In the development history of Yutong Buses, the property rights reform has experienced three phases. The first phase was in 1993 with restructuring, then in 1997 with listing on the stock market, and again in 2001 when Yutong Buses underwent another restructuring under Tang Yuxiang's MBO (Management Buyout) system which reached its "desired outcome", completing so-called MBO by the end of 2003. In fact, the MBO (Management Buyouts) implemented by Yutong is not merely at the governance level but more closely resembles an ESOP (Employee Stock Ownership Plan). Since the successful completion of Yutong's MBO, the company has achieved brilliant marketing results. By the end of 2002, sales had broken through 3.3 billion yuan, with bus sales exceeding 13,500 units. The Yutong Group has now become the world's largest bus production base. However, Tang Yuxiang, chairman of Yutong, does not dwell on this; his goal is to create an internationally renowned brand and build a century-old enterprise.
As the leader in the medium and large bus industry, the overall business and performance growth of Yutong Buses aligns with the basic trends of its industry sector, that is, after experiencing the low point of the industry in 2008 and 2009, it re-entered a stage of recovery and growth in 2010.
The excess growth relative to the overall industry level, we believe, is mainly due to the company’s stronger overall response capability to the market, control of细分 markets, and comprehensive marketing capabilities compared to competitors. Especially after a series of initial investments, including whole-vehicle electrostatic painting production lines and related projects, high-end line phase two renovation projects, and new large-scale equipment projects, the company's production assurance capacity, organizational ability, and product quality have all improved significantly, providing crucial support for the rapid increase in sales volume during the early stages.
According to announcements, Yutong decided in 2010 to start a technical transformation construction project to increase annual bus production by 20,000 units. By the end of 2010, a prepayment of 6 billion yuan for land had already been made, and according to Yutong's announcement in 2011, it appears another 6.55 billion yuan will be required for the land acquisition project. Simultaneously, the company plans a total investment of 1.697 billion yuan for constructing a production capacity of 5,000 units (investment per vehicle reaching 340,000 yuan), with the first phase planned to invest 535 million yuan. Additionally, the company has passed a plan to raise 2.5 billion yuan through a rights issue, mainly used for expanding production capacity to 10,000 units (investment per vehicle exceeding 250,000 yuan) of energy-saving buses (6,000 units) and new energy buses (4,000 units).
These projects are expected to gradually be completed by the end of 2012. After completion, they will greatly enhance the company's future sustainable growth potential, and the resulting profits will give the company the potential to double its current performance.
Regarding the excess growth relative to the overall industry level, we believe it is mainly due to the competitive advantages of the company's overall market response capability, control of segmented markets, and comprehensive marketing capabilities compared to competitors. Especially after a series of initial investments, including whole-vehicle electrostatic painting production lines and related projects, high-end line phase two renovation projects, and new large-scale equipment projects, the company's production assurance capacity, organizational ability, and product quality have all improved significantly, providing crucial support for the rapid increase in sales volume during the early stages.
From the above announcements, it can be seen that Yutong's institutional reforms have been quite successful. Whether it is G Yutong or the acquisition of Xiang Torch, Tang Yuxiang's MBO has brought smiles to many shareholders, and these outcomes stem from Yutong's institutional reforms.