Earnings Call Transcript
China Yuchai International Ltd (CYD)
Earnings Call Transcript - CYD Q4 2024
Operator, Operator
Good day, and thank you for standing by. Welcome to China Yuchai International Limited Second Half and Full Year 2024 Full Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I'd like now to turn the conference over to Kevin Theiss. Please go ahead, sir. Thank you for joining us today, and welcome to China Yuchai International Limited's conference call and webcast for the second half and fiscal year of 2024 ended on December 31, 2024. 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, MTU Power Company. Before we begin, I will remind all listeners that throughout this call, we may make statements that may contain forward-looking statements within the Private Securities Litigation Reform Act of 1995. 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. 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 in 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, then Mr. Loo will provide the financial results for the second half and full year ended December 31, 2024. Thereafter, we will conduct a question-and-answer session. For purposes of today's call, the 2024 results are unaudited and the 2023 financial numbers are audited, and they will be presented in RMB and U.S. dollars. All financial information presented is reported using the International Financial Reporting Standards as issued by the International Accounting Standards Board. Mr. Hoh, please begin your prepared remarks.
Weng Ming Hoh, President
Thank you, Kevin. We are pleased to report that our EBIT sales outperformed the Chinese truck and bus vehicle markets in the second half of 2024 and for the full year 2024. According to data from the China Association of Automobile Manufacturers (CAAM), compared with a 9.9% year-over-year decline in truck and bus vehicle sales in the second half of 2024, our truck and bus engine sales were up by 1.6% year-on-year. For the full year 2024, our truck and bus engine sales rose by 17.2% year-on-year compared with a 2.6% year-over-year decline in truck and bus vehicle sales. Our operating sales rose by 12.6% year-over-year in the second half and by 9.1% year-over-year for the 2024 full year. Agricultural engine sales were flat in 2024, while industrial engine sales were up by 11% year-over-year. Marine and gen set engine sales increased by 25.5% year-over-year. Revenue in the second half of 2024 was flat compared with the same period last year. Revenue in 2024 rose by 6.6% year-over-year to RMB19.1 billion or USD 2.7 billion. Gross profit increased faster than revenue rising by 14.3% year-on-year in the second half of 2024 and 10.8% year-over-year in the full year 2024 to RMB2.8 billion or $392.1 million compared with RMB2.5 billion in FY 2023. Gross margin increased to 40.7% compared with 40.1% in FY 2023. The increase in gross margin was mainly attributable to higher revenue and continuing cost reduction initiatives. Although our operating profit decreased slightly in FY 2024, our investment in associated companies and ventures delivered higher profit, growing by 18.2% year-over-year in the second half of 2024 and by 53.6% year-over-year for the full year 2024. Our 50-50 joint venture, MTU Yuchai Power, which sells power generator engines, achieved higher profit than the previous year. Our Y&C Engine and Purem Yuchai businesses achieved profitability in FY 2024 compared to losses last year. Generator engine sales remained robust. Additionally, the Yuchai Marine and Genset Power subsidiary and Rolls-Royce Power Systems division have entered into a second phase of cooperation and development for the MTU Yuchai Power venture. As part of this development, production and sales of MTU Series 4000 oil and gas engines are expected to begin shipments in late 2025. Manufacturing capabilities will be enhanced accordingly to cater to the expanded engine product portfolio. In 2024, Yuchai Machinery Power System, Thailand company or Yuchai Thailand, commenced production operations. Yuchai Thailand will mainly produce a range of diesel engines and other products for off-road applications. We have entered into a comprehensive strategic operation agreement with a subsidiary of a major group. This strategic cooperation consists of the grant and provision of technology licenses, component supply and related support services for the construction of a factory. This includes technology licensing rights for certain e-train engine models to be manufactured primarily for trucks versus other commercial vehicles. The licensing will have exclusive sales rights for the licensed engines in the specified market, along with priority sales rights in other ASEAN countries and South Korea. These licenses are valid for 15 years with a total licensing fee of $38 million. The operating environment in China was challenging in 2024. According to the National Bureau of Statistics, Chinese GDP increased by 5 percentage points year-over-year in 2024. The total value rose to $3.6 trillion worth of goods and services, creating a trade surplus of almost $1 trillion in ASEAN for 2024. However, property investment continued to decline in 2024. In the second half of 2024, our R&D expenditures, including capitalized costs, increased by 21.2% to RMB726 million or $101 million, representing 0.2% of revenue in the second half of 2024, as compared to RMB599.2 million, which represented $6.8 million of revenue in the second half of 2023. For FY 2024 total R&D expenditures, including capitalized costs were RMB1.2 billion or $165.4 million, representing 6.2% of revenue compared with RMB1.1 billion, representing 5.9% of revenue in FY 2023. We continue to improve the efficiency and performance of our National VI and Tier 4 engines and initiated the development of the next-generation emission standard engines for the on-road and off-road engine markets. We continue the development of new energy products, including products using alternative fuels such as hydrogen technologies. Our innovative new energy powertrains include two hydrogen-powered combustion engines, an off-gas power generation system, and a production plant which utilizes off-gas discharges to generate power and eliminate greenhouse gas emissions. The motor YCA07a hybrid engine was chosen to power 10-meter gas electric hybrid buses in Nanjing, and the first 50 Suzhou King-Long buses using our hydrogen fuel cells have commenced commercial operations in Beijing. Recently, we launched a new initiative aimed at enhancing wind power with the introduction of the high-strength QT 700-10 turbine fan-made shaft to improve wind turbine performance. In recognition of our innovative achievements with hydrogen, Guangxi Yuchai Machinery Company Limited, our main operating subsidiary in China, was appointed as a committee member of the new hydrogen combustion innovation consortium division of the China internal combustion engine society. They seek to encourage improved performance and engagement from senior leaders and key employees of Yuchai and its subsidiary and participate in an incentive plan that begins in 2024. This plan awards incentives to motivate these employees for their continued contributions and loyalty to enhance long-term growth for the company. In early June, we initiated our first share buyback plan, whereby we repurchased a total of 3.3 million shares, amounting to a total cost of $39.8 million. Moreover, the company paid a cash dividend of $0.03 per ordinary share on August 28, 2024. These share repurchases and dividend distribution demonstrate the company's confidence in our future revenue, profit, and cash flow generation, affirming our commitment to building shareholder value. Despite the share repurchase and cash dividends, our cash and bank balances were RMB6.4 billion or $895 million as of December 31, 2024. With that, I would now like to turn the call over to Mr. Choon Sen Loo, our Chief Financial Officer, who will provide more details on the financial results. Choon Sen, you may begin your remarks.
Choon Sen Loo, CFO
Thank you, Weng Ming. Now let me review our unaudited six-month results ended December 31, 2024. Revenue was RMB8.8 billion or $1.2 billion compared with RMB8.9 billion in the second half of 2023. The total number of engines sold in the second half of 2024 increased by 10.9% to 163,843 units compared with 147,700 units in the second half of 2023. The increase was mainly due to higher sales in the truck, bus, industrial, and marine power generation markets. The better performance in truck and bus engine sales was achieved despite a decline of 9.9% in sales of commercial vehicles, excluding gasoline and electric power vehicles, compared to the second half of 2023, as reported by CAAM. Gross profit increased by 14.3% to RMB1.4 billion or $195.7 million from RMB1.2 billion in the second half of 2023. The increase was mainly due to higher unit sales volume combined with lower material costs. Overall gross margin was 15.9% in the second half of 2024 compared with 13.9% in the second half of 2023. Other operating income increased by 31.2% to RMB401.5 million or $25.9 million compared with RMB306.2 million in the second half of 2023. The increase was mainly due to higher government grants, higher rebates on value-added taxes, and recognition of technology licensing fees. Research and development (R&D) expenses increased by 25.6% to RMB591.1 million or $22.2 million compared with RMB470.5 million in the second half of 2023, due to higher mold costs and impairment of a discontinued R&D project. Total R&D expenditures, including capitalized costs, were RMB726 million or $101 million representing 8.2% of revenue in the second half of 2024, as compared to RMB599.2 million, representing 6.8% of revenue in the second half of 2023. Selling, general and administrative (SG&A) expenses increased by 25.1% to RMB1.1 billion or $147 million from RMB844.6 million in the second half of 2023. This increase was mainly due to higher trade receivables provision, and higher travelling, personnel, and selling expenses compared with the same period last year. SG&A expenses represented 12% of revenue for the second half of 2024 compared with 9.5% for the second half of 2023. Operating profit declined to RMB160.1 million or $22.3 million from RMB221.8 million in the second half of 2023. The operating margin was 1.8% compared with 2.5% in the second half of 2023. Finance costs decreased by 20.4% to RMB37.1 million or $5.2 million from RMB46.5 million in the second half of 2023, primarily due to lower bills discounting. The share of financial results of the associates and joint ventures grew by 80.2% to a profit of RMB58.5 million or $8.1 million, compared with RMB32.5 million in the second half of 2023. The improvement was mainly driven by higher profits at MTU Yuchai Power Company Limited, MTU Yuchai. Additionally, Y&C Engine Co., Ltd., Y&C Engine, and Guangxi Purem Yuchai Automotive Technology Co., Ltd., Purem Yuchai achieved profitability in the second half of 2024 compared to a loss in the same period last year. Income tax expense was RMB26.4 million or $3.7 million compared with RMB37.9 million in the second half of 2023. Net profit attributable to equity holders of the company was RMB82.7 million or $11.5 million compared with RMB107.1 million in the second half of 2023. Basic and diluted earnings per share were RMB2.19 or $0.30 compared with RMB2.62 in the second half of 2023. Basic and diluted earnings per share for the second half of 2024 and second half of 2023 were based on a weighted average of 37,809,894 shares and 40,858,290 shares, respectively. Now we'll review the unaudited financial results for the fiscal year ended December 31, 2024. Revenue was RMB19.1 billion or $2.7 billion compared with RMB18 billion in financial year 2023. The total number of engines sold in the financial year increased by 13.7% to 356,586 units compared with 313,493 units in FY 2023. The increase was mainly due to higher sales in the truck, bus, industrial, and marine power generation markets. The stronger performance in truck and bus engine sales was achieved despite a 2.6% year-on-year decrease in sales of commercial engines, excluding gasoline and electric powered vehicles in financial year 2024 as reported by CAAM. Gross profit increased by 10.8% to RMB2.8 billion or $392.1 million, compared with RMB2.5 billion in FY 2023. Gross margin increased to 14.7% compared with 14.1% in financial year 2023. The increase in gross margin was mainly attributable to higher revenue from increased unit volume and continuing cost reduction initiatives, partially offset by greater labor and overhead expenses. Other operating income increased by 30.1% to RMB575.7 million or $80.1 million, compared with RMB442.4 million in FY 2023. The increase was mainly due to higher government grants, higher rebates on value-added taxes, and recognition of technology licensing fees. R&D expenses increased by 12.3% to RMB984.7 million or $137 million, compared with RMB876.6 million in FY 2023, mainly attributable to higher mold costs and impairment of a discontinued R&D project. Yuchai had continued with its initiatives to enhance engine efficiency and performance of its National VI and Tier-4 emission standard-compliant engines and marine power generation applications, while advancing new energy solutions. Total R&D expenditures, including capitalized costs, were RMB1.2 billion or $165.4 million, representing 6.2% of revenue for financial year 2024, compared with RMB1.1 billion, representing 5.9% of revenue for financial year 2023. SG&A expenses were RMB1.8 billion or $252.1 million, representing 9.5% of revenue in FY 2024, compared with RMB1.5 billion, representing 8.3% of revenue in financial year 2023. This increase was mainly due to higher trade receivables provision, and higher travelling, personnel and selling expenses compared with financial year 2023. Operating profit was RMB597 million or $83 million, compared with RMB609.4 million in financial year 2023. The operating margin was 3.1% compared with 3.4% in financial year 2023. Finance costs decreased by 22.2% to RMB78 million or $10.8 million from RMB100.2 million in financial year 2023, primarily due to lower bills discounting. The share of financial results of the associates and joint ventures increased by 63.6% to an income of RMB101.5 million or $14.1 million compared with income of RMB62.1 million in financial year 2023. The improvement was mainly driven by higher profits at MTU Yuchai. Additionally, Y&C Engine and Purem Yuchai achieved profitability in financial year 2024 compared to a loss last year. Income tax expense declined by 13.3% to RMB128.8 million or $17.9 million as compared with RMB148.5 million in financial year 2023. Net profit attributable to China Yuchai's shareholders was RMB323.1 million or $44.9 million compared with RMB285.5 million in financial year 2023. Basic and diluted earnings per share were RMB8.21 or $1.14 compared with RMB6.99 in financial year 2023. Basic and diluted earnings per share for FY 2024 and FY 2023 were based on a weighted average of 39,325,763 shares and 40,858,290 shares, respectively. As of December 31, 2024, the company's outstanding shares were, following a share buyback plan, reduced to 37,518,322 from 40,858,290 shares as of December 31, 2023. Now we will go through our balance sheet highlights as of December 31, 2024. Cash and bank balances were RMB6.4 billion or $895 million compared with RMB6.0 billion at the end of financial year 2023. Trade and bills receivables were RMB8.8 billion or $1.2 billion, compared with RMB7.8 billion at the end of financial year 2023. Inventories were RMB4.7 billion or $647.5 million compared with RMB4.6 billion at the end of financial year 2023. Trade and bills payables were RMB8.5 billion or $1.2 billion compared with RMB7.6 billion at the end of FY 2023. Short-term and long-term loans and borrowings were RMB2.5 billion or $349.1 million compared with RMB2.5 billion at the end of financial year 2023. I will now turn the call over to Kevin for comments for the Q&A section.
Operator, Operator
Thank you, Choon Sen. 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. With that, operator, we are ready to begin the Q&A.
Operator, Operator
Thank you. We will now take our first question from the line of Yiming Liu from Haitong Securities. Please ask your question, Yiming.
Yiming Liu, Analyst
No, this is Yiming from Haitong Securities. Thank you very much for having me. So I have two questions. Number one is about your data center generator business. So it looks like your JV with MTU got a very good result in 2024. But I'm just wondering how many units did you sell from both sides, I mean, from both the controlling interest and from the MTU JV. This is my question number one. Thanks.
Weng Ming Hoh, President
Kelvin, take that question, please?
Kelvin Lai, General Manager of Operations
Regarding the genset engine sales, for 2024, the MTU joint venture sales is about more than 700 units. But this includes not only data center units; it includes other applications. As for our high horsepower engine sales last year, it was about 800 units altogether. But that is again, it will be in the range of applications.
Yiming Liu, Analyst
Okay. All right. Thank you. So just a continuation of this question. It looks like the MTU JV was very profitable. So I wonder what is the profitability of this type of generators in the GMYCL either in terms of gross margin or net margin or something like that? Thanks.
Weng Ming Hoh, President
I'm sorry that we cannot disclose the margin of the two different types of engines due to variations in output or performance. They meet the requirements of the data center, with similar power ranges that suffice the major streams of data center construction. I would say, MTU is recognized for international branding and consequently garners a premium price from end-users. However, price-wise, I cannot provide specific comments.
Yiming Liu, Analyst
Okay. Okay. Understood. Thank you. So my second question is about the expected growth rate on the data center generator business in 2025. If possible, could you describe separately for GMYCL and the JV business? I wonder if there is any difference in the expected growth rate in 2025. Thanks.
Weng Ming Hoh, President
I would take it this way. Regardless of the GMYCL or the MTU joint venture, our order book for 2025 is already full. In fact, we are actually refusing further orders due to capacity constraints or component supply issues; however, I would say that in 2025, there will be a significant growth compared to last year, at least 30%.
Yiming Liu, Analyst
Okay. Great. Thank you. So just one more additional question. The profit attributed to the minorities in the second half of 2024 was quite high, around 47% of the total profit. Would that be a constant value in the future? Because in the past, it looks like it was around 30% or so. Thanks.
Choon Sen Loo, CFO
Okay. Let me answer that question. Compared to the past, the performance of our associate companies has been significantly better, particularly MTU, which has seen a substantial growth in demand for data centers, aligning well with our product offerings. Additionally, our other associate companies and joint ventures have shifted from losses to profitability, resulting in this larger number for our minority interests.
Yiming Liu, Analyst
Okay. All right. Thanks. I'm sorry, just one more question. There's an item called other operating profit or something which is pretty big. It was like RMB500 million in 2024. So I wonder how to expect that in the future. Is that going to be proportional to your revenue or something like that? Thanks.
Weng Ming Hoh, President
Sorry, can you repeat the question? I missed that.
Operator, Operator
All right. We have lost the line of Yiming. So we'll take our next question from an unidentified analyst from Pinpoint Asset Management. Please ask your question.
Pengyu Bai, Analyst
Right. Actually, I have a question: are we going to raise our price since the demand for, I think, 2 megawatt generators in China, AIDC is very strong? And as we know, the supply is fixed. So in the future, regarding 2025 and also 2026, are we going to raise our price for the generator? That's my first question.
Weng Ming Hoh, President
In terms of raising prices, there will likely be some improvement in pricing. But as it stands now, we haven't had any significant plans to increase prices. However, we believe there will be some improvement.
Pengyu Bai, Analyst
All right. Okay. Got you. So as I understand, we are going to increase our price, but it is not right now; maybe in the future. Okay. My next question is whether we are going to produce the generator set or the module by ourselves, since we only produce generators right now. So are we going to do the set in the future if the demand is very strong?
Weng Ming Hoh, President
There's no plan for that. We are actually an engine manufacturer. So we primarily produce engines for our OEM customers. If a customer specifically wants us to produce a genset, we can work on that, but that would not be our main business.
Pengyu Bai, Analyst
Okay. Got your question. So my last question is, I just heard that we already produced around 700 or 800 generators in the last year. So what is our capacity plan for 2025 and 2026? Are we going to increase it by a significant number, for example, above 100%? Can you give us some color on this question?
Kelvin Lai, General Manager of Operations
We have been planning to expand our capacity since last year. However, there are different factors to consider. Firstly, we need to increase our supply of the casting for the bigger engines and also improve our machining center capabilities. We would expect an increase of about 35% to 40% next year, and additionally, we will fill up our capacity by 2027.
Pengyu Bai, Analyst
Okay. Okay. Got you. So you just mentioned that the growth rate is about 30% to 40%. So at least for this year, we are going to have more than 1,000 2-megawatt generators capacity in this year, right? More than 1,000?
Kelvin Lai, General Manager of Operations
Yes, yes.
Pengyu Bai, Analyst
All right. Got you. And I believe that's all my questions. Thank you.
Operator, Operator
Thank you. We will now take our next phone question from the line of Andy Li from Daiwa. Please ask your question, Andy.
Andy Li, Analyst
Hi. Thank you management for taking my question. This is Andy from Daiwa. Yes, I just want to quickly clarify. I think I heard another 30% capacity increase in 2027, right?
Weng Ming Hoh, President
Yes, by 2026, yes. Hello? I mean, we start building capacity now, and the capacity will come on stream by 2026. Can you hear us, Andy Li? We lost him. Can you hear?
Choon Sen Loo, CFO
No, I can't hear anything.
Weng Ming Hoh, President
Yes, we have lost him.
Operator, Operator
We have lost the line of Andy. If you have further questions, please request to rejoin the queue. I'll be turning back to the presenters in the room for webcast questions.
Weng Ming Hoh, President
Okay. There are a few questions from the webcast. The first one is regarding the surge in demand for diesel engines driven by AI data centers. What impact do we expect on revenue growth? Could you give us some color on both revenue and net profit impacts from AI? Yes, there's a significant demand now for the data center segment of our business. We expect to see growth as previously discussed. While it will definitely impact revenue growth, we aren't ready to disclose exact figures yet. Now, on the next question related to our entry into the domestic data center market with major clients, there is indeed room for price increase, but understanding that pricing is largely influenced by tendering processes, where price transparency is considerable. It would be challenging to raise prices despite the high demand.
Kelvin Lai, General Manager of Operations
Sorry.
Weng Ming Hoh, President
You have to answer these questions? Okay. Sorry, Kelvin is calling from China. So you probably can’t see the question. Anyway, yes. We have entered the domestic data center market and have orders from large data center operators in China as well as the market.
Kelvin Lai, General Manager of Operations
So yes, as we build capacity to meet the demand we anticipate increased growth across our business segments. But it’s worth noting that overall demand is still not completely satisfied. Thus, we are optimistic for the next two years.
Choon Sen Loo, CFO
Hi. Yes. We expect spending on R&D in 2025 to remain steady or see a slight increase as we balance market demand and operational significance.
Weng Ming Hoh, President
So next question, again from the same person: does management expect growth acceleration in 2025 on the back of national policies? Yes, we do see some acceleration, but it's very challenging to estimate the magnitude at this time.
Choon Sen Loo, CFO
Yes, in fact, our second half 2024 SG&A expenses increased notably, primarily due to receivables provision, which we accounted for in 2024. Although the market was challenging, we anticipate improvements in our trade receivable provisions reflecting better conditions in 2025.
Operator, Operator
Thank you. We will now take our next phone question from the line of Andy Li from Daiwa. Please ask your question, Andy.
Andy Li, Analyst
Hi. I'm back. This is Andy. My line was cut off. Yes, thanks for the clarification. So my question is on associates and JV profit. This accounted for over 30% of your second half profit. So just wondering, could you please break down how much is from MTU Yuchai? Also, I know you have different lines of production lines for MTU. Can you walk us through which lines are for the large power generators applicable for data centers, please?
Weng Ming Hoh, President
Kelvin, do you want to take that question?
Kelvin Lai, General Manager of Operations
Regarding the product-wise breakdown, the MTU products include various center configurations. We have 12V, 12-cylinder, 16V, 16-cylinder, and also the 20V, which is the 20-cylinder engine. The bigger the engine, the better the return, as the competition is limited due to the high horsepower engine requirements.
Andy Li, Analyst
Yes. Can you provide any percentage or figures regarding MTU Yuchai's contribution to our profit?
Kelvin Lai, General Manager of Operations
Sorry. I cannot give you the exact figure.
Andy Li, Analyst
Okay. So do you start to negotiate with data center clients? What does the competition look like? Did you encounter any Chinese peers in the bidding or kind of competition?
Kelvin Lai, General Manager of Operations
The genset market is highly competitive, especially in China, as the tendering process for data centers is always transparent, making it difficult to raise prices even amid high demand. We need to win bids strategically and ensure we remain competitive.
Andy Li, Analyst
Got it. Thanks for the insights. Lastly, on your capacity expansion, can you share potential bottlenecks or issues you spend most of your time addressing?
Kelvin Lai, General Manager of Operations
The MTU joint venture has faced supply chain issues as some components are still imported from Germany. There’s a shortage of key components which has affected our assembly pace. Our partner MTU is working on additional investments with their suppliers to address these supply chain bottlenecks.
Andy Li, Analyst
Any chance you can use Chinese domestic suppliers instead of those imports?
Kelvin Lai, General Manager of Operations
We have a localization program to localize most of the engine components in China. However, some key components will still need to be sourced from our partner, which is necessary.
Andy Li, Analyst
Got it. That’s all from my side. Congratulations on the results.
Operator, Operator
Thank you. Our next question comes from the line of Yiming Liu from Haitong Securities. Please go ahead, Yiming.
Yiming Liu, Analyst
Hello. This is Yiming again. Thank you very much for having me again. So I will cut out, so I'm trying to continue with my question. From your income statement, there's a big item called other operating income, which is RMB576 million in the fiscal year 2024. I wonder if this value is proportional to your revenue, or if there are other factors impacting that? So how do we expect that in 2025 or in the future? Thanks.
Choon Sen Loo, CFO
Hi, Yiming. Thank you for your questions. Yes, in that line, we have various factors, as I mentioned earlier. This comprises income recognized according to specific projects and timing. Also, VAT rebates contribute significantly, as we're classified under advanced technology, making us eligible for rebates. Hence, there’s another part of income derived from licensing fees.
Yiming Liu, Analyst
So can we treat the majority of this value as recurring? Or what is the percentage of this value that is non-recurring in the future?
Choon Sen Loo, CFO
The recurring part will largely depend on how much we can successfully recognize based on project completions. The VAT rebate is also subject to specific applications each time. Thus, we anticipate a relatively stable income level in this area for 2025.
Yiming Liu, Analyst
Okay. I guess I see. Thank you very much.
Operator, Operator
Thank you. I'll now turn to the room for webcast questions.
Weng Ming Hoh, President
Okay. We'll answer some of the questions from the webcast. The next question is: for data center generator, are there any parts sourced from third parties that could face bottlenecks? As we previously answered, certain parts are sourced from Germany, which can lead to supply chain bottlenecks. Next, what is your capacity CAPEX plan this year and next year considering strong demand? Overall, our CAPEX plans remain consistent, but more resources will be directed towards fulfilling specific demands, such as for data centers. Regarding share repurchase plans, we have not discussed any new plans since the previous program. Lastly, can you share your revenue breakdown by domestic and export sales, to help understand product mix shifts in 2025 and their impact on ASP and gross margin? Approximately 20-25% of our unit sales are exported. We have seen this grow significantly over recent years, and the entire product mix is shifting slightly more towards marine power generation due to increased demand.
Operator, Operator
Thank you. We will now take our next phone question from an unidentified analyst. Please ask your question.
Unidentified Analyst, Analyst
Hi, what is the expected start date for shipping the new kit? Do you have an estimate of the number of units you anticipate selling and an approximate margin profile for those?
Weng Ming Hoh, President
Sorry, I didn't catch that. Can you repeat?
Unidentified Analyst, Analyst
Yes. When do you expect to start shipping the engine kits? Do you have an estimate on the number of kits and margin profile for those?
Kelvin Lai, General Manager of Operations
We need to assist in building the entire plant and help them procure the necessary equipment. I expect this whole installation, commissioning, and testing process will take about 9 to 10 months, so we could start shipping by the end of this year if everything proceeds as planned.
Unidentified Analyst, Analyst
Do you have an idea of how big this plant is going to be or how many units they expect to produce in a year?
Kelvin Lai, General Manager of Operations
The market is quite considerable. Our exports to Vietnam are approximately 20,000 to 25,000 per year. If we take over most of those orders, we could reach that number. However, we do not have concrete sales numbers since our agreement is purely a licensing arrangement.
Unidentified Analyst, Analyst
What are your expectations for in-vehicle engines this year?
Weng Ming Hoh, President
If you're inquiring about total engine sales for the year, we expect figures to range from a decrease of 5% to an increase of 10%. For marine power generation, we expect a rise of about 10% this year. While the agricultural and industrial machinery segments are also expected to show some growth, overall, we anticipate visibility to remain flat. Sorry, I cannot provide a specific number, but that's generally how the market appears.
Operator, Operator
Thank you. We have now reached the end of our question-and-answer session. I will turn the call back over to Kevin Theiss.
Operator, Operator
Thank you very much all for participating in our conference call. We wish each of you good health, and we look forward to speaking with you again next time. Thank you.
Operator, Operator
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.