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SINGAPORE - China Yuchai International Limited (NYSE: NYSE:CYD), a leading powertrain solution provider with a market capitalization of $589 million, has announced a strategic cooperation agreement with Vietnam’s Kim Long Motor, a subsidiary of FUTA Group, to establish an engine factory in Vietnam. The agreement includes technology licensing, component supply, and construction support for the new facility. The company’s stock has shown remarkable momentum, delivering a 64% return year-to-date, according to InvestingPro data.
Under the terms of the deal, Yuchai will grant Kim Long Motor the technology licensing rights for certain engine models, which will be manufactured primarily for commercial vehicles in Vietnam. Kim Long Motor will have exclusive rights to sell these engines in Vietnam, with priority rights in other ASEAN countries and South Korea, as well as aftermarket service rights in these regions. The licensing agreement is valid for 15 years and involves total fees of $28 million. The deal comes as China Yuchai maintains strong financial performance, with revenue growth of 15.3% in the last twelve months.
Yuchai will provide technical services for equipment installation and commissioning for the Vietnamese engine factory, with Kim Long Motor bearing the costs. Additionally, Yuchai will supply all necessary assembly parts and service kits for the engines produced in Vietnam.
The President of China Yuchai, Mr. Weng Ming Hoh, highlighted the significance of this cooperation, stating it is a key project to further penetrate the ASEAN-Korean trade areas and supports the company’s global growth strategy.
Kim Long Motor specializes in automobile manufacturing, assembly, and trading, as well as the production of automotive parts and components. The company also deals in industrial park infrastructure trading.
China Yuchai, through its subsidiary Guangxi Yuchai Machinery Company Limited, designs, manufactures, and sells a diverse range of engines for various applications. The company’s product portfolio includes diesel, natural gas, electric, and hybrid powertrain solutions. With a strong presence in China and expanding international reach, Yuchai sold over 313,000 engines in 2023.
This strategic agreement is expected to enhance Yuchai’s presence in the Vietnamese market and extend its reach in the wider ASEAN region and South Korea. The information is based on a press release statement from China Yuchai International Limited.
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