China Zenix Auto International Limited Reports Revenue Growth of 30.6% in the 2017 Third Quarter

ZHANGZHOU, China, Dec. 6, 2017 /PRNewswire/ -- China Zenix Auto International Limited (NYSE: ZX) ("Zenix Auto" or "the Company"), the largest commercial vehicle wheel manufacturer in China in both the aftermarket and OEM market by sales volume, today announced its unaudited financial results for the third quarter and first nine months ended September 30, 2017.

Financial Highlights

Third Quarter 2017:

    --  Revenue was RMB643.4 million (US$96.7 million), up 30.6% year-over-year
        from RMB492.7 million in the third quarter of 2016;
    --  Sales to the Chinese OEM market increased by 94.6% year-over-year to
        RMB353.5 million (US$53.1 million) from RMB181.7 million in the same
        quarter of 2016;
    --  Gross profit was RMB81.5 million (US$12.2 million), flat year-over-year
        from RMB81.1 million in the third quarter of 2016;
    --  Net loss and total comprehensive loss was RMB5.4 million (US$0.8
        million) with loss per American Depositary Share ("ADS") of RMB0.11 (US$
        0.02), compared with net loss and total comprehensive loss of RMB16.0
        million and loss per ADS of RMB0.31 in the third quarter of 2016;
    --  Net cash flow from operating activities was RMB60.1 million (US$9.0
        million).

First Nine Months of 2017:

    --  Revenue was RMB2,094.7 million (US$314.8 million), up 26.4%
        year-over-year from RMB1,657.6 million in the first nine months of 2016;
    --  Sales to the Chinese OEM market increased by 88.9% year-over-year to
        RMB1,135.1 million (US$170.6 million) and represented 54.2% of revenue;
    --  Sales of tubeless steel wheels accounted for 44.1% of revenue and sales
        of aluminum wheels accounted for 6.3% of revenue, as the vehicle market
        is moving towards light-weight components;
    --  Net loss and total comprehensive loss was RMB0.4 million (US$0.07
        million) with earnings per ADS of RMB0.01 (US$0.00), compared with net
        loss and total comprehensive loss of RMB14.3 million and loss per ADS of
        RMB0.28 in the same period of 2016.

Mr. Junqiu Gao, Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto, commented, "Our top line growth accelerated during the third quarter, as our shipments to many of our over 80 OEM customers experienced in excess of 32% year-over-year growth. While we benefited from the robust growth of our long-term OEM customers such as JAC, SAIC IVECO, Sinotruk and Yutong Bus, our market share with other leading OEMs such as FAW and Foton also experienced significant increases. As the largest wheel producer for the commercial vehicle market in China, our ongoing innovations in product development are finally paying off. Since the Chinese government is heavily campaigning for better on-road safety and lower emissions, OEMs and the aftermarket are increasingly adopting our tubeless steel wheels and aluminum wheel products due to their light-weight features. With the robust growth in aluminum wheel sales, we are planning to launch a second production line to meet this growing demand."

Mr. Martin Cheung, CFO of Zenix Auto, commented, "Higher raw material costs continued to affect our margin. However, we believe we can recover some of the cost increase through our cost-plus pricing model, and the improved product mix will also help offset some cost pressure. With the strong OEM market, we are also increasing collection efforts and our DSO dropped to 52 days from 60 days in December 31, 2016. In the third quarter, we generated positive cash flow from operations of US$ 9.0 million."

2017 Third Quarter Results

Revenue for the third quarter ended September 30, 2017 was RMB643.4 million (US$96.7 million) from RMB492.7 million for the third quarter of 2016. The increase in revenue on a year-over-year basis was mainly driven by increased demand for new trucks, especially in heavy- and medium-duty trucks due to the combined effect of the Government's anti-overloading policy and increased development of infrastructure and residential properties in China.

Aftermarket sales in China decreased by 10.8% year-over-year to RMB203.4 million (US$30.6 million) in the third quarter of 2017 from RMB227.9 million in the third quarter of 2016. Total unit sales in the aftermarket decreased by 27.7% year-over-year with pricing helping to stabilize revenues. Sales in the aftermarket wheel segment remained weak as higher new truck sales negatively affected aftermarket replacement volume.

Sales to the Chinese OEM market increased by 94.6% year-over-year to RMB353.5 million (US$53.1 million) in the third quarter of 2017 compared to RMB181.7 million in the same quarter of 2016. Total unit sales in the OEM market increased by 32.0% year-over-year as a result of strong truck sales, especially heavy- and medium-duty trucks, during the third quarter of 2017.

International sales increased by 4.0% year-over-year to RMB86.5 million (US$13.0 million) in the third quarter of 2017 compared to sales of RMB83.1 million in the third quarter of 2016. Total unit sales in the international sales decreased by 12.4% year-over-year in the third quarter of 2017 as we increased our pricing to reflect higher raw material costs.

In the third quarter of 2017, domestic aftermarket sales, domestic OEM sales and international sales contributed 31.6%, 55.0% and 13.4% of revenue, respectively.

Sales of tubed steel wheels comprised 44.4% of 2017 third quarter revenue compared to 54.9% in the same quarter in 2016. Tubeless steel wheel sales represented 44.4% of 2017 third quarter revenue compared to 35.7% in the same quarter of 2016. While tubed and tubeless steel wheel sales remain the main sources of revenue for the Company, sales of aluminum wheels posted a robust year-over-year growth in volume and accounted for 7.1% of third quarter revenue as compared to 4.9% in the same quarter a year ago.

Third quarter gross profit was RMB81.5 million (US$12.2 million), compared to RMB81.1 million in the same quarter in 2016. Gross margin was 12.7% compared with 16.5% in the third quarter of 2016. The decline in gross margin on a year-over-year basis was mainly driven by a significant cost increase in raw materials.

Selling and distribution expenses decreased by 2.0% to RMB40.6 million (US$6.1 million) from RMB41.4 million in the third quarter of 2016. As a percentage of revenue, selling and distribution costs were 6.3% in the third quarter of 2017, compared to 8.4% in the same quarter a year ago.

Research and development ("R&D") expenses decreased by 29.4% to RMB13.9 million (US$2.1 million), compared to RMB19.7 million in the third quarter of 2016. R&D as a percentage of revenue was 2.2% in the third quarter of 2017, compared to 4.0% in last year's third quarter.

Administrative expenses decreased by 3.8% to RMB35.0 million (US$5.3 million) from RMB36.4 million in the third quarter of 2016. As a percentage of revenue, administrative expenses were 5.4%, compared to 7.4% of revenue in the third quarter of 2016.

Net loss and total comprehensive loss for the third quarter of 2017 were RMB5.4 million (US$0.8 million), compared to net loss and total comprehensive loss of RMB16.0 million in the same quarter of 2016.

Basic and diluted loss per ADS in the third quarter of 2017 were RMB 0.11 (US$0.02) compared to basic and diluted loss per ADS of RMB0.31 in the same quarter of 2016.

In the third quarter of 2017, the Company recorded cash inflows from operating activities of RMB60.1 million (US$9.0 million). Capital expenditures for the purchase of property, plant and equipment in the 2017 third quarter were RMB34.7 million (US$5.2 million).

During the third quarter of 2017 and 2016, the weighted average number of ordinary shares was 206.5 million and the weighted average number of ADSs was 51.6 million.

2017 First Nine-Month Results

Revenue for the first nine months ended September 30, 2017 increased by 26.4% to RMB2,094.7 million (US$314.8 million) compared with RMB1,657.6 million in the first nine months of 2016.

Aftermarket sales declined by 12.7% year-over-year to RMB674.5 million (US$101.4 million) in the first nine months of 2017, and represented 32.2% of total nine-month revenue. Sales to the Chinese OEM market increased by 88.9% year-over-year to RMB1,135.1 million (US$170.6 million) and represented 54.2% of revenue. International sales increased by 0.5% year-over-year to RMB285.1 million (US$42.8 million) compared with the same period last year, and represented 13.6% of revenue.

Tubed steel wheel sales for the first nine months ended September 30, 2017 accounted for 45.8% of revenue compared with 55.4% in the same period in 2016. Tubeless steel wheel sales accounted for 44.1% of revenue compared with 36.7% in the same period in 2016. Aluminum wheel sales accounted for 6.3% of revenue compared with 3.4% in the same period in 2016.

Gross profit for the first nine months ended September 30, 2017 was RMB273.1 million (US$41.1 million), compared with RMB298.7 million in the same period in 2016. Gross margin decreased to 13.0% compared with 18.0% in the same period last year. Income before taxation was RMB3.4 million (US$0.5 million), compared to a loss before taxation of RMB12.2 million during the first nine months of 2016.

Net loss and total comprehensive loss for the first nine months ended September 30, 2017 was RMB0.4 million (US$0.1 million), compared with loss and total comprehensive loss of RMB14.3 million during the same period in 2016. Basic and diluted loss per ordinary share and per ADS for the first nine months ended September 30, 2017 were RMB0.00 (US$0.00) and RMB0.01 (US$0.00), respectively.

As of September 30, 2017, Zenix Auto had bank balances and cash of RMB795.8 million (US$119.6 million) and fixed bank deposits with a maturity period over three months of RMB290.0 million (US$43.6 million). Total bank loans were RMB558.0 million (US$83.9 million). Total equity attributable to owners of the Company was RMB2,537.1 million (US$381.3 million).

For the first nine months ended September 30, 2017, the Company recorded cash outflows from operating activities of RMB49.4 million (US$7.4 million). Capital expenditures for the purchase of property, plant and equipment for the first nine months of 2017 were RMB35.2 million (US$5.3 million).

Conference Call Information

The Company will host a conference call, to be simultaneously webcast, on Wednesday, December 6, 2017 at 8:00 a.m. EST/ 9:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-877-407-0782 (U.S. Toll Free) or +1-201-689-8567 (International). Please dial in five minutes before the call start time and ask to be connected to the "China Zenix Auto" conference call.

A telephone replay of the call will be available after the conclusion of the conference call through 8:00 A.M. ET on January 6, 2018. The dial-in details for the replay are: U.S. Toll Free Number +1-877-481-4010, International dial-in number +1-919-882-2331 using Conference ID "22591" to access the replay.

Exchange Rate Information

The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. All translations from RMB to U.S. dollars are made at a rate of RMB6.653 to US$1.00, the effective noon buying rate as of September 30, 2017 in The City of New York, for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board. The percentages stated are calculated based on RMB amounts.

About China Zenix Auto International Limited

China Zenix Auto International Limited is the largest commercial vehicle wheel manufacturer in China in both the aftermarket and OEM market by sales volume. The Company offers more than 798 series of aluminum wheels, tubed steel wheels, tubeless steel wheels, and off-road steel wheels in the aftermarket and OEM markets in China and internationally. The Company's customers include large PRC commercial vehicle manufacturers, and it also exports products to over 80 distributors in more than 28 countries worldwide. With six large, strategically located manufacturing facilities in multiple regions across China, the Company has a designed annual production capacity of approximately 15.5 million units of steel and aluminum wheels as of September 30, 2017. For more information, please visit: www.zenixauto.com/en.

Safe Harbor

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. The Company may make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding these risks is included in our filings with the SEC. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments are as of the date of the press release, and the Company undertakes no duty to update such information, except as required under applicable law.

For more information, please contact

Kevin Theiss
Investor Relations
Awaken Advisors
Tel: +1-(212) 521-4050
Email: Kevin.Theiss@awakenlab.com

- tables follow -


    China Zenix Auto International Limited

    Unaudited Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Income

    For the three months ended September 30, 2017 and 2016

    (RMB and US$ amounts expressed in thousands, except number of shares and ADSs and per share data)


                                                                                                       2016 Q3              2017 Q3             2017 Q3
                                                                                                       -------              -------             -------

                                                                                                      RMB' 000             RMB' 000             US$' 000


    Revenue                                                                                                        492,700              643,360               96,698

    Cost of sales                                                                                                (411,584)           (561,865)            (84,449)
                                                                                                                  --------             --------              -------

    Gross profit                                                                                                    81,116               81,495               12,249

    Other operating income                                                                                           3,346                9,562                1,437

    Net exchange gain(loss)                                                                                            142              (1,048)               (158)

    Selling and distribution costs                                                                                (41,445)            (40,631)             (6,107)

    Research and development expenses                                                                             (19,670)            (13,887)             (2,087)

    Administrative expenses                                                                                       (36,400)            (35,025)             (5,264)

    Finance costs                                                                                                  (5,295)             (5,262)               (791)
                                                                                                                    ------               ------                 ----

    Loss before taxation                                                                                          (18,206)             (4,796)               (721)

    Income tax credit (expense)                                                                                      2,174                (645)                (97)
                                                                                                                     -----                 ----                  ---


    Loss and total comprehensive                                                                                  (16,032)             (5,441)               (818)
    loss for the period


    Loss per share

    Basic                                                                                                           (0.08)              (0.03)              (0.00)

    Diluted                                                                                                         (0.08)              (0.03)              (0.00)
                                                                                                                     =====                =====                =====


    Loss per ADS

    Basic                                                                                                           (0.31)              (0.11)              (0.02)

    Diluted                                                                                                         (0.31)              (0.11)              (0.02)
                                                                                                                     =====                =====                =====


    Shares                                                                                                     206,500,000          206,500,000          206,500,000

    ADSs                                                                                                        51,625,000           51,625,000           51,625,000


    China Zenix Auto International Limited

    Unaudited Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Income

    For the nine months ended September 30, 2017 and 2016

    (RMB and US$ amounts expressed in thousands, except number of shares and ADSs and per share data)


                                                                                                             2016         2017         2017
                                                                                                             ----         ----         ----

                                                                                                       RMB' 000    RMB' 000    US$' 000

    Revenue                                                                                             1,657,645    2,094,703      314,837

    Cost of sales                                                                                     (1,358,949) (1,821,584)   (273,787)
                                                                                                       ----------   ----------     --------

    Gross profit                                                                                          298,696      273,119       41,050

    Other operating income                                                                                  6,702       18,942        2,847

    Net exchange gain(loss)                                                                                   944      (2,340)       (352)

    Selling and distribution costs                                                                      (136,479)   (132,653)    (19,938)

    Research and development expenses                                                                    (61,111)    (41,916)     (6,300)

    Administrative expenses                                                                             (104,954)    (95,769)    (14,394)

    Finance costs                                                                                        (16,043)    (15,952)     (2,398)
                                                                                                          -------      -------       ------

    (Loss) Profit before taxation                                                                        (12,245)       3,431          515

    Income tax expense                                                                                    (2,052)     (3,876)       (583)
                                                                                                           ------       ------         ----


    Loss and total comprehensive                                                                         (14,297)       (445)        (68)
    loss for the period


    Loss per share

    Basic                                                                                                  (0.07)      (0.00)      (0.00)

    Diluted                                                                                                (0.07)      (0.00)      (0.00)
                                                                                                            =====        =====        =====


    Loss per ADS

    Basic                                                                                                  (0.28)      (0.01)      (0.00)

    Diluted                                                                                                (0.28)      (0.01)      (0.00)
                                                                                                            =====        =====        =====


    Shares                                                                                            206,500,000  206,500,000  206,500,000

    ADSs                                                                                               51,625,000   51,625,000   51,625,000



    China Zenix Auto International Limited

    Unaudited Condensed Consolidated Statements of Financial Position

    (RMB and US$ amounts expressed in thousands)


                                                         December 31         September 30           September 30
                                                                        2016                   2017                 2017
                                                                        ----                   ----                 ----

                                                           RMB'000              RMB'000               US$' 000

    ASSETS

    Current Assets

    Inventories                                                      138,740                237,189               35,650

    Trade and other
     receivables and                                                 695,856                752,244              113,064
    prepayments

    Prepaid lease payments                                             9,425                  9,425                1,417

    Pledged bank deposits                                             32,100                 33,100                4,975

    Fixed bank deposits with
     maturity                                                        290,000                290,000               43,587
    period over three months

    Bank balances and cash                                           896,799                795,761              119,604

    Total current assets                                           2,062,920              2,117,719              318,297
                                                                   ---------              ---------              -------


    Non-Current Assets

    Property, plant and
     equipment                                                     1,379,287              1,309,372              196,800

    Prepaid lease payments                                           376,449                369,380               55,518

    Deferred tax assets                                               23,836                 25,750                3,870

    Intangible assets                                                 17,000                 17,000                2,555
                                                                      ------                 ------                -----

    Total non-current assets                                       1,796,572              1,721,502              258,743
                                                                   ---------              ---------              -------

    Total assets                                                   3,859,492              3,839,221              577,040
                                                                   =========              =========              =======


    EQUITY AND LIABILITIES

    Current Liabilities

    Trade and other payables
     and                                                             668,633                644,257               96,833
    accruals

    Amount due to a
     shareholder                                                       1,398                  2,981                  448

    Taxation payable                                                     109                  1,049                  158

    Bank borrowings                                                  558,000                558,000               83,868

    Total current liabilities                                      1,228,140              1,206,287              181,307
                                                                   ---------              ---------              -------

    Deferred tax liabilities                                          85,286                 87,911               13,213

    Deferred income                                                    8,496                  7,898                1,187

    Total non-current
     liabilities                                                      93,782                 95,809               14,400
                                                                      ------                 ------               ------

    Total liabilities                                              1,321,922              1,302,096              195,707
                                                                   ---------              ---------              -------


    EQUITY

    Share capital                                                        136                    136                   20

    Paid in capital                                                  392,076                392,076               58,930

    Reserves                                                       2,145,358              2,144,913              322,383
                                                                   ---------              ---------              -------

    Total equity attributable
     to owners of                                                  2,537,570              2,537,125              381,333
        the company

    Total equity and
     liabilities                                                   3,859,492              3,839,221              577,040
                                                                   =========              =========              =======



    China Zenix Auto International Limited

    Unaudited Condensed Consolidated Statement of Cash Flows

    For the three months ended September 30, 2017

    (RMB and US$ amounts expressed in thousands)


    OPERATING ACTIVITIES                                                             Three Months Ended

                                                                                  September 30, 2017
                                                                                  ------------------

                                                                         RMB' 000                 US$' 000

    Loss before taxation                                                             (4,796)                  (721)

    Adjustments for:

                            Amortization of prepaid lease payments                        2,357                     354

                            Depreciation of property plant and equipment                 36,684                   5,514

                            Release of deferred income                                    (199)                   (30)

                            Finance costs                                                 5,262                     791

                            Interest income                                             (2,854)                  (429)


    Operating cash flows before movements in working capital                          36,454                   5,479

    Decrease in inventories                                                              536                      81

    Decrease in trade and other receivables and prepayments                           54,626                   8,210

    Decrease in trade and other payables and accruals                               (35,099)                (5,275)
                                                                                     -------                  ------

    Cash generated from operations                                                    56,517                   8,495

    Interest received                                                                  3,617                     544
                                                                                                                ---

    NET CASH FROM OPERATING ACTIVITIES                                                60,134                   9,039
                                                                                      ------                   -----

    INVESTING ACTIVITIES

    Purchase of property, plant and equipment                                       (34,719)                (5,218)

    Proceeds on disposal of property, plant and equipment                                 26                       4

    Withdrawal of pledged bank deposits                                                2,800                     421

    Placement of fixed bank deposits with maturity periods over                    (240,000)               (36,072)
    three months

    Withdrawal of fixed bank deposits with maturity periods over                     240,000                  36,072
    three months


    NET CASH USED IN INVESTING ACTIVITIES                                           (31,893)                (4,793)
                                                                                     -------                  ------

    FINANCING ACTIVITIES

    New bank borrowings raised                                                        80,000                  12,024

    Repayment of bank borrowings                                                    (80,000)               (12,024)

    Interest paid                                                                    (6,199)                  (932)

    Advance from a shareholder                                                         2,981                     448
                                                                                       -----                     ---

    NET CASH USED IN FINANCING ACTIVITIES                                            (3,218)                  (484)
                                                                                      ------                    ----

    NET INCREASE IN CASH AND CASH EQUIVALENTS                                         25,023                   3,762

    Cash and cash equivalents at beginning of the period                             770,076                 115,743

    Effect of foreign exchange rate changes                                              662                      99
                                                                                                                ---

    Cash and cash equivalents at end of the period                                   795,761                 119,604
                                                                                     =======                 =======


    China Zenix Auto International Limited

    Unaudited Condensed Consolidated Statement of Cash Flows

    For the nine months ended September 30, 2017

    (RMB and US$ amounts expressed in thousands)


    OPERATING ACTIVITIES                                                               Nine Months Ended September 30,
                                                                                                              2017
                                                                                                              ----

                                                                              RMB' 000                       US$' 000

    Profit before taxation                                                                      3,431                        515

    Adjustments for:

                            Amortization of prepaid lease payments                                 7,069                      1,062

                            Depreciation of property plant and equipment                         110,639                     16,629

                            Release of deferred income                                             (598)                      (89)

                            Finance costs                                                         15,952                      2,398

                            Interest income                                                      (8,488)                   (1,276)

                            Loss on disposal of property, plant and equipment                         22                          3


    Operating cash flows before movements in working capital                                  128,027                     19,242

    Increase in inventories                                                                  (98,449)                  (14,797)

    Increase in trade and other receivables and prepayments                                  (58,534)                   (8,797)

    Decrease in trade and other payables and accruals                                        (27,480)                   (4,130)
                                                                                              -------                     ------

    Cash used in operations                                                                  (56,436)                   (8,482)

    Interest received                                                                           9,268                      1,393

    PRC income tax paid                                                                       (2,225)                     (334)
                                                                                                                           ----

    NET CASH USED IN OPERATING ACTIVITIES                                                    (49,393)                   (7,423)
                                                                                              -------                     ------

    INVESTING ACTIVITIES

    Purchase of property, plant and equipment                                                (35,218)                   (5,293)

    Proceeds on disposal of property, plant and equipment                                          45                          7

    Placement of pledged bank deposits                                                        (5,000)                     (752)

    Withdrawal of pledged bank deposits                                                         4,000                        601

    Placement of fixed bank deposits with maturity periods over three months                (530,000)                  (79,660)

    Withdrawal of fixed bank deposits with maturity periods over three months                 530,000                     79,660
                                                                                                                         ------

    NET CASH USED IN INVESTING ACTIVITIES                                                    (36,173)                   (5,437)
                                                                                              -------                     ------

    FINANCING ACTIVITIES

    New bank borrowings raised                                                                335,000                     50,351

    Repayment of bank borrowings                                                            (335,000)                  (50,351)

    Interest paid                                                                            (18,421)                   (2,769)

    Advance from a shareholder                                                                  1,583                        238
                                                                                                -----                        ---

    NET CASH USED IN FINANCING ACTIVITIES                                                    (16,838)                   (2,531)
                                                                                              -------                     ------

    NET DECREASE IN CASH AND CASH EQUIVALENTS                                               (102,404)                  (15,391)

    Cash and cash equivalents at beginning of the period                                      896,799                    134,790

    Effect of foreign exchange rate changes                                                     1,366                        205
                                                                                                                            ---

    Cash and cash equivalents at end of the period                                            795,761                    119,604
                                                                                              =======                    =======

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SOURCE China Zenix Auto International Limited