China Automotive Systems Inc (CAAS) 2025 Q2 法說會逐字稿

Greetings. Welcome to the China Automotive Systems second-quarter 2025 conference call. (Operator Instructions) Please note, this conference is being recorded. I will now turn the conference over to your host, Kevin Theiss, Investor Relations. You may begin.

問候。歡迎參加中國汽車系統2025年第二季電話會議。（操作員指示）請注意，本次會議正在錄音。現在我將會議交給主持人、投資人關係部 Kevin Theiss。你可以開始了。

Thank you, everyone, for joining us today. Welcome to China Automotive Systems 2025 second-quarter conference call. Joining us today are Mr. Jie Li, Chief Financial Officer of China Automotive Systems. He will be available to answer questions later in the conference call with the assistance of translation.

感謝大家今天加入我們。歡迎參加中國汽車系統2025第二季電話會議。今天與我們一起出席的還有中國汽車系統公司財務長李傑先生。他稍後將在翻譯的幫助下在電話會議中回答問題。

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. Forward-looking statements represent the company's estimates and assumptions only as of the date of this call.

在我們開始之前，我要提醒所有聽眾，在整個電話會議中，我們可能會做出包含《1995 年私人證券訴訟改革法案》所定義前瞻性陳述的聲明。前瞻性陳述僅代表本公司截至本次電話會議日的估計和假設。

As a result, the company's actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including those described under the heading Risk Factors, Results of Operations in the company's Form 10-K annual report for the year-ended December 31, 2024, as filed with the Securities and Exchange Commission and in other documents filed by the company from time to time with the Securities and Exchange Commission. Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict, and materially and adversely impact our business, financial condition, and results of operations.

因此，由於多種因素，包括公司向美國證券交易委員會提交的截至 2024 年 12 月 31 日的 10-K 表年度報告中「風險因素、經營業績」標題下所述的因素以及公司不時向美國證券交易委員會提交的其他文件中所述的因素，公司的實際業績可能與前瞻性陳述中的結果存在重大差異。任何這些因素以及我們無法控制的其他因素都可能對整體商業環境產生不利影響，導致我們開展業務的地區出現不確定性，導致我們的業務遭受我們無法預測的損失，並對我們的業務、財務狀況和經營業績產生重大不利影響。

A prolonged disruption or any unforeseen delay in our operations of the manufacturing, delivery, and assembly processes within any of our production facilities could result in the delays in shipments of products to our customers, increased costs, and reduced revenue. 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.

我們任何生產設施內的製造、交付和組裝流程的長期中斷或任何不可預見的延誤都可能導致向客戶發貨產品延遲、成本增加和收入減少。本公司明確表示不承擔對本次電話會議中任何前瞻性陳述進行更新的義務，無論是由於新資訊、未來事件或其他原因。

On this call, I will provide a brief overview and summary of the second-quarter 2025 results for the period ended June 30, 2025. Management will then conduct a question-and-answer session. The 2025 second quarter results are unaudited and are reported using US GAAP accounting. For the purposes of our call today, I'll review the financial results in US dollars.

在本次電話會議上，我將簡要概述並總結截至 2025 年 6 月 30 日的 2025 年第二季業績。管理層隨後將進行問答環節。2025 年第二季業績未經審計，並採用美國 GAAP 會計報告。為了我們今天的電話會議的目的，我將以美元來回顧財務結果。

We will begin with a review of some of the quarterly business highlights, recent dynamics of the Chinese economy and automobile industry and our market position. Our sales increased by 11.1% year-over-year to $176.2 million in the second quarter of 2025, compared to $158.6 million in the second quarter of 2024, an increase compared with $167.1 million in the first quarter of 2025. Total sales of electric power steering systems, EPS, increased by 31.1% year-over-year to $72.9 million as our sales mix continues to shift to higher technology products.

我們首先回顧一些季度業務亮點、中國經濟和汽車行業的近期動態以及我們的市場地位。2025 年第二季度，我們的銷售額年增 11.1% 至 1.762 億美元，而 2024 年第二季為 1.586 億美元，較 2025 年第一季的 1.671 億美元有所成長。隨著我們的銷售組合繼續向高科技產品轉變，電動輔助轉向系統 (EPS) 的總銷售額年增 31.1%，達到 7,290 萬美元。

Our Henglong KYB subsidiary achieved 26% year-over-year growth of its EPS products in the second quarter of 2025. Total EPS products were 41.2% of total sales for the three months ended June 30, 2025, versus 35.1% for the same quarter in 2024. Our steering subsidiary, Henglong, which produces traditional hydraulic steering systems for the Chinese passenger vehicle market, reported a 4.2% year-over-year sales increase to $83.4 million in the second quarter of 2025.

我們的恆隆KYB子公司在2025年第二季實現了EPS產品年增26%。截至 2025 年 6 月 30 日的三個月，EPS 產品總額佔總銷售額的 41.2%，而 2024 年同期為 35.1%。我們的轉向子公司恆隆為中國乘用車市場生產傳統液壓轉向系統，2025 年第二季銷售額年增 4.2%，達到 8,340 萬美元。

Sales by Jiulong’s commercial vehicle steering products increased by 25.6% year-over-year in the second quarter of 2025. Tax incentives, subsidiaries for scrapping older vehicles, and lower interest rate financing are among the government incentives to support the purchases of automobile vehicles in China for 2025. Additionally, local and private incentives may also aid buyers.

2025年第二季久隆商用車轉向產品銷售量年增25.6%。稅收優惠、老舊車輛報廢補貼以及低利率融資是中國政府為支持2025年中國汽車購買而採取的激勵措施之一。此外，地方和私人激勵措施也可能對買家有所幫助。

North American sales increased by 14.9% year-over-year to $30.8 million, primarily due to higher sales to Stellantis. Our Brazilian sales increased by 49.4% year-over-year, mainly due to higher demand by Stellantis also.

北美銷售額年增 14.9% 至 3,080 萬美元，主要由於 Stellantis 的銷售額增加。我們的巴西銷售額年增 49.4%，這主要歸功於 Stellantis 的需求增加。

Brazilian sales represented 10.1% of total sales in the second quarter of 2025. Combined, North and South American sales have risen to approximately 27.5% of total sales in the 2025 second quarter.

2025 年第二季度，巴西銷售額佔總銷售額的 10.1%。到 2025 年第二季度，北美和南美的銷售額合計將佔總銷售額的約 27.5%。

For the macro economy, Chinese GDP was 5.2% year-over-year in the second quarter of 2025, a slight decrease from the 5.4% in the first quarter of 2025. As the passenger vehicle and commercial vehicle markets in China are our largest markets, their status can have direct impact on our sales.

宏觀經濟方面，2025年第二季中國GDP年增5.2%，較2025年第一季的5.4%略有下降。由於中國乘用車和商用車市場是我們最大的市場，因此它們的地位會直接影響我們的銷售。

According to statistics from the China Association of Automobile Manufacturers, CAAM, total vehicle unit sales increased by 11.4% year-over-year in the first half of 2025. Passenger vehicle unit sales grew by 13% year-over-year and commercial vehicle sales increased by 2.6% year-over-year in the first six months of 2025.

根據中國汽車工業協會（CAAM）的統計數據，2025年上半年汽車總銷量年增11.4%。2025年上半年，乘用車銷量較去年同期成長13%，商用車銷量較去年同期成長2.6%。

Gross profit increased by 4.2% in the second quarter of 2025. Operating expenses were well controlled and declined by $2.2 million in the second quarter of 2025 compared with the 2024 second quarter. R&D expenses were stable at $8.1 million in the second quarter of 2025. We continue the development of our hydraulic and EPS products, especially our R-EPS product line.

2025年第二季毛利成長4.2%。營運費用控制良好，2025 年第二季與 2024 年第二季相比下降了 220 萬美元。2025 年第二季研發費用穩定在 810 萬美元。我們繼續開發我們的液壓和 EPS 產品，特別是我們的 R-EPS 產品線。

Income from operations rose by 20.2% to $13 million. Income tax expense was $4 million for the second quarter of 2025 as compared to $2.1 million for the 2024 second quarter. The increase in income tax is due to higher income before income tax expenses of $15.1 million and expected higher annual effective tax rate in 2025 based on the latest annual forecast as compared to 2024.

營業收入成長20.2%至1300萬美元。2025 年第二季的所得稅費用為 400 萬美元，而 2024 年第二季的所得稅費用為 210 萬美元。所得稅增加的原因是所得稅前收入增加了 1,510 萬美元，根據最新年度預測，預計 2025 年的年度有效稅率將高於 2024 年。

Net income attributable to parent common shareholders per diluted share was $0.25 versus $0.24 in the year ago second quarter. Net cash provided by operating activities rose by almost $40 million year-over-year to $49.1 million for the first six months of 2025. Total cash, cash equivalents plus cash and short-term investments were $135 3 million or approximately $4.48 per share at June 30, 2025.

歸屬於母公司普通股股東的每股攤薄淨利潤為 0.25 美元，去年同期第二季為 0.24 美元。2025 年前六個月，經營活動提供的淨現金年增近 4,000 萬美元，達到 4,910 萬美元。截至 2025 年 6 月 30 日，現金、現金等價物加上現金及短期投資總額為 1.353 億美元，或每股約 4.48 美元。

Our second-generation IRCB that's intelligent electrohydraulic circulating ball power steering for use in heavy-duty vehicles that use both hydraulic power and electrical controls is now in mass production in China. Following the IRCB's outstanding performance and cost efficiency, new orders in July by customers set a new record in the power steering industry for the ramp-up to mass production.

公司第二代IRCB，即液壓與電氣控制相結合的智慧電液循環球式重型車輛動力轉向器，目前已在中國實現量產。由於內燃機轉向架的出色性能和成本效益，7月客戶新訂單創下了動力轉向行業量產的新紀錄。

As China's first IRCB compatible system with the L2+ assisted driving. This system utilizes cutting-edge electrohydraulic control technology to achieve internationally leading benchmarks in steering accuracy and response speed. By optimizing energy consumption, it is projected to reduce operational costs by nearly RMB36,000 per vehicle annually.

作為中國首款相容IRCB的L2+輔助駕駛系統。該系統採用先進的電液控制技術，轉向精準度、反應速度達到國際領先水準。透過優化能源消耗，預計每輛車每年可降低營運成本近3.6萬元。

In our first six months of 2025, our R-EPS system steering product developed for Nanjing Iveco also entered mass production and is capable of performing autonomous driving functions such as automatic parking, lane keep assist, lane follow assist. And also in the first six months of 2025, our Shashi Jiulong Power Steering gears company, Shashi Jiulong subsidiary, won customer awards and accolades from two major commercial vehicle OEMs, Beiqi Foton Motor and Shaanxi Automobile Heavy Truck.

2025年上半年，我們為南京依維柯開發的R-EPS系統轉向產品也實現量產，可實現自動停車、車道維持輔助、車道跟隨輔助等自動駕駛功能。此外，在2025年上半年，我們的沙市久隆動力轉向器公司（沙市久隆子公司）贏得了兩大商用車原始設備製造商北汽福田汽車和陝汽重卡的客戶獎項和讚譽。

Given our growing international sales, the Board of Directors and management has decided to begin the process to change our corporate registration from the state of Delaware to the Cayman Islands. We believe this change will save significant costs, require less regulatory reporting and allow management to concentrate on improving operations, sales, and penetrating our growing international markets.

鑑於我們不斷增長的國際銷售額，董事會和管理層決定開始將我們的公司註冊地從特拉華州更改為開曼群島。我們相信這項變更將節省大量成本，減少監管報告，並使管理層能夠專注於改善營運、銷售和滲透我們不斷成長的國際市場。

The success of our R&D technology projects has provided state-of-the-art steering products. Our large diverse product portfolio provides solutions for the largest vehicle global OEMs and provides the mean to access more international markets to enhance our growth.

我們的研發技術專案的成功提供了最先進的轉向產品。我們豐富多樣的產品組合為全球最大的汽車原始設備製造商提供解決方案，並提供了進入更多國際市場的途徑，以促進我們的成長。

Now let me go over the financial results in the second quarter of 2025. Net sales increased by 11.1% year-over-year to $176.2 million compared to $158.6 million in the second quarter of 2024. Net sales of traditional steering products and parts increased slightly year-over-year to $103.3 million in the second quarter of 2025.

現在讓我回顧一下2025年第二季的財務表現。淨銷售額年增 11.1% 至 1.762 億美元，而 2024 年第二季為 1.586 億美元。2025 年第二季度，傳統轉向產品及零件的淨銷售額較去年同期略有成長，達到 1.033 億美元。

Net sales of EPS products rose 31.1% year-over-year to $72.9 million from $55.6 million for the same period in 2024. EPS product sales grew to 41.4% of the total net sales for the second quarter of 2025 compared to 35.1% for the same period in 2024.

EPS 產品的淨銷售額從 2024 年同期的 5,560 萬美元年增 31.1% 至 7,290 萬美元。2025 年第二季度，EPS 產品銷售額佔總淨銷售額的 41.4%，而 2024 年同期為 35.1%。

Our subsidiary Jiulong sales of commercial vehicle steering systems rose by 25.6% to $23.5 million compared with $18.7 million for the second quarter of 2024. Sales to North American customers increased by 11.8% to $30 million compared to $26.8 million in the second quarter of 2024. North American sales increased primarily due to improved demand by one customer.

我們的子公司久隆商用車轉向系統銷售額成長 25.6% 至 2,350 萬美元，而 2024 年第二季為 1,870 萬美元。對北美客戶的銷售額較 2024 年第二季的 2,680 萬美元成長 11.8%，達到 3,000 萬美元。北美銷售額的成長主要由於一位客戶的需求增加。

Sales in Brazil were 49.4% higher in the second quarter of 2024 to $17.9 million from $12 million in the second quarter of 2024. Gross profit grew by 4.2% year-over-year to $30.5 million from $29.3 million in the second quarter of 2024.

2024 年第二季度，巴西的銷售額從 2024 年第二季的 1,200 萬美元成長 49.4% 至 1,790 萬美元。毛利從 2024 年第二季的 2,930 萬美元年增 4.2% 至 3,050 萬美元。

Gross profit margin decreased to 17.3% in the second quarter of 2025 from 18.5% in the second quarter of 2024. The decrease in gross profit margin was mainly due to an increase in tariffs and a product mix change from increased sales portion of relatively lower-margin products.

毛利率從 2024 年第二季的 18.5% 下降至 2025 年第二季的 17.3%。毛利率下降主要是由於關稅增加以及產品結構變化，利潤率相對較低的產品銷售份額增加所致。

Gain on other sales was $0.5 million in the second quarter of 2025 compared to $1.7 million in the second quarter of 2024. Selling expenses of $4.5 million in the second quarter of 2025 were consistent with the second quarter of 2024. Selling expenses represented 2.6% of net sales in the second quarter of 2025 compared to 2.9% in the second quarter of 2024.

2025 年第二季其他銷售收益為 50 萬美元，而 2024 年第二季為 170 萬美元。2025 年第二季的銷售費用為 450 萬美元，與 2024 年第二季持平。2025 年第二季銷售費用佔淨銷售額的 2.6%，而 2024 年第二季為 2.9%。

General and administrative expenses, G&A, decreased to $5.4 million compared to $7.4 million in the second quarter of 2024, primarily due to decreased business taxes and surcharges. G&A expenses represented 3.1% of net sales in the second quarter of 2025 compared to 4.7% of net sales in the second quarter of 2024.

一般及行政開支 (G&A) 降至 540 萬美元，而 2024 年第二季為 740 萬美元，主要原因是營業稅及附加費減少。2025 年第二季度，一般及行政管理費用佔淨銷售額的 3.1%，而 2024 年第二季度該費用佔淨銷售額的 4.7%。

Research and development expenses, R&D, were stable at $8.1 million in the second quarter of each year. R&D expenses represented 4.6% of net sales in the second quarter of 2025 compared to 5.2% in the second quarter of 2024. Research and development programs include, but are not limited to electric power and hydraulic steering systems, automotive intelligence and software technologies, automotive electronics, high polymer materials and manufacturing technologies.

每年第二季的研發費用（R&D）穩定在 810 萬美元。2025 年第二季研發費用佔淨銷售額的 4.6%，而 2024 年第二季為 5.2%。研發項目包括但不限於電動輔助及液壓轉向系統、汽車智慧化及軟體技術、汽車電子、高分子材料及製造技術等。

Other income was $1.1 million for the second quarter of 2025 compared to $1.7 million for the three months ended June 30, 2024. Income from operations rose by 20.2% to $13 million in the second quarter of 2025 from $10.8 million in the second quarter of 2024. The increase was primarily due to higher sales.

2025 年第二季的其他收入為 110 萬美元，而截至 2024 年 6 月 30 日的三個月的其他收入為 170 萬美元。2025 年第二季營業收入從 2024 年第二季的 1,080 萬美元成長 20.2% 至 1,300 萬美元。成長主要歸因於銷售額增加。

Interest expense was $0.3 million in the second quarter of 2025 compared to $0.2 million in the second quarter of 2024. Net financial income was $1.3 million in the second quarter of 2025 compared to net financial expense of $0.7 million in the second quarter of 2024. The increase in net financial income was primarily due to an increase in the foreign exchange gain due to foreign exchange volatility.

2025 年第二季的利息支出為 30 萬美元，而 2024 年第二季的利息支出為 20 萬美元。2025 年第二季的淨財務收入為 130 萬美元，而 2024 年第二季的淨財務支出為 70 萬美元。淨財務收入的增加主要是由於外匯波動導致的外匯收益增加。

Income before income tax expenses and equity and earnings of affiliated companies was $15.1 million in the second quarter of 2025 compared to income before income tax expense and equity and earnings of affiliated companies of $11.7 million in the second quarter of 2024. The change in income before income tax expense and equity in earnings of affiliated companies was mainly due to higher income from operations in the second quarter of 2025 compared with last year's same quarter.

2025 年第二季度，扣除所得稅費用、權益和附屬公司收益前的收入為 1,510 萬美元，而 2024 年第二季度，扣除所得稅費用、權益和附屬公司收益前的收入為 1,170 萬美元。所得稅費用前利潤及關聯公司收益權益的變動主要是由於2025年第二季的營業收入較去年同期增加。

Income tax expense was $4 million in the second quarter of 2025 compared to $2.1 million for the second quarter of 2024. The increase in income tax expense was primarily due to a higher income before income tax expenses and higher expected annual effective tax rate in 2025 based on the annual forecast as compared to 2024.

2025 年第二季的所得稅費用為 400 萬美元，而 2024 年第二季的所得稅費用為 210 萬美元。所得稅費用的增加主要是由於所得稅費用前收入較高以及根據年度預測，2025 年的預期年度有效稅率高於 2024 年。

Net income attributable to parent company's common shareholders was $7.6 million in the second quarter of 2025 compared to net income attributable to parent company's common shareholders of $7.1 million in the second quarter of 2024. Diluted earnings per share were $0.25 second quarter of 2025 compared to $0.24 in the second quarter of 2024. The weighted average number of diluted common shares outstanding was 30,170,702 in the second quarter of 2025 compared to 30,185,702 in the second quarter of 2024.

2025 年第二季歸屬於母公司普通股股東的淨利為 760 萬美元，而 2024 年第二季歸屬於母公司普通股股東的淨利為 710 萬美元。2025 年第二季每股攤薄收益為 0.25 美元，而 2024 年第二季為 0.24 美元。2025 年第二季度，稀釋普通股的加權平均流通股數為 30,170,702 股，而 2024 年第二季為 30,185,702 股。

Six months of 2025, net sales increased by 15.2% year-over-year to $343 million in the first six months of 2025 compared to $298 million in the first six months of 2024, primarily due to increased sales of EPS systems. Six months gross profit increased by 10.8% year-over-year to $59.1 million from $53.4 million in the corresponding period last year. Six months gross profit margin was 17.2% compared with 17.9% in the first six months of 2024.

2025 年上半年，淨銷售額年增 15.2% 至 3.43 億美元，而 2024 年上半年為 2.98 億美元，主要歸因於 EPS 系統銷售額的成長。六個月毛利年增 10.8%，從去年同期的 5,340 萬美元增至 5,910 萬美元。六個月的毛利率為 17.2%，而 2024 年前六個月的毛利率為 17.9%。

Gain on other sales was $1.6 million in the first six months of 2025 compared to $2.2 million in the corresponding period last year. Income from operations increased by 5.7% year-over-year to $21.6 million in the first six months of 2025 from $20.5 million in the first six months of 2024.

2025 年前六個月其他銷售收益為 160 萬美元，去年同期為 220 萬美元。營業收入從 2024 年上半年的 2,050 萬美元年增 5.7% 至 2025 年上半年的 2,160 萬美元。

Net income attributable to parent company's common shareholders was $14.7 million in the first six months of 2025 compared to net income attributable to parent company's common shareholders of $15.4 million in the corresponding period in 2024. Diluted earnings per share in the first 6 months of 2025 were $0.49 compared to diluted earnings per share of $0.51 in the first six months of 2024.

2025 年上半年歸屬於母公司普通股股東的淨利為 1,470 萬美元，而 2024 年同期歸屬於母公司普通股股東的淨利為 1,540 萬美元。2025 年前 6 個月每股攤薄收益為 0.49 美元，而 2024 年前 6 個月每股攤薄收益為 0.51 美元。

Balance sheet items. Cash, cash equivalents and short-term investments were $135.3 million or approximately $4.48 per share as of June 30, 2025. Net working capital was $170.9 million. Total accounts receivable, including notes receivable, were $294.2 million. Accounts payable, including notes payable, were $269.6 million and short-term loans were $71.9 million.

資產負債表項目。截至 2025 年 6 月 30 日，現金、現金等價物及短期投資為 1.353 億美元，約每股 4.48 美元。淨營運資本為1.709億美元。應收帳款總額（包括應收票據）為 2.942 億美元。應付帳款（包括應付票據）為 2.696 億美元，短期貸款為 7,190 萬美元。

Total parent company stockholders' equity was $366.4 million as of June 30, 2024, compared to $349.6 million as of December 31, 2024. Additionally, net cash provided by operating activities of $49.1 million in the first six months of 2024. We invested $18.5 million in the capital expenditures in the first half of 2025 as we continue to invest in our R&D and production capabilities.

截至 2024 年 6 月 30 日，母公司股東權益總額為 3.664 億美元，而截至 2024 年 12 月 31 日為 3.496 億美元。此外，2024 年前六個月經營活動提供的淨現金為 4,910 萬美元。我們將繼續投資於研發和生產能力，並在 2025 年上半年投資 1,850 萬美元的資本支出。

The business outlook. Management has raised revenue guidance for the full fiscal year 2025 to $720 million. This target is based on the company's current views on operating and market conditions, which are subject to change.

商業前景。管理層已將 2025 財年全年營收預期上調至 7.2 億美元。該目標基於公司對當前營運和市場狀況的看法，可能會發生變化。

With that, operator, we are ready to begin the Q&A.

接線員，好了，我們可以開始問答了。

(Operator Instructions) Jonathan Nieves, Individual Investor.

（操作員指示）喬納森·尼維斯（Jonathan Nieves），個人投資者。

My question is why has the income tax rate increased in 2025?

我的問題是為什麼 2025 年所得稅率會增加？

(interpreted) So there's -- the increase of the tax is due to two factors. One is the pre-tax profit -- profit before tax has gone up as the overall revenue and it has increased. And the other reason is the tax rate has slightly ticked up. And last year, there was a $1.5 million tax adjustment and -- which affected in last year's tax provision. And this year has a different effect, and that's overall affecting the tax -- total tax provision.

（解釋）因此，稅收增加有兩個原因。一是稅前利潤－隨著總收入的增加，稅前利潤也隨之增加。另一個原因是稅率略有上升。去年，稅收調整金額為 150 萬美元，這影響了去年的稅收撥備。今年的影響有所不同，這總體上影響了稅收——總稅收撥備。

Michael Fiedler, Individual Investor.

麥可‧菲德勒，個人投資者。

I have a question about R&D. It's a -- in the 2025 second quarter, why was R&D flat at $8.1 million? And what's the outlook for R&D spending?

我有一個關於研發的問題。為什麼 2025 年第二季的研發費用持平於 810 萬美元？研發支出的前景如何？

(interpreted) So Q2, yeah, you're right. In the first quarter -- in the second quarter, our revenue has increased. As you can see, revenue increased by 11% but R&D, during the same quarter, was relatively flat. The reason being, during the first quarter, we actually was R&D expenses was a little bit overspent.

（解釋）那麼 Q2，是的，你是對的。在第一季至第二季度，我們的收入有所增加。如您所見，營收成長了 11%，但同一季度的研發支出相對持平。原因是，在第一季度，我們的研發費用其實有點超支。

It increased on a year-over-year basis during the first quarter was increased by -- I mean, $3.4 million. That's about 64% year-over-year increase. That's part of the reason we didn't have to increase as much during the second quarter.

第一季同比增長了 340 萬美元。這比去年同期增長了約 64%。這是我們在第二季不必增加那麼多的原因之一。

On the first half perspective, first half, the R&D expense is about $16.8 million versus last year same period, $13.5 million. So that R&D expense will continue to invest in the future technology, whether it's driverless technology or the different type of steering product going to electric vehicle. So we're very committed to long-term investment into R&D.

從上半年來看，上半年研發費用約為 1,680 萬美元，而去年同期為 1,350 萬美元。因此，研發費用將繼續投資於未來的技術，無論是無人駕駛技術還是用於電動車的不同類型的轉向產品。因此，我們非常致力於對研發的長期投資。

Yeah. On a full year basis, we're expecting $32 million to $35 million on R&D expenses. That's about 5% of total revenue. 80% of our R&D expenses is going to EV-related product, the steering product for the EV sector, including R-EPS and all the product and our customers are sending orders. So overall, R&D is on track.

是的。從全年來看，我們預計研發費用為 3,200 萬至 3,500 萬美元。這約佔總收入的 5%。我們 80% 的研發費用用於電動車相關產品、電動車領域的轉向產品，包括 R-EPS 和所有產品，我們的客戶正在發送訂單。整體而言，研發工作進展順利。

Okay. I have a follow-up question, which is, given the strong electric vehicles in China, how much of the current R&D spending is for new energy technologies? And for which products are these new energy technology is for?

好的。我有一個後續問題，鑑於中國電動車的強勁發展，目前有多少研發支出用於新能源技術？這些新能源技術又適用於哪些產品呢？

(interpreted) So 80% of our R&D expenditures are going to the EV. As you know, in China right now, every two cars sold in the market, one of every two cars is EV. So the EV penetration is very large, and they will most likely remain at this level, if not increasing. And so that's why our product portfolio had to also need to be adjusted to meet the demand.

（解釋）因此，我們 80% 的研發支出都用於電動車。眾所周知，目前在中國，市場上每賣出兩輛汽車，就有一輛是電動車。因此，電動車的普及率非常高，而且很可能會保持在這個水平，甚至會增加。這就是為什麼我們的產品組合也需要調整以滿足需求。

Gary Nash, Private Investor.

納許 (Gary Nash)，私人投資者。

With sales in Brazil rising by almost 50% in the second quarter, what is the capacity utilization and need for more capital investment?

巴西第二季的銷售額成長了近 50%，產能利用率如何？是否需要更多資本投資？

(interpreted) Yes, we're very pleased and very proud of our growth in the market of Brazil. It's not only growing at a very rapid pace, like 50% year-over-year. But also, now it's accounting -- it crossed the threshold of 10% of total revenue for our overall company. So it's very exciting about the Brazilian market.

（翻譯）是的，我們對我們在巴西市場的成長感到非常高興和自豪。它不僅以非常快的速度增長，例如同比增長 50%。而且，現在它已經超過了我們整個公司總收入的 10% 的門檻。因此，巴西市場令人十分興奮。

In terms of your question on capacity utilization, we right now have run on three production lines in Brazil facility. And the utilization is about 90%. We have experienced some -- a bit of a bottleneck on the production process, and that has been solved.

關於您關於產能利用率的問題，我們目前在巴西工廠有三條生產線在運作。利用率約90%。我們在生產過程中遇到了一些瓶頸，但這個問題已經解決。

And so -- and in addition to that, we are going to add another production line. So sometime by the end of this year, we'll have four production line. The new line is EPS product, electric power steering product. So we're going to have four production lines in Brazil alone. Total CapEx, as you asked, will be around $3.5 million.

因此——除此之外，我們還將增加另一條生產線。因此到今年年底，我們將擁有四條生產線。新產品線是EPS產品，電動輔助轉向產品。因此，我們光在巴西就會有四條生產線。正如您所問，總資本支出約為 350 萬美元。

(Operator Instructions) [Kevin Sies].

（操作員指示）[Kevin Sies]。

I had a question from an investor, and he wanted to know a comment, please, that the company is buying back shares and then issuing options to management. And he'd like to get some clarification on that.

我收到了一位投資者的提問，他想知道公司正在回購股票，然後向管理層發行選擇權。他希望對此能得到一些澄清。

So first, this question that you received on the e-mail?

那麼首先，您在電子郵件中收到的這個問題是什麼？

It was a conversation that he had with me.

這是他和我的一次對話。

Okay. So this question is the company has been buying back shares and also issued options to management team.

好的。所以這個問題是公司一直在回購股票並向管理團隊發行選擇權。

That's right. He would just like to have a comment from management.

這是正確的。他只是想聽聽管理階層的意見。

(interpreted) So to answer this question, yeah, it's a very good answer. Here's the answer for the question. The company buyback shares because company see the stock is undervalued or grossly undervalued. And they want to utilize the cash on the book to create some shareholder value.

（解釋）所以回答這個問題，是的，這是一個非常好的答案。這是該問題的答案。公司回購股票是因為公司認為股票被低估或嚴重低估。他們希望利用帳面現金來創造一些股東價值。

And it's part of shareholder return program like any other companies. When you see the stock price dip below intrinsic value, you buy the stock.

和其他公司一樣，它是股東回報計畫的一部分。當您看到股價跌破內在價值時，您就會買入該股票。

Now on the stock option plan to issue to give to management team, it's part of the incentive plan to incentivize middle operational management or even senior management to continue to execute the game plan to support the company's long-term growth, including a number of strategic initiatives from R&D to partnerships. And so these are critical tools to -- for a company to reward -- to award key employee and also attract talent to join the company.

現在，向管理團隊發行股票選擇權計劃是激勵計劃的一部分，旨在激勵中階營運管理人員甚至高階主管繼續執行遊戲計劃，以支持公司的長期成長，包括從研發到合作夥伴關係的一系列策略性舉措。因此，對於公司來說，這些都是獎勵關鍵員工並吸引人才加入公司的關鍵工具。

So this is no difference. This practice doing in CAAS is no difference. Other things are happening with Google, Microsoft, Amazon, it's exactly the same thing. The US company are incentivized their employee and attracting talent. And at the same time, they're using their strong cash flow -- free cash flow to buyback shares.

所以這沒有什麼區別。在中國農科院做的這個練習也沒什麼差別。Google、微軟、亞馬遜也在發生同樣的事情。美國公司激勵員工並吸引人才。與此同時，他們正在利用強勁的現金流——自由現金流來回購股票。

(Operator Instructions)

（操作員指示）

Okay. So I have another question then. Can you discuss the move to the Cayman Islands and what advantages you see to the company and also to the shareholders from this move?

好的。那我還有另一個問題。您能否討論一下遷至開曼群島的情況以及您認為此舉將為公司和股東帶來哪些好處？

(interpreted) Okay. Good. Yes, this is a very good question we received from a few shareholders regarding the redomicile to Cayman Island. This move is mainly for the purpose of reducing the overall cost of being a listed company. As you know, right now, since we are a US company, we have to do a quarterly filing 10-Qs and annual report and 10-Ks.

（翻譯）好的。好的。是的，我們從一些股東那裡收到了關於遷至開曼島的一個非常好的問題。此舉主要是為了降低上市公司的整體成本。如您所知，由於我們是一家美國公司，因此現在我們必須提交季度報告 10-Q、年度報告和 10-K。

So there are tremendous amount of saving if we move into this new structure, we're still reporting, but the overall cost of reporting is a lot lower as a foreign company. And we are -- most of our operations outside the US anyway. That's one.

因此，如果我們採用這種新結構，我們將節省大量資金，我們仍在報告，但作為一家外國公司，報告的總體成本要低得多。而且我們大部分的業務都在美國境外。那是一個。

And two is we -- even this move domiciled to Cayman doesn't change the main things we are still listed on Nasdaq. The stock ticker is still under CAAS. And our other shareholder reward program, whether it's dividend or share buyback will continue. So in terms of shareholders, there won't be any effect due to this change.

第二，即使我們將公司註冊地轉移到開曼群島，也不會改變我們仍在納斯達克上市的主要情況。該股票代號仍受 CAAS 管轄。我們的其他股東獎勵計劃，無論是股息還是股票回購都將繼續。因此，對於股東而言，這項變更不會產生任何影響。

And one more thing is being a Cayman company and no longer a US company give us business flexibility as we are -- as you can see, our business is now expanding globally. We already have a pretty good global footprint. Let me remind everybody on the call, we started off 30-odd years ago as a regional power steering company in China. We quickly grew into a national champion and by supporting and supplying to the fast-rising domestic brands.

還有一件事是，作為一家開曼公司而不再是美國公司，這為我們提供了業務靈活性——正如您所見，我們的業務現在正在全球擴展。我們的全球影響力已經相當大。讓我提醒電話會議中的各位，我們 30 多年前作為一家中國區域性動力轉向公司起步。透過支持和供應快速崛起的國內品牌，我們迅速成長為全國冠軍。

So now you see all the brands in the news, whether it's Cherry Auto, BYD, Geely, Great Wall, a number of those auto makers are very large automakers by global standard now. They are all our major customers, and they start up the first set of power steering with us. So we're very proud of that.

所以現在你看到新聞中的所有品牌，無論是奇瑞汽車、比亞迪、吉利、長城，其中許多汽車製造商現在以全球標準來說都是非常大的汽車製造商。他們都是我們的主要客戶，並與我們一起啟動了第一套動力轉向系統。所以我們對此感到非常自豪。

Then from there, about 18 years ago, we launched into -- we expand our footprint into US market. And so now you have formerly known as Chrysler and Ford, our major customers. And we have a quite large shares with these two companies in a number of products.

從那時起，大約 18 年前，我們開始進軍美國市場。現在，你們以前認識的克萊斯勒和福特是我們的主要客戶。而我們在許多產品上與這兩家公司有相當大的份額。

And then our European businesses start taking off. So our relationship with [Fiat] has deepened over the last 15 years. And now we are supplying to a number of European model automakers, auto models. We're growing very fast in terms of our market share.

然後我們的歐洲業務開始起飛。因此，我們與菲亞特的關係在過去 15 年裡不斷加深。目前我們為多家歐洲汽車製造商、汽車車型提供產品。我們的市佔率成長非常快。

And then lastly, we just mentioned earlier, our Brazilian business are growing very rapidly. So this quarter is 50%, and we're expanding more capacity. So overall, we are a global company now, and we will continue to expand our footprint. So that being said, being a foreign domicile company or non-US domicile company will give us a business flexibility to continue to win contracts and expand business and grow market share. And lastly, to build shareholder value.

最後，我們剛才提到，我們的巴西業務成長非常迅速。本季的產能為 50%，而且我們正在擴大產能。總的來說，我們現在是一家全球性公司，我們將繼續擴大我們的足跡。因此，作為一家外國公司或非美國公司，我們將擁有業務靈活性，可以繼續贏得合約、擴大業務並增加市場份額。最後，創造股東價值。

We have reached the end of the question-and-answer session, and I will now turn the call over to Kevin Theiss for closing remarks.

問答環節已經結束，現在我將把發言權交給 Kevin Theiss 作結語。

I want to thank everyone for participating in today's conference call. We wish you all to be safe, and we look forward to speaking with you in the future. Thank you.

我要感謝大家參加今天的電話會議。我們祝大家平安，並期待將來與您交談。謝謝。

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

今天的會議到此結束，大家可以斷開連線了。感謝您的參與。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

本記錄中標記（翻譯）的部分是由現場通話中的翻譯人員說的。翻譯由贊助此活動的公司提供。