Located in Xiangyang, Hubei, Changyuan Donggu reported a semi-annual performance of RMB 154 million in net profit, up 70.49% year on year, just three months after its listing. Additionally, the company allocated RMB 278 million in cash for dividends during the half-year period to reward investors.

　　Both revenue and profit increased.

　　RMB 278 million was used for cash dividends.

　　As a core component supplier for commercial vehicle engines, Changyuan Donggu’s main business is the R&D, production, and sales of diesel engine parts. Its primary products include cylinder blocks, cylinder heads, and connecting rods. The company was listed on the Shanghai Stock Exchange on May 26, 2020. Just three months after its listing, Changyuan Donggu released its semi-annual report and simultaneously announced a substantial 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 RMB 753 million, up 32.56% year on year. Thanks to an improved gross margin and prudent control of period expenses, net profit attributable to shareholders of the listed company reached RMB 154 million, a year-on-year increase of 70.49%.

　　On the same day, the company announced its plan for the distribution of profits for the first half of 2020. The parent company’s profit available for distribution to shareholders in the first half of 2020 amounted to RMB 375 million. To address investors’ reasonable expectations and provide appropriate returns, the company proposes to distribute a cash dividend of RMB 12 (including tax) for every 10 shares held, totaling RMB 278 million. A shareholders’ meeting will be held on August 25 to deliberate on this dividend proposal.

　　“At the end of 2019, the company’s consolidated financial statements showed undistributed profits of nearly RMB 600 million. Prior to the company’s listing, this portion of profits was not distributed to the original shareholders, building up substantial dividend-paying capacity. The company’s clients are all high-quality customers, and cash flow is very smooth. Therefore, after comprehensively considering factors such as its current stage of development, operating performance, and future investment plans, the company formulated this preliminary dividend plan, enabling both new and existing shareholders following the listing to share in the benefits of the company’s growth,” said Liu Wangcheng, secretary of the board of directors of Changyuan Donggu, in an interview with a reporter from the Securities Daily.

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

　　Positive for component manufacturers

　　Liu Wangcheng stated that in the first half of this year, Changyuan Donggu recorded substantial growth in operating revenue and net profit. Accounts receivable and inventory increased, but financial ratios such as the accounts receivable turnover ratio and inventory turnover ratio remained relatively healthy. As of June 30, the company’s accounts receivable stood at RMB 537 million, up 32% from RMB 407 million at the end of last year, accounting for 14.17% of total assets—a lower proportion than in previous years prior to the company’s listing. Affected by the increase in sales volume, which led to a higher accounts receivable balance, bad debt provisions for the period amounted to RMB 7.1442 million. Inventory totaled RMB 189 million, primarily due to stocking activities, an increase of 20% compared with the end of last year, but below the growth rate of operating revenue.

　　“Affected by industry conditions, demand from our major customers has been robust since we resumed operations in the first half of the year. Our sales revenue grew by more than 30% year over year, significantly outpacing the industry’s average growth rate. Another key driver of this sales growth was contributions from new customers such as Guangxi Yuchai, Shangfeihong, and China National Heavy Duty Truck Group. Overall, with the steady progress of new customers and new projects, the company’s major customer base became more diversified in the first half, reducing the share of total revenue attributable to the top five customers and continuously optimizing our customer mix,” said Liu Wangcheng.

　　Zhang Xiang, a senior researcher at the Expert Think Tank for New Energy and Intelligent Connected Vehicles, told a Securities Daily reporter that although the automotive market was hit by the pandemic in the first half of 2020, driven by major favorable factors—including various macroeconomic policies, infrastructure investment measures, the transition to new emission standards, weight and dimension control, and axle-based highway tolling—commercial vehicle production and sales both posted year-on-year growth during the same period, benefiting upstream component manufacturers. From a broader perspective, China’s commercial vehicle sector is relatively mature, and the industry should be able to return smoothly to normalcy after the pandemic.

　　In fact, the company’s major customers in Changyuan Donggu, including Foton Cummins, Dongfeng Cummins, and Dongfeng Commercial Vehicle, have strong order demand; additionally, newly developed customers in recent years, such as Guangxi Yuchai, Shangfeihong, and China National Heavy Duty Truck, have seen rapidly increasing plans for product demand. As a result, the company’s sales volume grew significantly in the first half of the year, and sales revenue reached a record high.

　　In addition, regarding the progress of the fundraising investment projects for Changyuan Donggu, as of June 30, 2020, the company’s remaining raised funds should be RMB 361 million.

　　According to relevant sources, the new project for Changyuan Donggu’s Dongfeng Cummins 13L cylinder block and cylinder head is planned to receive an investment of 150 million yuan; as of the end of June this year, 120 million yuan has been invested, completing 82.04% of the project. The new project for Changyuan Donggu’s Yuchai connecting rods and Cummins connecting rods has reached 44.76% completion. The new project for Changyuan Langhong’s Yuchai China VI cylinder block and cylinder head has now received 62.35% investment; the completed Phase I project entered mass production in January 2020, and Phase II is currently under construction.

　　Regarding the company’s future development, Liu Wangcheng stated: “Our next step will be to stabilize and expand our core component manufacturing business in the existing diesel engine sector, enabling a rapid yet steady increase in market share, further enhancing our advantages in large-scale production, and establishing a leading position in the industry. We will also explore new energy opportunities; the company is closely monitoring the development and applications of new energy technologies and seeking entry points for collaboration, ensuring that traditional fuels and new energy sources develop in tandem through a dual-track approach.”