Following the announcement of a strategic partnership, China Yuchai International Limited (NYSE: CYD) shares are seeing a notable increase on the charts today. At $19.63 as of the last check during the pre-market session, CYD stock was up 25.51%, extending the previous session’s rise of more than 18%. The upward momentum indicates that investors are becoming more confident in the company’s plans for growth.
Strategic Collaboration with Kim Long Motor
Through Guangxi Yuchai Machinery Company Limited (Yuchai), its main operational subsidiary, China Yuchai, a prominent producer of powertrain solutions, has signed a major collaboration deal with Kim Long Motor Hue, a division of Vietnam’s FUTA Group.
This partnership includes technical assistance, component supply, and technology license for the construction of an engine production plant at Kim Long Motor’s assigned location in Vietnam. It is anticipated that this collaboration would strengthen Yuchai’s regional footprint and support Vietnam’s automotive industry.
Market expansion and technology licensing
Kim Long Motor has been given technical license rights for specific engine types by Yuchai as per the conditions of the agreement. These engines are mainly intended for the Vietnamese market and will be manufactured for commercial vehicles like trucks and buses.
Kim Long Motor will have exclusive sales rights within Vietnam and priority sales rights in ASEAN nations and South Korea. Additionally, it will oversee aftermarket services in these regions. The licensing agreement spans 15 years, with total fees amounting to $28 million.
To facilitate factory development, Yuchai will extend technical support for equipment installation and commissioning, with associated costs covered by Kim Long Motor. Moreover, Yuchai will supply all necessary engine assembly parts and service kits, ensuring a seamless production process.
Increasing Market Penetration in Korea and ASEAN
China Yuchai’s aspirations to expand internationally, especially in the ASEAN and South Korean markets, have taken a major stride with this strategic partnership. The corporation improves its competitive stance in the region’s changing automotive environment by establishing a manufacturing base in Vietnam.
Furthermore, CYD’s current score stands at 49 on the ST Screener in the Industrial-Machinery sector with “Undervalued” valuation. This presents a promising investment opportunity for market participants seeking exposure to the industry. Investors can explore similar stocks on ST Screener link for further comparative analysis.