On the afternoon of March 25, CIMC successfully held its 2014 annual performance conference in Hong Kong, attended by representatives from various well-known media and investment institutions from mainland China and Hong Kong. Mai Boliang, President of CIMC Group, Yu Yuqun, Board Secretary of the Group, and Jin Jianlong, General Manager of the Group's Financial Management Department, attended the conference.

In 2014, the Group achieved operating revenue of RMB 70.071 billion, a year-on-year increase of 21.07%; net profit attributable to shareholders of the parent company was RMB 2.478 billion, a year-on-year increase of 13.64%. The main reasons for the double growth in operating revenue and net profit in 2014 were: significant improvement in profitability of the vehicle business; achievement of expected growth in the energy, chemical, and food businesses; and the first-time profitability of the offshore engineering business, which offset the impact of declining profitability in the container business. Facing multiple challenges and pressures brought by economic fluctuations and structural adjustments, the Group overcame difficulties, actively responded, and committed to business transformation and upgrading, management reform and optimization, business expansion and international mergers and acquisitions, product technology and business model innovation, corporate governance and operational compliance, and asset security and risk control, maintaining healthy development in its operations and management.

Overview of the Group's Main Industry Operations in 2014

Container Business: Entering a New Normal of Medium-Speed Growth

In 2014, the global economy continued to recover, and container market demand increased significantly. Due to the low prices of raw materials such as steel, container prices fell by approximately 5%. In 2014, CIMC achieved sales revenue of RMB 23.813 billion in its container manufacturing business, a year-on-year increase of 11.76%. Net profit reached RMB 710 million, a decrease of 30.32% compared to the same period last year. The primary reasons for the decline were the relocation and shutdown of container factories in Qingdao, Shanghai, and other locations, which led to increased management expenses during the shutdown period, and certain losses from exchange rate hedging arrangements.

"I believe the container business is in a very healthy development period and still possesses strong vitality. Its global growth, compared to previous rapid growth, has entered a new normal, and growth in the next few years will remain between 5%-7%. China, as a container manufacturing center, will remain unchanged in the foreseeable future, within the next decade." President Mai Boliang said at the press conference.

Road Transportation Vehicle Business: Global Market Demand Improves, Driving Rapid Profit Growth

In 2014, benefiting from low prices of raw materials such as steel, the industry's profit level increased. Driven by national policies promoting energy conservation and emission reduction, overload control, and pilot projects for drop-and-hook transportation, which pursue speed and efficiency, the proportion of logistics road transport vehicles in the overall road transport vehicle sector continued to rise.

During the reporting period, the road transportation vehicle business cumulatively sold 115,200 units (sets), a year-on-year increase of 9.92%; achieved sales revenue of RMB 13.390 billion, a year-on-year increase of 0.41%; and obtained a net profit of RMB 648 million, a year-on-year increase of 145.45%.

"Demand in the North American and European markets is improving, and customers in the Chinese market and other emerging markets have an increasing demand for new products. I believe the vehicle business will maintain relatively good growth in the future. We hope to maintain an average profit growth of no less than 25% in the next three to five years. After laying a very good foundation and finding good solutions, and through exploration, future growth should be relatively fast." President Mai Boliang said at the press conference.

Energy, Chemical, and Food Equipment Business: LNG Equipment and Liquid Food Equipment Advance Side by Side

In 2014, influenced by China's macroeconomic conditions and natural gas price reforms, the upward trend in this business segment temporarily slowed down in the first half of 2014, rebounded in the second half, and full-year revenue remained relatively stable compared to 2013. Benefiting from the gradual recovery of the global economy, the chemical equipment business saw a certain increase in turnover. In 2014, this business segment achieved sales revenue of RMB 12.916 billion, a year-on-year increase of 11.54%, and realized net profit of RMB 1.044 billion, a year-on-year increase of 14.47%.

President Mai Boliang revealed at the press conference: "Low-carbon energy is an inevitable trend, and the state provides corresponding encouragement and support to related industries in the future; the chemical industry accounts for a large proportion of global GDP and is closely related to the macroeconomic environment, so it is expected that the standard tank container business might fluctuate with the cyclical nature of the chemical market in 2015; the global liquid food industry, such as beer, is becoming increasingly mature, which inevitably requires investment in corresponding equipment to meet production and transportation needs, thus liquid food equipment will present a broad market prospect."

Ocean Engineering Business: Achieved Historic Turnaround

In 2014, CIMC's offshore engineering business achieved sales revenue of RMB 11.865 billion, a year-on-year increase of 69.94%, and realized a net profit of RMB 5 million, a year-on-year increase of 101%, marking the first time the offshore engineering business achieved profitability. The main reasons were: the delivery of CIMC Offshore's original self-built projects in 2014; projects under construction gradually entering the mid-to-late stages of construction, bringing sales revenue; effective control of period expenses and advantageous management measures taken; and fourth, the successful resolution of the USD 207 million accounts receivable dispute between CIMC and Brazilian company Schahin, with all outstanding debts and accrued interest recovered through arbitration. Projects built in 2014 progressed smoothly as planned, and market expansion met expectations. In 2014, a total of USD 1.121 billion in orders were secured. Currently, CIMC holds offshore engineering orders totaling approximately USD 5 billion, including five deepwater semi-submersible drilling rigs, accounting for 22% of the global market share for deepwater semi-submersible drilling rigs under construction.

"It is expected that 2015 will be a relatively low period for the offshore engineering equipment industry. International oil prices will hover at a low level, and oil companies will cut exploration and development investments, directly affecting the business of oil service companies. The industry will experience a reshuffle, with increased M&A activities, an oversupply of various offshore engineering equipment, and a further decline in new orders, leading to significant overall market pressure. However, we still have USD 5 billion in orders. I believe CIMC Offshore's sales revenue will continue to grow in 2015, and profitability should be better than in 2014," President Mai Boliang stated confidently.

Logistics Business: In a Critical Integration Period, Set to Become the Next RMB Ten Billion Sector

In 2014, CIMC Logistics Services business achieved sales revenue of RMB 8.473 billion, a year-on-year increase of 36.31%, and realized net profit of RMB 138 million, a decrease of 22.91% compared to the previous year. The main reason for the decline in net profit was losses incurred by certain subsidiaries included in the consolidation scope.

At the press conference, President Mai Boliang revealed: "CIMC is committed to providing specialized logistics equipment and integrated logistics solutions to customers across various industries. The logistics services business will leverage the integrated advantages of logistics equipment and services, starting with professional logistics, to promote a multimodal transport system, integrate advantageous resources to develop cross-border logistics business, and further leverage the 'equipment + service' advantage of the segment in the future to provide valuable integrated logistics solutions to customers."

Airport Business: Business Platform Integration Completed, New Airport Ready for Takeoff

The airport business completed a reverse acquisition of Singapore Deli International in 2014, successfully achieving a backdoor listing. Current airport member companies include the original CIMC Tianda, Singapore Deli International, Germany Ziegler, and France Air Marrel, among others. Ziegler, after being controlled by the Group, achieved a turnaround in 2014. In 2014, the airport business's sales revenue was RMB 2.727 billion, a year-on-year increase of 207.09%; net profit reached RMB 87 million, a year-on-year decrease of 25.00%. The main reason for the decline in net profit was losses incurred by the Singapore-listed entity.

Real Estate Business: Focusing on the Development of Industrial Real Estate

After several years of research, exploration, and practice, CIMC's industrial real estate projects have made significant breakthroughs. CIMC's first industrial real estate project—CIMC Wisdom Valley—has officially commenced development and construction. Leveraging the innovative practices of the CIMC Wisdom Valley project, CIMC Real Estate has initially formed a development pattern that combines industrial and traditional real estate, and through innovative land operation models of "industry-driven" and "integrated investment," it is vigorously promoting the revitalization and utilization of CIMC's land resources in Shenzhen Qianhai, Shanghai Baoshan, and other areas. In 2014, CIMC achieved sales revenue of RMB 1.136 billion in real estate, down 14.33% year-on-year; net profit reached RMB 204 million, up 29.94% year-on-year.

Finance: Continued High-Speed Growth in Profitability

The financial business is committed to building a financial service system that matches the Group's globally leading manufacturing status, to promote business expansion and improve the efficiency and effectiveness of internal fund utilization. The main operating entities include CIMC Leasing, CIMC Financial Company, and Tianyi Investment. The financial business will continue to cooperate closely with various business segments within the Group to further promote and develop synergy between industry and finance. In 2014, CIMC achieved sales revenue of RMB 1.581 billion in the financial business, an increase of over 80% year-on-year, and net profit of RMB 559 million, an increase of nearly 30% year-on-year.

Heavy Truck Business: Adhering to High-End Positioning and the Development of LNG Heavy Truck Strategy

The heavy truck business was included in CIMC's consolidated financial statements for the first time in 2014. In August 2014, the company completed a capital increase, increasing its stake from 45% to 66.24%, achieving controlling ownership of the heavy truck business. In 2014, the heavy truck business achieved sales revenue of RMB 1.059 billion, with a loss of approximately RMB 60 million from August to the end of the year, mainly due to the small production scale.

Regarding investors' questions about the increase in heavy truck shares, President Mai Boliang responded: "This is mainly due to the strategic synergy between heavy trucks and the Group's existing businesses. We will continue to adhere to the current high-end positioning of United Heavy Truck and the development strategy of LNG heavy trucks, actively leveraging the synergy with the Group's existing vehicle and energy businesses to form our unique advantages, and explore new business models through the integration of resources between heavy trucks and existing businesses, creating a competitive advantage different from our industry peers."

Key Issue: Qianhai Land Plot Expected to Achieve Breakthrough This Year, Free Trade Zone Benefits CIMC's Development

At the press conference, several reporters and institutional investors asked questions about the progress of Qianhai land development. President Mai Boliang responded: "Regarding Qianhai land development, we have always maintained close communication and exchanges with the Shenzhen Municipal Government. I expect that a phased breakthrough will be achieved this year in resolving this land issue. However, a complete resolution of the entire land issue may still require some time. Because the matter is large and complex, there are many cases to refer to, and there are also many challenging issues, so it will take some time. Once a formal agreement is signed, we will promptly announce it to everyone. In addition, the free trade zone will undoubtedly have a positive impact on CIMC's future development, as many of CIMC's businesses, including its headquarters, are located in the free trade zone. We are also continuously studying and tracking relevant implementation plans to see how to leverage CIMC's advantageous position to promote better and more innovative development."

Looking to the future, President Mai Boliang stated: "Although the global economic environment in 2015 remains challenging, the Group will adjust its future development goals, adapt to the needs of social transformation and economic reform, explore and promote the practice of mixed ownership, optimize the corporate governance structure; continuously improve and innovate in technology, business models, and management mechanisms; strive to seize historical opportunities, achieve high-quality growth, and truly become a diversified multinational industrial group that pursues sustainable and healthy value growth."