Ladies and gentlemen, thank you for standing by and welcome to the China Yuchai International Limited’s Fourth Quarter and Full Year 2012 Earnings Conference Call and Webcast. At this point in time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advice you that this conference is being recorded today Wednesday 27 of February 2013. I would now like to hand the conference over to Mr. Kevin Theiss. Thank you, sir. Please go ahead.

Thank you for joining us today, and welcome to China Yuchai International Limited’s fourth quarter and full-year 2012 earnings conference call and webcast. My name is Kevin Theiss, and I am with Grayling, China Yuchai’s U.S. Investor Relations Advisor. Joining us today are Mr. Benny H. Goh, and Mr. Kok Ho Leong, President and Chief Financial Officer of CYI respectively. Before we begin, I will remind all listeners that throughout this call we may make statements that 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, intend, aim, will or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical facts are statements that may be deemed forward-looking statements. These forward-looking statements are based on current expectations or beliefs, included, but not limited to, statements concerning the Company’s operations, financial performance and condition. 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, including those discussed in the Company’s reports filed with the Securities and Exchange Commission from time to time. The Company specifically disclaims any obligation to maintain or update the forward-looking information, whether of the nature contained in this release or otherwise in the future. Investor should note that the Company has not finalized its consolidated financial results for fiscal year 2012; the financial information of the Company presented about is unaudited and may differ materially from the audited financial statements of the Company for fiscal year 2012 to be released when it is available. Mr. Goh will provide a brief overview and summary and then Mr. Leong will review the financial results for the fourth quarter of 2012 and for the full year ended December 31, 2013. Thereafter, we will conduct a question-and-answer session. For the purposes of today’s call, the financial results are unaudited and they will be presented in RMB and U.S. dollars. Mr. Goh, please start your presentation.

Thank you, Kevin. I’m pleased to report our investments in research and development, R&D spending a full range of all diesel and gas engine products continue to pay off enabling us to capitalize on growth areas within the increasingly challenging automotive sector in China. While the economic slowdown in China last year, had a severe impact on the automotive industry, there were areas of opportunity within the bus and natural oil gas engine markets. In 2012, the China Association of Automotive Manufacturers, CAAM reported a 9% decline in diesel-powered commercial vehicle sales, 10.3% decrease in diesel truck sales and 28.6% decline in heavy-duty diesel trucks. However, bus market sales increased 2.1% in 2012, compared with 2011. In the fourth quarter of 2012, CAAM reported that the heavy-duty diesel vehicle market continued to be weak; in large bus and heavy-duty truck sales, down over 18%, but mini and light-duty truck sales were up by 7.5% over the fourth quarter of 2011. Sales of light bus and medium-duty truck sales were 14.5% and 16.5% ahead of last year’s quarter respectively. While sales of diesel trucks continue to be driven by the transport of goods as growth in the construction industry has slowed, the rapidly expending transportation needs of China’s many cities, changes in school bus requirements, and the rapidly expending highway system it all created sales opportunities in the bus segments. As the leading supplier of engines in the bus markets we had a number of important developments in 2012. First due to the low emission and high horsepower our natural gas engines are well suited for large buses, and have been widely installed in metro bus markets in China’s first tier cities such as Shanghai, and Beijing. These buses travel locally a return to the home base, natural gas engines are…

Thank you, Benny. Let me first walk you through our fourth quarter 2012 financial results, and then we will go over the full-years result. Our net revenue for the fourth quarter of 2012 was RMB 3.26 billion, $519.3 million compared with RMB 3.75 billion in the fourth quarter of 2011. The revenue decrease was mainly due to weaker demand in the commercial truck market. The total number of diesel engines sold by GYMCL during the fourth quarter of 2012 was 92,996 units compared with 104,352 units in the fourth quarter of 2011, a decrease of 11,356 units or 10.9%. Gross profit was RMB 804.9 million, $128.1 million compared with RMB 1.04 billion in the fourth quarter of 2011. Gross margin was 24.7% in the fourth quarter of 2012 as compared with 27.7% in the same quarter of 2011. The lower gross margin compared to the same quarter of 2011 was attributable to the sales mix as more light-duty engines were sold in the fourth quarter of 2012. In addition, the lower gross profit margin was mainly due to higher plant overhead per unit, as the sales volume was lower compared to the fourth quarter in 2011. Other operating income was RMB 45.3 million, $7.2 million compared with RMB 58.3 million in the fourth quarter of 2011. This decrease was mainly attributable to losses from the disposal of subsidiaries and foreign exchange revaluation, which was partially offset by higher interest income from bank deposits. Research and development, R&D expenses were RMB 102.7 million, $16.3 million, compared with RMB 84.7 million in the fourth quarter of 2011, an increase of 21.2%. As a percentage of net revenue, R&D spending rose to 3.1% compared with 2.3% in the fourth quarter of 2011. The increase in R&D expenses was mainly due to increased costs…

Thank you very much sir, ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) Thank you. Your first question will come from Alex Potter from Piper Jaffray. Please ask your question. Alexander E. Potter – Piper Jaffray, Inc.: Hi guys.

Hi Alex, good morning. Alexander E. Potter – Piper Jaffray, Inc.: I was wondering if you could comment on capacity utilization, what was your capacity utilization in Q4 and where it has been running so far year-to-date.

Alex, normally we don’t divulge our competitive information, but generally it has been pretty good. We look at the utilization almost similar to Q3, we’re expecting to be much better going forward. Alexander E. Potter – Piper Jaffray, Inc.: So, directionally would you say that in Q1 your capacity utilization is higher than it was in Q4?

Yes that’s right in fact we’re looking to a higher utilization this quarter and going forward. Alexander E. Potter – Piper Jaffray, Inc.: Okay. All right that’s helpful, was wondering also if you could comment on pricing, how pricing has trended, you don’t have to be too specific in terms of percentage increases or anything like that, but just directionally, up or down or your various different engine segments, so is there pricing pressure or not in heavy-duty, medium-duty, light-duty et cetera?

I think if you look at our ASP, I mean which you can compute our numbers over here, I mean we’ve been showing our increasing trend. I mean we’ve gone from quarter to quarter that increase our ASPs, in Q4 ASP is showing 35.1% versus the Q3, which was 31.6%, so this is a very healthy sign, and generally higher ASPs are coming from the fact that the product mix that we’re selling, they are higher better engines (inaudible) are breaking in our better margins. By and large as we have pointed out in the last quarter, with traditional engines, are too facing a lot of pressure, and that is something, which we continue to see, and I think going forward probably in our next two quarter, there will be same store of situation that will continue to observe over the next two months. Alexander E. Potter – Piper Jaffray, Inc.: Okay, and looking forward into 2013, I just guess broadly speaking I know it’s potentially difficult to you ask me at this point, but how do you think your mix will compare in 2013, versus 2012 regarding heavy duty, versus medium-duty and light-duty, where do you think that will trend.

In 2012 as you can see, I mean our mix was more slanted towards the light-duty engines and very appropriately so because of all the down turn, and in the first two quarters, we could see the similar kind of outlook because of the fact that the changeover of government is due fairly in place, and we’re only looking at Q2 and Q3, before incentive structure, moving are kicking down, and so by and large our mix of these light to medium to heavy duty will potentially remain the same, and towards the end of the year we see an uptick in petrol heavy duty. Alexander E. Potter – Piper Jaffray, Inc.: Okay that’s very helpful, and then I guess lastly then I will jump back in the queue here. I was wondering, if you could comment on inventory levels both of truck and of excavators or other types of machinery out there, at the dealership level, where do you see that trending, I know that historically you had said that the truck inventory has started coming down a little bit. Are you still seeing that same sort of trend, and then similar question for machinery? Thanks.

On high inventory, yes, this is continuing declining trend. Thanks for referring OEM, slowing down into production and the distribution channel, we have resumed the orders to the OEMs. So therefore, we see that has a very healthy sign. In terms of machinery, there is still a bit sluggish, although the inventories have come down somewhat. So there is different thing, which we are still watching very carefully. Alexander E. Potter – Piper Jaffray, Inc.: Okay, great. Thanks guys.

Thanks.

All right, thank you very much. Your next question comes from Sandy Mehta from Value Investment. Please ask your question. Sandy Mehta – Value Investment Principals Ltd.: Yes, good evening. Thanks for taking my question. When I look at the bills receivable balance, it was down fractionally about 1% quarter-over-quarter, it’s also down 1% year-over-year, and some of us, if you look at, it’s about $400 million above where it typically has been, and I know interest rates have gone up. So you have done a lot less factoring than you have normally done. So when do you expect to see the bills receivable balance come down to normal levels, and some of the cash that is tied up in that to be released and can you also maybe give us some comments on why or how you feel comfortable with the quality of the receivables? Thanks.

Okay. When you look at our account, you have to look at the trade and bills receivable in totality, okay. One of the main features that we are having is we are selling to the large OEM player, it would usually give us bank instrument in the form of bill receivables. So that’s not we are concerned, we are able to receive such instrument leading to a good quality payments, good quality instruments, for the good set we have delivered to them. Okay as you ask on the quality of our accounts receivable that is the main computing point that you would be able to see, and you can see also that we sell a lot to our big OEM and that’s gives us a color of accounts receivable or a bill receivable that are backed by good customer as well as bank backed instruments. As you talk about the bill receivables, we must always look at GYMCL as a big company, our annual turnover can be ranged RMB 15 billion a year, and therefore our loan can range from, if you look at our past history it can be RMB 2.5 million to RMB 3.5 billion this range, and accounts receivable and permitting, new receivable is a interplay between our auto financing instrument that we have at a point in time, and based on the market risk at a time. So we are not able to conclude with clarity that we will have lesser bill receivable or more bill receivables, and that is really determined by the market forces. But the concluding factor that I can give to you is by and large the quality of the, account receivables as well as the bills receivables; we are from reputable player in China as well as the impact by bank backed consumer. Sandy Mehta – Value Investment Principals Ltd.: Okay. Can you perhaps give us a sense of interest rates have come down in China, and is there a level of interest rates, where you might go back to factoring or discounting the receivables as you have normally done? Is any sort of visibility or expectation that that might go back to normal level, and again then reduce the overall balance of receivables?

Maybe I would like to first answer the larger environment of the China money market. There were two rate cuts one in the late June, the other one in the early July, of 50 basis points by and large these two cuts, just have a major impact on the big player like us, and then after from the cut in July, the industry movement in China, not much changes. That is overall market situation that we have seen in 2012. Moving forward 2013, we can’t see any major struggling factors that will move the interest rate very significantly, and through the leadership it’s in place as well as the initiative they want to go on infrastructure including overall theme in China is due containing the property market. So if you look at our financing instrument, we have as CYI or GYMCL our main operating units as we become more mature. We have continued to have to engage ourselves in the different form of financing instrument and you can see in 2011, we move to short term financing bond the total of RMB 2.39 million. In 2012, we have RMB 1 billion, short-term financing bond, and moving forward we continue to explore these instrument as you refer to those instruments such as AR factoring, and discussing sometimes in this instruments they have a spike, at a certain point of time of the market. So to say for sure, that we will avoid factoring, we would not factoring, we would say factoring is depend on the market conditions, so the only quick answer I would give to you is, we’re continued to explore bonds and other instruments depending on the market situation at that point of time

So, by and large we’re still having a mix of both Sandy, we have to get the vertical. Sandy Mehta – Value Investment Principals Ltd.: And just one final question in terms of the joint ventures, I presume that your expectation to start reporting profits here in 2013 at some point in the year. Thank you so much.

Yes in terms of our joint venture our remanufacturing joint venture we expect that to be although it is probably expected to be breaking even and breaking in profits over end of the year. Sandy Mehta – Value Investment Principals Ltd.: Okay. Thank you.

Thanks Sandy.

Thank you very much. Your next question comes from David Raso of ISI Group. Please ask your question. David Raso – ISI Group: Yes, your comments about first quarter capacity utilization will be better than the calendar fourth quarter, can I interpret that first as orders are up sequentially, and secondly, if that the case how much of that is just seasonal pattern or is it truly a pick up you see at your customers, and then I have a couple of follow up related to that.

Hi, David. Actually, we do not see a whole lot pickup at a moment. What we are seeing is two piece, one is because that our inventory levels have been come down somewhat and it is usual seasonal effect. And we are now only stepping into the second month of the year, while I consider the first year, it happens to be a full month compared to the previous year, which was half month, because of the Chinese New Year. So that showed a bit of up tick, but I think by and large, the utilization is for the first quarter is going to be to be much flat. And then I think our expectation is Q2 onwards, have you received things moving. David Raso – ISI Group: And related to the difference between on-highway and off-highway, is there any difference between those two markets on the orders sequentially or for the second quarter, which one are you getting the impression should be the first one to improve?

Right now, we are seeing the on-highway engines as the one basically coming up in Q1, and the off-highway is being mostly construction kind of, it’s decline right now and again, I reinforce the segments, changeover of government hasn’t fully taken place yet. And so we do not see any big incentive although the Central Government, they have talked about Central planning initiatives, but then it will trickle-down with the provisional governments, so until that happens, the construction equipment could be quite slow in terms of demand, and therefore, that trickle-down to the off-highway demand as well. David Raso – ISI Group: And last question about the on-highway comment. the orders, are they improving a bit in the heavy section of the market or the medium and maybe a little more color around. You said we’re getting better, but is there a ready evidence that the second quarter will show a greater acceleration or is it just a hope right now or (inaudible) actually orders starting to really suggest second quarter gets an acceleration?

Right. Maybe right now, we do not see a whole lot of movement in the heavy-duty, because as I mentioned before I see OEMs, but movement what we see right now is actually more on the medium-duty, and a bit more on the light-duty vehicles, and that’s again, rightly so because that is still very much the current demand as we see over the past quarter. But in Q2, we don’t see that hope we have certain expectation, because of a demand and a pool from and fairly July, we’re going to have the National IV regulation in place. So there’ll be some pre-orders taking place. So that will see some of this demand for heavy-duty trucks are coming in place as well. David Raso – ISI Group: That’s great. Thank you so much.

Thanks, David.

Thank you very much. Your next question comes from Gerwin Ho from Citi. Please ask your question. Gerwin Ho – Citigroup Global Markets Asia Ltd.: Hi, good morning, gentlemen. Thank you very much taking my question. Just three quick questions; first of all, what’s our latest outlook for the heavy-duty market for 2013, in terms of growth outlook? Last year, it was quite tough down 28%. For this year, what type of growth do we think can achieve and indirectly when do we think when you go back to positive yearly growth. We’ve heard some industry people talking about second quarter of 1.38, what should be on that? Secondly, can you give us your heavy-duty truck unit sales, engine unit sales for 2012 and 2011, and thirdly, I think it was just mentioned the China IV emission standards for heavy commercial vehicle, what’s your expectation, it seems that you expect that it would be implemented on July 1, so the three questions. Thank you.

Hi, Gerwin thanks, okay let me just address on the last question, which is regulation. We do believe the July 1, that will be implemented, and so consequently there will be some sort of pre-buy as I mentioned today, we just now, that will help us in terms of our heavy duty engines. Coming back to your first question, about what’s the outlook for the heavy-duty trucks? Quite clearly we are just moving out from the woods, if you look at last year, I think the whole industry was 640,000, heavy-duty engine sold. Coming year because again the first quarter is still on a wait and see mode, second quarter, there is some pre-buy, we do not expect a whole lot of improvement probably, some uptick maybe 700,000, and then eventually over the next two years, I think we kind of like stabilize 800 to 1000 or more. Again people would ask, are we going to reach the 1 million mark, again I think that will be much longer duration before we see that kind of demand. Gerwin Ho – Citigroup Global Markets Asia Ltd.: And in terms of heavy-duty engine unit sales in one-two and one-one for Yuchai please?

I’m sorry we don’t divulge the information, what you can say is that, our numbers in one-two was obviously was smaller than the one-one, because of the slowdown in the whole heavy-duty market. Gerwin Ho – Citigroup Global Markets Asia Ltd.: Is there a rough percentage of our overall unit sales, can we get that.

It’s too relatively small at the moment. Gerwin Ho – Citigroup Global Markets Asia Ltd.: So 20% type…

I’m afraid no, we would not divulge the number. Gerwin Ho – Citigroup Global Markets Asia Ltd.: Okay, I understand. Thank you very much.

Thanks, Gerwin.

Thank you very much. Your next question comes from Andrew Casey of Wells Fargo. Please ask your question. Andrew M. Casey – Wells Fargo Advisors LLC: Hello and thanks for taking my questions. A lot of them have been answered, but I wanted to go back to last year that were surrounding (inaudible) for emissions regulation change, could you talk about how you expect that to be implemented post July 1, is it a phasing or is it pretty much a drop dead?

It’s a good question; I think our industry is kind of like looking at it being more of phasing kind of approach. The reason is that China is going to slow down loss, and they are trying to make sure that things are coming back to normal. And so if you have a clear regulation, is going to be leased very strictly, it’s going to be very difficult to enforce and at the same time, I think it’d be a shake out in terms of the industry. We believe that it will be phasing approach, but quite definitely the major players, people at Yuchai, we are definitely poised to calculate the market for this implementation. Andrew M. Casey – Wells Fargo Advisors LLC: Okay, thanks. And then just a follow-up on the pre-buy, does that kind of suggest 2013 demand is from an engine perspective; it’s pretty concentrated in Q2 or is it more spread out, pretty really Q2, Q3, Q4?

Again, if you look at the past trend, Q1, Q2 has always been the higher sales number. So we have pre-buy. We believe that our Q2 will be higher than Q1. Q3 traditionally has been a very slow quarter and this year, we don’t expect it be any different, it will be pretty slow especially after the pre-buy has been taken place. In the Q4, we are expecting the fact that there maybe incentives coming in from a provisional level, stirring the demand in construction. And so therefore, we see hopefully a higher demand in Q4. Andrew M. Casey – Wells Fargo Advisors LLC: Okay, thank you very much.

Thank you. We’re looking at some of the webcast questions here; we got a question. How many school bus engines sold in 2012? We believe that it’s going to be it was more than 10,000 although the numbers have not been very clear that the fuel industry at this point in one-time. The second question over here has been, has (inaudible) taken over first place in the marine engine sector in China. Has been increasing percentage from 15% to 20% last year. I believe yes, we have (inaudible) in the marine sector in spite well of the various kind of people, I’ve always said our marine engines are thick and whole in the market. So this has got something that we are glad to say.

The next question is relating to, why are we holding so much cash on the balance sheet? We want to pay down the debt or use the money to buy back some of the company stocks. It indicates always that it is an interplay of the financing instrument that we have. So there will be time in our balance sheet that we will be holding more cash, because in some time, we’re holding less, because of going into factoring of duty progressing, we are subject to the tenure of the invoice or the views that we have. So we can’t live on these instruments alone. So you can see over the time, our load and cash balances were moved according to what instrument we’ve used. And if you look at the total size of the Company, we can reach RMB 13 billion to RMB 15 billion in the year. So you look at our loan size of RMB 3 billion, I think it is in the very comfortable range, okay. As you pay the cash that we are having about around that time, the customers understand that we have to keep sufficient cash for the running of the company and as well as, to meet the ongoing CapEx flow for sustaining address new project. So in our view, it is not a hard number that hide to, relating to the cash we have, but we have to interplay with all the various instruments we have. As for whether we should use such money to buyback our stocks, we do not have any stock buyback or share buyback arrangement at the moment. And this will continue to be the arrangement until they are changing policies.

I got another question web asking about the impacts that we see because of in light of the air pollution issues in China. To me, I think that’s very positive sign, I mean the air pollution issue is a manifestation of the bigger issue in terms of environments and green requirement for China, and that has come to our greater seriousness because of what you see in Beijing and that will translate into the demand for a higher emissions requirements, and that is actually very positive for Yuchai as you know we’re ahead of the curve, we’re already all our engines are National IV. We already have National V and National VI, so that will help us over the long-term, in terms of being able to capture the markets. We also have that gas natural gas engines which are also very environmentally friendly, and also less emissions as well so that also adds and advantage for someone like Yuchai, so by and large this is a very good call for our business.

Thank you very much. You have the question from the line, it’s a follow-up question from Mr. Ravi Gill of Goldman Sachs. Please ask your question.

Hello Ravi. Ravi Gill – Goldman Sachs: Thanks, and specifically on the natural gas side, my question was on if you can speak to the competitor environment and industry pricing in the fourth quarter as it compared to the third quarter. I know Weichai was engaged in some significant price competition. Can you just update us on how that fared in the fourth quarter of the year?

In terms of natural gas, I had similar Weichai has always been in the bus arena, and I think they has been very strong and very good for us. We’ve captured over 75% in our share of the bus markets, so that’s overall has given us a very strong advantage. In terms of pricing, the natural gas engines are continued to be very good in terms of average price, and it helps us tremendously. In terms of natural gas in truck sector because of the downturn infrastructure obviously that has impacted everyone not only to our competitors also ourselves as well so if you do not see as much demand at a point, and also the price as to remains more or less very much that price that you see in the market today. Ravi Gill – Goldman Sachs: Okay. Then can you update us on I guess the infrastructure build out for the bus and truck in China, did that were there any positive developments in the quarter.

Unfortunately for the gas infrastructure as you know is only the demand (inaudible) where as the infrastructure the branches between cities are still not income has not even started at this point in time. I think everyone is kind of waiting for initiatives from the Central Government and then also from the provincial government. So, what we’re that foreseeing is that in the mean time, the main demand will come from buses and then overtime quite certainly in line the next two to three quarters where we see a huge demand for trucks in the natural gas at this point in time. Ravi Gill – Goldman Sachs: Okay. Thank you very much.

Thank you.

Thank you very much. We have now reached the end of our Q&A session and I’ll turn the call back over to Mr. Goh