Greetings and welcome to the China Automotive Systems Incorporated Second Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kevin Theiss. Please go ahead, Mr. Theiss.

Thank you for joining us today and welcome to China Automotive Systems 2015 second quarter conference call. My name is Kevin Theiss, and I’m with Grayling, China Automotives U.S. Investor Relations Advisor. Joining us today are Mr. Hanlin Chen, Chairman; Mr. Qizhou Wu, Chief Executive Officer, Mr. Jie Li, Chief Financial Officer; and Mr. Daming Hu, Chief Accounting Officer of China Automotive Systems. They will be available to answer questions later in the conference call. And we will help with translation. Before we begin, I will remind all listeners that throughout this call, we may make statements that may contain forward looking statements. Forward looking statements represent our estimates and assumptions only as of the date of this call. As a result, the company’s actual results could differ materially from those contained in these forward looking statements due to a number of factors including those described under the heading Risk Factors in the company’s Form 10-K Annual Report for the year ended December 31, 2014 filed with the Securities and Exchange Commission on March 26, 2015, respectively; and in documents filed by the company from time to time with the Securities and Exchange Commission. The company expressly disclaims any duty to provide updates to any forward looking statements made in this call whether as a result of new information, future events or otherwise. I will provide a brief overview and summary of the 2015 second quarter and six months financial results. And then I will turn to management to conduct the question-and-answer session. The 2015 second quarter and six months results are unaudited numbers, results are reported under U.S. GAAP. For our call today, I’ll review the financial results in U.S. dollars. First, let’s review the industry status and our market position for the second quarter of 2015. According to…

Thank you, sir. [Operator Instructions] At this time sir, I am seeing no further questions. I am sorry. We do have a question from Cormac Glynn of Wall Street Wonders. Please go ahead.

Good morning. Thank you for an interesting discussion. I got two or three questions to ask. What is you goal for sales in South America?

[Foreign Language]

Excuse me, do you have an interpreter?

[Foreign Language]

Okay. So Mr. Cormac, the answer is 2015 the facility in Brazil is still under construction. Our sales is light for that region, mostly to the retail market where the aftermarket sales is our main focus. In 2016 according to our CEO, Mr. Wu, our sales will reach between 70,000 to 100,000 units.

[Foreign Language]

And longer term…

[Foreign Language]

In the next two years we plan to sell 350,000 units in Brazil alone.

[Foreign Language]

What will your current expenditures be for the rest of 2015?

[Foreign Language]

To your second question, our CapEx for 2015 is around US$30 million, half of that – around half of that $13.7 million has been spent in the first six months, and mainly used for the production line for Ford and as well as our EPS product. After reflecting on your first question [Technical Difficulty] in the Fiat in Brazil.

Okay. Thank you very much.

[Foreign Language]

Thank you.

[Foreign Language]

[Operator Instructions] Our next question, yes, sir?

Go ahead.

Our next question comes from Robert Polivich. He is a Private Investor. Please go ahead.

Good morning. This is Robert Polivich. And I was wondering, I didn’t join the call in the beginning, I missed the few minutes. I was just wondering, developments with Ford in the United States and globally and also any developments with Japanese car companies?

Go ahead. Do you have more questions?

No. I guess, the other question would be, growth in 2015, what do you anticipate and is this trend slowdown in your view temporary? Thank you. I am sure that’s enough, okay.

[Foreign Language]

On Ford, we have two projects it was Ford right now, we have procured the production equipment. It’s gradually coming into our facility and the Von Shau [ph] as under final construction. Its - we expect the facility will be up and running about in sometime in late September. And beyond the project and that we are also in discussion on potential work on vehicles. So we'll make an announcement, make the announcement when we reach a conclusion.

[Foreign Language]

Okay. In terms of Japanese vehicles, OEMs, we have been in discussion with one of the major commercial vehicle producer’s Japanese brands and believe its going to come online soon. And in terms of passenger vehicles, Japanese passenger vehicle, we are also exploring with one of the OEMs. So we think it’s promising.

[Foreign Language]

Okay. So the product will be selling into Japanese, with targeting Japanese passenger vehicle is EPS. And so we're taking our time to finalize the discussion.

[Foreign Language]

In terms of 2015, honestly we don’t expect a big year for the auto sector in China.

[Foreign Language]

There is talks of potential stimulus about the Chinese government, if that happens would be coming in the – in third, late third or maybe fourth quarter, and that’s – how those economy help us in the first quarter.

[Foreign Language]

And moving on to 2016.

[Foreign Language]

Okay. So, there are some policies or potential new policies coming in, government policy will help the auto industry. And however for the step to take – for the policy to take it fast, it will take some time. We believe the second half of 2016 there will be a pick up for the sector.

[Foreign Language]

Okay. And also the Chairman likes to remind everyone, steering systems is one of the key safety components. So for us to win a customers, to expand our order, especially of the new customer, OEM customers it takes time to go through vigorous certification process and all the quality control and testing. That’s why we have to spend quite a bit of engineering resources and production, higher production resources working with all potential customers starting from the samples or prototypes and all the way down to low tax. So it would take some time, at least a year to complete a certification process and start to going to orders.

Okay. Thank you for your several answers. I appreciate it.

Thank you.

[Operator Instructions] Seeing no more questions at this time, I apologize, we do have another question. Our next question comes from Rebecca Wen of JPMorgan. Please go ahead.

[Foreign Language]?

So this is from JPMorgan's Research, Rebecca Wen. The first question she has is that [Technical Difficulty] performance and some policies or potential policy to help stimulus - stimulates the autos and she wants to know exactly what type of policy we anticipate. Secondly, she wants to know who are the large OEM customers in China Automotive Systems in China and US respectively. And the third question she has is, she wants to know the breakdown of the EPS product and HPS product in China Automotive Systems product and portfolio sales?

[Foreign Language]

So in terms of – let's answer your second question first. Our OEM customers in US is Fiat's Chrysler, now Chrysler account for 13.2% of our total revenue, and they are the largest, single largest customer for China Automotive Systems. Domestically we have GM-Wuling, we have Chery Auto, Geely, BYD, Great Wall, those are large customers of us on the passenger vehicle sector. On the commercial vehicle sector, we have just about all the major players, including Beijing Auto, Beijing [indiscernible] to name a few. [Foreign Language]

[Foreign Language]

Okay. In terms of product breakdown, EPS now account for 16% of out total earning, EPS product and this part last year so we had experienced a dramatic increase. We came starting from tens of thousands units, now this first half of year 2015 we already reached 320,000 units. On year-over-year basis we booked 75% volume increase and 90% revenue increase year-over-year.

[Foreign Language]

In terms of macro policies, stimulus policy, we see some of the new policy will be coming to help the infrastructure sector and as you know the commercial vehicle sector has suffered quite a lot in 2015 alone. And we believe if there is new policy coming into help was – continue to build out the infrastructure in China it will definitely help the commercial vehicle sector and they will also help with all the skewing business accelerating to the commercial vehicle OEM customers. And also as you already seen, Chinese government lately decided to devalue RMD currency. That tremendously helps with export oriented business like us. And we believe we will continue to increase our shipment globally and our goal is in the next five years to have our international sales to reach around 30% of our total sales.

[Foreign Language]

Yes. So basically auto industries are one of the largest industry for the GDP sense, as well as employment sense. So we believe Chinese government will have some policies of – have policies asset.

[Foreign Language]

Thank you.

Our next question comes from Frank Hu of [indiscernible] Please go ahead.

Hi. I have several [Technical Difficulty] type of pricing, the margin, given for the future, is that [Foreign Language]?

[Foreign Language]

Okay. So let me repeat Mr. Hu's question. First question is RMB currency devaluation, was that going to affect our pricing as well as margins. And that include both gross margin and operating margin. The second question regarding to land, that we have any other land for sale in the coming period?

[Foreign Language]

Okay, answers to your question. First one is the RMB devaluation, our product all types in US dollars, that’s all denominating currency for our product. So – and if the RMB devaluates like 3% as we've seen already is going to all flow into our gross margin. So it’s clear aimed for us. And also for the new customer because our product now it will become more competitive, in terms of pricing, so we believe it help us with other product support opportunity, we'll look forward to capture them. In terms of land sales, we booked one land sales in the last 18 months and that’s just one off. We don’t expect to do more and we're not in that business and just happen to be one of the higher land we have, if some wants to buy. So we don’t expect to use them in the near term, so we decided to sell. So that’s a one off activity.

[Foreign Language]

Third question is guidance, we currently are only guiding – we are providing guidance for revenue line, and he wants to know what's our expectation on margins, gross margin and operating margin?

[Foreign Language]

Its all common factors, we normally only provide the revenue guidance, yes, that’s all purchased in the last couple of years.

Okay. Thank you.

Thank you.

[Operator Instructions] Our next question is a follow up from Robert Polivich, a Private Investor.

Thank you. Thank you for taking my question. I was just wondering is there any discussion regarding share price and possible stock buyback. We've seen the sales of China Automotive trended to move higher over the last 5 years, but the share price really hasn’t moved much. And I am just wondering how do you feel about this and is there any interest to do a share buyback? Thank you.

[Foreign Language]

Okay. As you know this entire auto sector is experiencing headwind at the moment. This macro environment, we hope the macro environment to improve. But so far it’s been challenging. So in this kind of an environment we do not have any aggressive plan in terms of how to use our capital. And we are tied to reserve our cash and compare and continue to optimize our operation in this challenging environment.

Okay. Thank you.

Thank you.

Mr. Theiss, I see that there are no further questions at this time. Would you like to make any closing remarks?

Yes. Thank you. Thank you to all for participating in our second quarter 2015 financial results conference call. We look forward to speaking with you again and we wish you all a good day.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.