Stock Code: 000570, 200570 Stock Name: Changchai, Changchai-B Announcement No. 2023-005
CHANGCHAI COMPANY, LIMITEDANNUAL REPORT 2022 (SUMMARY)Part I Important NotesThis Summary is based on the full Annual Report of Changchai Company, Limited (together with its consolidatedsubsidiaries, the “Company”, except where the context otherwise requires). In order for a full understanding of theCompany’s operating results, financial position and future development plans, investors should carefully read theaforesaid full text, which has been disclosed together with this Summary on the media designated by the ChinaSecurities Regulatory Commission (the “CSRC”).All the directors of the Company attended in person the board meeting for the approval of this Report.Independent auditor’s modified opinion:
□ Applicable √ Not applicable
Board-approved final cash and/or stock dividend plan for ordinary shareholders for the Reporting Period:
√ Applicable □ Not applicable
Bonus issue from capital reserves:
□ Yes √ No
The Board has approved a final dividend plan for ordinary shareholders as follows: based on the 705,692,507 shares,a cash dividend of RMB0.10 (tax inclusive) per 10 shares is to be distributed to the shareholders, with no bonusissue from either profit or capital reserves.Board-approved final cash and/or stock dividend plan for preferred shareholders for the Reporting Period:
□ Applicable √ Not applicable
This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies ormisunderstandings between the two versions, the Chinese versions shall prevail.
Part II Key Corporate Information
1. Stock Profile
| Stock name | Changchai， Changchai-B | Stock code | 000570, 200570 |
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Contact information | Board Secretary | Securities Representative |
| Name | He Jianjiang | |
| Address | 123 Huaide Middle Road, Changzhou, Jiangsu, China | |
| Fax | （86）519-86630954 | |
| Tel. | （86）519-68683155 | |
| Email address | cchjj@changchai.com |
2. Principal Activities or Products in the Reporting Period
1. Principal Operations of the Company
We mainly specialize in the R&D, manufacture and sales of diesel engines under the brand "Changchai" andgasoline engines under the brand "Robin". Our products are mainly used in agricultural machinery, smallengineering machinery, light commercial vehicles, generator sets and shipborne machinery and other fields closelyrelated to people's livelihood.In the Reporting Period, there were no major changes in the Company's core business and main products.
2. Main Products of the Company
Our main products are divided into two categories: diesel engines and gasoline engines. The details are as follows:
| Main products | Graphic display | Product description | Product features | Application fields |
| Diesel engine | Our diesel engine products include single-cylinder diesel engines and multi-cylinder engines, covering power range from 1.62kW to 117.6kW, and cylinder diameters from 65mm to 135mm, with one or more cylinders. Besides sale in domestic market, our diesel engines are sold to Southeast Asia, South America, the Middle East and Africa. | High power, low oil consumption, low noise, compact structure, low emission, good reliability | Agricultural machinery, construction machinery, generator sets, shipborne machinery | |
| Gasoline engine | Our gasoline engines are mainly general-purpose small gasoline engines, covering the power range from 1.5kW to 7.0kW. Besides sale in domestic market, our gasoline engines are sold to Southeast Asia, the Middle East, Europe and America, Africa, Japan and other countries and regions. | Simple structure, good reliability, easy maintenance | Agricultural machinery, small construction machinery |
3. Industry Review
(1) Basic information on the industry
The internal combustion engine is an important support for China's manufacturing industry security, energy securityand national defense security, and an important basic industry of national economy and national defense
construction. The internal combustion engine is the most power-dense, thermally efficient and widely used heatengine power unit.In order to implement the national overall development strategy of energy conservation, emission reduction,transformation, and upgrading, the internal combustion engine industry and agricultural machinery industry willstrengthen independent innovation and research and development, accelerate the construction of a common basictechnology platform, optimize the construction of the upstream and downstream industry chain, implementintelligent manufacturing, and actively carry out international exchange and cooperation to accelerate the realizationof industrial technology upgrading.
(2) Development pattern and trend of the industry
In terms of policies, at the beginning of 2023, the 20th No. 1 Document guiding the work on agriculture, rural areas,and farmers issued by the central government demonstrated the government’s intention to attach greater importanceto agriculture and strengthen agricultural development. In a bid to do so, the government will step up efforts toenhance agricultural science and technology and provide more equipment, drive to tackle key problems of key andcore technologies in agriculture, and make agricultural machinery more intelligent and automated. In terms ofindustry concerns, the upgrade and conversion to products that meet the National Emission Standard IV raisechallenges to enterprises. At the end of 2022, the central government appropriated RMB211.5 billion ofagriculture-related transfer payment funds for 2023 in advance, including RMB14.5 billion for subsidies ofagricultural machinery procurement and application. The central government allocated substantive funds forsubsidies and implemented policies to strengthen agriculture and benefit farmers, indicating that the state willcontinue to attach great importance to agricultural mechanization.In terms of industrial development, after a ten-year golden period of development, since 2016, the entire agriculturalmachinery industry has entered a period of deep adjustment that has lasted for years. Although short-term explosivegrowth was seen in 2020, it went down again, entering a phase of updating existing machinery from the growth ofnew machine procurement. 2022, the first year of switching to the National Emission Standard IV for Non-roadVehicles, the agricultural machinery industry faced pressures such as the shrinking of the demand side, prematuremarket overdraft, participation of tycoons from other industries, and the impact of new energy market on thetraditional market. Currently, multiple segmented scenarios still require all-weather and continuous input and output,which is an advantage of diesel engines that cannot be substituted in a short time. Furthermore, new developmentopportunities have been brought about in the process of national strategic deployment and acceleration oftransformation and upgrade. Therefore, the traditional market of agricultural machinery still has a brilliant future.China's diesel engine and gasoline engine industries present a pattern of multiple competitions. As the state adopts
increasingly strict environmental protection policy and the emission standards continue to upgrade, the coretechnology and key parts of internal combustion engines will be rapidly developed and applied, and the research,development, promoting and application of environmentally friendly and efficient diesel engines and gasolineengines will become the mainstream trend, which promotes the wide use of the fuel injection system,high-efficiency supercharger and high-efficiency after-treatment. In the new normal, the internal combustion engineindustry and agricultural machinery industry will improve the industry's capability of independent innovation,support the whole machine development, and organize and implement green manufacturing and intelligentmanufacturing, so as to improve the overall strength of the industry. The market share of diesel and gasoline enginesis gradually concentrated in a few large-scale enterprises with technical and capital strength.The present development trend of internal combustion engine industry is as follows: (1) energy saving and emissionreduction; (2) intelligent manufacturing; (3) lightweight. Medium- and low-end internal combustion engines withlow technical content and low added value will be gradually squeezed out of the market. The upgrade of emissionstandards and the market's demand for high-end products will eliminate those small enterprises with low level ofresearch and development or less technology reserves.
(3) Sales of internal combustion engine industry in 2022
The total volume of the market dropped significantly due to factors such as subsidy policy change, tight supplychain, upgrading of the National Emission Standard IV for Non-road Vehicles, and intensified existing competition.The total sales of internal combustion engines in 2022 were 43,154,700 units, a decrease of 14.51% compared to2021. The total sales of diesel engines for the year were 4,286,600 units, down by 29.82% year on year. Specifically,837,200 engines for construction machinery, 1,222,300 engines for agricultural machinery, 39,700 engines forshipborne machinery, and 311,700 engines for electricity generation were sold. The sales of gasoline internalcombustion engines were 38,856,000, a drop of 12.39% year on year.On the whole, the internal combustion engine market showed a declining tendency for the whole year, with theconstruction and agricultural machinery still showing an adjustment trend. The agricultural machinery industryfaced a major shakeout, focusing on the switching of products that meet the China IV emission standards fornon-road mobile machinery. According to the information on the subsidies of agricultural machinery procurement,the main terminal products that need to be upgraded to meet China IV emission standards are large and mediumtractors, wheat harvesters, forage harvesters, and spray rod-type sprayers. The market paid more attention towhether they can be adequately verified to meet China IV emission standards and whether mass production can berealized. In the second half of 2022, the sales of large and medium tractors, wheat harvesters, and corn harvesterspeaked, showing that the traditional demand cycle was altered.
In terms of the segments of the internal combustion engine market, in 2022, 897,300 units of constructionmachinery were sold, down by 21.00% year on year; 4,141,300 units of agricultural machinery were sold, down by
22.87% year on year; 39,700 units of shipborne machinery were sold, down by 1.18% year on year; 1,253,000 unitsof generator sets were sold, down by 19.02 year on year; and 1,645,400 units of horticultural machinery were sold,down by 34.15% year on year. Compared with last year, the year-over-year growth of all kinds of machinery wasnegative.Due to the impact of international trade and the characteristics of the enterprise scale, the internal combustionengine industry was steady and showed a positive trend on the whole. In 2022, the total volume of imports andexports was USD30,086 million, down by 2.47% year on year; specifically, the import volume was USD8,803million, down by 18.63% year on year and the export volume was USD21,284 million, up by 6.27% year on year.
4. The Company's position in the market
We mainly specialize in the R&D, manufacture and sales of diesel engines under the brand "Changchai" andgasoline engines under the brand "Robin". Up to now, we have successfully developed a number of advanced coretechnologies with independent intellectual property rights. In terms of diesel engine, according to the statistics ofChina Internal Combustion Engine Industry Association (CICEIA), as the largest small- and medium-sizedsingle-cylinder diesel engine manufacturer in the agricultural machinery industry of China, we have maintained ahigh market share of single-cylinder engines, and our market share of single-cylinder diesel engines of some powerranges has ranked first in China. For many years, in the process of achieving steady economic development of theenterprise, we developed in a sound manner and cultivated the "Changchai" brand, a famous small diesel enginebrand of China with independent intellectual property rights.
3. Key Financial Information
(1) Key Financial Information of the Past Three Years
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
Unit: RMB
| 2022 | 2021 | 2022-over-2021 change (%) | 2020 | |
| Operating revenue (RMB) | 2,182,043,095.61 | 2,452,430,515.60 | -11.03% | 2,296,464,711.24 |
| Net profit attributable to the listed company’s shareholders (RMB) | 76,684,796.91 | 103,006,232.54 | -25.55% | 52,432,443.05 |
| Net profit attributable to the listed company’s | -73,636,511.02 | 5,329,092.87 | —— | 25,483,147.57 |
| shareholders before exceptional gains and losses (RMB) | ||||
| Net cash generated from/used in operating activities (RMB) | 364,930,277.84 | -266,323,779.30 | —— | 251,796,654.53 |
| Basic earnings per share (RMB/share) | 0.1087 | 0.1657 | -34.40% | 0.0934 |
| Diluted earnings per share (RMB/share) | 0.1087 | 0.1657 | -34.40% | 0.0934 |
| Weighted average return on equity (%) | 2.51% | 3.86% | -1.35% | 2.40% |
| 31 December 2022 | 31 December 2021 | Change of 31 December 2022 over 31 December 2021 (%) | 31 December 2020 | |
| Total assets (RMB) | 5,219,359,853.42 | 4,860,382,961.26 | 7.39% | 3,952,954,464.45 |
| Equity attributable to the listed company’s shareholders (RMB) | 3,284,710,665.90 | 3,077,550,018.33 | 6.73% | 2,273,349,347.02 |
(2) Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 675,718,729.65 | 502,503,762.39 | 545,599,669.07 | 458,220,934.50 |
| Net profit attributable to the listed company’s shareholders | -31,087,265.83 | 16,491,996.22 | 150,405,621.57 | -59,125,555.05 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | -12,317,891.45 | 6,508,531.38 | -5,566,500.16 | -62,260,650.79 |
| Net cash generated from/used in operating activities | -47,199,474.48 | -27,101,026.64 | -8,250,338.30 | 447,481,117.26 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differsmaterially from what have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
4. Share Capital and Shareholder Information at the Period-End
(1) Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well asHoldings of Top 10 Shareholders
Unit: share
| Number of ordinary shareholders at the period-end | 50,886 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 49,998 | Number of preferred shareholders with resumed voting rights at the period-end | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report | 0 | |||||
| Top 10 shareholders | ||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Restricted shares held | Shares in pledge or frozen | |||||||
| Status | Shares | |||||||||||
| Changzhou Investment Group Co., Ltd | State-owned legal person | 32.26% | 227,663,417 | 56,818,181 | ||||||||
| Chen Jian | Domestic natural person | 0.71% | 4,979,900 | |||||||||
| MORGAN STANLEY & CO. INTERNATIONAL PLC. | Foreign legal person | 0.45% | 3,146,392 | |||||||||
| KGI ASIA LIMITED | Foreign legal person | 0.44% | 3,101,695 | |||||||||
| Yang Xuee | Domestic natural person | 0.37% | 2,611,500 | |||||||||
| China Minsheng Bank-Goldstate Yuanqi Dynamic Asset Allocation Mixed Type Securities Investment Fund | Other | 0.36% | 2,530,800 | |||||||||
| CLSA Asset Management Limited-Clients’ Capital | Foreign legal person | 0.25% | 1,780,068 | |||||||||
| Dai Wenping | Domestic natural person | 0.25% | 1,776,200 | |||||||||
| Li Suinan | Domestic natural person | 0.22% | 1,569,100 | |||||||||
| Huang Guoliang | Domestic natural person | 0.22% | 1,528,891 | |||||||||
| Related or acting-in-concert parties among the shareholders above | It is unknown whether there is among the top 10 public shareholders and the top 10 unrestricted public shareholders any related parties or acting-in-concert parties as defined in the Administrative Measures for Information Regarding Shareholding Alteration. | |||||||||||
| Top 10 shareholders involved in securities margin trading (if any) | Shareholders Chen Jian and Dai Wenping held 3,320,000 and 1,610,200 shares respectively in the Company through their margin accounts. |
(2) Number of Preferred Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
No preferred shareholders in the Reporting Period.
(3) Ownership and Control Relations between the Actual Controller and the Company
5. Outstanding Bonds at the Date when this Report Was Authorized for Issue
□ Applicable √ Not applicable
Part III Significant Events
(1) The Sixth Extraordinary Meeting of the Board of Directors in 2021 held by the Company on 28 October 2021deliberated on and approved the Proposal on Participation in Bidding for 41.5% Equity Interests in ZhenjiangSiyang Diesel Engine Manufacturing Co., Ltd., authorizing the Management of the Company to participate inbidding for 41.5% equity interest in Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd. (hereinafter referredto as "Zhenjiang Siyang") that had been put out for sale by Jiangsu Keda Assets Marketing Co., Ltd. (hereinafter,“Keda Assets”). On 12 January 2022, Jiangsu Assets and Equity Exchange Co., Ltd. issued the Confirmation ofTransaction on the Transfer of 41.5% Equity Interests (Corresponding to Capital Contribution of RMB830,000) inZhenjiang Siyang Diesel Engine Manufacturing Co., Ltd. The Company won the bid for the 41.5% equity interestsin Zhenjiang Siyang at a price of RMB33,520,800.00. On 23 February 2022, the Company signed the Contract on
Transfer of State-owned Property Rights with Keda Assets. On 9 March 2022, Zhenjiang Siyang has completed therelevant registration alteration formalities with the competent industrial and commercial administration. On 16 May2022, Zhenjiang Siyang held meetings of shareholders, the Board of Directors and the Supervisory Committee toelect and appoint new members for the Board of Directors, the Supervisory Committee and management, with theCompany taking over half of the seats in the Board of Zhenjiang Siyang. As such, Zhenjiang Siyang has beenincluded in the consolidated financial statements of the Company.
(2) On 25 August 2022, the Company held the Fourth Interim Meeting of the Board of Directors and the FourthInterim Meeting of the Supervisory Committee in 2022 and deliberated and approved the Proposal on Planning toParticipate in Capital Increase and Share Expansion and Related Transactions of Jiangsu Horizon New EnergyTechnology Co., Ltd., agreeing to increase RMB75 million capital to Horizon New Energy for the subscription ofits newly registered capital of RMB18,844,200 and authorizing Shi Xinkun, the Company’s Chairman, to signcapital increase agreements with related parties. In August 2022, Horizon New Energy and its shareholders signedthe Capital Increase Agreement of Jiangsu Horizon New Energy Technology Co., Ltd., agreeing that the registeredcapital of Horizon New Energy was increased from RMB1,405,622,491 to RMB1.75 billion. In October 2022,Horizon New Energy completed the industrial and commercial change registration procedures according to theaforesaid capital increase agreement and obtained the new business license.