Ladies and gentlemen, thank you for standing by, and welcome to China Yuchai International Limited Second Quarter 2017 Earnings Conference Call. [Operator Instructions] Now I would like now to turn the conference over to Kevin Theiss. Please go ahead, sir.

Thank you for joining us today, and welcome to China Yuchai International Limited’s Second Quarter 2017 Conference Call and Webcast. Joining us today are Mr. Weng Ming Hoh and Dr. Thomas Phung, President and Chief Financial Officer of CYI, respectively. In addition, we also have in attendance Mr. Kelvin Lai, VP of Operations of CYI. 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, 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-F under the headings Risk Factors, Results of Operation and Business Overview; and other reports filed with the Securities and Exchange Commission from time to time. All forward-looking statements are applicable only as of the date it is made and the company specifically disclaims any obligation to maintain or update the forward-looking information, whether of the nature contained in this conference call or otherwise in the future. Mr. Hoh will provide a brief overview and summary, and then Dr. Phung, will review the financial results for the second quarter and six months ended June 30, 2017. Thereafter, we will conduct a question-and-answer session. For the purposes of today’s call, the financial results for the second quarter and six months ended June 30, 2017 are unaudited, and they will be presented in RMB and U.S. dollars. All the financial information presented is reported using International Financial Reporting Standards, as issued by the International Accounting Standards Board. Mr. Hoh, please begin your prepared remarks.

Thank you, Kelvin. For the second quarter of 2017, our net revenue increased by 11.7% to RMB4.1 billion or US$64.2 million. With both higher unit sales and higher average selling price, ASP. Our ASP increased as it sold more higher price and just due to better sales mix in the second quarter of 2017, compared to last year’s second quarter. We achieved double-digit growth in both the heavy-duty truck and heavy-duty bus segments. Net earnings attributable to China Yuchai’s shareholders rose 6.3% in second quarter 2017. According to data reported by the China Association of Automobile Manufacturers, CAAM, in the second quarter of 2017, sales of commercial vehicles, excluding gasoline-powered and electric vehicles, increased by 18.1% year-over-year. Industry trucks have continued to expand with sales up 20.3%, led by 5.1% increase in heavy-duty trucks. Light-duty and medium-duty trucks achieved more modest growth rates of 3.1% and 7.5% respectively. Our bus sales rebounded with 3% higher sales in the second quarter of 2017, as heavy-duty and light-duty sales grew 5.8% and 9% respective, partially offsetting 26.2% reduction in medium-duty bus sales. In the first half of 2017 the total number engines sold by Guangxi Yuchai Machinery Company Limited, GYMCL, grew 18% to 210,648 units, compared with 178,562 units in the same period of 2016. The increase was primarily due to robust growth in the heavy-duty and light-duty truck segment and slow recovery of the vast market led by higher sales of heavy-duty bus engine. GYMCL achieved a strong increase in truck engine sales in the second quarter of 2017. Demand for heavy-duty truck grew due to ongoing strict enforcement of China’s anti-overloading policy, which continued to be the catalyst for higher truck sales. China’s GDP growth of 6.9% and 6% investment in the second quarter 2017 also contributed to the growth…

Thank you, Weng Ming. Now let me review our second quarter results. Net revenue for the second quarter of 2017 increased by 11.7% to RMB4.1 billion, US$604.2 million, compared to RMB3.7 billion in the second quarter of 2016. The total number of engines sold by GYMCL during the second quarter of 2017 was 90,638 units, compared with 87,791 units in the same quarter last year, an increase of 3.2%. The increase was mainly due to increased truck sales. The Company’s sales in the power generation application and the industry and equipment application increased as compared with the same quarter last year. The company growth in the net revenue was due to a higher average selling price result from FX sales mix and an increase in the unit sales. According to the data reported by the China Association of Automotive Manufacturers, CAAM, excluding sales of gasoline-powered and electric vehicle, in the second quarter of 2017, sales of buses increased by 3.0%, while truck sales increased by 20.3%. According to the – according to CAAM, in the second quarter of 2017, sales of commercial vehicle, excluding sales of gasoline-powered and electric vehicles, increased by 18.1%, compared to same quarter last year. Gross profit increased by 5.9% to RMB752.7 million, US$111.1 million, compared with RMB710.4 million in the second quarter of 2016. Gross margin was 18.4%, compared with 19.4% a year ago. The decrease was mainly attributable to higher material costs and labor costs during the quarter. Other operating income was RMB48.6 billion, US$7.2 million, compared with RMB16.1 million in the second quarter of 2016. The increase was mainly due to higher interest income from bank deposits and higher foreign exchange gains in the second quarter of 2017, compared to the same quarter last year. Research and development, R&D, expenses were RMB113.0 million,…

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of Manoj Tiwari. Please ask your question.

Hi, congratulations on good set of results. Can you provide the breakdown of mix sales into bus engine, truck engine and off-road application unit sales?

Hi, this is Weng Ming here. Yeah, no, we don’t break it down for those numbers. But the bulk of our sale side on the on-road application, mainly bus and truck.

Okay. And for over one and a half year of sluggish demand, the bus sales finally picked up in the second quarter. Do you believe that things have started to turn around in the bus market? And can you provide some color on that time line for phasing out of subsidies on EV buses?

Now, I mean, we saw some pick up in the heavy-duty buses in the second quarter, yes. In those segments, we were awarded. We see a 3% improvement, right. But I mean, whether or not that’s going to continue into the next two quarters, I think it’s going to difficult to say. But we also see the electric vehicle sales dropping from January to May, and there is also a turnaround in June. So – but overall, the incentive for the electric buses and vehicles were better were reviewed from January of this year. So as to whether or not there is going to be changes, I think it’s going to be – we have no clue on that one. Okay.

Thank you, sir. [Operator Instructions] We have the next question from the line of Himanshu Shah from Shah Capital. Please ask your questions.

Weng Ming few questions for you. Can you talk about the hybrid engines and also with the marine engines and what kind of market share Yuchai had, not just in Q2 but in 2017? And I have a follow-up.

Okay, now the hybrid engines, we’re starting to sell some of them, as I’ve mentioned in my scripts. We sold some to the bus application. This is diesel and electric hybrid. It’s a big part of the business at the moment, but we do see that there’s a potential in there. In the case of marine engines, overall market for the marine, for both application actually started growing. In fact, there was a decline. We probably saw in terms of growth within the gen set type of business. So here we do see some significant growth in the gen set business, which in a way offset the decline in the marine or the board applications of the marine engine. So overall, we saw an improvement, overall, for the, what we call, the gen set and marine applications together, all right?

But are we maintaining our number one market share? Or do you see that being challenged by a competitor?

We are growing some market share. We are taking a little bit from competitors. We haven’t loss much any of it yet to anybody.

Thank you. The next question comes from the line of David Raso from Evercore ISI. Please ask your question.

Thank you. I was curious, I think the general consensus is building that this year’s sales in China truck, heavy truck, is so strong that sort of base case next year, we have to assume China truck is down. I was just curious, your thoughts on that, just given the strength we’ve seen year-to-date in your view of normalized demand. And what is an early – I know it’s early, but an early thought about how to think about 2018 industry demand for heavy trucks in China?

Thank you, David. All right, now the Chinese – the heavy truck growth in the first half was very, very significant, okay, and also towards the end of last year. Now the main driving force for that, the factors for that is twofold. One is the strict enforcement of the anti-overloading policy as there is a law but I think it wasn’t strictly enforced. So the government decided to enforce it towards the end of last year. So as a result, I think there were quite a few vehicle replacements. Now the other factor is that, although it’s not a big factor, there was the implementation of National V emission standard from this month on as well, in most cases. So there is – although the price difference is not very big, but there is opportunity for trucks to upgrade that. And so there was also an increase in the fixed asset investments in China as well. So all those drove the heavy-duty truck in the first half of this year and fourth quarter last year. Now I will think, from my point – from my view point is that the replacement due to anti-overloading may be coming to an end, okay. So very good results this year, I think we will still see sales, but it would not be – it would not have the same level of growth compared to the first six months of this year. And you’ll probably expect towards the beginning of next year. Because by then, whatever the needs we replaced would have been replaced and I think you take a little few years before this new round of purchases will be up for replacement. So in the case of first quarter, second quarter next year, my personal view is it will be flat or maybe even see level of decline or some decline in this heavy truck segment.

Thank you very much.

Thank you. [Operator Instructions] There are no further questions at this time. We have reached the end of our Q&A session and I will turn the call back over to Mr. Hoh. Over to you, sir.

Thank you all for participating in our conference call. We look forward to speaking to you again. Bye.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for your participation. You may all disconnect your lines now. Thank you.