driven by various macroeconomic policies, infrastructure investment policies, emission standard switching, overload control, and highway axle-based toll collection, the production and sales volume of commercial vehicles in the first half of the year both increased year-on-year, benefiting upstream parts manufacturers. From an overall perspective, China's commercial vehicle system is relatively mature, and after the epidemic, the industry can smoothly return to normal.

　　In fact, Changyuan Donggu's major clients, such as Foton Cummins, Dongfeng Cummins, and Dongfeng Commercial Vehicle, have strong order demand for the company's products. In addition, the demand for the company's products from newly developed clients such as Guangxi Yuchai, Shangfei Hong, and China National Heavy Duty Truck has increased rapidly in recent years, resulting in a significant increase in the company's sales volume in the first half of the year, creating a historical high in sales.

　　In addition, regarding the progress of Changyuan Donggu's listed fundraising projects, as of June 30, 2020, the company's remaining fundraising balance was 361 million yuan.

　　According to sources, Changyuan Donggu's Dongfeng Cummins 13L cylinder block and cylinder head new project plans to invest 150 million yuan, and 120 million yuan had been invested by the end of June this year, completing 82.04% of the project. Changyuan Donggu's Yuchai connecting rod and Cummins connecting rod new project has completed 44.76%. The Changyuan Longhong Yuchai National VI cylinder block and cylinder head new project has completed 62.35%. The completed Phase I project began mass production in January 2020, and Phase II is under construction.

　　Regarding the company's future development, Liu Wangcheng said: "The company will next stabilize and expand its core component manufacturing business in the existing diesel engine field, enabling the company to rapidly and steadily increase its market share, further enhance the advantages of large-scale production, and establish a leading position in the industry. We will also try new energy. The company is closely monitoring the development and application of new energy and seeking entry points for new energy cooperation, allowing traditional fuels and new energy to develop simultaneously, operating on two tracks."