China Yuchai International Secures Operational Control of Nanyue Diankong (Hengyang) Industrial Technology

Overview of the Acquisition

China Yuchai International Limited (NYSE: CYD), one of China’s leading powertrain solution manufacturers, has announced a major strategic acquisition. Its main operating subsidiary, Guangxi Yuchai Machinery Company Limited (“Yuchai”), has acquired 83,918,495 shares of Nanyue Diankong (Hengyang) Industrial Technology Company Limited (“NYDK”), representing a 27.97% equity interest. The deal was completed for a consideration of approximately RMB 176.2 million in cash.

Following this transaction, Yuchai is now the second-largest shareholder of NYDK. More importantly, Yuchai has entered into a concerted action agreement with NYDK’s largest shareholder, Hunan Hengyang Auto Parts Factory. This agreement grants Yuchai operational control over NYDK, including the right to nominate six out of nine directors on its board and to designate NYDK’s general manager.

Strategic Rationale and Expected Impact

The acquisition is a significant move to strengthen Yuchai’s supply chain, especially in key components for its powertrain solutions. NYDK is recognized as a national high-tech industry leader specializing in fuel injection systems—including common rail systems, unit pumps, and mechanical pumps. Control over NYDK is expected to:

• Secure critical supply of advanced fuel injection technologies
• Enhance vertical integration and reduce supply chain risks
• Support Yuchai’s expansion into new energy and hybrid technologies
• Potentially improve margins and product reliability

Company Profile and Recent Performance

China Yuchai International, through Yuchai, is a leading Chinese manufacturer of powertrain solutions with a diverse portfolio, including diesel, natural gas, pure electric, range extenders, hybrid, and fuel cell systems. Yuchai engines are used in trucks, buses, pickups, construction and agricultural machinery, marine, and power generation applications.

In 2024, Yuchai sold 356,586 engines, consolidating its leadership position in the domestic market. The company has built a robust brand reputation, backed by a strong R&D team and reliable after-sales support. Yuchai also maintains an extensive distribution and service network throughout China and is expanding overseas.

Potential Price-sensitive Information

• Operational Control over NYDK: The concerted action agreement provides Yuchai with board majority and management appointment rights, giving it direct influence over NYDK’s strategic direction and operations.
• Supply Chain Enhancement: Full control over a high-tech supplier of key engine components may improve Yuchai’s cost structure, product quality, and innovation capabilities—factors that could positively impact future profitability and market share.
• Large Cash Outlay: The acquisition price of RMB 176.2 million represents a significant investment that shareholders should monitor for ROI and integration risks.
• Potential Expansion into New Technologies: Given NYDK’s expertise in fuel injection systems, the acquisition may accelerate Yuchai’s push into hybrid and new energy sectors, possibly influencing future growth trajectories and strategic partnerships.

Forward-Looking Statements and Risks

Management notes that all forward-looking statements are subject to risks and uncertainties, including regulatory, competitive, political, and economic factors. Shareholders are reminded that actual results may differ materially from current projections.

Investor Relations Contact

Kevin Theiss
Tel: +1-212-510-8922
Email: [email protected]
For more details, visit cyilimited.com.

Disclaimer: This article contains forward-looking statements that are subject to risks and uncertainties. Investors should review all available company filings and consult with financial advisors before making investment decisions. The information provided does not constitute investment advice and is intended for informational purposes only.

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