Good day, and thank you for standing by. Welcome to the China Yuchai International Limited First Half 2025 Financial Results Conference Call and Webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Kevin Theiss. Please go ahead. Thank you for joining us today, and welcome to China Yuchai International Limited's Conference Call and Webcast for the first half of 2025 ended on June 30, 2025. Joining us today are Mr. Weng Ming Hoh and Mr. Choon Sen Loo, President and Chief Financial Officer of CYI, respectively. In addition, we also have in attendance Mr. Kelvin Lai, General Manager of Operations of CYI and Chairman of MTU Yuchai Power Company Limited or 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. 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 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 risks 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 under the headings Risk Factors, Results of Operations and Business Overview and other reports filed 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, whether of the nature contained in the press release made during today's call or otherwise in the future. Mr. Hoh will provide a brief overview and summary, and then Mr. Loo will review the financial results for the first half year ended June 30, 2025. Thereafter, there will be a question-and-answer session. For the purposes of today's call, the 2025 and 2024 financial numbers are unaudited and presented in RMB and U.S. dollars. All financial information presented is reported using the IFRS accounting standards as issued by the International Accounting Standards Board. Mr. Hoh, please begin your prepared remarks.

Thank you, Kevin. We are pleased to report that our unit sales in the first half of 2025 outperformed nearly every on-road market category. Revenue increased by 34% year-over-year to RMB 13.8 billion or USD 1.9 billion. Gross profit rose by 30.3% year-over-year to RMB 1.8 billion or USD 257 million. Operating profit increased by 42.3% year-over-year and profit to equity holders of the company rose by 62.2% year-over-year. Earnings per share were 65.8% higher year-over-year to RMB 9.75 or USD 1.36. This growth in our financial results was due to the sale of our light-duty, medium-duty, and heavy-duty engines, our new energy products, high horsepower engines, and solutions we provide to our customers. Our sales exceeded the vehicle unit sales in our market categories and demonstrated significant year-over-year sales growth in the first half of 2025. According to data from the China Association of Automobile Manufacturers, truck and bus unit market sales, excluding gasoline and electric powered vehicles, in the first half of 2025 declined by 2.6% year-on-year, while our combined truck and bus unit sales were up by 38% year-on-year. Our overall truck engine sales increased by 44.3% year-over-year compared to CAAM truck market unit sales declining by 1.8%. Our truck engine unit sales growth was led by a 40.7% year-over-year rise in the important heavy-duty truck segment in contrast to the negative 2.8% year-over-year growth in the heavy-duty truck market unit sales according to CAAM. We experienced strong growth in the heavy-duty truck engine segment, which is mainly attributable to gas engine sales for heavy-duty trailers. Our overall bus engine unit sales in the first half of 2025 achieved 8.9% year-over-year growth compared with CAAM bus unit sales declining by 7.5% year-over-year. Our heavy-duty bus engine unit sales increased by 14.4% year-over-year, contrasted with a 13.5% decline in CAAM heavy-duty bus unit sales. Our off-road market unit sales increased by 17.5% year-over-year in the first half of 2025, led by an engine sales increase of 31.5% year-over-year in the marine and power generation market. Data centers require significant amounts of reliable electric power to function, and backup sources of electric power are essential to guarantee uninterrupted data center operations. This demand has generated robust growth in our power generation operations in the first half of 2025. Yuchai's subsidiary from Yuchai Marine and Genset Power Company Limited and Rolls-Royce Power Systems division has started the second phase cooperation and development of the MTU Yuchai Power Venture. Included in the second phase will be the MTU Series 4000 oil and gas generation engines, which are expected to begin shipment in late 2025. Also, by adding MTU 2000 model engine and Yuchai-branded VC series diesel engine in the near future, our power generation business is enhanced to service additional customers and application requirements. Engine unit sales for industrial applications rose by 27.2% year-over-year, and engine sales for agriculture equipment experienced modest unit growth in the first half of 2025. The successful sales growth of our broad range of engines is a testament to our research and development expertise, our manufacturing proficiency, and our large service network. In addition to improving our engine products and automotive technologies, R&D is developing additional new energy products, including those using alternative fuels such as hydrogen, methanol, and ammonia combustion technologies. Despite an increase in total R&D expenses in the first half of 2025 to RMB 551.7 million or USD 77.1 million, including capitalized costs, R&D represented 4% of revenue in the first half of 2025 as compared to 4.5% of revenue in the first half of 2024. Our strategic alliance produced a year-over-year increase in profit propelled by higher sales and profit results from MTU Yuchai and improved operations across other ventures in the first half of 2025. As we are well established in the large Chinese Indian market, we view international markets as important drivers of future sales growth. Our nearby markets in the ASEAN region are prime areas for penetration. Our subsidiary, Yuchai Machinery Power Systems (Thailand), is now ramping up production of a range of diesel engines for on and off-road applications. Through a comprehensive strategic cooperation covering technology licensing, component supply, and related support in Vietnam, we are further deepening our market penetration into the growing ASEAN market. The company paid a cash dividend of USD 0.53 per ordinary share on July 7, 2025, highlighting the company's confidence in future revenue, profits, and cash flow generation and showing our commitment to building shareholder value. Cash and bank balances were RMB 7.8 billion or USD 1.1 billion as at June 30, 2025. With that, I would now like to turn the call over to Mr. Choon Sen Loo, our Chief Financial Officer, who will provide more detail on the financial results. Choon Sen, you may begin your remarks.

Thank you, Weng Ming. Now let me review our unaudited six months results ended June 30, 2025. Revenue was RMB 13.8 billion or USD 1.9 billion compared with RMB 10.3 billion in first half 2024. The total number of engines sold in the first half of 2025 increased by 29.9% to 250,396 units compared with 192,743 units in the first half of 2024. The increase was mainly due to higher sales in almost every engine segment. The company's truck and bus engine unit sales rose by 38% year-on-year in the first half of 2025 despite a decline of 2.6% witnessed in the commercial vehicle market, excluding gasoline and electric powered vehicles as reported by the China Association of Automobile Manufacturers. The company's truck engines were up 44.3% year-over-year compared with negative growth of 1.8% in truck market unit sales as reported by CAAM. In particular, heavy and light-duty truck engine unit sales were 40.7% and 82.1% higher year-over-year in contrast to CAAM market unit sales growth of negative 2.8% and 1.3% respectively. The company's heavy-duty bus engine sales rose by 14.4% compared to a CAAM bus market unit sales reduction of 13.5%. Overall, bus engine unit sales increased by 8.9% in the first half of 2025 in contrast to a 7.5% decline in overall market unit sales. Engine sales to off-road markets increased by 17.5% year-over-year in the first half of 2025. Engine sales to the marine and power generation markets drove the off-road segment growth with a 31.5% year-on-year increase. Sales for industrial applications rose by 27.2% year-over-year in the first half of 2025, while engine sales for agricultural equipment experience modest growth in the first half of 2025. Gross profit increased by 30.3% to RMB 1.8 billion or USD 257 million from RMB 1.4 billion in the first half of 2024. The increase was mainly due to higher sales volume. Overall gross margin was 13.3% in the first half of 2025 compared with 13.7% in the first half of 2024. Other operating income increased by 27.2% to RMB 221.4 million or USD 30.9 million compared with RMB 174.1 million in the first half of 2024. The increase was mainly driven by the recognition of technology licensing fees and the higher rebate of value-added taxes. Research and development expenses increased by 21.1% to RMB 476.7 million or USD 66.6 million compared with RMB 393.6 million in the first half of 2024, due to higher experimental and personnel costs. Total R&D expenditures, including capitalized costs, were RMB 551.7 million or USD 77.1 million, representing 4.0% of revenue in the first half of 2025, as compared to RMB 463.2 million and 4.5% of revenue in the first half of 2024. Selling, general, and administrative expenses increased by 27.4% to RMB 962.5 million or USD 134.5 million from RMB 755.7 million in the first half of 2024. This increase was mainly due to higher personnel expenses compared with the same period last year. SG&A expenses represented 7.0% of revenue for the first half of 2025 compared with 7.3% for the first half of 2024. Operating profit increased by 42.3% to RMB 621.7 million or USD 86.9 million, compared to RMB 436.9 million in the first half of 2024. The operating margin was 4.5%, in contrast to 4.2% in the first half of 2024. Higher operating profit and operating margin were achieved by increased sales and gross profit combined with lower growth in operating expenses. Finance costs decreased by 21.3% to RMB 32.2 million or USD 4.5 million from RMB 40.9 million in the first half of 2024, primarily due to lower term loans and less bills discounting. The share of financial results of the associates and joint ventures grew by 42.6% to a profit of RMB 61.4 million or USD 8.6 million compared with RMB 43.1 million in the first half of 2024. The improvement was mainly driven by higher profits at MTU Yuchai Power Company Limited. Income tax expense increased by 13.4% to RMB 116.2 million or USD 16.2 million compared with RMB 102.4 million in the first half of 2024. Net profit attributable to equity holders of the company increased by 52.2% to RMB 365.8 million or USD 51.1 million compared with RMB 240.3 million in the first half of 2024. Basic and diluted earnings per share were RMB 9.75 or USD 1.36 compared with RMB 5.88 in the first half of 2024. Basic and diluted earnings per share for the first half of 2025 and first half of 2024 were based on a weighted average of 37,518,322 shares and 40,858,290 shares, respectively. We will now go over some key financial highlights at June 30, 2025. Cash and bank balances were RMB 7.8 billion or USD 1.1 billion compared with RMB 6.4 billion at the end of 2024. Trade and bills receivables were RMB 12.7 billion or USD 1.8 billion compared with RMB 8.8 billion at the end of 2024. Inventories were RMB 4.7 billion or USD 655.4 million compared with RMB 4.7 billion at the end of 2024. Trade and bills payable were RMB 11.9 billion or USD 1.7 billion compared with RMB 8.5 billion at the end of 2024. Short-term and long-term loans and borrowings were RMB 2.2 billion or USD 304.6 million compared with RMB 2.5 billion at the end of 2024. I will now turn the call over to Kevin for comments for the Q&A session.

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 questions in Chinese, please kindly translate your own questions into English before turning to management for answers. And before we start the Q&A, we would also like to announce that the management will be attending the forthcoming UBS Conference on September 1 and September 2, and the Bank of America Merrill Lynch Conference on September 8 through September 10. If you are interested in a one-on-one or 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 of the conference venues. Now operator, we are ready for questions.

This is Yiming, an analyst from Guotai Haitong Securities. Congratulations on your very outstanding results for the first half. My question is on the capacity. So do you have any plan to raise your capacity for the JV with MTU or for the GYMCL entity?

This is Kelvin Lai. Regarding capacity, we have sufficient capacity on the MTU joint venture side. The only bottleneck is the supply of components, which limits our production at present. If we can have sufficient component supply from Germany, then we can increase our capacity there. For our main operation, the Yuchai operation at the GYMCL, currently, the capacity is about 2,000. We have extension plans that we will be ready by the end of Q3 or early Q4, and we will see about a 30% increase in capacity by the end of this year, so next year, we can enjoy a more productive roll off of the engines.

Okay. And the other question from me is on the guidance for the full year. So do you have any guidance on unit sales for the whole year 2025? Specifically, do you have guidance for the data center related generators, how many units of that will be sold for the whole year 2025?

Sorry, Mr. Liu, we do not provide guidance.

We have a few questions actually. First question, does Yuchai have 10% or higher market share in long-bore engines for data centers? And do you foresee this market share holding or improving going forward?

Don, this is Kelvin again. Our market share on the long-bore engine for the data center application is well ahead of 10% of the global market. We believe we can maintain a similar share at least for this and next year.

When do you see Yuchai's net return surpassing 5% of sales from 2.6% in the first half? Can you talk about initiatives to accomplish this objective?

There's a lot of factors that will determine the return on sales, Don. There are too many to try to pin down. So for now, we are not prepared to announce a target date for the return on sales. As I said earlier, we do not provide any guidance.

The first question is about the ASP increase. You mentioned that you may consider raising ASP for data center engines this year in the second half. Any color on this?

I think we have not really increased the average selling price for data centers much this year. We really produce the engines and sell the engines to our OEM customers. The OEM customer, in turn, will determine the actual price of the final product, which is the genset that we sell to the end customer. Yes, our engine price has gone up slightly, but it has gone up slightly.

Could you specify if that was for the first half or the second half?

For the first half. We do not provide guidance again.

You mentioned you would like to expand from engine making to generator making. So you will expand the business. Could you give us some color on this? How will this translate into revenue growth and profit per unit growth?

Our core business is really just to sell engines. We will only do gensets if customers want us to do it. The reason is that we do not want to compete with our customers, the real customers, which are the OEMs. By building gensets, we would actually be competing with customers. Unless end users have a specific need for it, we rather not do that and let our customers handle it. So we do not expect to see big revenue gains from this.

I'm Hing Shi from CICC. My first question is about the on-highway engines. I see from this year that it has a strong market share in both truck and bus engines. What is the reason the company has such strong market share in on-highway engines? Additionally, we see the rapid growth of new energy adoption in China's commercial vehicle sector. How is the company seeing this phenomenon, and could this negatively impact the company's engine business?

Regarding our truck engine sales, we have seen significant improvements this year, mainly due to acquiring new customers from Tier 1 and Tier 2 OEMs who have started using the Yuchai engine for heavy-duty and medium-duty applications. Additionally, our introduction of a new gas engine, which is highly adaptable for the trailer market in the Chinese domestic market, is also a significant factor. Export markets also contributed significantly to our growth in the first half of 2025. Similar trends are reflected in the bus segment; the export market has been a major driver of our growth here as well.

Yes, our cash and bank balances increased quite handsomely compared to last year. This cash will be deployed in our CapEx, including operational maintenance. You may also notice that our R&D expenses increased; we continue to use our cash wisely in this aspect. In terms of any specific plans for the future, we will not make any comments at this point.

This is Andy Li from Daiwa. Congrats on the results. I just want to ask about the power generation topic. I want to clarify the 2,000 capacity from Yuchai brand you mentioned earlier, is it going up by 30%? Can I get an update on the execution and any negotiation activities with your clients right now regarding the data center?

Currently, our in-house production capacity for the Yuchai brand is 2,000 units, which we expect to increase by over 30% by the end of this year. Most of our high horsepower engines are directed towards data center applications, with 650 units shipped for the data center in the first half of 2025 and the rest for other applications. There's strong demand in the data center market, so it's challenging to meet current demand even with increased capacity. We'll be conservative with our expansion plans and assess market conditions in 2026 and beyond before further expansions.

The 2,000 capacity we have for high horsepower is not entirely for data centers; other applications are also included. However, a large portion will cater to data centers.

What about the latest auction or negotiation with your data center clients? Any pricing insights?

In purchasing for such a magnitude, it usually goes through tenders or multiple suppliers. Much is done through our OEMs, and we could possibly participate in tenders through more than one OEM. While there is a competitive industry, the pricing for the final gensets is largely determined by our customers.

First, I want to congratulate the team for the impressive numbers published. My question touches on the transformation of China Yuchai, specifically regarding the power generation business unit. It seems that various business units have seen growth of over 30% this year while the industry remains flat. Can the team identify specific reasons for outperforming the market so significantly in the first half of 2025?

In the case of vehicle engines, our cooperation with OEMs has been crucial. Our customers have been successfully capturing more market share and are choosing to use more of our engines over those of competitors. This success did not happen overnight; we've been cultivating relationships for several years. Export has also been a significant driver, growing in double digits over the years. Our export sales, especially to regions outside North America and Europe, give us a better margin since we don't need to comply with National VI or Euro VI requirements. Lastly, the data center segment has seen tremendous growth as well, with great demand driving up sales.

Congratulations on your performance. There has been booming demand in the overseas data center market. Is the company planning to expand overseas, including direct sales to overseas internet giants?

Currently, we work with OEMs, who serve as our major customers for both domestic and overseas markets. We maintain this practice. Recently, major domestic internet players have also approached us to place orders, and we are working closely with them. However, our primary orders still come from OEMs.

The bulk of our sales has gone to the domestic market, which remains strong. While we have some sales in export markets, they are not a significant part of the business yet.

My question is about the capacity of the diesel engines. I want to clarify the capacity of the 2,000 units. Is this the overall capacity for the JV part plus the in-house part? What is the bottleneck for the capacity?

The 2,000 units mentioned is the overall capacity for the high horsepower class 4 engines, of which some will cater to data centers. The constraint we have is not so much the assembly but in the casting and machining capacity, which we are actively working to resolve to increase volume. For the MTU side, the limitations are due to the components provided from overseas.

For the joint venture, due to the agreement, several components need to be procured from the German operation, which limits our capabilities. The allocation for the Chinese operation depends on global market demand, and our components are also supplied to operations in Europe and the U.S.

Regarding dividend payout and repurchase, we have no current plans for repurchase. Our track record for dividend payments is strong, although we do not have a formal policy. We are likely to continue with the same practice going forward.

Can I follow up on the JV profit? You mentioned last time that a segment in your JV reached breakeven. How is that segment and other segments performing in the first half?

The segment that was breakeven last year is making a little more profit this year, but it’s still not very substantial. We need time to develop that segment. The profit from JV in the associates account mainly comes from the MTU Yuchai joint venture. Thank you all for participating in our conference call. We wish each and every one of you good health, and we look forward to speaking with you again. Thank you.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.