China Yuchai International Limited (NYSE: CYD) and its subsidiary Guangxi Yuchai Machinery Company Limited completed a purchase of 83,918,495 shares of Nanyue Diankong (Hengyang) Industrial Technology Company Limited for approximately RMB 176.2 million in cash, giving Yuchai a 27.97% equity interest and making it the second‑largest shareholder of the fuel‑injection specialist.
Through a concerted action agreement with Nanyue Diankong’s largest shareholder, Hunan Hengyang Auto Parts Factory, Yuchai now holds the right to appoint six of the nine directors and to designate the general manager, effectively granting it operational control of the company’s product development and supply‑chain decisions.
Nanyue Diankong’s portfolio of high‑tech fuel‑injection systems—including common‑rail, unit‑pump and mechanical‑pump solutions—provides Yuchai with advanced technology that can be integrated into its diesel and natural‑gas engines. The acquisition is intended to secure a critical component supplier, reduce sourcing costs, and accelerate Yuchai’s expansion into high‑horsepower engines for data‑center and industrial applications.
Yuchai’s 2024 engine sales totaled 356,586 units. Over the past three years the company’s revenue growth has declined 6.5%, with operating, net and gross margins at 2.9%, 1.99% and 14.33% respectively. An Altman Z‑Score of 1.94 signals potential financial stress, yet the balance sheet remains solid with a current ratio of 1.46 and a debt‑to‑equity ratio of 0.27. Valuation multiples stand at a P/E of 24.8, a P/S of 0.5 and a P/B of 1.19, while an RSI of 75.68 indicates overbought conditions. By cutting component costs and enhancing product differentiation, the deal is expected to improve Yuchai’s margin profile and operational efficiency.
The transaction aligns with a broader industry trend toward vertical integration to secure critical components amid supply‑chain uncertainties. By controlling a key supplier, Yuchai can better manage pricing, reduce lead times, and accelerate its entry into hybrid and new‑energy engine markets, thereby strengthening its competitive position against other engine manufacturers.
The acquisition marks a significant step in Yuchai’s strategy to consolidate its supply chain, improve cost structure, and expand its product portfolio, positioning the company for future growth in emerging powertrain markets.
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