HONG KONG, Apr 4, 2022 - (ACN Newswire) - On March 31, Wuling Motors Holdings Ltd. (hereinafter referred to as "Wuling Motors" or the "Company", 00305. HK) released the "Disclosable Transactions and Related Party Transactions and Continuing Related Party Transactions Regarding the Capital Increase of Wuling New Energy". Wuling Motors, Guangxi Automobile Group, Wuling Industry, and Wuling New Energy entered into a capital increase agreement, under which Wuling Motors agreed to make a cash contribution of RMB 305.6 million to Wuling New Energy and Wuling Industry conditionally agreed to use the new energy that Wuling Industry is currently engaged to contribute RMB 300 million to Wuling New Energy in the form of certain business-related assets and equipment (valued at RMB 85 million) and cash of RMB 215 million, part of which was used by Wuling New Energy for the transfer of patent packages from Wuling Industrial and the purchase of inventory and tooling mold, the employee stock ownership platform invested 80 million yuan.

According to the agreement of the letter of intent, Guangxi Automobile and Wuling New Energy have entered into the first-phase capital injection contract, under which Guangxi Automobile will contribute RMB 1.6 billion to Wuling New Energy. After the completion of the capital increase, Wuling New Energy will be owned 70%, 13.37%, and 13.13% by Guangxi Automobile Group, Wuling Motors, and Wuling Industry respectively. It should be pointed out that Wuling Motors announced on December 1, 2021, that within 365 days after the completion of the third phase of capital increase Wuling Motors has the right to choose to further subscribe to new equity interests in Wuling New Energy and increase its shareholding ratio to 50% above.

According to public information, Wuling Motors (00305. HK) is one of the top 100 global automobile parts suppliers. Its controlling shareholder is Guangxi Automobile Group. The operation is mainly carried out by the subsidiary holding company Wuling Industry, of which Wuling Motor holds a 60.9% stake in Wuling Industry. Guangxi Automobile Group holds 39.1% of the shares of the Wuling Industry, and Wuling New Energy, the invested party, is a wholly-owned subsidiary of Guangxi Automobile Group.

Strategically integrate resource advantages to enhance cluster competitiveness
Guangxi Automobile Group, the parent company of Wuling Motors, actively integrates ecological cluster of its subsidiaries Wuling Motors and Wuling Industry, and plans to build Wuling New Energy into an automotive technology company focusing on cost-effective pure electric and plug-in hybrid new energy intelligent travel products, improve the construction of the industrial chain, cultivate and develop new economic growth points, and enhance the comprehensive competitiveness of the group. It is reported that Guangxi Automobile Group will afterward inject approximately RMB 1.6 billion in non-cash assets and/or cash into Wuling New Energy, which includes a new production base located in Liudong New District, Liuzhou City. The base covers an area of about 550,000 square meters with a planned production capacity of 300,000 vehicles per year, effectively increasing the production capacity of the new energy business and providing good business support for the development of the new energy business. According to industry insiders, this move by Guangxi Automobile Group is to thoroughly implement the decision-making and deployment of the mixed-ownership reform policy of the State-owned Assets Supervision and Administration Commission, to adapt to changes in the market environment in terms of technology and product structure and to enhance the development vitality of state-owned enterprises.

After this asset reorganization, Wuling New Energy will achieve the independent operation of a range of new energy businesses, including new energy vehicle research and development, manufacturing, and sales. It helps complete the direct connection with the capital market, expand diversified and multi-level financing channels, improve financing flexibility, and expand space for capital operation.

For Wuling Motors, at the business level, by investing in Wuling New Energy, it may benefit from Guangxi Automobile Group's new energy vehicle business resources, make up for the insufficient production capacity of the Wuling Industry, and enhance the market competitiveness of the company in the field of new energy vehicles. According to the announcement, the target production of Wuling New Energy in 2022-2024 is 20,600, 55,000, and 85,000 individually. In the current environment where the development of new energy vehicles is promising, Wuling New Energy's future performance expectations are worth looking forward to.

It is worth mentioning that, according to the announcement, the patented technology of new energy vehicles, held by the original Wuling Industry, will be sold to Wuling New Energy, and the research and development expenses of the original new energy vehicle business will also be transferred to Wuling New Energy after the completion of the reorganization. This will effectively reduce the follow-up research and development expenses of Wuling Motors, and the net profit of Wuling Motors may improve in the future. The announcement stated that entering into the capital increase agreement with Guangxi Automobile and Wuling Industry will help Wuling Motors build a new energy vehicle business segment with a unique platform and specific business strategy, which will be beneficial to the long-term development of Wuling Motors' new energy vehicle business.

With the policy support, Develop new energy vehicle industry
In 2020, China proposed the goal of "Carbon Peaking by 2030 and Carbon Neutrality by 2060". Following last year's "Double Carbon" written into the government work report for the first time at the Two Sessions, this year's government work report once again put forward clearer requirements to encourage the promotion of energy living in the process of implementing carbon peaking, which will undoubtedly further stimulate the development of new energy vehicles.

As a critical participant in the production and consumption market of new energy vehicles, Wuling Motors closely follows the national "dual carbon" target policy and market trend, takes the lead in the new energy vehicle industry, and continues to invest in R&D and production capacity. From automobile parts to complete vehicles, from product development to manufacturing capabilities, Wuling Motors has been anchoring the new energy market for technical reserves and capacity building, and has gradually formed the domain axis of the new energy vehicle business and the main growth point for future performance.

According to public information, Wuling Motors actively researches and reserves new energy power technologies and products, such as hybrid engines and pure electric vehicle motors, adds core development capabilities for the new energy vehicle power system integration, and accelerates the pace of industrial application.

At present, Wuling Motors has successfully developed new energy vehicle hybrid products. It reduces fuel consumption by greater than or equal to30% compared to traditional power vehicles of the same type, becoming the first supplier which can integrate hybrid power with an engine-motor-motor controller system in Guangxi. It has matched with multiple models of OEMs inside and outside the region. It also has coordinated the technological innovation and development of the upstream and downstream for the electrification of OEMs.

While improving the market segment layout with new energy commercial vehicles as the leading products, Wuling Motors seeks to "go global" and actively explores a new model of domestic ODM + overseas travel cooperation. In 2021, Wuling Motors and ELMS has reached an in-depth collaboration. The overseas order industry has formed an emerging growth bright spot. On January 1 this year, RCEP officially took effect, marking the official launch of a free trade zone with the largest sizable scale, largest population and greatest development potential in the world. It will also be a critical historical opportunity for Guangxi Automobile Group's industrial transformation and upgrading. In the same month, Guangxi Automobile Group signed the "Agreement on the Commissioned Development and Mass Production of Micro Electric Logistics Vehicles" with Japan's ASF Company to jointly develop pure electric logistics vehicles. The electric logistics vehicle is small in size and flexible in mobility. It matches multi-purpose scenarios such as "last mile" logistics and transportation. It can be applied to short-distance transportation of goods for local small and micro enterprises in Japan, and terminal logistics distribution in cities, towns, communities, and supermarkets.

2022 is a critical year for the new energy vehicle industry. Wuling Motors has outstanding competitive advantages in the upstream and downstream supply chain, core technology, production capacity, production base, and sales network. With the gradual deepening of the new energy strategy and resource depth focusing on integration, Wuling Motors' brand power and valuation system are expected to be restructured.





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