Changchai Company Limited Annual Report 2022 (Summary)

Stock Code: 000570 200570 Stock Name: Changchai Changchai-B Announcement No. 2023-005

CHANGCHAI COMPANY LIMITED

ANNUAL REPORT 2022 (SUMMARY)

Part I Important Notes

This Summary is based on the full Annual Report of Changchai Company Limited (together with its consolidated

subsidiaries the “Company” except where the context otherwise requires). In order for a full understanding of the

Company’s operating results financial position and future development plans investors should carefully read the

aforesaid full text which has been disclosed together with this Summary on the media designated by the China

Securities 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 705692507 shares

a cash dividend of RMB0.10 (tax inclusive) per 10 shares is to be distributed to the shareholders with no bonus

issue 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 or

misunderstandings between the two versions the Chinese versions shall prevail.Part II Key Corporate Information

1. Stock Profile

Changchai，Stock name Stock code 000570 200570

Changchai-B

Stock exchange for stock listing Shenzhen Stock Exchange

1Changchai Company Limited Annual Report 2022 (Summary)

Contact information Board Secretary Securities Representative

Name He Jianjiang

123 Huaide Middle Road

Address

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" and

gasoline engines under the brand "Robin". Our products are mainly used in agricultural machinery small

engineering machinery light commercial vehicles generator sets and shipborne machinery and other fields closely

related 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 Product Application

Graphic display Product description

products features fields

Our diesel engine products include

single-cylinder diesel engines and

High power low Agricultural

multi-cylinder engines covering

oil consumption machinery

power range from 1.62kW to

low noise construction

Diesel 117.6kW and cylinder diameters from

compact machinery

engine 65mm to 135mm with one or more

structure low generator sets

cylinders. Besides sale in domestic

emission good shipborne

market our diesel engines are sold to

reliability machinery

Southeast Asia South America the

Middle East and Africa.Our gasoline engines are mainly

general-purpose small gasoline

engines covering the power range Simple structure Agricultural

Gasoline from 1.5kW to 7.0kW. Besides sale in good reliability machinery small

engine domestic market our gasoline engines easy construction

are sold to Southeast Asia the Middle maintenance machinery

East Europe and America Africa

Japan and other countries and regions.

3. Industry Review

(1) Basic information on the industry

The internal combustion engine is an important support for China's manufacturing industry security energy security

and national defense security and an important basic industry of national economy and national defense

2Changchai Company Limited Annual Report 2022 (Summary)

construction. The internal combustion engine is the most power-dense thermally efficient and widely used heat

engine 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 will

strengthen independent innovation and research and development accelerate the construction of a common basic

technology platform optimize the construction of the upstream and downstream industry chain implement

intelligent manufacturing and actively carry out international exchange and cooperation to accelerate the realization

of 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 importance

to agriculture and strengthen agricultural development. In a bid to do so the government will step up efforts to

enhance agricultural science and technology and provide more equipment drive to tackle key problems of key and

core technologies in agriculture and make agricultural machinery more intelligent and automated. In terms of

industry concerns the upgrade and conversion to products that meet the National Emission Standard IV raise

challenges to enterprises. At the end of 2022 the central government appropriated RMB211.5 billion of

agriculture-related transfer payment funds for 2023 in advance including RMB14.5 billion for subsidies of

agricultural machinery procurement and application. The central government allocated substantive funds for

subsidies and implemented policies to strengthen agriculture and benefit farmers indicating that the state will

continue to attach great importance to agricultural mechanization.In terms of industrial development after a ten-year golden period of development since 2016 the entire agricultural

machinery industry has entered a period of deep adjustment that has lasted for years. Although short-term explosive

growth was seen in 2020 it went down again entering a phase of updating existing machinery from the growth of

new machine procurement. 2022 the first year of switching to the National Emission Standard IV for Non-road

Vehicles the agricultural machinery industry faced pressures such as the shrinking of the demand side premature

market overdraft participation of tycoons from other industries and the impact of new energy market on the

traditional 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 development

opportunities have been brought about in the process of national strategic deployment and acceleration of

transformation 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

3Changchai Company Limited Annual Report 2022 (Summary)

increasingly strict environmental protection policy and the emission standards continue to upgrade the core

technology 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 gasoline

engines 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 engine

industry 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 intelligent

manufacturing so as to improve the overall strength of the industry. The market share of diesel and gasoline engines

is 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 emission

reduction; (2) intelligent manufacturing; (3) lightweight. Medium- and low-end internal combustion engines with

low technical content and low added value will be gradually squeezed out of the market. The upgrade of emission

standards and the market's demand for high-end products will eliminate those small enterprises with low level of

research 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 supply

chain 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 43154700 units a decrease of 14.51% compared to

2021. The total sales of diesel engines for the year were 4286600 units down by 29.82% year on year. Specifically

837200 engines for construction machinery 1222300 engines for agricultural machinery 39700 engines for

shipborne machinery and 311700 engines for electricity generation were sold. The sales of gasoline internal

combustion engines were 38856000 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 the

construction and agricultural machinery still showing an adjustment trend. The agricultural machinery industry

faced a major shakeout focusing on the switching of products that meet the China IV emission standards for

non-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 medium

tractors wheat harvesters forage harvesters and spray rod-type sprayers. The market paid more attention to

whether they can be adequately verified to meet China IV emission standards and whether mass production can be

realized. In the second half of 2022 the sales of large and medium tractors wheat harvesters and corn harvesters

peaked showing that the traditional demand cycle was altered.

4Changchai Company Limited Annual Report 2022 (Summary)

In terms of the segments of the internal combustion engine market in 2022 897300 units of construction

machinery were sold down by 21.00% year on year; 4141300 units of agricultural machinery were sold down by

22.87% year on year; 39700 units of shipborne machinery were sold down by 1.18% year on year; 1253000 units

of generator sets were sold down by 19.02 year on year; and 1645400 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 was

negative.Due to the impact of international trade and the characteristics of the enterprise scale the internal combustion

engine industry was steady and showed a positive trend on the whole. In 2022 the total volume of imports and

exports was USD30086 million down by 2.47% year on year; specifically the import volume was USD8803

million down by 18.63% year on year and the export volume was USD21284 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" and

gasoline engines under the brand "Robin". Up to now we have successfully developed a number of advanced core

technologies with independent intellectual property rights. In terms of diesel engine according to the statistics of

China Internal Combustion Engine Industry Association (CICEIA) as the largest small- and medium-sized

single-cylinder diesel engine manufacturer in the agricultural machinery industry of China we have maintained a

high market share of single-cylinder engines and our market share of single-cylinder diesel engines of some power

ranges has ranked first in China. For many years in the process of achieving steady economic development of the

enterprise we developed in a sound manner and cultivated the "Changchai" brand a famous small diesel engine

brand 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-over-2021

202220212020

change (%)

Operating revenue

2182043095.612452430515.60-11.03%2296464711.24

(RMB)

Net profit attributable to

the listed company’s 76684796.91 103006232.54 -25.55% 52432443.05

shareholders (RMB)

Net profit attributable to

-73636511.025329092.87——25483147.57

the listed company’s

5Changchai Company Limited Annual Report 2022 (Summary)

shareholders before

exceptional gains and

losses (RMB)

Net cash generated

from/used in operating 364930277.84 -266323779.30 —— 251796654.53

activities (RMB)

Basic earnings per share

0.10870.1657-34.40%0.0934

(RMB/share)

Diluted earnings per

0.10870.1657-34.40%0.0934

share (RMB/share)

Weighted average return

2.51%3.86%-1.35%2.40%

on equity (%)

Change of 31

31 December December 2022

31 December 2022 31 December 2020

2021 over 31 December

2021(%)

Total assets (RMB) 5219359853.42 4860382961.26 7.39% 3952954464.45

Equity attributable to the

listed company’s 3284710665.90 3077550018.33 6.73% 2273349347.02

shareholders (RMB)

(2) Key Financial Information by Quarter

Unit: RMB

Q1 Q2 Q3 Q4

Operating revenue 675718729.65 502503762.39 545599669.07 458220934.50

Net profit attributable to the

-31087265.8316491996.22150405621.57-59125555.05

listed company’s shareholders

Net profit attributable to the

listed company’s shareholders

-12317891.456508531.38-5566500.16-62260650.79

before exceptional gains and

losses

Net cash generated from/used in

-47199474.48-27101026.64-8250338.30447481117.26

operating activities

Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs

materially 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 as

Holdings of Top 10 Shareholders

Unit: share

6Changchai Company Limited Annual Report 2022 (Summary)

Number of

Number of Number of

preferred

ordinary preferred

Number of shareholders

shareholders shareholders

ordinary with resumed

at the with

shareholder 50886 49998 0 voting rights at 0

month-end resumed

s at the the month-end

prior to the voting rights

period-end prior to the

disclosure of at the

disclosure of

this Report period-end

this Report

Top 10 shareholders

Sharehold Shares in pledge or

Total shares

Nature of ing Restricted frozen

Name of shareholder held at the

shareholder percentag shares held

period-end

e Status Shares

Changzhou Investment State-owned

32.26%22766341756818181

Group Co. Ltd legal person

Domestic

Chen Jian natural 0.71% 4979900

person

MORGAN STANLEY

& CO. Foreign

0.45%3146392

INTERNATIONAL legal person

PLC.Foreign

KGI ASIA LIMITED 0.44% 3101695

legal person

Domestic

Yang Xuee natural 0.37% 2611500

person

China Minsheng

Bank-Goldstate Yuanqi

Dynamic Asset

Other 0.36% 2530800

Allocation Mixed Type

Securities Investment

Fund

CLSA Asset

Foreign

Management 0.25% 1780068

legal person

Limited-Clients’ Capital

Domestic

Dai Wenping natural 0.25% 1776200

person

Domestic

Li Suinan natural 0.22% 1569100

person

Domestic

Huang Guoliang natural 0.22% 1528891

person

It is unknown whether there is among the top 10 public shareholders

Related or acting-in-concert parties and the top 10 unrestricted public shareholders any related parties or

among the shareholders above acting-in-concert parties as defined in the Administrative Measures

for Information Regarding Shareholding Alteration.

7Changchai Company Limited Annual Report 2022 (Summary)

Shareholders Chen Jian and Dai Wenping held 3320000 and

Top 10 shareholders involved in

1610200 shares respectively in the Company through their margin

securities margin trading (if any)

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 2021

deliberated on and approved the Proposal on Participation in Bidding for 41.5% Equity Interests in Zhenjiang

Siyang Diesel Engine Manufacturing Co. Ltd. authorizing the Management of the Company to participate in

bidding for 41.5% equity interest in Zhenjiang Siyang Diesel Engine Manufacturing Co. Ltd. (hereinafter referred

to 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 of

Transaction on the Transfer of 41.5% Equity Interests (Corresponding to Capital Contribution of RMB830000) in

Zhenjiang Siyang Diesel Engine Manufacturing Co. Ltd. The Company won the bid for the 41.5% equity interests

in Zhenjiang Siyang at a price of RMB33520800.00. On 23 February 2022 the Company signed the Contract on

8Changchai Company Limited Annual Report 2022 (Summary)

Transfer of State-owned Property Rights with Keda Assets. On 9 March 2022 Zhenjiang Siyang has completed the

relevant registration alteration formalities with the competent industrial and commercial administration. On 16 May

2022 Zhenjiang Siyang held meetings of shareholders the Board of Directors and the Supervisory Committee to

elect and appoint new members for the Board of Directors the Supervisory Committee and management with the

Company taking over half of the seats in the Board of Zhenjiang Siyang. As such Zhenjiang Siyang has been

included 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 Fourth

Interim Meeting of the Supervisory Committee in 2022 and deliberated and approved the Proposal on Planning to

Participate in Capital Increase and Share Expansion and Related Transactions of Jiangsu Horizon New Energy

Technology Co. Ltd. agreeing to increase RMB75 million capital to Horizon New Energy for the subscription of

its newly registered capital of RMB18844200 and authorizing Shi Xinkun the Company’s Chairman to sign

capital increase agreements with related parties. In August 2022 Horizon New Energy and its shareholders signed

the Capital Increase Agreement of Jiangsu Horizon New Energy Technology Co. Ltd. agreeing that the registered

capital of Horizon New Energy was increased from RMB1405622491 to RMB1.75 billion. In October 2022

Horizon New Energy completed the industrial and commercial change registration procedures according to the

aforesaid capital increase agreement and obtained the new business license.

9