Revenue growth of 28.9% for the full year was driven by higher unit sales across nearly every reporting category, particularly in heavy-duty and high-horsepower engines.

The data center market emerged as a critical growth engine, with combined sales of MTU Yuchai and Yuchai branded high-horsepower units increasing from 750 to over 2,000 units.

Gross margin expansion to 16.5% was attributed to a favorable shift in product mix toward high-margin heavy-duty engines and ongoing cost reduction initiatives.

Market share gains in the truck and bus segments significantly outpaced industry averages, led by a 146.1% year-over-year surge in heavy-duty truck engine sales during the second half.

Strategic globalization efforts were bolstered by new production partnerships in Vietnam and Thailand, alongside expanding bus engine deliveries in Mexico.

Management strengthened the supply chain and technological moat through a 27.97% equity acquisition in Nanyue Diankong, a leader in fuel injection systems.

R&D investment increased by 37.3% to support National VI and Tier 4 compliance while advancing alternative fuel technologies including hydrogen, methanol, and ammonia.

Management expects double-digit growth in the data center segment for 2026, though overall vehicle engine demand remains highly dependent on Chinese government replacement policies.

Production capacity expansion is currently underway to meet the anticipated rise in demand for power-generating engines used in backup data center operations.

The company is preparing for the potential introduction of National VII emission standards within the next 2 to 3 years through targeted R&D programs.

An application for listing the Guangxi Yuchai Marine and Genset Power subsidiary on the Hong Kong Stock Exchange was filed in January 2026 to secure additional growth resources.

Future profitability in the MTU Yuchai joint venture may be impacted by supply chain constraints from German partners and shifts in the high-horsepower product mix.

The effective tax rate spiked to 44% in the second half due to a non-cash write-off of deferred tax assets, though the normalized rate remains approximately 20% to 21%.

Other operating income declined by 22.5% for the year, primarily due to a substantial reduction in government grants as Chinese incentive policies tightened.

R&D expenses included specific impairment charges related to fuel cell development during the second half of 2025.

Rising raw material costs are expected to exert upward pressure on engine pricing and production costs in the coming periods.

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Management clarified the 44% rate was driven by a non-cash impairment of deferred tax assets required by accounting standards based on future profit assessments.

Excluding this one-time adjustment, the effective tax rate for 2025 would have been between 20% and 21%.

Order backlogs remain strong with typical delivery lead times of 3 to 4 months.

While domestic supply chains for Yuchai-branded engines are stable, the MTU joint venture faces component bottlenecks from German suppliers.

Yuchai possesses the technology for 2-megawatt natural gas generators, but current data center customers in Asia still prefer diesel due to cost considerations.

Natural gas engine applications are currently limited primarily to industrial sectors rather than primary data center power.

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