China Zenix Auto International : Reports 22% Revenue Growth in two thousand seventeen 2nd Quarter

ZHANGZHOU, China , Aug. 25, two thousand seventeen /PRNewswire / — China Zenix Auto International Limited (NYSE: ZX) (‘Zenix Auto’ or ‘the Company’), the largest commercial vehicle wheel manufacturer in China in both the aftermarket and OEM market by sales volume, today announced its unaudited financial results for the 2nd quarter ended June 30, two thousand seventeen .

2nd Quarter 2017:

• Revenue was RMB781.0 million ( US$115.Two million ), up 22.1% year-over-year;
• Sales to the Chinese OEM market enhanced 76.8% year-over-year;
• Sales of aluminum wheels enhanced by 160.7% year-over-year;
• Gross margin was 11.0%;
• Net cash flow from operating activities was RMB57.Five million ( US$8.Five million ).

Very first Six Months of two thousand seventeen

• Revenue was RMB1,451.Trio million ( US$214.1 million ), up 24.6% compared with RMB1,164.9 million in the very first six months of 2016;
• Tubeless steel wheel sales enhanced by 47.3%;
• Gross margin was 13.2%;
• Net profit and total comprehensive income for the period was RMB5.0 million ( US$0.7 million ) with earnings per American Depositary Share (‘ADS’) of RMB0.Ten (US$0.01) ;
• Bank balances and cash, pledged bank deposits and immobile bank deposits with maturity period over three months totaled RMB1,096.0 million ( US$161.7 million ).

Mr. Junqiu Gao , Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto, commented, ‘We are pleased to have posted another strong top line growth in the 2nd quarter. The Chinese government’s anti-overloading campaign continued to lift request in the OEM truck market. Our top five customers such as JAC, FAW and Sinotruk all experienced sturdy growth, benefitting from the positive market dynamics. Our tubeless steel wheel, industrial equipment wheel and aluminum wheel products continued to demonstrate solid growth. On the cost side, the sharply rising steel price negatively impacted our gross margin. However, we foresee an improvement in the 2nd half of the year as we plan to raise prices and increase aluminum product shipments.’

Mr. Martin Cheung , CFO of Zenix Auto, commented, ‘We are pleased that our advanced tubeless steel wheels and aluminum wheels are gaining market share as their advantages are being realized by end users. We continued to generate positive cash flow in the 2nd quarter of two thousand seventeen as our current production capacity required modest capital expenditures, combined with a reduction in operational expenses as we become more efficient. One of our key concentrates is to maintain our financial strength and provide the resources for our future operations.’

2017 2nd Quarter Results

Revenue for the 2nd quarter was RMB781.0 million ( US$115.Two million ) from RMB639.Five million for the 2nd quarter of 2016. The increase in revenue on a year-over-year basis was mainly due to strong sales to the domestic truck OEM market driven by Chinese government enforcement against truck overloading. The increase in total revenue was also attributable to the higher price adjustment in response to the rising raw material costs.

Sales to the Chinese OEM market enlargened by 76.8% year-over-year to RMB434.1 million ( US$64.0 million ) in the 2nd quarter of two thousand seventeen compared to RMB245.Five million in the same quarter of 2016. Total unit sales in the OEM market enhanced by 35.8% year-over-year during the 2nd quarter of 2017.

Aftermarket sales in China decreased by 16.8% year-over-year to RMB239.Five million ( US$35.Trio million ) in the 2nd quarter of two thousand seventeen from RMB288.0 million in the 2nd quarter of 2016. Total unit sales in the aftermarket decreased by 30.3% year-over-year as the aftermarket wheel segment remained feeble after the reinforcement of anti-overloading regulations.

International sales enhanced by 1.2% year-over-year to RMB107.Four million ( US$15.8 million ) in the 2nd quarter of two thousand seventeen compared to sales of RMB106.1 million in the 2nd quarter of 2016. Total unit sales in the international sales decreased by Legitimate.1% year-over-year in the 2nd quarter of two thousand seventeen mainly due to continued feeble request in Southeastern Asian countries, offset by higher pricing due to the higher material cost.

In the 2nd quarter of 2017, domestic OEM sales, domestic aftermarket sales and international sales contributed 55.6%, 30.7% and 13.7% of revenue, respectively.

Sales of tubed steel wheels comprised 47.8% of two thousand seventeen 2nd quarter revenue compared to 56.2% in the same quarter in 2016. Tubeless steel wheel sales represented 42.7% of two thousand seventeen 2nd quarter revenue compared to 36.3% in the same quarter of 2016. While tubed and tubeless steel wheel sales remain the main sources of revenue for the Company, sales of aluminum wheels enhanced by 160.7% year-over-year and accounted for 6.0% 2nd quarter revenue as compared to Two.8% in the same quarter a year ago. The tightened regulation by Chinese government to curb emissions and increase road safety fueled high request for light-weight tubeless and aluminum wheels.

2nd quarter gross profit decreased by 26.6% to RMB85.9 million ( US$12.7 million ), compared to RMB117.0 million in the same quarter in 2016. Gross margin was 11.0%, compared with Legitimate.3% in the 2nd quarter of 2016. The decrease in gross margin on a year-over-year basis was mainly due to the acute rise of raw material costs. The Company raised selling prices during the 2nd quarter, but they were not high enough to offset the increase of the raw material costs.

Selling and distribution expenses decreased by Four.0% to RMB49.6 million ( US$7.Three million ) from RMB51.6 million in the 2nd quarter of 2016. The decrease in selling and distribution costs was primarily due to lower marketing and advertising expenses associated with weaker aftermarket sales in China in the 2nd quarter of two thousand seventeen compared with the same quarter last year. As a percentage of revenue, selling and distribution costs were 6.3% in the 2nd quarter of 2017, compared to 8.1% in the same quarter a year ago.

Research and development (‘R&D’) expenses decreased by 33.7% to RMB14.0 million ( US$Two.1 million ), compared to RMB21.1 million in the 2nd quarter of 2016. R&D as a percentage of revenue was 1.8% in the 2nd quarter of 2017, compared to Trio.3% in the same quarter a year ago. As the Company’s aluminum products continued to mature, R&D expenses were lowered.

Administrative expenses decreased by 14.4% to RMB29.1million ( US$Four.Three million ) from RMB34.0 million in the 2nd quarter of 2016. As a percentage of revenue, administrative expenses were Trio.7%, compared to Five.3% of revenue in the 2nd quarter of 2016.

Net loss and total comprehensive loss were RMB7.9 million ( US$1.Two million ) in the 2nd quarter of two thousand seventeen compared to net income and total comprehensive income of RMB4.6 million for the 2nd quarter of 2016.

Basic and diluted loss per ADS were RMB0.15 (US$0.02) in the 2nd quarter of two thousand seventeen compared to basic and diluted income per ADS of RMB0.09 in the 2nd quarter of 2016.

In the 2nd quarter of 2017, the Company recorded net cash inflows from operating activities of RMB57.Five million ( US$8.Five million ). Effective collection of large sums of account receivables positively affected operating cash-flows. Days Sales Outstanding (DSO) remained at sixty six days in the 2nd quarter of 2017, vapid in comparison with sixty eight days during the utter year of 2016. Capital expenditures for the purchase of property, plant and equipment in the 2nd quarter were RMB 0.Trio million (US$38,000) .

During the 2nd quarter of two thousand seventeen and 2016, the weighted average number of ordinary shares was 206.Five million and the weighted average number of ADSs was 51.6 million.

2017 Very first Six Months Results

Revenue for the very first six months ended June 30, two thousand seventeen was RMB1,451.Three million ( US$214.1 million ) compared with RMB1,164.9 million in the very first six months of 2016.

Aftermarket sales declined by 13.6% year-over-year to RMB471.1 million ( US$Sixty nine.Five million ) in the very first six months of 2017, and represented 32.5% of total six-month revenue. Sales to the Chinese OEM market enlargened by 86.4% year-over-year to RMB781.7 million ( US$115.Trio million ) and represented 53.9% of revenue. International sales decreased by 1.0% year-over-year to RMB198.6 million ( US$29.Trio million ) compared with the same period last year, and represented 13.6% of revenue.

Tubed steel wheel sales for the very first six months ended June 30, two thousand seventeen enlargened by Four.3% compared with the same period in two thousand sixteen and comprised 46.5% of revenue. Tubeless steel wheel sales enhanced by 47.3% from the same period a year ago and comprised 44.0% of revenue.

Gross profit for the very first six months ended June 30, two thousand seventeen was RMB191.6 million ( US$28.Three million ) compared with RMB217.6 million during the same period in 2016, down 11.9% year-over-year. Gross margin was 13.2% compared with Legal.7% in the same period last year. Profit before taxation was RMB8.Two million ( US$1.Two million ), compared with profit before taxation of RMB6.0 million during the very first six months of 2016.

Net profit and total comprehensive income for the very first six months ended June 30, two thousand seventeen , was RMB5.0 million ( US$0.7 million ) compared with RMB1.7 million during the same period in 2016. Basic and diluted earnings per ordinary share and per ADS for the very first six months ended June 30, two thousand seventeen were RMB0.02 (US$0.00) and RMB0.Ten (US$0.01) , respectively.

As of June 30, two thousand seventeen , Zenix Auto had bank balances and cash of RMB770.1 million ( US$113.6 million ) and immobile bank deposits with a maturity period over three months of RMB290.0 million ( US$42.8 million ). Total bank borrowings were RMB558.0 million ( US$82.Trio million ). Total equity attributable to owners of the Company was RMB2,542.6 million ( US$375.0 million ).

Conference Call Information

The Company will host a conference call, to be at the same time webcast, on Friday, August 25, two thousand seventeen at 8:00 a.m. ET / 8:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-877-407-0782 (U.S. Toll Free) or +1-201-689-8567 (International). Please dial in five minutes before the call begin time and ask to be connected to the ‘China Zenix Auto’ conference call.

A replay will be available shortly after the conclusion of the conference call through September 25, two thousand seventeen , at 8:00 a.m. ET . Interested parties may access the replay by dialing +1-877-481-4010 (U.S. Toll Free) or +1-919-882-2331 (International) and using Conference ID nineteen thousand eight hundred sixty four to access the replay.

The United States dollar (US$) amounts disclosed in this press release are introduced solely for the convenience of the reader. All translations from RMB to U.S. dollars are made at a rate of RMB6.7793 to US$1.00 , the effective noon buying rate as of June 30, two thousand seventeen in The City of Fresh York , for cable transfers of RMB as set forward in the H.Ten weekly statistical release of the Federal Reserve Board. The percentages stated are calculated based on RMB amounts.

About China Zenix Auto International Limited

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