China Yuchai International : Evercore ISI Annual Industrial Conference Presentation

China Yuchai International Limited

China Yuchai International Ltd.

[NYSE: CYD]

March 2021

China Yuchai International Limited

This presentation 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 including, but not limited to, statements concerning the Company's operations, financial performance and condition 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-Fs 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. Among others, if the COVID-19 pandemic is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected due to a deteriorating market for automotive sales, an economic slowdown in China and abroad, a potential weakening of the financial condition of our customers, or other factors that we cannot foresee. All forward-looking statements are applicable only as of the date it is made and China Yuchai specifically disclaims any obligation to maintain or update the forward-looking information.

The financial information presented herein for the financial year ended December 31, 2019 is audited and 2020 financial information is unaudited.

China Yuchai International Ltd.

Truck and Bus engines applicationsMarine engines applicationsOff-road and Agriculture applications

Company Structure

Corporate Summary

• • GYMCL was founded in 1951

• • Leading manufacturer of a wide array of light-duty, medium-duty and heavy-duty engines for various applications

• • One of the top commercial engine suppliers in annual unit sales as ranked by the China Association of Automobile Manufacturers ("CAAM")

• • Operates the largest single facility for the production of commercial automotive and industrial engines in China

• • Engine production facilities are based in both GYMCL and its subsidiaries, total capacity of 600,000 units per annum

• • World-class R&D program with large patent portfolio

• • Over 3,000 domestic services stations, and 28 vehicle engine sales, 12 off road engine sales and 10 marine & powergen engine sales offices throughout China*

• • 13 Overseas sales office located across Asia, Europe and Latin America

* As of 31 Dec 2020

Vehicle Engine OEMs

Off Road /Marine Engine OEMs

2020 Market Overview

Market Statistics

China's economy rebounded and increased 2.3% for the year after declining in the first quarter due to the lockdowns and travel restrictions from the Covid-19 infection in early 2020

According to CAAM, commercial vehicle unit sales (diesel & others):

• 1. CV industry grew by +23.8% (excluding EV)

• 2. Truck market - YoY change for HD (+38.2%), MD (+14.2%) and LD (+19.4%) segments

• 3. Bus market - YoY change for HD (-36.4%), MD (-35.5%) and LD (-0.2%) segments

Market review - On road

• 1. HD Truck segment sales exceeded 1.6 million units creating a new record high due to new replacement demand, anti-overloading policy, strong demand from logistics industry

• 2. The HD and MD bus segments were significantly weaker as most public transit buses purchased were electric powered. EV bus sales continued to grow but slowed due to declining government incentives

Market review - Off road

• 1. Agricultural machinery sales has increased due to extended government incentive scheme to promote farming activities during Covid-19 pandemic, a significant growth in sales of harvesting machineries and tractors

• 2. Engines for construction applications grew in segments such as loaders and excavators

• 3. Marine segment declined but demand for G-drive engine has increased due to export market growth

Market Overview: Commercial Vehicles 2016-2020

China Truck Market

4000	500
3500
400
3000
2500
300
2000
200
1500
1000
100
500
0	0

China Bus Market

Total

HD

2016

MD	LD	Mini	Total	Large	Small
2017	2018	2019	2020	2016	2019

Medium

Source: China Automotive Industry Newsletter

(Powered by Diesel and Others)

20172018

China Truck Market Drivers

• • China's economic growth

• • Anti-overloading policies

• • Urbanization / logistics networks

• • Stringent emission standards

• • Covid-19 stimulus package

China Bus Market Drivers

2020

• • Rapid expansion into rural areas

• • Booming tourism

• • Continued urbanization

• • Demand affected by EV and HSR

China Yuchai Unit Sales: 2016-2020

SalesVolume

500,000

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000 -

On Road EngineOff Road EngineTotal

2016 241,312 79,112 320,424

2017 270,737 96,360 367,097

2018 268,317 107,414 375,731

2019 259,005 117,143 376,148

2020 275,398 154,922 430,320

Emission standard in China

• • National IV Emission Standard was fully enforced nationwide from 31st December 2014

• • National V emission standard was fully implemented from 1st January 2018

• • Full enforcement of off-road Tier 3 emission standards from December 2016

• • National VIa emission standard for gas engine was implemented from 1st July 2019

• • National VIa diesel engine emission regulation to be fully enforced from 1st July 2021

• • Off-road machinery (below 560kW) Tier 4 emission standard implementation is scheduled

  on 1st December 2022

• • National VIb emission standard for diesel engine is scheduled on 1st July 2023

Operations Strategy

• 1. Product Strategy

  • • Ensure all products meet current stringent emission standards and be among the first engine manufacturers compliant with future emission standards

  • • Expand HD products into marine, power gen and construction markets

  • • Develop New Energy products for hybrid and fuel cell power systems

  • • Extend product applications

• 2. Business Strategy

  • • Grow new markets with new products such as High Horsepower engines for marine and power generation segments

  • • Extend off-road engine platforms for agricultural, industrial, construction and mining machineries

  • • Nurture strategic alliances with OEM customers

  • • Grow international business

  • • Implement cost reductions through Supply Chain and Manufacturing Process improvement

  • • Explore launching more production and assembly facilities to sustain future growth

China Yuchai International Limited

China Yuchai International Ltd.

[NYSE: CYD]

Operational Overview

GYMCL Strategic Locations

Facilities & JVs

National VI Engine Assembly Plant

Engine Plant No. 5 - HD Engine Assembly Line

• • Yulin facility is the primary manufacturing facility

• • Independent R&D facilities for engine development and testing

• • Production of diesel and natural gas for various applications

• • Production of high horsepower engines for marine and power generation market

• • In-house machining plants for all major engine components

Yulin Facility

Nat VI Engine Manufacturing Plant

Engine Component Machining Plants

Engine Assembly Plant

微正压、恒温、恒湿车间 Micro-positive pressure, constant temperature and humidity workshop.

Component Foundry

Foundry Phase 1

Foundry Phase 2

•  Foundry Phase 1 and 2 are in full operation for the casting of engine blocks and heads for all engine models

•  Large Casting Foundry is fully operational since early 2015, mainly producing the casting for HHP engines

•  Total annual capacity over 1 million engine cylinder blocks and/or heads

•  One of the largest foundry and engine casting facilities in China

High Horsepower Engine Plant

Engine Assembly Line

Gantry CNC milling center A

• • Designed for HHP engine (16 liter and above) machining and assembly

• • HHP engines are mainly used for marine and power generation applications

• • Installation of Gantry CNC milling centers for cylinder block and head machining

• • New assembly line with robots and other automated processes ensure top quality standards

• • Individual automated engine painting line

• • Individual engine testing stands for comprehensive performance tests

Wuhu Y&C Power

Engine Assembly Line

Machining Center

• • Latest designed engines (10L - 13L) comply with China National V and VI emission standards

• • Production and machining lines are fully commissioned

• • Existing capacity for 30,000 units per annum (single shift operation)

• • Gas version YC6K engine is available for both on-road and off-road applications

• • YC6K13 (13L) is available for HD truck market

MTU Yuchai Power Company Ltd.

Our JV partner MTU

•  A diesel engine manufacturer specializing in high-speed, large-rating diesel engines for power generation, oil & gas, railway, marine and mining applications

•  MTU is a wholly owned subsidiary of Rolls-Royce Power Systems

The Joint Venture

•  The Joint Venture ownership of 50:50 between MTU and GYMCL

•  Main manufacturing site is located in Yulin within present GYMCL facilities

•  JV company was incorporated in January 2017

•  Total investment of RMB150M in phase 1

•  In 2020, engine production of 215 units, total sales 251 units

Existing Products Meeting Stringent Emissions Standard

Engine Series

6C/12VC/16VCCCS, ZC, ZY, IMO Certified, Tier 2,

Tier 3 Certified

6T/6TD

CCS, ZC, ZY, IMO certified, Tier 2 /T3 Certified

6K

National 5 Certified for both diesel and gas engines

6MK

National 5 , Tier 2 Certified, Tier 3 certification in progress; IMO Certified

6L

National 5 & 6 Certified; Tier 3, Euro 5 Certified

Tier 3 Certified; National 5 Certified for CNG/LPG

6G (6A)

National 5 Certified; Euro 5 certified; Nat 5 for CNG; Tier 3 certified; Hybrid

6J

National 5 Certified for CNG/LPG ; Tier 3 ; Hybrid

4G

National 5 Certified; Tier 3 certified

4A/4D/4E

National 5 Certified

4S

National 5 Certified

4Y/4FA

National 5 Certified

0

200

400

600

800

1000

3600

Power (Ps)

• • Implementation of National V emission standards nationwide in China starting from January 1, 2017 and fully implemented by January 1, 2018

• • Implementation of China T3 emission standard for off-road construction market from April 2016 and agricultural market from December 2016

China National VI Emission Standard

Compliant Engines

China National VI Emission Standard Compliant Engines

K13/K15

Engine

(500－650PS)

K09/K11

(350－460PS)

K05/K08

(190－350PS)

S04/S06

(140－270PS)

Y30

(150－160PS)

Y20/Y24

(100－140PS)

100

200

300

400

500

600

700

Power Rating (PS)

•Implementation of National VIa emission standards for gas engine starting from 1st July 2019 •Implementation of National VIa emission standards for diesel engine will start from 1st July 2020 and fully implemented by 1st July 2021

LD and MD National VI Engines

Y24 - 100-150 PS

Y30 - 130-180 PS

22

MD and HD National VI Engines

K09 - 360-400 PS K11 - 430-500 PS

23

K13 - 530-600 PS K15 - 600-650 PS

Marine and Power Generation

Engine Platform (Tier 3 & 4)

Marine and Powergen Engine t

技术来源 Source	Ricardo	FEV	FEV	AVL	AVL	AVL	AVL	FEV	FEV	FEV
技术平台 Main Platform	F	A	K	TD	C
产品平台 Product Platform	F36	A05	A08	K11	K13	TD20	TD40	12VC	16VC	20VC

20VC

Engine

16VC
（2005~3310）
12VC
（1120~2205）
TD40
（715~1345）
TD20	（441~735）
K13	（335~420）
K11
（235~330）
A08
（150~259）
A05
（95~152）
F36	（50~97）

0

4500

500

1000

1500

2000

2500

3000

Power Rating (Ps)

3500

4000

5000

Note: Implementation of China Tier 4 emission regulation for off road machinery will start from 1st December 2022

HHP Marine and Power Generation Engines

YC12VT

YC6C

YC12VC

YC16VC

• • YC6T/6TD - 16/19.5L with 550 - 900 Ps power rating, available for IMO and T2/T3 standard

• • YC6C/6CL - 40-54L with 600 - 1520 Ps power rating, available for IMO and T2/T3 standard

• • YC12VT - 12 cylinders, 33L, rated at 750 - 900 Ps, available for T2/T3 standard

• • YC12VC - 12 cylinders, 79L, rated at 1680-2700 Ps, available for IMO and T2/T3 standard

• • YC16VC - 16 cylinders, 106L, rated at 3000-3600 Ps, available for IMO and T2/T3 standard

• • YC20VC - 20 cylinders, 132L, rated at 3750-4500 Ps, available for IMO and T3 standard

China Distribution Network

China Distribution Network

• • 3,146 services stations in China

• • Regional sales centers

  • • 28 on road engine sales centers

  • • 12 off road engine sales centers

  • • 10 marine & power gen sales centers

•As of 31 December 2020

International Sales and Service Network

GYMCL International Offices

Global Sales and Service Network

• • 13 international offices

• • 248 authorized overseas service stations

* As of 31 December 2019 27

Green Technology

• • National VI Emission Standards (Equivalent to Euro VI)

  •  Full suite National VI-compliant Diesel and Natural Gas Engines are available from beginning

    of 2019.

  •  National VI-a emission standard for gas engine was implemented from 1st July 2019

  •  National VI-a standard to be nationally mandated on 1st July 2021

  •  National VI-b standard to be nationally mandated on 1st July 2023

• • National Tier 3 and 4 Emission Standards for off-road applications

  •  Off-road Tier 3 emission regulation was implemented from Dec 2016, Tier 3 engines are available for construction, agricultural and power generation markets

  •  GYMLC has launched 10 model Tier 4 engine for light - medium - and heavy-duty off-road applications for agricultural, industrial, construction and power generation markets

  •  Tier 4 emission regulation is expected nationally mandated by 1st December 2022

• • Hybrid Diesel and Gas Power Train

  •  Approx. 23k hybrid systems used in Public Transport Systems, including GYMCL's self-developed Hybrid power train

  •  Second-generation Gas engine plug-in hybrid was commercially launched in mid-2014

• • Natural Gas (CNG, LNG)

  •  Gas Engine testing center in service since 2015

  •  Complete range Gas Engine is available for both truck and bus application

  •  Dual Fuel marine and power generation engine is available for specific requirement

  •  Gas Engine Sales of 18k+ units in 2020

Cost & Technology Improvement

Lean Manufacturing

•  Promote lean manufacturing across all machining shop and engine assembly plants

•  Machining processes outsourcing to reduce capital investment

Supply Chain Improvement

•  Reduce number of suppliers through stringent vendor selection policy and establish long-term partnership program to achieve cost saving

•  Improve component sourcing standard through total quality commitment program, GYMCL has implemented new standard in 2017 at engine plants that component unpacking inspection and cleansing processes are removed prior to engine assembly

Intelligent Manufacturing

•  Implemented Intelligent Manufacturing SAP projects throughout all factories, foundry and testing centre

•  SAP system was implemented in finance, supply chain, logistics and R&D departments

V Configuration for HHP engines

•  Developing the 12VT (33L), 12VC (79L), 16VC(106L) and 20VC(132L) engines to extend HHP engines power range

R&D Capability

•  Self established the National Engineering Laboratory, an efficient, energy-saving and environment-friendly internal combustion engine testing laboratory in China, which is rated at top tier in Chinese Diesel Industry.

•  Installation of 84 engine test benches and 16 parts & components test benches (the number ranks first in the industry).

•  The measurement scope covers engines with displacement of 1~120L, and the overall R&D facilities reach the international advanced level.

R&D capability

•  Approximately 700 engineers including PhDs and Master Degree holders in the R&D team

•  Over 2,000 patents have been registered since 2004

•  Nanning R&D Institute commenced operations from October 2013

Engine innovations

•  2017: Newly developed National VI and Tier 4 compliant engines are available for performance testing and OEM trial run

•  Late 2017: YC20VC (over 4000 PS) prototype engine marked first ignition on test stand

•  2018: 24 prototype engines introduced compliant with National VI and Tier 4

•  Late 2018: Model K08 engine became the first domestic diesel engine to pass the National VI-b

•  Early 2019: Introduced the high-power marine engine for yacht class market

•  Mid 2020: Commercial launch the 65kW and 100kW range extender power system for both truck and bus applications

31

GYMCL New Energy Products

High-speed electric motor:

High rotation speed: more than 15000 rpm.

High power density, and high torque density.

New energy power

Fuel cell system

High efficiency: maximum efficiency＞70%

High integration, high power density, and ultra-low starting temperature. Wide application field

32

Integrated power generating engine power assembly system:

The engine and motor are highly integrated, with compact structure. The flywheel integrated permanent magnet motor,

Integrated bridge system

•  Highly integrated motor, motor controller,

  TCU, oil pump and sensor.

Reduce the whole vehicle weight

New generation hybrid power system:

High saving rate of fuel consumption: the oil saving rate is over 65%.

High integration, electromechanical coupling, and modular design.

GYMCL Recent Awards & Recognitions

• • GYMCL National VI engine family (up to 13L) has passed certification for National VI-b emission testing.

• • GYMCL YCK13 diesel engine won the First prize in "2020 China International Truck Fuel Saving Competition"

• • GYMCL was ranked No.5 in National Enterprise Technology Centre Award, published by China NDRC

• • Yuchai YCA05 engine has passed the European E-mark certification for Off-road machinery Stage V emission regulation

• • GYMCL enters in a new strategic alliance with Sany Truck. Sany Group is considered to be one the world's largest concrete machinery manufacturers and the number one manufacturer of construction equipment in China

• • GYMCL introduced the advanced high-powered marine engine for growing domestic marine yachts.

33

GYMCL Awards & Recognitions

China Yuchai International Limited

China Yuchai International Ltd.

[NYSE: CYD]

Business and Finance

Overview

Sales units:

Chart 1: Engine unit sales (Unit)

• • Y2016 @ 320.4K units. Declined by 12.1% due to overall flat economy 450,000 and slow down in the non-electric bus segment and agricultural

  segment of Tier-2 to Tier-3 transition - completed in December 2016.

• • Y2017 @ 367.1K units. Increased by 14.6% due to high demand in HD truck engines - anti-overloading enforcement, fleet replacement and increase in logistics services.

• • Y2018 @ 375.7K units. Increased by 2.4% due to high demand in MD truck engines and the off-road engines sales increased in 2018 compared with 2017.

• • Y2019 @ 376.1K units. increased by 0.1% due to lower demand in bus engines - moving into EV buses, while off-setting by higher demand in off-road segment - growth in Industrial engines.

• • Y2020 @ 430.3K units. Increased by 14.4% due to higher growth on Agricultural engines by 54.5% and the Trucks growth by 17.6% YoY compared with 2019.

Our product offerings

• • Wide variety of engines

• • Continual improvement of engines / emission standards

• • Development of natural gas and hybrid engines

• • Increasing sales to off-road markets - marine gen-set applications

We are a leading engine manufacturer.

• • Consistently ranked as one of the top engine manufacturers by "China Association of Automobile Manufacturers"

Chart 2: Sales Revenue (RMB million)

Chart 3: Earnings per share (US$)

* 2017 EPS includes extraordinary and one-time events

Y2020

Y2016

Y2017

Y2018

Y2019

Un-Audited

Engines sold Revenue Gross Profit Operating Profit PAT

PATMI PATMI EPS

Units RMB Million RMB Million RMB Million RMB Million RMB Million US$ Million US$ per share

320,424

13,643

367,097

16,198

2,972

375,731

16,263

3,356

980

376,148

18,016

430,320

20,581

3,092

1,604

736.0

1,319.9

525.2

3,106

3,190

1,283

974.4

888.8

$76.4

$140.4

695.3

$103.9

1,146

1,182

860.7

799.3

604.9

548.9

$85.4

$84.1

$1.91

$3.44

$2.54

$2.09

$2.06

Return on Equity

%

7.3%

12.0%

8.7%

7.4%

6.8%

* 2017 Operating profit and PAT include extraordinary and one-time events

Review of Performance

• • We consistently maintain profitability

• • Consistent earnings reflect Company's capabilities and potential

¥1,400.0

PAT - RMB Million

¥1,319.9

¥1,200.0

¥1,000.0

¥800.0

¥600.0

¥400.0

¥200.0

¥-

¥974.4
¥736.0	¥799.3

Y2020 Un-Audited 37

Y2016

Y2017

Y2018

Y2019

Financial Indicators Review

25.0%

Cash flow:

Strong historical cash flow

EBITDA:

• • RMB 1.5 Billion (2020)

• • RMB 1.4 Billion (2019)

• • RMB 1.6 Billion (2018)

Gross margin:

•	GM% = 15.5% (2020)
•	GM% = 17.2% (2019)
Y2020
•	GM% = 19.0% (2018)	Un-Audited

0.0%

20.0%

15.0%

10.0%

5.0%

PAT %

21.8% 20.7% 19.0%

17.2% 15.5%

9.9%

7.2% 6.4% 5.7% 8.2%

5.4% 6.0% 4.8% 3.8%

Gross

Profit %Operating

Profit %Y2016

Y2017

Y2018

Y2019

* 2017 Operating profit and EBITDA include extraordinary and one-time events

Balance Sheet Review

Y2020

Currency: RMB Million

Y2016

Y2017

Y2018

Y2019

Un-Audited

Total Assets

18,516

21,015

21,658

23,854

26,291

Equity for CYD

7,736

8,334

8,396

8,768

9,015

Cash & Bank Balance Total Loans

4,053

6,029

910

1,626

6,129

2,016

6,391

2,055

6,448

2,230

Gearing Ratio

[Total Loans / Total Equity] Current Ratio

9.1%

14.8%

18.1%

17.8%

18.8%

1.70

1.71

1.72

1.55

1.48

Inventory Turnover days

57

73

70

69

94

Healthy Balance Sheet

• • Strong cash position

• • Positive net cash position

• • Healthy Gearing at 18.8% (Y2020), 17.8% (Y2019), & 18.1% (Y2018)

• • Healthy current ratio 1.48 (Y2020), 1.55 (Y2019), & 1.72 (Y2018)

• • Equity for CYD grew to

RMB 9.0Bn (Y2020), RMB 8.8BN (Y2019), & RMB 8.4Bn (Y2018)

Financial Return Review

Note # Shareholders can elect to receive dividend in cash or shares

China Yuchai International Limited

China Yuchai International

[NYSE: CYD]

Thank You