Sunday, April 18, 2021
 
Columnist
Martin Hennecke
 
CSR
HKEx Stock Code : 01766 
 
Corporate Profile
Principally engaged in the research and development, manufacturing, sale and refurbishment of locomotives, passenger carriages, freight wagons, multiple units and metro cars, as well as other businesses that utilise proprietary rolling stock technologies.

Business Review - For the year ended December 31, 2012

CSR is an integrated rolling stock manufacturer, the core business of which includes R&D and design, manufacturing, refurbishment, sales and leasing of locomotives, passenger carriages, freight wagons, MUs, rapid transit vehicles and key components as well as other extended businesses that utilize proprietary rolling stock technologies.

In recent years, CSR pressed ahead with the construction of three technology platforms comprising design, manufacturing and products. The establishment of a batch of internationally advanced R&D and manufacturing bases for the complete units and components has consolidated the market position of CSR.

In 2012, different business segments of CSR, following the direction with a focus on the environmental protection innovation, guaranteed the development of transportation. A reasonable industrial layout and the technological strength helped CSR obtain more orders for the newly built locomotive vehicles and for maintenance, realizing the comprehensive presence of its rolling stock products in the high-end market around the world. Our stable growth and market expansion demonstrated CSR's brand to the world.

MUs -Speed generates value

CSR's MUs sector is a MU business cluster comprising complete vehicle manufacturers including CSR Sifang, CSR Zhouzhou, CSR Puzhenand BST as well as core component manufacturers, such as CSR ZELRI, CSR Electric and CSR Qishuyan. Although there was a slow down in the high-speed railway construction in China, relying on its independent capability of ancillary research and development of high-speed MU technologies, CSR's MUs sector managed to record a revenue of RMB21.52 billion in 2012, representing a year-on-year growth of 2.58%.

Complete industrial system: Since 2004, CSR experienced the technology import and four stages of innovation, namely joint design, integrated innovation, optimal design and comprehensive innovation. It established the technology innovation and manufacturing platforms for high-speed railways and refined a high-speed railway system that consists of complete basic theory, design and manufacturing, testing and evaluation, application and maintenance as a comprehensive industrial chain of high-speed trains. The key technologies and main supporting technologies of MUs can be developed independently and matched with each other, which not only satisfy the diversified demand of the market, but also create more value for CSR.

Reliable operating performance: by the end of 2012, CSR delivered an aggregate of 459 trains of high-speed MUs including short-train and long-train MUs (equivalent to 621 standard trains of MUs), representing 57.4% of the total number of MU trains in China. In 2012, for CSR's CRH MUs, the total railway mileage being put into operation reached 240 million km, which contributed to 55% of all operation mileage carried out by MUs in China. Having undertaken such a daunting task, our high-speed MUs maintained a sound record in terms of quality. In comparison with the market average failure rate, the Company improved its average failure rate to merely 0.42 piece per one million km, which was far below the standard level of the industry and lived up with international advanced standard. It is the safety, reliability and the low failure rate of the entire vehicle and the simplicity and appropriateness of its design and functions as well as its low-weight and low cost features which gave CSR an edge over market competitions in its MUs business segment.

CSR Corporation Limited played an important role in the commissioning of the Beijing-Guangzhou high-speed railway in 2012 -- the world's longest operating railway mileage, and eye-catching event in the high-speed railway industry, as well as the most important south-north major traffic corridor of China's ¡§Four South-north and Four East-west Lines¡¨ high-speed rail network. In particular, our CRH380A/AL high-speed MUs have taken up 70% of the transportation capacity and 60% of the total Beijing-Guangzhou high-speed railway MUs. Once again, it witnessed the powerful strength of CSR MU segment.

Forward-looking technical research and development: Aiming at the future development of high-speed MUs, the forward-looking research is of great significance for optimizing the technical system of China's high-speed MUs and obtaining greater say in the global high-speed rail sector. In 2012, the experimental train of higher speed designed and manufactured by CSR attained the laboratory speed of 605 KM per hour on the comprehensive rolling testing platform. It marked the phased great achievement of China's forward-looking research for high-speed train. With support of our national research and development institutions including the National Engineering Laboratory for High- Speed Train System Integration and the National Assembly Engineering Center for High Speed Multiple Units, CSR, as the main promoter, integrated the R&D resources of the domestic scientific research institutions to set up the High Speed Train Industrial Alliance for Technology Innovation in 2012, and also signed the technology cooperation agreement with the Chinese Academy of Engineering to further optimize the system of CSR's technology development, so as to consolidate the cutting-edge technology advantage of the Company in high-speed train sector.

The leading inter-city MUs: As a link connecting the high-speed railway and the urban rapid transit system, the intercity rail will be critical factor in the fusion of ¡§Three Networks¡¨ to form China's rail traffic framework for promoting the progress of regional economic integration. CSR, having seized the opportunity of inter-city traffic development, took the lead to launch the 200 KM/h CRH6A inter-city MU and successfully captured the best market share in 2012. At a speed of 200 KM, the CRH6A inter-city MU is CSR's first model of its Cinova brand new technological platform, which is another innovative achievement of independent research and development for the technological project of the Ministry of Transport. It features big transport capacity, fast stop and start, fast ride and alighting, comfort, reliability, safety, energy-saving and environmental protection. It managed to fill the gap in the sector of domestic passenger rail transportation. At present, the CRH6A inter-city MU at speed of 200 KM/h are under the circular line and main line test at the China Academy of Railway Science. The first CRH6F inter-city MU at a speed of 160 KM/h will be launched shortly. The purchase contract for the first lot of inter-city MUs totaling 24 trains of CRH6A and CRH6F for Pearl River Delta was signed. They will be launched into operation upon completion of relevant model test and operation appraisal in 2013.

Knowledge Link:

MU Train: It refers to the passenger train comprising the fixed formation of vehicles with traction power and those without traction power. Vehicles with traction power are called multiple units and vehicles without traction power are called trailers.

MU trains are classified into internal combustion MU trains and electric MU trains. According to the allocation of power device, they can also be classified into concentrated power MU trains and distributed power MU trains. CSR's MU trains are mainly distributed electric power MU trains including the MU trains with designed speed of below 200 KM/h, at 200-250 KM/h and at 300-350 KM/h.

Locomotive Segment - Power that Hauls the Future

Enterprises specializing in the manufacturing and repair of locomotives, including CSR Zhouzhou, CSR Ziyang, CSR Qishuyan, CSR Luoyang and CSR Chengdu, and those specializing in the manufacturing of main components, including CSR ZELRI, Qishuyan Institute and CSR Electric form the complete locomotive industry chain of CSR. By virtue of the leading technology in the world, years of research and development experiences, and forward-looking design concepts, CSR has got in line with the modern locomotive technological development trend, coupled with on-going adaptation to the users' customization and diversified new dynamic requirements, to accumulate development stronghold with innovative capability. In 2012, revenue derived from CSR's locomotive segment reached RMB14.4 billion, representing a decrease of 19.14% as compared with the previous year, due to the drop of total purchase in the domestic market.

Leading Technological Innovation: Following the global rolling stock locomotive development trend in 2012, CSR's locomotive segment was pushing ahead with progress in the railway heavy loading capacity, high-speed and AC transmission technology and took the lead in developing China's rolling stock traction power. Supported by our core technologies, the Company went on smoothly with its participation in the new China made AC transmission locomotive research and development. The products of high-powered locomotive series in modular design and varying in axle arrangement (including 6-axle and 8-axle) and traction powers were launched into the market to meet diversified market demands. In particular, the new 8-axle 9,600 KW high-powered AC transmission electric locomotive has been undergoing operation examination on the Wuhan-Guangzhou Railway Line for nearly 70,000 KM. The 6-axle 7,200 KW electric locomotive with designed speed of 160 KM/h has been undergoing operation examination on the Beijing-Guangzhou Railway Line for nearly 100,000 KM. The plateau electric locomotive has undergone the adaptive operation examination at Qinghai-Tibet Railway Line for more than 200,000 KM (each locomotive) and has completed the technology appraisal by transportation authorities with flying colors. The HXN5 diesel locomotive with twin driver chamber has begun operation examinations after completing the whole car test. Having completed the trial run of its first whole vehicle, the modular, standardized and full ranged Core Dragon series diesel locomotive with 4,400 H. P. is undergoing its whole car test.

Solid Market Position: CSR's high-powered electric locomotives are frequently found running on freight railways in most regions in China, and account for over 50% of the total number of locomotives in operation. Our locomotives are able to meet the special requirements of various regions and different climatic environments. They are adapted to the environmental temperature range of ¡Ó40¢J. As at the end of 2012, CSR delivered nearly 2,000 high-powered AC transmission electric locomotives and more than 600 high-powered AC transmission diesel locomotives, thus greatly alleviating the great pressure of the areas with busy rail freight traffic in China.

By virtue of comprehensive resolutions and extensive, full-fledged application experience and all-rounded repair and maintenance and after-sales services, CSR has built up the optimal technological, production, repair and maintenance system to make significant contribution to the rail freight business in China, thus vigorously promoting the development of rail transport and national economy.

Knowledge Link:

Locomotive: It is the self-driving vehicle hauling or pushing the rail carriages but does not carry any payload by itself. It is the traction power source of the train. Depending on the power source, they are classified as the electric locomotives and the diesel locomotives. The electric locomotive transforms the power supply from the power grid into the traction power. The diesel locomotive provides the traction power from internal combustion. In order to satisfy the on-going higher requirements for the traction power of locomotives, most electric locomotives and diesel locomotives adopt the means of electric transmission. In particular, the application of the advanced highly effective AC transmission technology on the new high-powered locomotive is on the rise. In recent years, the high-powered locomotives manufactured by CSR mainly include the 9,600 KW 6-axle and 8-axle electric locomotives, 7,200 KW 6-axle electric locomotives and the diesel locomotive with 6,000 H. P.

Rapid Transit Segment - Forming the Urban Main Artery

CSR's rapid transit segment is the industry cluster comprising three enterprises qualified for manufacturing of the urban rail transit vehicle: CSR Zhuzhou, CSR Sifang and CSR Puzhen, as well as the core and key component manufacturers: CSR ZELRI, and Qishuyan Institute with independent research and development, auxiliary system and large scale operation. In 2012, the revenue of CSR's rapid transit segment was RMB7.95 billion, representing a decrease of 3.29% as compared with the previous year.

Market Development with Fruitful Results: By virtue of its powerful comprehensive strength, stronghold in leading technology, highly steady product quality, delicacy management, large-scale business and brand influence, CSR set up urban rail transit vehicle bases in Guangzhou, Kunming, Luoyang, Ningbo, Chengdu, Tianjin, Hangzhou, and Wuhan to lay the good foundation for developing the rapid transit market. In 2012, out of the 16 vehicle tender invitation projects and 3 tender discussion projects for vehicles from 12 cities including Beijing, Shanghai, Shenzhen, Chongqing, Dalian, Dongguan, Wuxi, Hangzhou, Suzhou, Nanjing, Nanchang, and Ningbo, CSR was awarded 10 tender invitation projects and 2 tender discussion projects. By the end of 2012, for the 25 domestic cities having launched the urban rail transit vehicle tenders, CSR's products were admitted to 18 cities.

Apart from keeping the stronghold in the above vehicle markets, CSR also obtained fruitful results from the tender invitations for core components of urban rail transit vehicles. It was awarded a total purchase order of RMB2.3 billion for the urban rail transit vehicle traction system and brake system. Out of the 11 domestic tender invitation projects, we were awarded 8 and was the only domestic qualified enterprise for participating in the traction system bidding and having won the biggest numbers of purchase orders independently.

To comply with the market demand, CSR also pushed ahead proactively with the general contracting business of new urban rail transit including the low floor trams. Various project cooperation agreements, including the demonstration line for Ningbo new tram business, have been signed.

Innovative High-end Technological Products: CSR possesses the research and production technologies of various vehicles. We grasp the overall key technologies in relation to the body, bogie, train traction control, and established traction converter, traction motor, brake system and signal system, and established the core stronghold of CSR's rapid transit industry. The Company has the capability of independent research and development covering rapid transit vehicles with the speed of 80KM/h, 100KM/h and 120KM/h respectively. Several new rapid transit vehicles have completed their research and production successfully.

Our environmentally friendly medium-low speed maglev train was rolled off the production line by CSR, thus turning China into the fourth nation mastering the medium-low speed maglev core technology. Having overcome the difficulties encountered in the super-capacitor technology and the integration technology energy-storage power sources, CSR has succeeded in the research and production of the prototype of the energy-storage electric traction light rail vehicle.

This is the world's first light rail vehicle with the super-capacitor storage device as the traction power source. We got abreast of the world's leading edge in the research and development of the energy-storage light rail vehicles.

Furthermore, our permanent magnet synchronous traction system -- the latest research and development achievement of CSR -- which is in operation at Shenyang Metro for passengers, has reached the operation mileage of over 10,000 KM, and has reserved the key technology for upgrading the energy-saving capacity of rail traffic vehicles.

CSR is one of the enterprises with the most comprehensive rapid transit product varieties and the most complete product chain available. By means of on-going research and development of advanced, full-fledged and energysaving new products, the Company has managed to provide overall system solutions to enable passengers to enjoy more environmentally friendly, faster, and more comfortable trips.

Knowledge Link:

Urban Rapid Transit: According to the Common Terms of Urban Public Transport in China, it is defined as the collective term for the electric fast massive public transport running on rail wheels, including the urban metro train, the light rail train and the urban tram. Their difference lies in the transportations capacity, with metro train being the largest, followed by light rail train and the urban train in turn. The international rapid transit is also called ¡§The Main Artery of Urban Traffic¡¨ and includes the metro train, the light train, the suburban railway, the tram and the maglev train. CSR mainly manufactures Type A and Type B vehicles of various body materials and at different speeds, as well as the linear motor driving metro vehicle.

Passenger Carriage Segment - Carefree Journey

The passenger carriage segment of CSR comprises CSR Puzhen, CSR Sifang, CSR Sifang Ltd., CSR Chengdu and BST with the revenue of RMB7.75 billion in 2012, representing an increase of 22.01% over the previous year.

Demand Leading to Vitality: China's diversified operating modes have become the development trend. China's high-speed railway is developing rapidly while sufficient emphasis is also placed on the traditional passenger transport. The demand for ordinary passenger carriage at different speeds per hour led to the new vitality of the traditional passenger transport market. By virtue of modular design, lean production, and on-going enhancement in terms of quality, efficiency and benefits, the Company has managed to satisfy the clients' requirements and enhance its competitiveness in the traditional passenger carriage market.

Help to Promote International Multimodal Transport: In 2012, CSR provided 34 Beijing-Ulan Bator-Moscow K3/K4 international multimodal transport vehicles, thus realizing the first technological upgrade in 16 years of international multimodal transport passenger carriage. This lot of passenger carriage vehicles comprise seven car models, that is, the first-class cushioned berth sleeping car, the cushioned berth sleeping car, the semi- cushioned berth sleeping car, the semi- cushioned berth sleeping car for the handicapped with broadcasting function, the baggage car, the power generating car and the dining car. The centralized power supply from the power generating car, the coal-fired/electric boiler for warm water circular heating, and the sanitary facilities including water closet are adopted for the first time. Such interior personalized design has achieved the highest technological level of China's Model 25 passenger carriage, with all-out efforts to create safe and comfortable trips for the passengers. Such passenger carriage connects China, Mongolia and Russia. The operating environment along the railway is comparatively harsh, the problems of low temperature, long routing and strong dust bearing wind must be overcome. Consequently, CSR's designers have conducted a lot of improved designs and experimental verification aiming at solving these problems. The operating speed of the train is maintained at 120 KM per hour. Two types of bogies for the standard gauge railway and the wide gauge railway are adopted for normal operation on the railway of different gauges in China, Russia and Mongolia.

Sufficient reference has been made to the advanced concepts and technological achievements of Qinghai-Tibet plateau railway passenger carriage and the high-speed MUs for the design of the international multimodal passenger carriage. With its technological advantages, the Qinghai-Tibet railway passenger carriage series are able to overcome the worldwide recognised technological difficulties in the operation of plateau and cold region. CSR is the only domestic supplier for such products.

Knowledge Link:

Passenger Carriage: The railway passenger carriage refers to the specific type of vehicles for carrying passengers and providing services for passengers on the particular railway. The railway passenger carriage mainly comprises the body for carrying passengers and the bogie moving on the particular rail. The railway passenger carriage is classified into three types of cars for carrying passengers, serving passengers and for special purposes.

The car for carrying passengers: including the car with semi-cushioned seats, the car with cushioned seats, the semi-cushioned berth sleeping car, the cushioned berth sleeping car and the high-grade chartered car.

The passenger service car: including the baggage car, the dining car and the mail car.

The special purpose passenger car: including the motor car, the test car, the service car, the medical car, and the maintenance car.

Railway passenger carriage is classified as 120 KM/h, 140 KM/h and 160 KM/h based on their respective speed.

Freight Wagon Segment - Connecting the World

CSR's freight wagon segment comprises CSR Yangtze, CSR Meishan, CSR Er Qi and CSR Shijiazhuang. In 2012, despite the slight decline of the total freight volume of China railway, CSR still enjoyed growth in terms of the sales volume and revenue of its freight wagon segment through reinforced research and development and lean management.

Revenue of Freight Wagon Segment Exceeded RMB10 billion: In 2012, the revenue of CSR's freight wagon business was RMB10.42 billion, representing an increase of 7.51% as compared to 2011, coupled with the increase in the sales unit price of the new construction of freight wagons compared to 2011. In 2012, within the quality assurance period, approximately 300,000 freight wagons constructed or repaired by CSR did not incur any accident attribution to of quality responsibility. The comprehensive performance of the segment has created the best historical level. The overseas freight wagon business maintained steady growth. We have signed export orders for Australia, Columbia, Venezuela, Cameroon, Sierra Leone, Senegal, Gabon and Hong Kong and have achieved the sustainable development in major markets.

On-going Upgrading of Product Research and Development: The research and development of new products lead to the freight wagon market expansion in width and depth remained to be the objective of CSR's development of freight wagon business in 2012. The research and production and relevant tests for universal freight wagon of 80t load capacity have been completed. Its load capacity has exceeded that of the existing freight wagon with the biggest load capacity by more than 14%. In order to provide applicable freight wagons for the new heavy-load railway lines including Shanxi Central-south Region Railway, the design and trial production of special purpose freight wagons of 100t load capacity have been completed. Its load capacity is approximately 20% more than that of C80 Series open freight wagons. The research and development of fast-load container flat wagons have obtained greater breakthrough.

The wagon under test has achieved the maximum speed of 220 KM/h, thus achieving better dynamic functions.

By virtue of our advanced design technology and production technology, we have put forward the project of exporting railway hopper cars for sulphur to United Arab Emirates. This type of hopper cars adopted the advanced technologies such as the electro pneumatic brake, the hot box detection and wagon derailment detection to achieve the light weight and intelligent operation of vehicles featuring much better reliability and safety to become one of the most technologically advanced railway freight wagons in the world.

Knowledge Link:

Freight Wagon: It is the collective name for railway wagons carrying goods. Its load capacity and operating speed are the important indexes to judge the technical standard of the wagon. Based on different purposes, the railway freight wagon is classified into the universal freight wagon and the special purpose freight wagon.

The universal freight wagon is for carrying ordinary goods of various types without specific requirements. Such type of wagons comprises a bigger proportion of railway freight wagons in use. It is usually classified as the open wagon, the flat wagon and the box wagon.

Special purpose freight wagon: It usually refers to the kind of wagons carrying very limited types of goods. Its usage is more unified. Usually, such type of wagons includes the container wagon, the oversize commodity wagon, the poisonous material wagon, the livestock wagon, the cement wagon, the grain hopper wagon, the thermal wagon, the tank wagon, the special wagon and the ore wagon.

In order to meet the requirements for overseas and domestic railway load capacity, CSR mainly manufactures the universal (special purpose) railway freight wagon with a load capacity of 70 tonnes, 80 tonnes, 100 tonnes and 137.5 tonnes respectively. Our special purpose freight wagon has the maximum load capacity of 360 tonnes.

New Business Segment - Commitment to Environmental Protection

By virtue of the core technology of the rail transportation equipment, CSR has actively adjusted the layout in the sector of China's strategic emerging industries including new energies, new materials, and new energy automobiles, pushed ahead with the amalgamation and joint venture cooperation, expedited the industrialization of technological achievements, and enhanced the industrial competitiveness so as to lay the solid foundation for optimizing the industrial structure and operation scale development. In 2012, the revenue of the new business segment was RMB10.9 billion, representing a decrease of 6.32% compared to the previous year.

Optimizing Industrial Layout: By virtue of the accumulated exclusive technology and solid experiences in the sector of rail transportation equipment, CSR has expedited the industrial layout in the sectors including the wind power equipment, electric automobiles, composite materials and engineering machinery in line with the national conditions in China. In the sector of wind power equipment, the Company has established the optimal industrial chain covering the wind power blade, the wind turbine generator and the complete wind turbine generator system. By means of acquiring the enterprises of wind turbine generator system, the Company has been equipped with the production capacity of direct-driven wind turbine with permanent magnet synchronous generator system and further enriched its product line. In the sector of engineering machinery, by means of acquiring the coal-mine machinery manufacturing enterprises, the Company has been able to give full play to its technological stronghold in the integration of electrical and mechanical equipment systems, enter the coal-mine machinery industry, and set up the initial development platform for the coal-mine machinery industry. In the sector of composite materials, the Company has grasped the transforming trend for sustainable development of low carbon, environmental protection and energy-saving. By means of acquiring the water treatment enterprises, the Company has expanded the composite materials industry to the downstream environmental protection water treatment industry with vast market space and good development prospects. In the sector of electric automobile, it has a stable and existing demonstrative urban market, with the first breakthrough to the domestic non-demonstrative urban market to enable more reasonable industry and market layout.

Specializing in Innovative Research and Development: The Company has placed emphasis on the innovative research and development of energy-saving and environmental protection technologies and set up independent system of intellectual property to provide impetus for the development of new industries. We launched the first domestic 2MW low wind speed generator applicable to the wind speed below 7M/second and the cold-proof blade adapted to the special climate in the plateau region. By virtue of taking the biggest market share in the high altitude wind power generator, the Company has taken the proactive move in the participation in preparing China's Application Guide for High Sea Level Wing Power Generators. In the sector of car equipment sector, the product line of electric passenger car series has been further optimized. The motor controllers for commercial passenger cars including the hybrid electric car, the pure electric car and the plug-in models have been simplified and unified. In the sector of composite materials, the trial production of the HB nylon synthetic technology was successful, with function up to the world leading level, which marks the breakthrough of the Company in the goal of extending upstream of new materials. In the sector of civil engineering machinery, the piling machinery product line has been further optimized. The crawler crane, the dynamic compactor, the concrete pump truck and the special engineering machinery of independent research and development were launched by the Company. The research and production of 220t mine electric unloading cars were successful. The product structure has become more diversified. In the sector of rail engineering machinery, the Company has undertaken the independent research project for the key technology of steel rail flaw detection system of the Ministry of Railways. The three major tests of traction, dynamics and comprehensive function for the first 160 KM/h diesel AC express rail car have been completed and passed the examination and assessment of the Ministry of Railways authorities. It will be put into direct line operation for one year shortly.

Development of Cooperation in Depth and in Width: The Company adheres to the ¡§Cooperation and Win-Win¡¨ operation concept. Through enhanced strategic cooperation and capital based ¡§marriage¡¨ to expand the development space for new business. The Company has reinforced association and deepened cooperation with large enterprisers including Aluminum Corp. of China, China Huadian Corp., CITIC, China South Industries Group Corp. and Wuhan Iron and Steel Group for joint market development. The Company also cooperated with China State Shipbuilding Corp. and China Nonferrous to push ahead with the overseas rectification projects and so on, and set up the joint venture with Nanyang Explosion Protection Group for joint expansion of the market in the sector of flameproof inverter to create the top-class system integrated brand.

Overseas Business Segment - Expediting Global Development

CSR has expanded its overseas business on proactive basis and upgraded its level of international operation by means of developing innovative business modes to provide significant security for the continuous growth of its performance. In 2012, the record-breaking export revenue was RMB8.48 billion, representing an increase of 38.86% compared to the previous year.

Outstanding Persistent Market Effects: By virtue of the whole car export core enterprises including CSR Zhouzhou, CSR Ziyang, CSR Yangtze, Qishuyan Institute and CSR Sifang, CSR not only covers a market extending more than 70 nations but also obtains the continuous purchase orders from Asia, America, Africa and Oceania. In 2012, following the light rail train project of Izmir in Turkey, CSR also obtained the metro vehicle purchase order from Ankara, Capital City of Turkey. In Malaysia, with the goodwill brought about by Kuala Lumpur inter-city MU project, the Company has again succeeded in obtaining the Ampang light rail vehicle project, thus further consolidating its market position in the regions of the Association of South East Asian Nations. In each of Australia, Kazakhstan, Turkmenistan, and Singapore, CSR has signed the purchase contracts for more than three lots of locomotives, freight wagons, and metro vehicles, which greatly enhanced the goodwill of CSR brand.

Various Breakthroughs of Regional Varieties: CSR has closely followed up the South African railway recovery and expansion investment project and succeeded in obtaining the South African electric locomotive project. This is the first time for China electric locomotives to enter Africa, and also the biggest overseas electric locomotive order for Chinese enterprises. The high-speed MU at 350 KM/h has succeeded in the international bidding for the Hong Kong high-speed train project. It has achieved the breakthrough of China high-speed train going overseas. The electric MU traction system and network control system, which are the independent research and development outcome of CSR, have also succeeded in the export of whole systems for the electric MUs in Georgia, which further enhanced the additional value of the technology for the export products of CSR.

Optimal Innovation of Commercial Mode: CSR has proactively pushed ahead with the localization of overseas projects, and expedited the transformation from export trade to international operation. The promotion of the commercial mode ¡§Production + Services¡¨ has brought about opportunities for CSR. Following the Malaysian MU project, localized cooperation was also launched through localized investment in the construction of production bases and ¡§4S¡¨ shops in respect of the South Africa electric locomotive project, the project of Ankara in Turkey, and Kazakhstan diesel locomotive project, so as to push ahead with the enhancement of local rail transportation equipment industry in the place of the project and even in the peripheral nations and promote the local economic development and obtain the win-win outcome with the local government and people. In compliance with the need for localized strategy and the construction of marketing network, the Company expedited the strategic layout for overseas markets in 2012 with the establishment of more than a dozen overseas branches and sites of services, and active organization of regional companies to lay the foundation for the subsequent international operation.

Business Outlook - For the year ended December 31, 2012

During the ¡§Twelfth Five-Year¡¨ period, the Company will pool more resources into scientific research and establish a sound, internationally advanced system that brings together studies of industry development, product research and development, design and production and manufacturing, in a bid to becoming a highly renowned brand worldwide. Its goal in the mid to long term is to be an eco-friendly, sizable equipment manufacturer focusing on rolling stock and a leading enterprise among its international peers. We target to join the ¡§Global 500¡¨ club and bring CSR's brand into a globally recognised brand.

Our development planning of each major product line is as follows:

Locomotive operation: according to the developmental trend of railway locomotives, high-speed, heavy-hauling and high-powered locomotives will become the mainstream. The Company will focus on the development of electric locomotives, especially high-speed, heavy-hauling and high-powered electric products, aiming to keep the research and development, test and manufacturing of its electric locomotives to world-class standards. Through realigning its scale and product mix for higher performance, the Company expects to maintain its production capacity, technology and export edges on high-powered diesel, mining and shunting locomotives in the PRC to align with international advanced standards.

MU operation: MU business is a stronghold in future development. The Company will incessantly develop new products based on principles of green eco-friendliness, high speed intelligence, safety and reliability, so as to cement its leading presence in the research, development and manufacturing of MUs and to boost the rapid development of inter-city MUs as well.

Passenger carriage operation: the Company aims to maintain its existing manufacturing capacity and leading edge by promoting the development of passenger carriage vehicles with a speed of 200 KM/h, optimising its product portfolio and improving its passenger carriage operation. It strives to improve the productivity and product quality through streamlined production.

Freight wagon operation: leveraging its existing production capability, the Company proposes to enhance its technological innovation and capacity expansion, so as to meet the demand for new products such as bigaxis overhauling freight wagons and express freight wagons arising from the division of passenger carriage and freight wagon operations in railway transportation as well as the vibrant development of heavy hauling and express freight wagons, and further cement its technological edge in China. In addition, it will promote resource integration to excel in the freight wagon industry with world-class capability in research and development, as well as the testing and manufacturing of freight wagons.

Rapid transit vehicle operations: in line with the market trend, the Company will expand and enhance rapid transit vehicle operations by speeding up the improving and optimising the industrial layout, improving overall capacity and rapidly responding to market scale operation. Furthermore, it will step up its effort in increasing technology innovation and independent development. Based on various rapid transit vehicle technology platforms utilizing aluminum alloy, stainless steel and other bodywork technologies, as well as different speedclass bogie technologies, the Company aims to realise resource sharing through technology integration, in the hope of building a world-class research and development, testing and manufacturing base for rapid transit vehicles. The Company will also engage in the maintenance of rapid transit vehicles and component refurbishment operations, aiming at establishing its new, growing business segment.

New businesses: in the coming years, alongside the focus on the rolling stock industry and innovations listed above, the Company will draw upon its technical expertise and advantages derived therefrom to develop extended products based on proprietary rolling stock technologies. Such products will include wind power equipment, electric automobiles, gear transmission systems, industrial motors and transformers, project machines, engines and parts, industrial converters, electrical installations, high power electric devices, automobile parts elastic components, composite materials and so forth. These will diversify the income stream and increase the business potentials of the Company for higher profitability and comprehensive competitiveness.

Source: CSR Corp (01766) Annual Results Announcement
Chairman Zheng Changhong Issued Capital (shares) 2,024M
Par Value RMB 1 Market Capitalisation (HKD) 11,395M
 
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