CSR 2013 Annual Results Announcement Apr. 2014. Page 1 This document has been prepared by China...

CSR 2013 Annual Results

Announcement

Apr. 2014

This document has been prepared by China South Locomotive & Rolling Stock Corporation Limited (the “Company”). The information contained in this document has not been independently verified. No representation or warranty express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. The information contained herein is subject to change, and the Company is under no obligation to correct or update any such forward-looking information or any other information contained in this document. The Company shall not have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document.

The information contained in this document related to the Company and other issues may contain forward-looking statements that reflect risks and uncertainties. The opinion and the forward-looking statements concerning China’s economy and transportation equipment manufacturing industry in China and around the world are based on a range of assumption, which are restricted by some known and unknown risks, including the factors that are beyond the Company’s control. Therefore, the actual results may significantly differ from the forward-looking statements or explicit or implicit opinions. None of the Company nor any of its respective affiliates, advisors or representatives shall have any liability to update the above-mentioned opinions or forward-looking statements based on the issues and matters happened after the date of completion of such document.

This presentation document is not intended to constitute an offer to, or a solicitation for offer to, sell, purchase, or subscribe the securities of the Company. This document, as a whole or in part, shall not constitute a basis for any contracts or commitments, which also shall not be used as a reliable source for any contracts or commitment. Any purchase or subscription will be made exclusively by means of the Company’s announcement.

Disclaimer

Table of Content

I 2013 Annual Results Summary

II 2013 Operation Review

III 2013 Financial Performance Review

IV 2014 Outlook

2013 Annual Results Summary

Summary of P/L Statement

FY2012 FY2013 Change YoY

Revenue (RMB mn) 89,019 96,525 +8.4%

Gross Profit (RMB mn) 15,755 16,629 +5.5%

Net Profit (RMB mn) 4,009 4,140 +3.3%

Gross Margin (%) 17.7 17.2 -0.5ppt

Operating Margin (%) 6.5 6.3 -0.2ppt

Net Margin (%) 4.5 4.3 -0.2ppt

EPS (RMB cent) 29.9 30.0 +0.3%

DPS (RMB cent) 9.0 9.0 0.0%

Summary of B/S


Total Assets (RMB mn) 105,217 121,129 +15.1%

Total Liabilities (RMB mn) 65,707 74,975 +14.1%

Total Equity (RMB mn) 39,510 46,155 +16.8%

Shareholders’ Equity (RMB mn) 32,755 36,560 +11.6%

Cash (RMB mn) 14,497 14,905 +2.8%

Current Ratio (%) 117% 124% +7ppt

ROE(%) 14.5% 12.0% -2.5ppt

Net Asset Per share (RMB) 2.37 2.65 +11.6%

Summary of C/F Statement


Operating Cash Flow (RMB mn) 2,395 5,412 +126.0%

Investing Cash Flow (RMB mn) -4,246 -7,245 +70.7%

Financing Cash Flow (RMB mn) -5,672 1,473 NA

Net Cash Flow (RMB mn) -7,523 -360 NA

2013 Operation Review

New orders & backlog

New OrdersNew Orders

2012 20130

30

60

90

120

150

82

135+65% YoY

RMB bn

Backlog as of Year EndBacklog as of Year End

2012 20130

30

60

90

120

150

78

111+42% YoY

RMB bn

Revenue growth of major segments

RMB MN

RMB MN

Locomotives Passenger Carriages

Freight Wagons

Multiple Units Rapid Transit VehiclesNew Business

YoY +64% YoY -2% YoY +28% YoY +83% YoY +7% YoY -13%YoY +22%

Others

RMB mn

RMB MNYOY +38% YOY -15% YOY -5% YOY -11% YOY +4% YOY +22%YOY +20%

Revenue FY13 vs. FY12Revenue FY13 vs. FY12

RMB mn

2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 20134,000 7,000

10,000 13,000 16,000 19,000 22,000

14,396

19,846

7,753

6,590

10,420 9,932

21,524 19,189

7,947 8,251

10,902 13,053

16,079

19,664

Locomotives Passenger Carriages Freight Wag-ons

Multiple Units Rapid Transit Vehicles New Business Others

Revenue 2H13 vs. 2H12Revenue 2H13 vs. 2H12

2H12 2H13 2H12 2H13 2H12 2H13 2H12 2H13 2H12 2H13 2H12 2H13 2H12 2H130

3,000

6,000

9,000

12,000

15,000

8,187

13,441

4,691 4,587 4,611

5,925 7,737

14,143

4,857 5,218 5,494 6,719

11,593 10,051

2011 2012 20130

5,000

10,000

15,000

20,000

25,000

30,000

20,981 21,52419,189

Chart Title

RMBmnUnits

Multiple Units RevenueMultiple Units Sales Volume

Multiple Units

MU new orders surged to 269 trains / RMB40.6 billion in China in 2013, market share over

50%.

2013 MU sales 880 units, -8.3%YoY; MU revenue -10.9% YoY, due to low delivery in 1H13.

2H13 MU revenue +82.8%YoY driven by strong orders in 2H13.

Improved platform for inter-city MU trains.

Complete the first prototype car of intelligent HS train in China.

CSR “experimental train of higher speed” attained the laboratory speed of 605km per hour.

Strong new orders in 2013 will support decent growth in 2014.

2011 2012 20130

300

600

900

1,200

904 960 880Chart Title

2011 2012 20130

5,000

10,000

15,000

20,000

25,000

30,000

17,80314,396

19,846

Chart Title

RMBmnUnits

Locomotives RevenueLocomotives Sales Volume

Locomotives

2011 2012 20130

300

600

900

1,200

1,500

969

558650

Chart Title

CSR inked orders and delivered high-powered AC locomotives of 459 units, market share >50%.

CSR obtained all the orders from non-railway high-powered AC locomotives In China in 2013.

Locomotives sales 650 units, +16.5%YoY; revenue from locomotives +37.9%YoY in 2013.

Locomotives export to South Africa were produced and delivered in 2013.

Made progress in railway heavy loading capacity, high-speed and AC transmission technology.

2011 2012 20136,000

7,000

8,000

9,000

8,2177,947

8,251Chart Title +3.8%YoY

RMBmn

Rapid Transit Vehicles Revenue

Rapid Transit Vehicles

RTV 2013 sales 1,441 units, +7.9%YoY; revenue from RTV +3.8%YoY.

CSR won 20 RTV projects among total 34 RTV projects in 20 cities in China in 2013.

As of YE13, among RTV projects in 28 cities, CSR entered into 21 cities; of which 12 cities

offered CSR exclusive contracts; CSR won 13 out of 27 projects in the RTV traction system

market, leading the market.

R&D focus was on future-oriented and environmental friendly products.

2011 2012 20130

2,000

4,000

6,000

8,000

10,000

12,0009,692

10,420 9,932Chart Title

RMBmnRMBmn

Freight Wagons RevenuePassenger Carriages Revenue

Passenger Carriages & Freight Wagons

2011 2012 20130

2,000

4,000

6,000

8,0006,354

7,7536,590Chart Title

CSR passenger carriages 2013 sales 1,366

units; revenue RMB6.59bn, -15.0%YoY.

CSR passenger carriage 2013 new orders

1,418 units.

CSR freight wagons 2013 sales 18,015

units; revenue RMB9.93bn, -4.7%YoY.

In 2013, over 300,000 freight wagons

produced by CSR were running on

China major railway lines.

RMBmn

New Business Breakdown in FY13Revenue from New Business

New Business

2011 2012 20130

3,000

6,000

9,000

12,000

15,000

11,637 10,902

13,053Chart Title

New business 2013 revenue RMB13.05bn, +19.7%YoY. CSR delivered c.100 units of wind turbines totaling RMB2bn in 2013, and signed RMB2.09bn contract of wind

power generation motor with Goldwind Science. Annual sales of new energy vehicles exceeded 1,000 units for the first time. Photovoltaic inverter and electric system new contract exceeded RMB200mn in 2013. IGBT product packaging line completed, the first self-developed high-power IGBT product line in China. CSR completed a cross-border acquisition for 55% stake in E+M Drilling Technologies in Germany in August

2013 for truck-mounted drilling rig business. A subsidiary of CSR entered into a purchase agreement in Dec 2013 to acquire the entire rubber and plastic

business of ZF Friedrichshafen AG (the “BOGE”).

Business Revenue (RMB mn)

Chang YoY

Wind Power equipment 2,693 +31%

Construction Machinery 2,648 +10%

Composite materials 2,020 +5%

Auto equipment 2,214 +51%

Others 3,478 +14%

+19.7%YoY

Export

CSR inked overseas orders of US$2.23 billion in 2013, record high, with 40 countries

or regions including Argentina, Malaysia, Australia, Kazakhstan and etc. CSR received nearly US$1.0bn MU orders from Argentina, the largest export order of

inter-city MUs in China. In 2013 only, CSR obtained 3 orders from Malaysia market, total US$400mn. Improved overseas marketing network and localized operation.

CSR’s Major Overseas Orders Since 2013

Contract Time Country Customer Type Contract Value (RMBmn)

13-Jan Argentina Ministry of Interior and Transport Inter-city MU 3,43013-Jan Australia Roy Hill Infrastructure Wagon 90013-Jan Mauritania Societe Nationale Industrielle et Miniere Wagon 16013-Jan Nigeria Kintech Nigeria Ltd DMU 10013-May Argentina Ministry of Interior and Transport Inter-city MU 2,24013-Jul Thailand Santi Forestry Co. Ltd Locomotive 37013-Jul Singapore Land Transport Authority Locomotive 17013-Oct Malaysia Ministry of Transport Inter-city MU 96014-Mar South Africa Transnet Locomotive 12,800

Rapid Enhancement in R&D

Total Technology InvestmentTotal Technology Investment

Period R&D investment (RMB mn) Chg YoY As % of revenue

2008 1,810 5.1%

2009 2,620 +44.8% 5.7%

2010 3,550 +35.5% 5.5%

2011 4,480 +26.2% 5.6%

2012 4,700 +4.9% 5.2%

2013 5,220 +11.1% 5.3%

Major R&D breakthroughs in 2013

Multiple Units: - Completed the first prototype of intelligent high-speed train - “Experimental train of higher speed” attained the lab speed of 605km/hr

Locomotives: - Significant progress in heavy loading capacity, high-speed and AC transmission technology - Launched high-power locomotives with varying axle arrangement and traction powers

Rapid transit vehicles: - Focus on future-oriented and environmentally friendly products development - New technologies for maglev system, super-capacitor storage, permanent magnet motor drive, the articulated bogie technology etc.

Freight wagons: - Trial-produced 27t axle load vehicles outperformed peers in dynamic and compatibility test - Adopted world leading integrated braking device technology in 30t axle load aluminum alloy coal hopper wagon

New business: - Independently developed China’s first EBZ260 vertical axis hard rock boring machine - Completed the first full-load hybrid electric bus and first super-capacitor trolley bus - CSR’s electric business vehicles listed in 2014 national science and technology plan

Maintenance Business

Multiple Units: - Taking CRH380A MU for example, in its full life circle of 20 years, it needs 8 times of level III overhaul, 4 times of level IV overhaul and 3 times of level V overhaul. - In 2013, MU maintenance orders obtained by CSR involved 328 MU trains.

Locomotives: - 3 categories locomotive maintenance: overhaul (every 6 years), medium maintenance (every 2 years), and aided repair; - Overhauls and certain medium maintenance should be conducted by manufacturers. - In 2013, CSR obtained repair orders for 1,195 units of locomotives.

Rapid transit vehicles: - Inspection and repair scheme combines scheduled inspection and repair with improvised maintenance.

Passenger Carriages: - Type 25G passenger carriage inspection and repair comprises three categories: A1, A3 (depot repair) and A4 (shop repair); - The cycle of A4 repair: 2.4±0.6 mn km or 10 years operation.

Freight wagons: - Follow the “preventive maintenance plan”, supplemented with condition-based repair.

2013 Financial Performance Review

Revenue GrowthRevenue Growth Product MixProduct Mix

YoY Growth = 8.4%RMB mn

Revenue

2012 201350,000

60,000

70,000

80,000

90,000

100,000

80,541

90,128

8,479

6,397

Domestic Overseas

2012 20130%

20%

40%

60%

80%

100%

16% 21%

9%7%

12% 10%

24% 20%

9%9%

12% 14%

18% 20%

Locomotives Passenger Carriages Freight WagonsMultiple Units Rapid Transit Vehicles News BusinessesOthers

RMB MN

Gross Profit & Gross MarginGross Profit & Gross Margin Net Profit & Net MarginNet Profit & Net Margin

RMB mn RMB mn

Profit & Margin Trend

2012 20130

4,000

8,000

12,000

16,000

20,000

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

15,75516,629

17.7% 17.2%

Gross Profit Gross Margin

2012 20130

1,500

3,000

4,500

6,000

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

4,010 4,140

4.5% 4.3%

Net Profit Net Margin

2012 201328

29

30

31

29.9 30.0

EPS

EPSEPS Return on EquityReturn on Equity

YoY Growth = 0.3%

RMB cent

2012 20130%

4%

8%

12%

16%

20%

14.5%

ROE

12.0%

EPS & ROE

Dividend Distribution

RMB mn

Cash DividendCash Dividend

2012 20130

3

6

9

12

15

9 9

DPS

RMB cent

DPSDPS

2012 20130

300

600

900

1,200

1,500

0%

10%

20%

30%

40%

50%

1,242 1,242

31% 30%

Cash dividend Dividend Payout Ratio

Improving Ability of Cost Control

Improving Ability Of Cost Control Improving Ability Of Cost Control

2012 20130

3,000

6,000

9,000

12,000

15,000

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

3,153 3,085

3,042 3,602

4,6464,960

764546

13.0%12.6%

Sales Cost R&D cost Administrative cost Financial Cost % of Total Revenue

RMB mn

Optimized Financial Structure

2012 20130.00

0.30

0.60

0.90

1.20

0.870.97

2012 20130.00

0.30

0.60

0.90

1.20

1.501.17 1.24

Current RatioCurrent Ratio

Quick RatioQuick Ratio

Interest Coverage, Liability to Asset RatioInterest Coverage, Liability to Asset Ratio

2012 20130

1

2

3

4

5

6

7

8

9

10

11

12

50.0%

55.0%

60.0%

65.0%

70.0%

7.61

11.19

62.4% 61.9%

Interest Coverage Liability to Asset Ratio

Turnover Ratio

Account ReceivableAccount Receivable InventoryInventory

Note: Sales and delivery of MUs and locomotives to CRC surged in 4Q13, causing

higher receivable and lower inventory as of YE13.

YE12 YE130

10,000

20,000

30,000

40,000

0

40

80

120

160

200

26,619

34,121

109129

Account Receivables

Account Receivables days

DaysRMB mn

YE12 YE130

5,000

10,000

15,000

20,000

25,000

0

40

80

120

160

200

18,770

17,721

94

81

Inventory Inventory Days

DaysRMB mn

2014 Outlook

Increasing Railway Operating Length in China

Period-end Railway Operating Length in China

Railway operating length 2005-2015E

1,000km

Source: MOR Bulletin, National Bureau of Statistics


Newly Added Railway Operating Length

2011 2012 2013 2014E 2015E0

2

4

6

8

10

12

2

4 6

8 8

Estimated annual newly added railway length in next 2 years

1,000km


Note: high-speed railway incl. all railways with max speed > 200km/h

YE05 YE10 YE150

30

60

90

120

150

75 86 97

0.45

23

High-speed railway Normal Railway

1,000km

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E0

30

60

90

120

75.0 76.7 77.6 78.6 82.1 86.0 86.6 88.3 90.7 94 97

0.4 0.4 0.4 1.1 3.5 5.1 6.6 9.4 12.518.0

23.0

High-speed railway Normal Railway

Investment in Railway Equipment Growing

Railway Basic Construction FAI Railway Upgrading and Vehicle Procurement FAI

Source: MOR/CRC

2008 2009 2010 2011 2012 2013E0

200

400

600

800

-40%

-20%

0%

20%

40%

60%

80%

338

600

707

460

519 529

61%

69%

20%

-29%

7% 5%

Railway Basic Construction FAI Chg YoY

2008 2009 2010 2011 2012 2013E0

50

100

150

200

-20%

-10%

0%

10%

20%

30%

40%

79

104

135 135

115

135

0%

31% 30%

0%

-14%

17%

Railway upgrading and vehicle procurement FAI Chg YoY

RMB bnnRMB bnn

High-speed Railway (incl. all railways with max speed >200km/h)

YE High-speed Railway Length Newly Added High-speed Railway Length

Source: MOR/CRC

EMU Units in Operation

Source: MoR/CRC

Source: CRC, NBS Source: CRC, NBS

2008 2009 2010 2011 2012 2013 2014E0

3

6

9

12

15

18

0

0.5

1

1.5

2

2.5

1

35

7

9

13

18

205%

48%29%

42% 34% 43%

YE high-speed railway length Chg YoY

1,000 km

High-speed Railway Transport Volume

2008 2009 2010 2011 2012 2013 2014E0

1

2

3

4

5

6

-0.5

0

0.5

1

1.5

2

2.5

0.7

2.3 1.6 1.4

2.7 3.2

5 219%

-33% -9%

92%

17%

58%

Newly-added high-speed railway length Chg YoY

1,000 km

2007 2008 2009 2010 2011 2012 20130

2

4

6

8

10

12

0.00.20.40.60.81.01.21.41.61.82.0

0.7 1.4 2.3

4.4

6.8

8.6 10 1.78

1.24

0.670.86

1.030.92

0.80

EMU units in operation Density of EMU

1,000 Units Units/km

2008 2009 2010 2011 2012 20130

40

80

120

160

200

0%20%40%60%80%100%120%140%160%180%200%

216

46

106

145

1951.8557336621455

1.28497409326425

0.3663076341647770.35

High-speed railway bn passenger.km Chg YoY

bn passenger.km

Railway Global Comparison

A gap between China and developed countries for per-capita railway lengthThe second longest railway length in the world

As of YE13 the length of railways in operation of China amounted to around 103,000km, ranking No. 2 in the world. 1.67

0.73 0.59

0.51 0.50 0.41

0.08 0.05 0.0

0.5

1.0

1.5

2.0

Canada US Russia France UK Germany China India

m/per capita

Source: the World Bank, MOR, data above excluding HK, Macau and Taiwan

Source: the World Bank, MOR, data above excluding HK, Macau and Taiwan

1,000km

229

103 85

64 58 34 34 31

0

50

100

150

200

250

US China Russia India Canada Germany France UK

Rapid Transit Vehicles Enjoy Unprecedented Development Opportunity

Delivery of rapid transit vehicles in China

Source: Local gov plans, CEIC

Length of MTR in China

2005 2006 2007 2008 2009 2010 2011 2012 20130

1,000

2,000

3,000

4,000

5,000

-40%

-20%

0%

20%

40%

60%

80%

Delivery of rapid transit vehicles in China units YoY Chg %

Units

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2020E

0

2,000

4,000

6,000

8,000

10,000

-10%

0%

10%

20%

30%

40%

50%

60%

Length of MTR in China km YoY Chg %

km

MTR Global Comparison

Global major cities’ MTR length

Per-capita MTR length

Km/mn person

533

442 402 368 327

305 260

220

0

100

200

300

400

500

600

Shanghai Beij ing London New York Seoul Tokyo Guangzhou Par is

km

48

32 25

23 22 21 20 19

0

10

20

30

40

50

London Seoul Hong Kong Tokyo Shanghai Bei j ing Guangzhou New York

Source: World Metro Database

Export Outlook

Highlights:

CSR inked an RMB12.8bn locomotives order from South Africa Transnet in

March 14, China’s historical largest rolling stock export

CRH380A, as a fist product in the Premier’s promotion of China’s high-speed

railway, has become a spectacular card in China’s high-speed railway

diplomacy and also a major model of the high-speed railways of China in

overseas display.

Under the favorable situation brought about by the “high-speed railway

diplomacy” promoted by the PRC government, CSR will achieve more

breakthroughs in high-speed MU export.

China’s Railway Diplomacy

Date Country Promoter Progress

13-Oct Thailand Premier LiSigned the Memorandum of Understanding on Deepening Railway Cooperation between China and Thailand

13-Oct Australia Premier LiPromoted China high-speed rail's advanced technology, reliability and cost advantageChina interested in participating in the construction of Australia's first high-speed railway

13-Oct Malaysia President XiEncouraged Chinese companies to participate in Malaysia's high-speed railway construction

13-Nov Hungary/Serbia Premier Li3 countries to cooperate in Belgrade-Budapest railway construction

13-Nov Romania Premier Li China likely to export high-speed rail technology to Romania

13-Dec UK Premier Li China likely to invest GBP50bn in UK's HS2 high-speed railway

14-Mar Europe President Xi Promoted China high-speed rail technology export

2014 Business Plan

Promote enterprise reform and development

Step up innovation

Reinforce scientific management

Expand the market and development area

Strengthen the soft power of the enterprise

2014 revenue

growth target: over 10%

The main strategic goal of CSR “12th Five Year Plan”

One of Top 3 in the global

industry by sales size

Total revenue exceeds

RMB100bn

World-class enterprise with international

competitiveness

CSR “12th Five-Year Plan” Strategic Goal

Creating a famous world brand—CSR

Thank You

CSR 2013 Annual Results Announcement Apr. 2014. Page 1 This document has been prepared by China...

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