UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2021
Or
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to _________
Commission file number: 000-33123
China Automotive Systems, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 33-0885775 | |
| (State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) | |
| organization) |
No. 1 Henglong Road, Yu Qiao Development Zone, Shashi District
Jing Zhou City, Hubei Province, the People’s Republic of China
(Address of principal executive offices)
| (86) 716- 412- 7901 | ||
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of each exchange on which registered |
| Common Stock, $0.0001 par value | CAAS | The Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| Non-accelerated filer | x |
Smaller reporting company Emerging growth company |
x ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
As of May 12, 2021, the Company had 30,851,776 shares of common stock issued and outstanding.
CHINA AUTOMOTIVE SYSTEMS, INC.
INDEX
2
Cautionary Statement
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the Company’s future financial performance. The Company has attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will” or the negative of these terms or other comparable terminology. Such statements are subject to certain risks and uncertainties, including the matters set forth in this Quarterly Report or other reports or documents the Company files with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. The Company’s expectations are as of the date this Form 10-Q is filed, and the Company does not intend to update any of the forward-looking statements after the date this Quarterly Report on Form 10-Q is filed to conform these statements to actual results, unless required by law. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission.
3
PART I — FINANCIAL INFORMATION
| Item 1. | FINANCIAL STATEMENTS. |
China Automotive Systems, Inc. and Subsidiaries
Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income
(In thousands of USD, except share and per share amounts)
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Net product sales ($16,575 and $7,494 sold to related parties for the three months ended March 31, 2021 and 2020) | $ | 130,341 | $ | 73,555 | ||||
| Cost of products sold ($8,214 and $3,134 purchased from related parties for the three months ended March 31, 2021 and 2020) | 110,593 | 62,403 | ||||||
| Gross profit | 19,748 | 11,152 | ||||||
| Gain on other sales | 1,316 | 600 | ||||||
| Less: Operating expenses | ||||||||
| Selling expenses | 5,609 | 2,118 | ||||||
| General and administrative expenses | 4,615 | 3,429 | ||||||
| Research and development expenses | 6,680 | 5,193 | ||||||
| Total operating expenses | 16,904 | 10,740 | ||||||
| Income from operations | 4,160 | 1,012 | ||||||
| Other income, net | 1,723 | 117 | ||||||
| Interest expense | (343 | ) | (365 | ) | ||||
| Financial expense, net | (239 | ) | (531 | ) | ||||
| Income before income tax expenses and equity in loss of affiliated companies | 5,301 | 233 | ||||||
| Less: Income taxes expense | (641 | ) | (514 | ) | ||||
| Less: Equity in loss of affiliated companies | (1,429 | ) | (347 | ) | ||||
| Net income/(loss) | 3,231 | (628 | ) | |||||
| Less: Net income/(loss) attributable to non-controlling interests | 18 | (600 | ) | |||||
| Accretion to redemption value of redeemable non-controlling interests | (7 | ) | - | |||||
| Net income/(loss) attributable to parent company’s common shareholders | $ | 3,206 | $ | (28 | ) | |||
| Comprehensive income: | ||||||||
| Net income/(loss) | $ | 3,231 | $ | (628 | ) | |||
| Other comprehensive income: | ||||||||
| Foreign currency translation loss, net of tax | (2,271 | ) | (4,961 | ) | ||||
| Comprehensive income/(loss) | 960 | (5,589 | ) | |||||
| Comprehensive loss attributable to non-controlling interests | (118 | ) | (1,053 | ) | ||||
| Comprehensive income/(loss) attributable to parent company | $ | 1,078 | $ | (4,536 | ) | |||
| Net income/(loss) attributable to parent company’s common shareholders per share - | ||||||||
| Basic | $ | 0.10 | $ | - | ||||
| Diluted | $ | 0.10 | $ | - | ||||
| Weighted average number of common shares outstanding - | ||||||||
| Basic | 30,851,776 | 31,174,045 | ||||||
| Diluted | 30,857,736 | 31,174,045 | ||||||
| Share-based compensation included in operating expense above is as follows: | ||||||||
| General and administrative expenses | 88 | - | ||||||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
4
China Automotive Systems, Inc. and Subsidiaries
Condensed Unaudited Consolidated Balance Sheets
(In thousands of USD unless otherwise indicated)
| March 31, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 90,374 | $ | 97,248 | ||||
| Pledged cash | 31,663 | 30,813 | ||||||
| Accounts and notes receivable, net - unrelated parties | 217,372 | 216,519 | ||||||
| Accounts and notes receivable - related parties | 19,273 | 17,621 | ||||||
| Inventories | 89,638 | 88,325 | ||||||
| Other current assets | 30,963 | 25,132 | ||||||
| Total current assets | 479,283 | 475,658 | ||||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | 138,542 | 141,004 | ||||||
| Land use rights, net | 10,626 | 10,774 | ||||||
| Long-term investments | 45,518 | 49,766 | ||||||
| Other non-current assets | 27,794 | 30,358 | ||||||
| Total assets | $ | 701,763 | $ | 707,560 | ||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Short-term loans | $ | 46,193 | $ | 44,238 | ||||
| Accounts and notes payable - unrelated parties | 212,925 | 212,522 | ||||||
| Accounts and notes payable - related parties | 10,984 | 12,730 | ||||||
| Accrued expenses and other payables | 51,458 | 55,607 | ||||||
| Other current liabilities | 27,216 | 29,387 | ||||||
| Total current liabilities | 348,776 | 354,484 | ||||||
| Long-term liabilities: | ||||||||
| Other long-term payable | 35 | 1,126 | ||||||
| Long-term tax payable | 23,884 | 23,884 | ||||||
| Other non-current liabilities | 8,105 | 8,151 | ||||||
| Total liabilities | $ | 380,800 | $ | 387,645 | ||||
| Commitments and Contingencies (See Note 23) | ||||||||
| Mezzanine equity: | ||||||||
| Redeemable non-controlling interests | 530 | 523 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock, $0.0001 par value - Authorized - 80,000,000 shares; Issued - 32,338,302 and 32,338,302 shares as of March 31, 2021 and December 31, 2020, respectively | $ | 3 | $ | 3 | ||||
| Additional paid-in capital | 64,361 | 64,273 | ||||||
| Retained earnings- | ||||||||
| Appropriated | 11,303 | 11,303 | ||||||
| Unappropriated | 218,697 | 215,491 | ||||||
| Accumulated other comprehensive income | 15,285 | 17,413 | ||||||
| Treasury stock - 1,486,526 and 1,486,526 shares as of March 31, 2021 and December 31, 2020, respectively | (5,261 | ) | (5,261 | ) | ||||
| Total parent company stockholders' equity | 304,388 | 303,222 | ||||||
| Non-controlling interests | 16,045 | 16,170 | ||||||
| Total stockholders' equity | 320,433 | 319,392 | ||||||
| Total liabilities, mezzanine equity and stockholders' equity | $ | 701,763 | $ | 707,560 | ||||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
5
China Automotive Systems, Inc. and Subsidiaries
Condensed Unaudited Consolidated Statements of Cash Flows
(In thousands of USD unless otherwise indicated)
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income/(loss) | $ | 3,231 | $ | (628 | ) | |||
| Adjustments to reconcile net income/(loss) from operations to net cash (used in)/provided by operating activities: | ||||||||
| Share-based compensation | 88 | - | ||||||
| Depreciation and amortization | 6,544 | 5,101 | ||||||
| Reversal of credit losses | (177 | ) | (1 | ) | ||||
| Deferred income taxes | (254 | ) | (34 | ) | ||||
| Equity in loss of affiliated companies | 1,429 | 347 | ||||||
| Government subsidy reclassified from government loans | - | 287 | ||||||
| Loss on fixed assets disposals | 9 | 52 | ||||||
| (Increase)/decrease in: | ||||||||
| Accounts and notes receivable | (3,972 | ) | 33,444 | |||||
| Inventories | (1,934 | ) | 10,430 | |||||
| Other current assets | (1,371 | ) | (3,455 | ) | ||||
| Increase/(decrease) in: | ||||||||
| Accounts and notes payable | 1,595 | (18,032 | ) | |||||
| Accrued expenses and other payables | (4,135 | ) | 2,557 | |||||
| Other current liabilities | (1,811 | ) | (824 | ) | ||||
| Net cash (used in)/provided by operating activities | (758 | ) | 29,244 | |||||
| Cash flows from investing activities: | ||||||||
| Increase in demand loans and employee housing loans included in other non-current assets | (33 | ) | (212 | ) | ||||
| Repayment of loan from a related party | 154 | - | ||||||
| Cash received from property, plant and equipment sales | 51 | 242 | ||||||
| Payments to acquire property, plant and equipment (including $137 and $242 paid to related parties for the three months ended March 31, 2021 and 2020, respectively) | (3,267 | ) | (1,984 | ) | ||||
| Payments to acquire intangible assets | (112 | ) | - | |||||
| Investment under the equity method | - | (2,579 | ) | |||||
| Purchase of short-term investments | (14,661 | ) | - | |||||
| Proceeds from maturities of short-term investments | 9,873 | 5,781 | ||||||
| Cash received from long-term investment | 2,237 | 448 | ||||||
| Net cash (used in)/provided by investing activities | (5,758 | ) | 1,696 | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from bank loans | 12,569 | 14,368 | ||||||
| Repayments of bank loans | (10,086 | ) | (16,247 | ) | ||||
| Repayments of the borrowing for sale and leaseback transaction | (1,107 | ) | (1,028 | ) | ||||
| Net cash provided by/(used in) financing activities | 1,376 | (2,907 | ) | |||||
| Effects of exchange rate on cash, cash equivalents and pledged cash | (884 | ) | (1,851 | ) | ||||
| Net (decrease)/increase in cash, cash equivalents and pledged cash | (6,024 | ) | 26,182 | |||||
| Cash, cash equivalents and pledged cash at beginning of the period | 128,061 | 106,403 | ||||||
| Cash, cash equivalents and pledged cash at end of the period | $ | 122,037 | $ | 132,585 | ||||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
6
China Automotive Systems, Inc. and Subsidiaries
Notes to Condensed Unaudited Consolidated Financial Statements
Three Months Ended March 31, 2021 and 2020
| 1. | Organization and business |
China Automotive Systems, Inc., “China Automotive,” was incorporated in the State of Delaware on June 29, 1999 under the name Visions-In-Glass, Inc. China Automotive, including, when the context so requires, its subsidiaries described below, is referred to herein as the “Company.” The Company is primarily engaged in the manufacture and sale of automotive systems and components, as described below.
Great Genesis Holdings Limited, a company incorporated in Hong Kong on January 3, 2003 under the Companies Ordinance in Hong Kong as a limited liability company, “Genesis,” is a wholly-owned subsidiary of the Company.
Henglong USA Corporation, “HLUSA,” incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after-sales service and research and development support accordingly.
The Company owns the following aggregate net interests in the following subsidiaries organized in the People's Republic of China, the “PRC,” and Brazil as of March 31, 2021 and December 31, 2020.
| Percentage Interest | ||||||||
| Name of Entity | March 31, 2021 | December 31, 2020 | ||||||
| Shashi Jiulong Power Steering Gears Co., Ltd., “Jiulong” 1 | 100.00 | % | 100.00 | % | ||||
| Jingzhou Henglong Automotive Parts Co., Ltd., “Henglong” 2 | 100.00 | % | 100.00 | % | ||||
| Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., “Shenyang” 3 | 70.00 | % | 70.00 | % | ||||
| Wuhan Jielong Electric Power Steering Co., Ltd., “Jielong” 4 | 85.00 | % | 85.00 | % | ||||
| Wuhu Henglong Automotive Steering System Co., Ltd., “Wuhu” 5 | 77.33 | % | 77.33 | % | ||||
| Hubei Henglong Automotive System Group Co., Ltd., “Hubei Henglong” 6 | 100.00 | % | 100.00 | % | ||||
| Jingzhou Henglong Automotive Technology (Testing) Center, “Testing Center” 7 | 100.00 | % | 100.00 | % | ||||
| Chongqing Henglong Hongyan Automotive System Co., Ltd., “Chongqing Henglong” 8 | 70.00 | % | 70.00 | % | ||||
| CAAS Brazil’s Imports and Trade In Automotive Parts Ltd., “Brazil Henglong” 9 | 95.84 | % | 95.84 | % | ||||
| Wuhan Chuguanjie Automotive Science and Technology Ltd., “Wuhan Chuguanjie” 10 | 85.00 | % | 85.00 | % | ||||
| Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong” 11 | 100.00 | % | 100.00 | % | ||||
| Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., “Jingzhou Qingyan” 12 | 60.00 | % | 60.00 | % | ||||
| Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., “Henglong KYB” 13 | 66.60 | % | 66.60 | % | ||||
| Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., “Wuhan Hyoseong” 14 | 51.00 | % | 51.00 | % | ||||
| Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun” 15 | 62.00 | % | 62.00 | % | ||||
| Changchun Hualong Automotive Technology Co., Ltd., “Changchun Hualong” 16 | 100.00 | % | 100.00 | % | ||||
| 1. | Jiulong was established in 1993 and mainly engages in the production of integral power steering gears for heavy-duty vehicles. |
| 2. | Henglong was established in 1997 and mainly engages in the production of rack and pinion power steering gears for cars and light duty vehicles. |
7
| 3. | Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles. |
| 4. | Jielong was established in 2006 and mainly engages in the production and sales of automotive steering columns. |
| 5. | Wuhu was established in 2006 and mainly engages in the production and sales of automobile steering systems. |
| 6. | On March 7, 2007, Genesis established Hubei Henglong, formerly known as Jingzhou Hengsheng Automotive System Co., Ltd., its wholly-owned subsidiary, to engage in the production and sales of automotive steering systems. On July 8, 2012, Hubei Henglong changed its name to Hubei Henglong Automotive System Group Co., Ltd. |
| 7. | In December 2009, Henglong, a subsidiary of Genesis, formed Testing Center, which mainly engages in the research and development of new products. |
| 8. | On February 21, 2012, Hubei Henglong and SAIC-IVECO Hongyan Company, “SAIC-IVECO,” established a Sino-foreign joint venture company, Chongqing Henglong, to design, develop and manufacture both hydraulic and electric power steering systems and parts. |
| 9. | On August 21, 2012, Brazil Henglong was established as a Sino-foreign joint venture company by Hubei Henglong and two Brazilian citizens, Ozias Gaia Da Silva and Ademir Dal’ Evedove. Brazil Henglong engages mainly in the import and sales of automotive parts in Brazil. In May 2017, the Company obtained an additional 15.84% equity interest in Brazil Henglong for nil consideration. The Company retained its controlling interest in Brazil Henglong and the acquisition of the non-controlling interest was accounted for as an equity transaction. |
| 10. | In May 2014, together with Hubei Wanlong, Jielong formed a subsidiary, Wuhan Chuguanjie Automotive Science and Technology Ltd., “Wuhan Chuguanjie”, which mainly engages in research and development, manufacture and sales of automobile electronic systems and parts. Wuhan Chuguanjie is located in Wuhan, China. |
| 11. | In January 2015, Hubei Henglong formed Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong”, which mainly engages in the design and sales of automotive electronics. |
| 12. | In November 2017, Hubei Henglong formed Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., “Jingzhou Qingyan”, which mainly engages in the research and development of intelligent automotive technology. |
| 13. | In August 2018, Hubei Henglong and KYB (China) Investment Co., Ltd. (“KYB”) established Hubei Henglong KYB Automobile Electric Steering System Co., Ltd., “Henglong KYB”, which mainly engages in design, manufacture, sales and after-sales service of automobile electronic systems. Hubei Henglong owns 66.6% of the shares of this entity and has consolidated it since its establishment. |
| 14. |
In March 2019, Hubei Henglong and Hyoseong Electric Co., Ltd. established Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., “Wuhan Hyoseong”, which mainly engages in the design, manufacture and sales of automotive motors and electromechanical integrated systems. Hubei Henglong owns 51.0% of the shares of Wuhan Hyoseong and has consolidated it since its establishment.
|
| 15. | In December 2019, Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun”, which mainly engages in the development, manufacturing and sale of high polymer materials. Hubei Henglong owns 62.0% of the shares of Wuhu Hongrun and has consolidated it since its establishment. |
| 16. | In April 2020, Hubei Henglong acquired 100.0% of the equity interests of Changchun Hualong Automotive Technology Co., Ltd., “Changchun Hualong”, for total consideration of RMB 1.2 million, equivalent to approximately $0.2 million from an entity controlled by Hanlin Chen. Before the acquisition, 52.1% of the shares of Changchun Hualong were ultimately owned by Hanlin Chen and 47.9% of the shares were owned by third parties. Changchun Hualong mainly engages in design and R&D of automotive parts. |
8
| 2. | Basis of presentation and significant accounting policies |
| (a) | Basis of Presentation |
Basis of Presentation - The accompanying condensed unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. The details of subsidiaries are disclosed in Note 1. Significant inter-company balances and transactions have been eliminated upon consolidation. The condensed unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions in Regulation S-X. Accordingly they do not include all of the information and footnotes required by such accounting principles for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
The accompanying interim condensed consolidated financial statements are unaudited, but in the opinion of the Company’s management, contain all necessary adjustments, which include normal recurring adjustments, for a fair statement of the results of operations, financial position and cash flows for the interim periods presented.
The condensed consolidated balance sheet as of December 31, 2020 is derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2021.
Estimation - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Foreign Currencies - China Automotive, the parent company, and HLUSA maintain their books and records in United States Dollars, “USD,” their functional currency. The Company’s subsidiaries based in the PRC and Genesis maintain their books and records in Renminbi, “RMB,” their functional currency. The Company’s subsidiary based in Brazil maintains its books and records in Brazilian real, “BRL,” its functional currency. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830, foreign currency transactions denominated in currencies other than the functional currency are remeasured into the functional currency at the rate of exchange prevailing at the balance sheet date for monetary items. Nonmonetary items are remeasured at historical rates. Income and expenses are remeasured at the rate in effect on the transaction dates. Transaction gains and losses, if any, are included in the determination of net income for the period.
| (b) | Recent Accounting Pronouncements |
No accounting standards newly issued during the three months ended March 31, 2021, had a material impact on the Company’s financial statements or disclosures.
| (c) | Significant Accounting Policies |
| There have been no updates to the significant accounting policies set forth in the notes to the consolidated financial statements for the year ended December 31, 2020. | |
9
| 3. | Accounts and notes receivable, net |
The Company’s accounts and notes receivable, net as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
| March 31, 2021 | December 31, 2020 | |||||||
| Accounts receivable - unrelated parties | $ | 140,944 | $ | 141,018 | ||||
| Notes receivable - unrelated parties | 86,040 | 85,354 | ||||||
| Total accounts and notes receivable - unrelated parties | 226,984 | 226,372 | ||||||
| Less: allowance for doubtful accounts - unrelated parties | (9,612 | ) | (9,853 | ) | ||||
| Accounts and notes receivable, net - unrelated parties | 217,372 | 216,519 | ||||||
| Accounts and notes receivable - related parties | 19,274 | 17,622 | ||||||
| Less: allowance for doubtful accounts - related parties | (1 | ) | (1 | ) | ||||
| Accounts and notes receivable, net - related parties | 19,273 | 17,621 | ||||||
| Accounts and notes receivable, net | $ | 236,645 | $ | 234,140 | ||||
| Notes receivable represent accounts receivable in the form of bills of exchange for which acceptances are guaranteed and settlements are handled by banks. |
| As of March 31, 2021 and December 31, 2020, the Company pledged its notes receivable in amounts of $8.1 million and $8.2 million, respectively, as collateral in favor of the local government for the government loans; and pledged its notes receivable in amounts of $6.3 million and $5.5 million, respectively, as collateral for banks to endorse the payment of the Company’s notes payable to the noteholders upon maturity (See Note 7). | |
| Allowance for doubtful accounts receivable reversed in the consolidated statements of operations amounted to $0.2 million and $0.02 million, respectively, for the three months ended March 31, 2021 and 2020. | |
|
During the three months ended March 31, 2021, the Company’s five largest customers accounted for 43.3% of its consolidated net product sales, with one customer individually accounting for more than 10% of consolidated net sales, i.e., 16.5%. As of March 31, 2021, approximately 8.1% of accounts receivable were from trade transactions with the aforementioned customers and there was no individual customer with a receivables balance of more than 10% of total accounts receivable.
During the three months ended March 31, 2020, the Company’s five largest customers accounted for 53.7% of its consolidated net product sales, with one customer individually accounting for more than 10% of consolidated net sales, i.e., 33.7%. As of March 31, 2020, approximately 8.8% of accounts receivable were from trade transactions with the aforementioned customers and there was no individual customer with a receivables balance of more than 10% of total accounts receivable. | |
| 4. | Inventories |
The Company’s inventories as of March 31, 2021 and December 31, 2020 consisted of the following (figures are in thousands of USD):
| March 31, 2021 | December 31, 2020 | |||||||
| Raw materials | $ | 27,274 | $ | 24,367 | ||||
| Work in process | 10,508 | 10,098 | ||||||
| Finished goods | 51,856 | 53,860 | ||||||
| Total | $ | 89,638 | $ | 88,325 | ||||
The Company recorded $1.0 million and $0.8 million of inventory write-down to cost of product sold for the three months ended March 31, 2021 and 2020, respectively.
| 5. | Long-term investments |
The Company’s long-term investments at March 31, 2021 and December 31, 2020, are summarized as follows (figures are in thousands of USD):
| March 31, 2021 | December 31, 2020 | |||||||
| Chongqing Venture Fund(1) | $ | 18,286 | $ | 20,230 | ||||
| Hubei Venture Fund | 14,171 | 14,473 | ||||||
| Suzhou Venture Fund | 7,328 | 7,740 | ||||||
| Beijing Henglong (1) | 3,749 | 5,241 | ||||||
| Henglong Tianyu | 1,022 | 1,070 | ||||||
| Chongqing Jinghua | 565 | 599 | ||||||
| Jiangsu Intelligent | 397 | 413 | ||||||
| Total | $ | 45,518 | $ | 49,766 | ||||
| (1) | In January 2021, the Chongqing Venture Fund and Beijing Henglong made distributions that were proportional to each owner’s allocated share of the fund, pursuant to which Hubei Henglong received $0.7 million and $1.5 million, respectively. |
10
| 6. | Property, plant and equipment, net |
The Company’s property, plant and equipment, net as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
| March 31, 2021 | December 31, 2020 | |||||||
| Costs: | ||||||||
| Buildings | $ | 61,432 | $ | 61,035 | ||||
| Machinery and equipment | 233,711 | 233,273 | ||||||
| Electronic equipment | 6,512 | 6,491 | ||||||
| Motor vehicles | 5,018 | 5,064 | ||||||
| Construction in progress | 22,520 | 20,813 | ||||||
| Total amount of property, plant and equipment | 329,193 | 326,676 | ||||||
| Less: Accumulated depreciation (1) | (190,651 | ) | (185,672 | ) | ||||
| Total amount of property, plant and equipment, net (2)(3) | $ | 138,542 | $ | 141,004 | ||||
| (1) | Depreciation charges were $6.4 million and $5.0 million for the three months ended March 31, 2021 and 2020, respectively. |
| (2) | As of March 31, 2021 and December 31, 2020, the Company pledged property, plant and equipment with net book value of approximately $63.0 million and $66.1 million, respectively, as security for its comprehensive credit facilities with banks in China. |
| (3) | Interest costs capitalized for the three months ended March 31, 2021 and 2020, were $0.2 million and $0.3 million, respectively. |
| 7. | Loans |
Loans consist of the following as of March 31, 2021 and December 31, 2020 (figures are in thousands of USD):
| March 31, 2021 | December 31, 2020 | |||||||
| Short-term bank loans (1) | $ | 38,584 | $ | 36,575 | ||||
| Current portion of long-term government loan (2) | 7,609 | 7,663 | ||||||
| Subtotal | 46,193 | 44,238 | ||||||
| Long-term government loans (2) | 7,609 | 7,663 | ||||||
| Less: Current portion of long-term government loans (2) | (7,609 | ) | (7,663 | ) | ||||
| Subtotal | - | - | ||||||
| Total bank and government loans | $ | 46,193 | $ | 44,238 | ||||
| (1) | The Company entered into credit facility agreements with various banks, which were secured by property, plant and equipment and land use rights of the Company. The total credit facility amount was $173.1 million and $172.7 million, respectively, as of March 31, 2021 and December 31, 2020. As of March 31, 2021 and December 31, 2020, the Company has drawn down loans with an aggregate amount of $38.6 million and $36.6 million, respectively. The weighted average interest rate was 3.8% and 3.7% for the three months ended March 31, 2021 and December 31, 2020, respectively. |
| (2) | On August 7 and September 3, 2019, the Company borrowed from the local government loans of RMB 20.0 million and RMB 30.0 million, equivalent to approximately $3.0 million and $4.6 million, respectively. These loans are due for repayment on June 30, 2021 and have an interest rate of 3.80% per annum. As of March 31, 2021 and December 31, 2020, Henglong pledged RMB 53.5 million and RMB 53.5 million, equivalent to approximately $8.1 million and $8.2 million, respectively, of notes receivable as collateral for the local government loans (See Note 3). |
The Company must use the loans for the purpose as prescribed in the loan contracts. If the Company fails to do so, it will be charged penalty interest and/or trigger early repayment. The Company complied with such financial covenants as of March 31, 2021.
11
| 8. | Accounts and notes payable |
The Company’s accounts and notes payable as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
| March 31, 2021 | December 31, 2020 | |||||||
| Accounts payable - unrelated parties | $ | 129,099 | $ | 132,349 | ||||
| Notes payable - unrelated parties (1) | 83,826 | 80,173 | ||||||
| Accounts and notes payable - unrelated parties | 212,925 | 212,522 | ||||||
| Accounts and notes payable - related parties | 10,984 | 12,730 | ||||||
| Total | $ | 223,909 | $ | 225,252 | ||||
| (1) | Notes payable represent payables in the form of notes issued by the bank. As of March 31, 2021 and December 31, 2020, the Company has pledged cash of $30.7 million and $30.8 million, respectively. As of March 31, 2021 and December 31, 2020, the Company has pledged notes receivable of $6.3 million and $5.5 million, respectively, as collateral for banks to endorse the payment of the Company’s notes payable to the noteholders upon maturity. The Company entered into credit facility agreements with various banks, which were secured by property, plant and equipment and land use rights of the Company. As of March 31, 2021 and December 31, 2020, the Company has used $49.5 million and $43.9 million, respectively, for issuing bank notes. |
| 9. | Accrued expenses and other payables |
The Company’s accrued expenses and other payables as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
| March 31, 2021 | December 31, 2020 | |||||||
| Warranty reserves (1) | $ | 35,985 | $ | 36,215 | ||||
| Accrued expenses | 7,870 | 8,627 | ||||||
| Current portion of other long-term payable (See Note 10) | 4,177 | 4,131 | ||||||
| Payables for overseas transportation and custom clearance | 1,956 | 3,278 | ||||||
| Dividends payable to holders of non-controlling interests | 457 | 460 | ||||||
| Accrued interest | 588 | 646 | ||||||
| Other payables | 425 | 2,250 | ||||||
| Balance at end of year | $ | 51,458 | $ | 55,607 | ||||
| (1) | The Company provides for the estimated cost of product warranties when the products are sold. Such estimates of product warranties are based on, among other things, historical experience, product changes, material expenses, services and transportation expenses arising from the manufactured products. Estimates will be adjusted on the basis of actual claims and circumstances. |
For the three months ended March 31, 2021 and 2020, the warranties activities were as follows (figures are in thousands of USD):
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Balance at beginning of the period | $ | 36,215 | $ | 32,907 | ||||
| Additions during the period | 3,681 | 3,428 | ||||||
| Settlement within the period | (3,645 | ) | (3,174 | ) | ||||
| Foreign currency translation gain | (266 | ) | (520 | ) | ||||
| Balance at end of the period | $ | 35,985 | $ | 32,641 | ||||
12
| 10. | Other long-term payable |
On January 31, 2018, the Company entered into an equipment sales agreement with a third party (the “buyer-lessor”) and simultaneously entered into a four-year contract to lease back the equipment from the buyer-lessor. The carrying value of the equipment was RMB 91.3 million (equivalent to $13.9 million as of March 31, 2021) and the sales price was RMB 100.0 million (equivalent to $15.2 million as of March 31, 2021). Pursuant to the terms of the contract, the Company is required to pay to the buyer-lessor lease payments over four (4) years with a quarterly lease payment of approximately $1.0 million and is entitled to obtain the ownership of this equipment at a nominal price upon the expiration of the lease. The Company is of the view that the transaction does not qualify as a sale. Therefore, the transaction was accounted for as a financing transaction by the Company. As of March 31, 2021, $4.2 million was recognized as other payable (See Note 9) and $0.04 million was recognized as other long-term payable to the buyer-lessor according to the contract term.
| 11. | Redeemable non-controlling interests |
In September 2020, one of the Company’s subsidiaries issued shares to Hubei Venture Fund amounting to $0.7 million. The shares will be transferred to the Company and the other shareholder of the subsidiary on a pro rata basis at the holder’s option if the subsidiary fails to complete a qualified IPO in a pre-agreed period of time after their issuance with a transfer price of par plus 6% per year. $0.5 million of the shares are subject to purchase by the Company and are therefore accounted for as redeemable non-controlling interests in mezzanine equity and are accreted to the redemption value over the period starting from the issuance date.
For the three months ended March 31, 2021, the Company recognized accretion of $0.007 million to the redemption value of the shares over the period starting from the issuance date with a corresponding reduction to retained earnings.
| 12. | Additional paid-in capital |
The Company’s positions in respect of the amounts of additional paid-in capital for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Balance at beginning of the period | $ | 64,273 | $ | 64,466 | ||||
| Share-based compensation | 88 | - | ||||||
| Acquisition of the non-controlling interest in USAI | - | (29 | ) | |||||
| Balance at end of the period | $ | 64,361 | $ | 64,437 | ||||
13
| 13. | Stock Options |
The Company’s stock option plan was approved at the Annual Meeting of Stockholders held on June 28, 2005, and extended to June 27, 2025 at the Annual Meeting of Stockholders held on September 16, 2014. The maximum common shares available for issuance under this plan is 2,200,000. The stock incentive plan provides for the issuance, to the Company’s officers, directors, management and employees who served over three years or have given outstanding performance, of options to purchase shares of the Company’s common stock. The Company has issued 658,850 stock options under this plan, and there remain 1,541,150 stock options issuable in the future as of March 31, 2021.
Under the aforementioned plan, the stock options granted will have an exercise price equal to the closing price of the Company’s common stock traded on NASDAQ one day before the date of grant, and will expire two to five years after the grant date. The stock options granted during the three months ended March 31, 2021 were exercisable immediately on the grant date. Stock options will be settled in shares of the Company’s common stock upon exercise and are recorded in the Company’s consolidated balance sheets under the caption “Additional paid-in capital.” As of March 31, 2021, the Company has sufficient unissued registered common stock for settlement of the stock incentive plan mentioned above.
The fair value of stock options was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instruments. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends.
For the stock options granted during the three months ended March 31, 2021, assumptions used to estimate the fair value of stock options on the grant date is as follows:
| Issuance Date | Expected volatility | Risk-free rate | Expected term (years) | Dividend yield | ||||||||||||
| February 3, 2021 | 76.91 | % | 0.46 | % | 5 | 0.00 | % | |||||||||
The stock options granted during the three months ended March 31, 2021 were exercisable immediately and their fair value on the grant date using the Black-Scholes option pricing model was $0.1 million. For the three months ended March 31, 2021 and 2020, the Company recognized stock-based compensation expenses of $0.1 million and nil, respectively.
The activities of stock options are summarized as follows, including granted, exercised and forfeited.
| Weighted-Average | ||||||||||||
| Weighted-Average | Contractual | |||||||||||
| Shares | Exercise Price | Term (years) | ||||||||||
| Outstanding - January 1, 2020 | 30,000 | $ | 4.99 | 5 | ||||||||
| Expired | (7,500 | ) | 5.58 | 5 | ||||||||
| Outstanding - December 31, 2020 | 22,500 | $ | 4.79 | 5 | ||||||||
| Granted | 22,500 | 6.26 | 5 | |||||||||
| Outstanding - March 31, 2021 | 45,000 | $ | 5.52 | 5 | ||||||||
The following is a summary of the range of exercise prices for stock options that are outstanding and exercisable at March 31, 2021:
| Outstanding Stock | Weighted Average | Weighted Average | Number of Stock | |||||||||||||
| Range of Exercise Prices | Options | Remaining Life | Exercise Price | Options Exercisable | ||||||||||||
| $2.37 - $6.95 | 45,000 | 2.39 | $ | 5.52 | 45,000 | |||||||||||
14
As of March 31, 2021 and December 31, 2020, the total intrinsic value of the Company’s stock options that were exercisable was $0.2 million and $0.1 million, respectively.
For the three months ended March 31, 2021 and 2020, no Company’s stock options were exercised.
During the three months ended March 31, 2021, the weighted average fair value of the Company’s stock options granted was $3.92. No stock option was granted during the three months ended March 31, 2020.
| 14. | Retained earnings |
Appropriated
Pursuant to the relevant PRC laws, the profits distribution of the Company’s subsidiaries, which are based on their PRC statutory financial statements, are available for distribution in the form of cash dividends after these subsidiaries have paid all relevant PRC tax liabilities, provided for losses in previous years, and made appropriations to statutory surplus at 10% of their respective after-tax profits each year. When the statutory surplus reserve reaches 50% of the registered capital of a company, no additional reserve is required. For the three months ended March 31, 2021 and 2020, no statutory reserve was appropriated by the subsidiaries in China.
The Company’s activities in respect of the amounts of appropriated retained earnings for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Balance at beginning of the period | $ | 11,303 | $ | 11,265 | ||||
| Balance at end of the period | $ | 11,303 | $ | 11,265 | ||||
Unappropriated
The Company’s activities in respect of the amounts of the unappropriated retained earnings for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Balance at beginning of the period | $ | 215,491 | $ | 221,298 | ||||
| Cumulative effect of accounting change - credit loss | - | (789 | ) | |||||
| Net income/(loss) attributable to parent company | 3,213 | (28 | ) | |||||
| Accretion of redeemable non-controlling interests | (7 | ) | - | |||||
| Balance at end of the period | $ | 218,697 | $ | 220,481 | ||||
| 15. | Accumulated other comprehensive income |
The Company’s activities in respect of the amounts of accumulated other comprehensive income for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Balance at beginning of the period | $ | 17,413 | $ | (3,462 | ) | |||
| Foreign currency translation adjustment attributable to parent company | (2,128 | ) | (4,508 | ) | ||||
| Balance at end of the period | $ | 15,285 | $ | (7,970 | ) | |||
15
| 16. | Treasury stock |
| Treasury stock represents shares repurchased by the Company that are no longer outstanding and are held by the Company. Treasury stock is accounted for under the cost method. On August 13, 2020, the Board of Directors of the Company approved a share repurchase program under which the Company was permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing market prices not to exceed $3.50 per share through August 12, 2021. As of March 31, 2021, the Company had cumulatively repurchased 322,269 of the shares that were authorized to be repurchased under the program that was approved on August 13, 2020. The repurchased shares are presented as “treasury stock” on the balance sheet. | |
| 17. | Non-controlling interests |
The Company’s activities in respect of the amounts of the non-controlling interests’ equity for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Balance at beginning of the period | $ | 16,170 | $ | 20,250 | ||||
| Net income/(loss) attributable to non-controlling interests | 18 | (600 | ) | |||||
| Acquisition of the non-controlling interest in USAI | - | 29 | ||||||
| Cumulative effect of accounting change - credit loss | - | (102 | ) | |||||
| Dividends declared to non-controlling interest holders of non-wholly owned subsidiaries | - | (430 | ) | |||||
| Foreign currency translation adjustment attributable to non-controlling interests | (143 | ) | (453 | ) | ||||
| Balance at end of the period | $ | 16,045 | $ | 18,694 | ||||
| 18. | Net product sales |
Revenue Disaggregation
Management has concluded that the disaggregation level is the same under both the revenue standard and the segment reporting standard. Please refer to Note 25.
Contract Assets and Liabilities
Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. The majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory, fixed assets and intangible assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing processes.
Contract liabilities are mainly customer deposits. As of March 31, 2021 and December 31, 2020, the Company has customer deposits of $1.1 million and $1.5 million, respectively, which were included in other current liabilities on the consolidated balance sheets. During the three months ended March 31, 2021, $1.0 million was received and $1.4 million (including $1.4 million from the beginning balance of customer deposits) was recognized as net product sales revenue. During the three months ended March 31, 2020, $0.3 million was received and $0.6 million (including $0.6 million from the beginning balance of customer deposits) was recognized as net product sales revenue. Customer deposits represent non-refundable cash deposits for customers to secure rights to an amount of products produced by the Company under supply agreements. When the products are shipped to customers, the Company will recognize revenue and bill the customers to reduce the amount of the customer deposit liability.
| 19. | Financial expense, net |
During the three months ended March 31, 2021 and 2020, the Company recorded financial expense, net which is summarized as follows (figures are in thousands of USD):
16
Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Interest income | $ | 313 | $ | 351 | ||||
| Foreign exchange loss, net | (469 | ) | (711 | ) | ||||
| Bank fees | (83 | ) | (171 | ) | ||||
| Total financial expense, net | $ | (239 | ) | $ | (531 | ) | ||
| 20. | Income/(loss) per share |
Basic income per share is computed using the weighted average number of ordinary shares outstanding during the period. Diluted income per share is computed using the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. The dilutive effect of outstanding stock options is determined based on the treasury stock method.
The calculations of basic and diluted income per share attributable to the parent company for the three months ended March 31, 2021 and 2020, were as follows (figures are in thousands of USD, except share and per share amounts):
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Numerator: | ||||||||
| Net income/(loss) attributable to the parent company’s common shareholders - Basic and Diluted | $ | 3,206 | $ | (28 | ) | |||
| Denominator: | ||||||||
| Weighted average shares outstanding | 30,851,776 | 31,174,045 | ||||||
| Dilutive effects of stock options | 5,960 | - | ||||||
| Denominator for dilutive income per share - Diluted | 30,857,736 | 31,174,045 | ||||||
| Net income/(loss) per share attributable to parent company’s common shareholders - Basic | $ | 0.10 | $ | - | ||||
| Net income/(loss) per share attributable to parent company’s common shareholders - Diluted | $ | 0.10 | $ | - | ||||
As of March 31, 2021, the exercise prices for 30,000 shares, of outstanding stock options were above the weighted average market price of the Company’s common stock during the three months ended March 31, 2021. Therefore, these stock options were excluded from the calculation of the diluted income per share for the corresponding periods presented.
For the three months ended March 31, 2020, assumed conversion of the stock options has not been reflected in the dilutive calculation pursuant to ASC 260, “Earnings Per Share,” due to the anti-dilutive effect as a result of the Company’s net loss. The effects of all outstanding share options with common share equivalents of 74 shares, have been excluded from the calculation of the diluted loss per share for the three months ended March 31, 2020, due to their anti-dilutive effect.
| 21. | Significant concentrations |
A significant portion of the Company’s business is conducted in China where the currency is the RMB. Regulations in China permit foreign owned entities to freely convert the RMB into foreign currency for transactions that fall under the "current account", which includes trade related receipts and payments, interest and dividends. Accordingly, the Company’s Chinese subsidiaries may use RMB to purchase foreign currency for settlement of such "current account" transactions without pre-approval.
17
China Automotive, the parent company, may depend on dividend payments from Genesis and HLUSA, which are generated from their subsidiaries in China, “China-based Subsidiaries,” after they receive payments from the China-based Subsidiaries. Regulations in the PRC currently permit payment of dividends of a PRC company only out of accumulated profits as determined in accordance with accounting standards and regulations in China. Under PRC law China-based Subsidiaries are required to set aside at least 10% of their after-tax profit based on PRC accounting standards each year to their general reserves until the cumulative amount reaches 50% of their paid-in capital. These reserves are not distributable as cash dividends, or as loans or advances. These foreign-invested enterprises may also allocate a portion of their after-tax profits, at the discretion of their boards of directors, to their staff welfare and bonus funds. Any amounts so allocated may not be distributed and, accordingly, would not be available for distribution to Genesis and HLUSA.
The PRC government also imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currencies out of China. The China-based Subsidiaries may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currencies. If China Automotive is unable to receive dividend payments from its subsidiaries, including the China-based subsidiaries, China Automotive may be unable to effectively finance its operations or pay dividends on its shares.
Transactions other than those that fall under the "current account" and that involve conversion of RMB into foreign currency are classified as "capital account" transactions; examples of "capital account" transactions include repatriations of investment by or loans to foreign owners, or direct equity investments in a foreign entity by a China domiciled entity. "Capital account" transactions require prior approval from China's State Administration of Foreign Exchange, or SAFE, or its provincial branch to convert a remittance into a foreign currency, such as U.S. Dollars, and transmit the foreign currency outside of China.
This system could be changed at any time and any such change may affect the ability of the Company or its subsidiaries in China to repatriate capital or profits, if any, outside China. Furthermore, SAFE has a significant degree of administrative discretion in implementing the laws and has used this discretion to limit convertibility of current account payments out of China. Whether as a result of a deterioration in the Chinese balance of payments, a shift in the Chinese macroeconomic prospects or any number of other reasons, China could impose additional restrictions on capital remittances abroad. As a result of these and other restrictions under the laws and regulations of the People's Republic of China, or the PRC, the Company’s China subsidiaries are restricted in their ability to transfer a portion of their net assets to the parent. The Company has no assurance that the relevant Chinese governmental authorities in the future will not limit further or eliminate the ability of the Company’s China subsidiaries to purchase foreign currencies and transfer such funds to the Company to meet its liquidity or other business needs. Any inability to access funds in China, if and when needed for use by the Company outside of China, could have a material and adverse effect on the Company’s liquidity and its business.
| 22. | Related party transactions and balances |
Related party transactions are as follows (figures are in thousands of USD):
Related sales
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Merchandise sold to related parties | $ | 16,575 | $ | 7,494 | ||||
| Materials and others sold to related parties | 426 | 270 | ||||||
| Rental income obtained from related parties | 106 | 77 | ||||||
| Total | $ | 17,107 | $ | 7,841 | ||||
Related purchases
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Materials purchased from related parties | $ | 8,214 | $ | 3,134 | ||||
| Equipment purchased from related parties | 225 | 69 | ||||||
| Others purchased from related parties | 10 | 4 | ||||||
| Total | $ | 8,449 | $ | 3,207 | ||||
18
Related receivables
| March 31, 2021 | December 31, 2020 | |||||||
| Accounts and notes receivable from related parties | $ | 19,274 | $ | 17,622 | ||||
Related advance payments
| March 31, 2021 | December 31, 2020 | |||||||
| Advance payments for property, plant and equipment to related parties | $ | 2,393 | $ | 3,284 | ||||
| Advance payments and others to related parties | 551 | 522 | ||||||
| Total | $ | 2,944 | $ | 3,806 | ||||
Related payables
| March 31, 2021 | December 31, 2020 | |||||||
| Accounts and notes payable | $ | 10,984 | $ | 12,730 | ||||
These transactions were consummated under similar terms as those with the Company's third party customers and suppliers.
As of May 12, 2021, Hanlin Chen, the chairman of the board of directors of the Company, owns 57.9% of the common stock of the Company and has the effective power to control the vote on substantially all significant matters without the approval of other stockholders.
| 23. | Commitments and contingencies |
Legal proceedings
On January 7, 2019, three purported stockholders of the Company filed a stockholder derivative complaint on behalf of the Company against the Company’s directors Hanlin Chen, Qizhou Wu and Guangxun Xu and former directors Arthur Wong and Robert Tung in the Delaware Court of Chancery, alleging that they had (a) breached their fiduciary duties by approving and paying excessive compensation to the non-employee directors of the Company, Arthur Wong, Guangxun Xu and Robert Tung, and (b) failed to make full and accurate disclosure of all material information with respect to director qualification and director compensation paid in 2017 in the Company’s annual proxy statement on Schedule 14A filed on October 10, 2018. The directors have engaged their own counsel to answer this complaint. On April 9, 2019, the Company moved to dismiss the complaint. The motion to dismiss was denied on July 17, 2019. In November 2020, the Company reached a settlement to resolve the lawsuit for the sum of $55,998. The Company did not admit any liability in reaching the settlement. On February 5, 2021, the Court of Chancery conducted a hearing to confirm the settlement of the stockholder derivative action. The Court entered a Final Order and Judgment approving the settlement. The Court further ordered that the plaintiffs’ application for an award of attorneys’ fees and reimbursement of litigation expenses be reduced from $100,000 to $30,000. The Court’s Final Order and Judgment is publicly available on the Court of Chancery docket. As of March 31, 2021, the Company has received above settlement of $55,998 from the directors and paid the above attorneys’ fees and reimbursement of litigation expenses.
Other than as described above, the Company is not a party to any pending or, to the best of the Company’s knowledge, any threatened legal proceedings and no director, officer or affiliate of the Company, or owner of record of more than five percent of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.
19
Other commitments and contingencies
In addition to the bank loans, notes payables and the related interest, the following table summarizes the Company’s major commitments and contingencies as of March 31, 2021 (figures are in thousands of USD):
| Payment obligations by period | ||||||||||||||||||||
| 2021 | 2022 | 2023 | Thereafter | Total | ||||||||||||||||
| Obligations for investment contracts (1) | $ | 2,678 | $ | - | $ | - | $ | - | $ | 2,678 | ||||||||||
| Obligations for purchasing and service agreements | 19,873 | 1,550 | - | - | 21,423 | |||||||||||||||
| Total | $ | 22,551 | $ | 1,550 | $ | - | $ | - | $ | 24,101 | ||||||||||
| (1) |
In April 2019, Hubei Henglong entered into an agreement with other parties and committed to contribute RMB 5.0 million, equivalent to approximately $0.7 million, to Jiangsu Intelligent Networking Automotive Innovation Center Co. Ltd., “Jiangsu Intelligent”, representing 19.2% of Jiangsu Intelligent’s shares. As of March 31, 2021, Hubei Henglong has completed a capital contribution of RMB 3.0 million, equivalent to approximately $0.4 million. According to the agreement, the remaining capital commitment of RMB 2.0 million, equivalent to approximately $0.3 million, will be paid in 2021.
In November 2019, Hubei Henglong entered into an agreement with other parties and committed to purchase 70% of the shares of Hefei Senye Light Plastic Technology Co., Ltd. for total consideration of RMB 33.6 million, equivalent to approximately $5.0 million. As of March 31, 2021, Hubei Henglong has paid the amount of RMB 18.0 million, equivalent to approximately $2.6 million, which was reported in other non-current assets as the transfer of shares had not been consummated. According to the agreement, of the remaining consideration of RMB 15.6 million, equivalent to approximately $2.4 million, will be paid in 2021. |
||||||||||||||||||||||||||
| 24. | Off-balance sheet arrangements |
As of March 31, 2021 and December 31, 2020, the Company did not have any significant transactions, obligations or relationships that could be considered off-balance sheet arrangements.
| 25. | Segment reporting |
The accounting policies of the product sectors (each entity manufactures and sells different products and represents a different product sector) are the same as those described in the summary of significant accounting policies disclosed in the Company’s 2020 Annual Report on Form 10-K except that the disaggregated financial results for the product sectors have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting them in making internal operating decisions. Generally, the Company evaluates performance based on stand-alone product sector operating income and accounts for inter-segment sales and transfers as if the sales or transfers were to third parties, at current market prices. Each product sector is considered a reporting segment.
As of March 31, 2021, the Company had 15 product sectors, six of which were principal profit makers and were reported as separate sectors and engaged in the production and sales of power steering (Henglong, Jiulong, Shenyang, Wuhu, Henglong KYB and Hubei Henglong), and one holding company (Genesis). The other nine sectors were engaged in the development, manufacturing and sale of high polymer materials (Wuhu Hongrun), R&D services (Changchun Hualong), automobile steering columns (Jielong), provision of after-sales and R&D services (HLUSA), production and sale of power steering (Chongqing Henglong), trade (Brazil Henglong), manufacture and sales of automobile electronic systems and parts (Wuhan Chuguanjie), research and development of intelligent automotive technology (Jingzhou Qingyan) and manufacture and sales of automotive motors and electromechanical integrated systems (Wuhan Hyoseong).
20
As of March 31, 2020, the Company had 14 product sectors, six of which were principal profit makers and were reported as separate sectors and engaged in the production and sales of power steering (Henglong, Jiulong, Shenyang, Wuhu, Henglong KYB and Hubei Henglong), and one holding company (Genesis). The other eight sectors were engaged in the production and sale of modular sensors (USAI), automobile steering columns (Jielong), provision of after sales and R&D services (HLUSA), production and sale of power steering (Chongqing Henglong), trade (Brazil Henglong), manufacture and sales of automobile electronic systems and parts (Wuhan Chuguanjie), research and development of intelligent automotive technology (Jingzhou Qingyan) and manufacture and sales of automotive motors and electromechanical integrated systems (Wuhan Hyoseong).
The Company’s product sector information for the three months ended March 31, 2021 and 2020, is as follows (figures are in thousands of USD):
| Net Product Sales | Net Income/(Loss) | |||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Henglong | $ | 49,079 | $ | 23,907 | $ | 799 | $ | (682 | ) | |||||||
| Jiulong | 33,719 | 12,759 | 1,000 | (1,450 | ) | |||||||||||
| Shenyang | 4,092 | 2,793 | 353 | (170 | ) | |||||||||||
| Wuhu | 4,159 | 2,803 | 7 | 239 | ||||||||||||
| Hubei Henglong | 35,458 | 28,132 | 666 | 4,065 | ||||||||||||
| Henglong KYB | 18,206 | 6,126 | 165 | (907 | ) | |||||||||||
| Other Entities | 21,237 | 9,482 | 508 | (1,935 | ) | |||||||||||
| Total Segments | 165,950 | 86,002 | 3,498 | (840 | ) | |||||||||||
| Corporate | - | - | (217 | ) | (61 | ) | ||||||||||
| Eliminations | (35,609 | ) | (12,447 | ) | (50 | ) | 273 | |||||||||
| Total | $ | 130,341 | $ | 73,555 | $ | 3,231 | $ | (628 | ) | |||||||
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
The following discussion and analysis should be read in conjunction with the Company’s condensed unaudited consolidated financial statements and the related notes thereto and the other financial information contained elsewhere in this Report.
General Overview
China Automotive Systems, Inc. is a leading power steering systems supplier for the China automobile industry. The Company has business relationships with more than sixty vehicle manufacturers, including China’s top ranking domestic automobile manufacturers such as JAC motors, Changan Automobile Group, BAIC Group, Dongfeng Group, Brilliance Jinbei, Chery, BYD and Zhejiang Geely, as well as Sino-foreign or foreign automobile manufacturer such as General Motors, Citroen, Fiat Chrysler North America and Ford. Starting in 2008, the Company has supplied power steering gears to the Sino-foreign joint ventures established by GM, Citroen and Volkswagen in China. The Company has supplied power steering gear to Fiat Chrysler North America since 2009 and to Ford Motor Company since 2016.
Most of the Company’s production and research and development institutes are located in China. As of March 31, 2021, the Company has approximately 4,566 employees dedicated to design, development, manufacture and sales of its products. By leveraging its extensive experience, innovative technology and geographic strengths, the Company aims to grow leading positions in automotive power steering systems and to further improve overall margins, long-term operating profitability and cash flows. To achieve these goals and to respond to industry factors and trends, the Company is continuing work to improve its operations and business structure and achieve profitable growth.
21
In addition, as a result of COVID-19, the Company’s businesses, results of operations, financial position and cash flows had been materially and adversely affected in the first quarter of 2020. The Company resumed operation in March of 2020. However, because of the significant uncertainties surrounding COVID-19, which are still evolving, the extent of the business disruption, including the duration and the related financial impact on subsequent periods cannot be reasonably estimated at this time. See “Item 1A. Risk Factors—Our business operations have been and may continue to be materially and adversely affected by the outbreak of the coronavirus disease (COVID-19)” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Corporate Structure
The Company, through its subsidiaries, engages in the manufacture and sales of automotive systems and components. Great Genesis Holdings Limited, a company incorporated in Hong Kong on January 3, 2003 under the Companies Ordinance of Hong Kong as a limited liability company, “Genesis,” is a wholly-owned subsidiary of the Company and the holding company of the Company’s joint ventures in the PRC. Henglong USA Corporation, “HLUSA,” incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after-sales service and research and development support. CAAS Brazil’s Imports And Trade In Automotive Parts Ltd., “Brazil Henglong,” was established by Hubei Henglong Automotive System Group Co., Ltd., formerly known as Jingzhou Hengsheng Automotive System Co., Ltd., “Hubei Henglong,” as a Sino-foreign joint venture company with two Brazilian citizens in Brazil in August 2012. In May 2017, the Company obtained an additional 15.84% equity interest in Brazil Henglong for nil consideration. The Company retained its controlling interest in Brazil Henglong and the acquisition of the non-controlling interest was accounted for as an equity transaction. Fujian Qiaolong was acquired by the Company in the second quarter of 2014, as a joint venture company that mainly manufactures and distributes drainage and rescue vehicles with mass flow, drainage vehicles with vertical downhole operation, crawler-type mobile pump stations, high-altitude water supply and discharge drainage vehicles, long-range control crawler-type mobile pump stations and other vehicles, which was disposed of by the Company in the second quarter of 2016. USAI was established in 2005, and the Company and Hubei Wanlong owned 83.34% and 16.66%, respectively. In May 2020, USAI merged with and into Wuhan Chuguanjie, a wholly-owned subsidiary of Wuhan Jielong, and it deregistered from the local business administration on April 28, 2020. Following the merger, 85.0% of Wuhan Chuguanjie was owned by the Company and 15.0% was owned by Hubei Wanlong. In April 2020, Hubei Henglong acquired 100.00% of the shares of Changchun Hualong Automotive Technology Co., Ltd., “Changchun Hualong”, for total consideration of RMB 1.20 million, equivalent to approximately $0.2 million. Changchun Hualong mainly engages in design and R&D of automotive parts. Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun” was formed in December 2019, which mainly engages in the development, manufacturing and sale of high polymer materials.
Critical Accounting Estimates
The Company prepares its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amount of revenues and expenses during the reporting periods. Management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions. The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company’s condensed consolidated financial statements.
The Company considers an accounting estimate to be critical if:
| · | It requires the Company to make assumptions about matters that were uncertain at the time it was making the estimate, and |
| · | Changes in the estimate or different estimates that the Company could have selected would have had a material impact on the Company’s financial condition or results of operations. |
22
The table below presents information about the nature and rationale for the Company’s critical accounting estimates:
| Balance Sheet Caption |
Critical Estimate Item |
Nature of Estimates Required |
Assumptions/Approaches Used |
Key Factors | |||||
|
Accrued liabilities and other long-term liabilities
|
Warranty obligations
|
Estimating warranty requires the Com-pany to forecast the resolution of existing claims and expected future claims on products sold. OEMs (Original Equipment Manufacturers) are increasingly seeking to hold suppliers responsible for product warranties, which may impact the Company’s exposure to these costs. | The Company bases its estimate on historical trends of units sold and payment amounts, combined with its current understanding of the status of existing claims and discussions with its customers. |
·OEM sourcing ·OEM policy decisions regarding warranty claims
| |||||
| Property, plant and equipment, intangible assets and other long-term assets |
Valuation of long- lived assets and investments
|
The Company is required from time to time to review the recoverability of certain of its assets based on projections of anticipated future cash flows, including future profitability assessments of various product lines. | The Company estimates cash flows using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments. |
·Future production estimates ·Customer preferences and decisions | |||||
|
Accounts receivable |
Allowance for doubtful accounts |
The Company is required from time to time to review the credit of customers and make timely provision of allowance for doubtful accounts. |
The Company estimates the collect-ability of the receivables based on the future cash flows using historical experiences. | Customer credit | |||||
|
Inventory
|
Write-down of inventory
|
The Company is required from time to time to review the cash ability of inventory based on projections of anticipated future cash flows, including write-down of inventory for prices that are higher than market price and undesirable inventories. | The Company estimates cash flows using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments. |
·Future production estimates ·Customer preferences and decisions | |||||
|
Deferred income taxes
|
Recoverability of deferred tax assets
|
The Company is required to estimate whether recoverability of its deferred tax assets is more likely than not based on forecasts of taxable earnings in the related tax jurisdiction. | The Company uses historical and projected future operating results, based upon approved business plans, including a review of the eligible carry forward period, tax planning opportunities and other relevant considerations. |
·Tax law changes ·Variances in future projected profitability, including by taxing entity |
23
Recent Accounting Pronouncements
Please see Note 2 to the consolidated financial statements under Item 1 of Part I of this report.
Results of Operations
Three Months Ended March 31, 2021 and 2020
Selected highlights from our results of operations are as follows (in thousands of U.S. dollars):
| Three Months Ended March 31, | ||||||||||||||||
| 2021 | 2020 | Change | Change% | |||||||||||||
| Net product sales | $ | 130,341 | $ | 73,555 | $ | 56,786 | 77.2 | % | ||||||||
| Cost of products sold | 110,593 | 62,403 | 48,190 | 77.2 | ||||||||||||
| Gain on other sales | 1,316 | 600 | 716 | 119.3 | ||||||||||||
| Selling expenses | 5,609 | 2,118 | 3,491 | 164.8 | ||||||||||||
| General and administrative expenses | 4,615 | 3,429 | 1,186 | 34.6 | ||||||||||||
| Research and development expenses | 6,680 | 5,193 | 1,487 | 28.6 | ||||||||||||
| Other income, net | 1,723 | 117 | 1,606 | 1,372.6 | ||||||||||||
| Interest expense | 343 | 365 | (22 | ) | -6.0 | |||||||||||
| Income taxes | 641 | 514 | 127 | 24.7 | ||||||||||||
| Net income/(loss) | 3,231 | (628 | ) | 3,859 | -614.5 | |||||||||||
| Net income/(loss) attributable to non-controlling interests | 18 | (600 | ) | 618 | -103.0 | |||||||||||
| Net income/(loss) attributable to parent company’s common shareholders | $ | 3,206 | (28 | ) | $ | 3,234 | -11,550.0 | % | ||||||||
Net Product Sales and Cost of Products Sold
| Net Product Sales | Cost of Products Sold | |||||||||||||||||||||||||||||||
| (in thousands of USD, except percentages) | (in thousands of USD, except percentages) | |||||||||||||||||||||||||||||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | |||||||||||||||||||||||||||
| Henglong | $ | 49,079 | $ | 23,907 | $ | 25,172 | 105.3 | % | $ | 45,119 | $ | 23,069 | $ | 22,050 | 95.6 | % | ||||||||||||||||
| Jiulong | 33,719 | 12,759 | 20,960 | 164.3 | 30,668 | 13,347 | 17,321 | 129.8 | ||||||||||||||||||||||||
| Shenyang | 4,092 | 2,793 | 1,299 | 46.5 | 3,313 | 2,421 | 892 | 36.8 | ||||||||||||||||||||||||
| Wuhu | 4,159 | 2,803 | 1,356 | 48.4 | 3,872 | 2,375 | 1,497 | 63.0 | ||||||||||||||||||||||||
| Hubei Henglong | 35,458 | 28,132 | 7,326 | 26.0 | 29,485 | 19,307 | 10,178 | 52.7 | ||||||||||||||||||||||||
| Henglong KYB | 18,206 | 6,126 | 12,080 | 197.2 | 16,895 | 6,083 | 10,812 | 177.7 | ||||||||||||||||||||||||
| Other Entities | 21,237 | 9,482 | 11,755 | 124.0 | 16,738 | 8,388 | 8,350 | 99.5 | ||||||||||||||||||||||||
| Total Segments | 165,950 | 86,002 | 79,948 | 93.0 | 146,090 | 74,990 | 71,100 | 94.8 | ||||||||||||||||||||||||
| Elimination | (35,609 | ) | (12,447 | ) | (23,162 | ) | 186.1 | (35,497 | ) | (12,587 | ) | (22,910 | ) | 182.0 | ||||||||||||||||||
| Total | $ | 130,341 | $ | 73,555 | $ | 56,786 | 77.2 | % | $ | 110,593 | $ | 62,403 | $ | 48,190 | 77.2 | % | ||||||||||||||||
24
Net Product Sales
Net product sales were $130.3 million for the three months ended March 31, 2021, compared to $73.6 million for the same period in 2020, representing an increase of $56.7 million, or 77.0%, mainly due to the market recovery after COVID-19.
Net sales of traditional steering products and parts were $105.6 million for the three months ended March 31, 2021, compared to $65.5 million for the same period in 2020, representing an increase of $40.1 million, or 61.2%. Net sales of electric power steering (“EPS”) were $24.7 million for the three months ended March 31, 2021 and $8.1 million for the same period in 2020, representing an increase of $16.6 million. As a percentage of net sales, sales of EPS were 19.0% for the three months ended March 31, 2021, compared with 11.0% for the same period in 2020.
The increase in net product sales was due to the effects of three major factors: i) the increase in sales volume led to a sales increase of $60.7 million due to the increase in demand as a result of the recovery of manufacturing and operations of the Company’s customers after COVID-19 around the world; ii) the decrease in average selling price of steering gears led to a sales decrease of $7.9 million; and iii) the appreciation of the RMB against the U.S. dollar in this quarter compared to the same quarter last year resulted in a sales increase of $3.9 million.
Further analysis by segment (before elimination) is as follows:
| • | Henglong mainly engages in providing passenger vehicle steering systems. Net product sales for Henglong were $49.1 million for the three months ended March 31, 2021, compared with $23.9 million for the three months ended March 31, 2020, representing an increase of $25.2 million, or 105.4%. An increase in sales volume led to a sales increase of $24.5 million, a decrease in selling price led to a sales decrease of $0.3 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $1.0 million. |
| • | Jiulong mainly engages in providing commercial vehicle steering systems. Net product sales for Jiulong were $33.7 million for the three months ended March 31, 2021, compared with $12.8 million for the three months ended March 31, 2020, representing an increase of $20.9 million, or 163.3%. The increase was primarily due to the increased demand in the China commercial vehicle market after the COVID-19 pandemic along with China’s economic stimulus policies. An increase in sales volume led to a sales increase of $20.3 million, a decrease in selling price led to a sales decrease of $0.2 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $0.8 million. |
| • | Shenyang mainly engages in providing vehicle steering systems to Shenyang Brilliance Jinbei Automobile Co., Ltd. (“Jinbei”), one of the major automotive manufacturers in China. Net product sales for Shenyang were $4.1 million for the three months ended March 31, 2021, compared to $2.8 million for the same period in 2020, representing an increase of $1.3 million, or 46.4%. An increase in sales volume led to a sales increase of $1.5 million, a decrease in selling price led to a sales decrease of $0.4 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $0.2 million. |
| • | Wuhu mainly engages in providing vehicle steering systems to Chery Automobile Co., Ltd. (“Chery”), one of the major automotive manufacturers in China. Net product sales for Wuhu were $4.2 million for the three months ended March 31, 2021, compared to $2.8 million for the same period in 2020, representing an increase of $1.4 million, or 50.0%. An increase in sales volumes led to a sales increase of $2.5 million, a decrease in selling prices led to a sales decrease of $1.3 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $0.2 million. |
| • | Hubei Henglong mainly engages in providing vehicle steering systems to Chrysler and Ford. Net product sales for Hubei Henglong were $35.5 million for the three months ended March 31, 2021, compared with $28.1 million for the three months ended March 31, 2020, representing an increase of $7.4 million, or 26.3%. An increase in sales volume led to a sales increase of $8.3 million, a decrease in selling price led to a sales decrease of $1.8 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $0.9 million. |
25
| • | Henglong KYB mainly engages in providing passenger EPS products. Net product sales for Henglong KYB were $18.2 million for the three months ended March 31, 2021, compared with $6.1 million for the three months ended March 31, 2020, representing an increase of $12.1 million, or 198.4%. An increase in sales volume led to a sales increase of $12.1 million, a decrease in selling price led to a sales decrease of $0.5 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $0.5 million. |
| • | Net product sales for other entities were $21.2 million for the three months ended March 31, 2021, compared to $9.5 million for the same period in 2020, representing an increase of $11.7 million, or 123.2%, mainly caused by increases in sales of Jielong and Chongqing |
Cost of Products Sold
For the three months ended March 31, 2021, the cost of products sold was $110.6 million, compared to $62.4 million for the same period of 2020, representing an increase of $48.2 million, or 77.2%. The increase in cost of sales was mainly due to the effect of the following major factors: i) the decrease in unit price led to a cost of sales decrease of $6.3 million; (ii) the increase in sales volumes led to a cost of sales increase of $50.6 million; and iii) the appreciation of the RMB against the U.S. dollar resulted in a cost of sales increase of $3.9 million. Further analysis is as follows:
| • | Cost of products sold for Henglong was $45.1 million for the three months ended March 31, 2021, compared to $23.1 million for the same period of 2020, representing an increase of $22.0 million, or 95.2%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $21.3 million, a decrease in unit cost resulting in a cost of sales decrease of $0.3 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $1.0 million. |
| • | Cost of products sold for Jiulong was $30.7 million for the three months ended March 31, 2021, compared to $13.3 million for the same period of 2020, representing an increase of $17.4 million, or 130.8%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $20.5 million, a decrease in unit cost resulting in a cost of sales decrease of $3.9 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $0.8 million. |
| • | Cost of products sold for Shenyang was $3.3 million for the three months ended March 31, 2021, compared to $2.4 million for the same period of 2020, representing an increase of $0.9 million, or 37.5%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $1.1 million, a decrease in unit cost resulting in a cost of sale decrease of $0.4 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $0.2 million. |
| • | Cost of products sold for Wuhu was $3.9 million for the three months ended March 31, 2021, compared to $2.4 million for the same period of 2020, representing an increase of $1.5 million, or 62.5%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $2.4 million, a decrease in unit cost resulting in a cost of sales decrease of $1.0 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $0.1 million. |
| • | Cost of products sold for Hubei Henglong was $29.5 million for the three months ended March 31, 2021, compared to $19.3 million for the same period of 2020, representing an increase of $10.2 million, or 52.8%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $17.2 million, a decrease in unit cost resulting in a cost of sales decrease of $7.7 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $0.7 million. |
| • | Cost of products sold for Henglong KYB was $16.9 million for the three months ended March 31, 2021, compared to $6.1 million for the same period of 2020, representing an increase of $10.8 million, or 177.0%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $11.1 million, a decrease in unit cost resulting in a cost of sales decrease of $0.7 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $0.4 million. |
26
| • | Cost of products sold for other entities was $16.7 million for the three months ended March 31, 2021, compared to $8.4 million for the same period in 2020, representing an increase of $8.3 million, or 98.8%. |
Gross margin was 15.1% for the three months ended March 31, 2021, which is consistent with 15.2% for the same period of 2020.
Selling Expenses
Selling expenses were $5.6 million for the three months ended March 31, 2021, as compared to $2.1 million for the same period of 2020, representing an increase of $3.5 million, which was primarily due to higher sales volume and increased air freight charge.
General and Administrative Expenses
General and administrative expenses were $4.6 million for the three months ended March 31, 2021, as compared to $3.4 million for the same period of 2020, representing an increase of $1.2 million, or 35.3%, which was mainly due to the increased payroll expenses.
Research and Development Expenses
Research and development expenses were $6.7 million for the three months ended March 31, 2021, as compared to $5.2 million for the three months ended March 31, 2020, representing an increase of $1.5 million which was mainly due to increased expenditures on R&D activities for EPS products.
Other Income
Other income, net was $1.7 million for the three months ended March 31, 2021, as compared to $0.1 million for the three months ended March 31, 2020, representing an increase of $1.6 million, which was mainly due to the various government subsidies of $1.4 million received in the first three months of 2021, whereas only $0.5 million was received in the same period of last year.
Interest Expense
Interest expense was $0.3 million for the three months ended March 31, 2021, which is consistent with $0.4 million for the three months ended March 31, 2020.
Income Taxes
Income tax expense was $0.6 million for the three months ended March 31, 2021, compared to $0.5 million for the three months ended March 31, 2020, which was due to the increase in income before income tax expenses.
Net Income/(loss) Attributable to Non-controlling Interests
Net income attributable to non-controlling interests amounted to $0.02 million for the three months ended March 31, 2021, compared to net loss attributable to non-controlling interests of $0.6 million for the three months ended March 31, 2020.
Net Income/(loss) Attributable to Parent Company’s Common Shareholders
Net income attributable to parent company’s common shareholders was $3.2 million for the three months ended March 31, 2021, compared to net loss attributable to parent company’s common shareholders of $0.03 million for the three months ended March 31, 2020, representing an increase in net income attributable to parent company’s common shareholders of $3.2 million.
27
Liquidity and Capital Resources
Capital Resources and Use of Cash
The Company has historically financed its liquidity requirements from a variety of sources, including short-term borrowings under bank credit agreements, bankers’ acceptances, issuances of capital stock and notes and internally generated cash. As of March 31, 2021, the Company had cash and cash equivalents and short-term investments of $105.2 million, compared to $107.4 million as of December 31, 2020, representing a decrease of $2.2 million, or 2.0%.
The Company had working capital (total current assets less total current liabilities) of $130.5 million as of March 31, 2021, compared to $121.2 million as of December 31, 2020, representing an increase of $9.3 million, or 7.7%.
Except for the expected distribution of dividends from the Company’s PRC subsidiaries to the Company in order to fund the payment of the one-time transition tax due to the U.S. Tax Reform, the Company intends to indefinitely reinvest the funds in subsidiaries established in the PRC.
We cannot predict the impact COVID-19 may have on our cash flow for the rest of 2021. However, based on our liquidity assessment, we believe that our cash flow from operations and proceeds from our financing activities will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for the foreseeable future and for at least twelve months subsequent to the filing of this report.
Capital Source
The Company’s capital source is multifaceted, such as bank loans and banks’ acceptance facilities. In financing activities and operating activities, the Company’s banks require the Company to sign line of credit agreements and repay such facilities within one to two years. On the condition that the Company can provide adequate mortgage security and has not violated the terms of the line of credit agreement, such facilities can be extended for another one to two years.
The Company had short-term loans of $46.2 million (See Note 7) and bankers’ acceptances of $86.6 million (See Note 8) as of March 31, 2021.
The Company currently expects to be able to obtain similar bank loans, i.e., RMB loans, and bankers’ acceptance facilities in the future if it can provide adequate mortgage security following the termination of the above-mentioned agreements, see the table under “Bank Arrangements” below for more information. If the Company is not able to do so, it will have to refinance such debt as it becomes due or repay that debt to the extent it has cash available from operations or from the proceeds of additional issuances of capital stock. Due to a depreciation of assets, the value of the mortgages securing the above-mentioned bank loans and banker's acceptances is expected to be reduced by approximately $16.2 million over the next 12 months. If the Company wishes to maintain the same amount of bank loans and banker's acceptances in the future, it may be required by the banks to provide additional mortgages of $16.2 million as of the maturity date of such line of credit agreements, see the table under “Bank Arrangements” below for more information. The Company can still obtain a reduced line of credit with a reduction of $8.6 million, which is 52.9%, the mortgage ratio, of $16.2 million, if it cannot provide additional mortgages. The Company expects that the reduction in bank loans will not have a material adverse effect on its liquidity.
28
Bank Arrangements
As of March 31, 2021, the principal outstanding under the Company’s credit facilities and lines of credit was as follows (figures are in thousands of USD):
| Bank | Due Date | Amount Available(3) | Amount Used(4) | Assessed Mortgage Value(5) | ||||||||||||
| 1. Comprehensive credit facilities | China Everbright Bank (1) | Mar 2021 | 4,565 | 3,453 | 9,678 | |||||||||||
| 2. Comprehensive credit facilities | Shanghai Pudong Development Bank (2) | Oct 2021 | 19,783 | 10,637 | 22,385 | |||||||||||
| 3. Comprehensive credit facilities | China CITIC Bank (2) | Aug 2022 | 64,675 | 22,605 | 21,680 | |||||||||||
| China CITIC Bank (2) | Aug 2021 | 10,652 | 2,563 | - | ||||||||||||
| China CITIC Bank | Jun 2022 | 3,287 | 1,671 | 6,712 | ||||||||||||
| 4. Comprehensive credit facilities | Hubei Bank | Mar 2022 | 25,870 | 24,070 | 70,943 | |||||||||||
| 5. Comprehensive credit facilities | Bank of Chongqing | Sep 2021 | 761 | 228 | 2,377 | |||||||||||
| 6. Comprehensive credit facilities | Bank of China (2) | Sep 2020 | 17,653 | 13,087 | - | |||||||||||
| 7. Comprehensive credit facilities | China Merchants Bank (2) | Oct 2021 | 22,826 | 8,742 | - | |||||||||||
| 8. Comprehensive credit facilities | Agricultural Bank of China | Mar 2022 | 1,522 | 1,065 | 4,227 | |||||||||||
| 9. Comprehensive credit facilities | Huishang Bank | May 2021 | 1,522 | - | - | |||||||||||
| Total | $ | 173,116 | $ | 88,121 | $ | 138,002 | ||||||||||
| (1) | These facilities have expired. The Company is currently in the process of negotiating with these banks to renew the credit facilities. |
| (2) | The comprehensive credit facilities with Shanghai Pudong Development Bank are guaranteed by Henglong in addition to the above pledged assets. The comprehensive credit facilities with China CITIC Bank are guaranteed by Henglong and Hubei Henglong in addition to the above pledged assets. The comprehensive credit facilities with Bank of China are guaranteed by Hubei Henglong. The comprehensive credit facilities with China Merchants Bank are guaranteed by Hubei Henglong. |
| (3) | “Amount available” is used for the drawdown of bank loans and issuance of bank notes at the Company’s discretion. If the Company elects to utilize the facility by issuance of bank notes, additional collateral is requested to be pledged to the bank. |
| (4) | “Amount used” represents the credit facilities used by the Company for the purpose of bank loans or notes payable during the facility contract period. The loans or notes payable under the credit facilities will remain outstanding regardless of the expiration of the relevant credit facilities until the separate loans or notes payable expire. The amount used includes bank loans of $38.6 million and notes payable of $49.5 million as of March 31, 2021. |
| (5) | In order to obtain lines of credit, the Company needs to pledge certain assets to banks. As of March 31, 2021, the pledged assets included property, plant and equipment and land use rights with an aggregate assessed value of $138.0 million. |
The Company may request the banks to issue notes payable or bank loans within its credit line using a 365-day revolving line.
The Company’s bank loan terms range from 9 months to 23 months. Pursuant to the comprehensive credit line arrangement, the Company pledged and guaranteed:
1. Land use rights and buildings with an assessed value of approximately $9.7 million as security for its comprehensive credit facility with China Everbright Bank.
29
2. Buildings with an assessed value of approximately $22.4 million as security for its revolving comprehensive credit facility with Shanghai Pudong Development Bank.
3. Land use rights and buildings with an assessed value of approximately $21.7 million as security for its comprehensive credit facility with China CITIC Bank Wuhan Branch.
4. Land use rights and buildings with an assessed value of approximately $6.7 million as security for its comprehensive credit facility with China CITIC Bank Shenyang Branch.
5. Equipment with an assessed value of approximately $70.9 million as security for its revolving comprehensive credit facility with Hubei Bank.
6. Buildings with an assessed value of approximately $2.4 million as security for its comprehensive credit facility with Bank of Chongqing.
7. Buildings with an assessed value of approximately $4.2 million as security for its comprehensive credit facility with Agricultural Bank of China.
Short-term and Long-term Loans
The following table summarizes the contract information of short-term and long-term borrowings between the banks, government and the Company as of March 31, 2021 (figures are in thousands of USD).
| Borrowing | Annual | Date of | ||||||||||||||||||
| Bank | Borrowing | Term | Interest | Interest | ||||||||||||||||
| Government | Purpose | Date | (Months) | Principal | Rate | Payment | Due Date | |||||||||||||
| Financial Bureau of Jingzhou Development Zone | Working Capital | Aug 07, 2019 | 23 | 3,044 | 3.80 | % | Pay annually | Jun 30, 2021 | ||||||||||||
| Financial Bureau of Jingzhou Development Zone | Working Capital | Sep 03, 2019 | 22 | 4,565 | 3.80 | % | Pay annually | Jun 30, 2021 | ||||||||||||
| Agricultural Bank of China | Working Capital | Mar 18, 2021 | 12 | 1,065 | 4.05 | % | Pay monthly | Mar 17, 2022 | ||||||||||||
| China CITIC Bank | Working Capital | Jun 19, 2020 | 12 | 2,729 | 2.50 | % | Pay in arrear | Jun 18, 2021 | ||||||||||||
| China CITIC Bank | Working Capital | Mar 22, 2021 | 12 | 4,112 | 3.45 | % | Pay in arrear | Mar 22, 2022 | ||||||||||||
| Bank of China (1) | Working Capital | Apr 29, 2020 | 12 | 6,087 | 3.92 | % | Pay monthly | Apr 28, 2021 | ||||||||||||
| China CITIC Bank (1) | Working Capital | Apr 29, 2020 | 12 | 1,522 | 4.35 | % | Pay monthly | Apr 29, 2021 | ||||||||||||
| China CITIC Bank | Working Capital | May 20, 2020 | 12 | 1,522 | 4.35 | % | Pay monthly | May 20, 2021 | ||||||||||||
| China CITIC Bank | Working Capital | May 29, 2020 | 12 | 1,522 | 4.00 | % | Pay monthly | May 29, 2021 | ||||||||||||
| China CITIC Bank | Working Capital | Jun 19, 2020 | 12 | 2,922 | 2.50 | % | Pay in arrear | Jun 18, 2021 | ||||||||||||
| China CITIC Bank | Working Capital | Mar 22, 2021 | 12 | 6,831 | 3.45 | % | Pay in arrear | Mar 18, 2022 | ||||||||||||
| Bank of China | Working Capital | Jun 28, 2020 | 12 | 7,000 | 3.80 | % | Pay monthly | Jun 27, 2021 | ||||||||||||
| China CITIC Bank | Working Capital | Sep 03, 2020 | 12 | 1,522 | 4.35 | % | Pay monthly | Sep 03, 2021 | ||||||||||||
| China CITIC Bank | Working Capital | Sep 11, 2020 | 12 | 1,522 | 5.22 | % | Pay monthly | Sep 11, 2021 | ||||||||||||
| Bank of ChongQing | Working Capital | Dec 29, 2020 | 9 | 228 | 4.05 | % | Pay monthly | Sep 19, 2021 | ||||||||||||
| $ | 46,193 | |||||||||||||||||||
| (1) | These bank loans were repaid between April and May 2021 when they became due. |
30
The Company must use the loans for the purpose described and repay the principal outstanding on the specified date in the table. If it fails to do so, it will be charged additional 30% to 100% penalty interest.
The Company has complied with such financial covenants as of March 31, 2021.
Notes Payable
The following table summarizes the contract information of issuing notes payable between the banks and the Company as of March 31, 2021 (figures are in thousands of USD):
| Purpose | Term (Months) | Due Date | Amount Payable on Due Date | |||||||||
| Working Capital(1) | 6 | Apr. 2021 | 13,167 | |||||||||
| Working Capital(1) | 6 | May. 2021 | 14,691 | |||||||||
| Working Capital | 6 | Jun. 2021 | 15,390 | |||||||||
| Working Capital | 6 | Jul. 2021 | 11,879 | |||||||||
| Working Capital | 6 | Aug. 2021 | 16,273 | |||||||||
| Working Capital | 6 | Sep. 2021 | 15,152 | |||||||||
| Total (See Note 8) | $ | 86,552 | ||||||||||
| (1) | The notes payable were repaid in full on their respective due dates. |
The Company must use notes payable for the purpose described in the table. If it fails to do so, the banks will no longer issue the notes payable, and it may have an adverse effect on the Company’s liquidity and capital resources. The Company has to deposit a sufficient cash on the due date of notes payable for payment to the suppliers. If the bank has advanced payment for the Company, it will be charged an additional 50% penalty interest. The Company complied with such financial covenants as of March 31, 2021.
Cash Flows
| (a) | Operating Activities |
Net cash used in operating activities for the three months ended March 31, 2021 was $0.8 million, compared with net cash provided in operating activities of $29.2 million for the same period of 2020, representing an increase in net cash outflows by $30.0 million, which was mainly due to (1) the increase in net income excluding non-cash items by $5.7 million, (2) the decrease in cash inflows from movements of accounts and notes receivable by $37.4 million, (3) the decrease in the cash outflows from movements of accounts and notes payable by $19.6 million, and (4) a combination of other factors contributing an increase of cash outflows by $17.9 million.
31
| (b) | Investing Activities |
Net cash used in investing activities for the three months ended March 31, 2021 was $5.8 million, as compared to net cash provided by investing activities of $1.7 million for the same period of 2020, representing an increase in net cash outflows by $7.5 million, which was mainly due to the net effect of (1) an increase in payments to acquire property, plant and equipment by $1.3 million, and (2) a combination of other factors contributing an increase of cash inflows by $6.3 million, primarily including an increase in purchase of short-term investment by $14.7 million, offset by the increase in cash received from proceeds from maturities of short-term investment and long-term time deposits by $4.1 million, and a decrease in investment under the equity method by $2.6 million.
| (c) | Financing Activities |
Net cash provided by financing activities for the three months ended March 31, 2021 was $1.4 million, compared to net cash used in financing activities of $2.9 million for the same period of 2020, representing an increase in net cash inflows by $4.3 million, which was mainly due to the net effect of (1) a decrease in proceeds from bank loan by $1.8 million, and (2) a decrease in repayment of bank loans by $6.1 million.
Off-Balance Sheet Arrangements
As of March 31, 2021 and December 31, 2020, the Company did not have any significant transactions, obligations or relationships that could be considered off-balance sheet arrangements.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
There were no material changes to the disclosure made in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 regarding this matter.
| ITEM 4. | CONTROLS AND PROCEDURES. |
| A. | Disclosure Controls and Procedures |
The Company’s management, under the supervision and with the participation of its chief executive officer and chief financial officer, Messrs. Wu Qizhou and Li Jie, respectively, evaluated the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2021, the end of the period covered by this Report. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this Form 10-Q, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, Messrs. Wu and Li concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2021.
The Company’s disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of its disclosure control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.
| B. | Changes in Internal Control Over Financial Reporting |
There have been no changes in the Company’s internal control over financial reporting during the three months ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
32
| ITEM 1. | LEGAL PROCEEDINGS. |
On January 7, 2019, three purported stockholders of the Company filed a stockholder derivative complaint on behalf of the Company against the Company’s directors Hanlin Chen, Qizhou Wu and Guangxun Xu and former directors Arthur Wong and Robert Tung in the Delaware Court of Chancery, alleging that they had (a) breached their fiduciary duties by approving and paying excessive compensation to the non-employee directors of the Company, Arthur Wong, Guangxun Xu and Robert Tung, and (b) failed to make full and accurate disclosure of all material information with respect to director qualification and director compensation paid in 2017 in the Company’s annual proxy statement on Schedule 14A filed on October 10, 2018. The directors have engaged their own counsel to answer this complaint. On April 9, 2019, the Company moved to dismiss the complaint. The motion to dismiss was denied on July 17, 2019. In November 2020, the Company reached a settlement to resolve the lawsuit for the sum of $55,998. The Company did not admit any liability in reaching the settlement. On February 5, 2021, the Court of Chancery conducted a hearing to confirm the settlement of the stockholder derivative action. The Court entered a Final Order and Judgment approving the settlement. The Court further ordered that the plaintiffs’ application for an award of attorneys’ fees and reimbursement of litigation expenses be reduced from $100,000 to $30,000. The Court’s Final Order and Judgment is publicly available on the Court of Chancery docket. As of March 31, 2021, the Company has received above settlement of $55,998 from the directors and paid the above attorneys’ fees and reimbursement of litigation expenses.
Other than as described above, the Company is not a party to any pending or, to the best of the Company’s knowledge, any threatened legal proceedings and no director, officer or affiliate of the Company, or owner of record of more than five percent of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.
| ITEM 1A. | RISK FACTORS. |
There have been no material changes from the risk factors previously disclosed in Item 1A of the Company’s 2020 Annual Report on Form 10-K.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
None.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES. |
Not applicable.
| ITEM 5. | OTHER INFORMATION. |
None.
33
| ITEM 6. | EXHIBITS. |
INDEX TO EXHIBITS
| (i) | Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income, | |
| (ii) | Condensed Unaudited Consolidated Balance Sheets, | |
| (iii) | Condensed Unaudited Consolidated Statements of Cash Flows, and | |
| (iv) | related notes | |
| * | filed herewith |
34
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CHINA AUTOMOTIVE SYSTEMS, INC. | ||
| (Registrant) | ||
| Date: May 12, 2021 | By: | / s/ Qizhou Wu |
| Qizhou Wu | ||
| President and Chief Executive Officer | ||
| Date: May 12, 2021 | By: | /s/ Jie Li |
| Jie Li | ||
| Chief Financial Officer | ||
35
Exhibit 31.1
RULE 13a-14(a) CERTIFICATION FOR FORM 10-Q
I, Qizhou Wu, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of China Automotive Systems, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 12, 2021 | By: /s/ Qizhou Wu |
| Qizhou Wu | |
| President and Chief Executive Officer |
Exhibit 31.2
RULE 13a-14(a) CERTIFICATION FOR FORM 10-Q
I, Jie Li, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of China Automotive Systems, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 12, 2021 | By: /s/ Jie Li |
| Jie Li | |
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of China Automotive Systems, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Qizhou Wu, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 12, 2021 | By: /s/ Qizhou Wu |
| Qizhou Wu | |
| President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of China Automotive Systems, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jie Li, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 12, 2021 | By: /s/ Jie Li |
| Jie Li | |
| Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
May 12, 2021 |
|
| Document and Entity Information [Abstract] | ||
| Document Type | 10-Q | |
| Document Period End Date | Mar. 31, 2021 | |
| Entity Registrant Name | CHINA AUTOMOTIVE SYSTEMS INC | |
| Title of 12(b) Security | Common Stock, $0.0001 par value | |
| Security Exchange Name | NASDAQ | |
| Entity Current Reporting Status | Yes | |
| Entity Interactive Data Current | Yes | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Small Business | true | |
| Entity Emerging Growth Company | false | |
| Entity Shell Company | false | |
| Trading Symbol | CAAS | |
| Entity Common Stock, Shares Outstanding | 30,851,776 | |
| Entity Central Index Key | 0001157762 | |
| Current Fiscal Year End Date | --12-31 | |
| Document Fiscal Year Focus | 2021 | |
| Document Fiscal Period Focus | Q1 | |
| Amendment Flag | false |
Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Revenue from Related Parties | $ 16,575 | $ 7,494 |
| Related Party Costs | 8,214 | 3,134 |
| General and administrative expense | ||
| Share-based compensation | $ 88 | $ 0 |
Condensed Unaudited Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Condensed Unaudited Consolidated Balance Sheets | ||
| Accounts and notes receivable - Related parties, allowance for doubtful accounts | $ 1 | $ 1 |
| Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 80,000,000 | 80,000,000 |
| Common stock, shares issued | 32,338,302 | 32,338,302 |
| Treasury stock, shares | 1,486,526 | 1,486,526 |
Condensed Unaudited Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Payments to Acquire Property, Plant, and Equipment | $ 3,267 | $ 1,984 |
| Related Party [Member] | ||
| Payments to Acquire Property, Plant, and Equipment | $ 137 | $ 242 |
Organization and business |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and business | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and business | 1. Organization and business China Automotive Systems, Inc., “China Automotive,” was incorporated in the State of Delaware on June 29, 1999 under the name Visions-In-Glass, Inc. China Automotive, including, when the context so requires, its subsidiaries described below, is referred to herein as the “Company.” The Company is primarily engaged in the manufacture and sale of automotive systems and components, as described below. Great Genesis Holdings Limited, a company incorporated in Hong Kong on January 3, 2003 under the Companies Ordinance in Hong Kong as a limited liability company, “Genesis,” is a wholly-owned subsidiary of the Company. Henglong USA Corporation, “HLUSA,” incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after-sales service and research and development support accordingly. The Company owns the following aggregate net interests in the following subsidiaries organized in the People’s Republic of China, the “PRC,” and Brazil as of March 31, 2021 and December 31, 2020.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation and significant accounting policies |
3 Months Ended | ||||
|---|---|---|---|---|---|
Mar. 31, 2021 | |||||
| Basis of presentation and significant accounting policies | |||||
| Basis of presentation and significant accounting policies | 2. Basis of presentation and significant accounting policies
Basis of Presentation – The accompanying condensed unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. The details of subsidiaries are disclosed in Note 1. Significant inter-company balances and transactions have been eliminated upon consolidation. The condensed unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions in Regulation S-X. Accordingly they do not include all of the information and footnotes required by such accounting principles for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2020. The accompanying interim condensed consolidated financial statements are unaudited, but in the opinion of the Company’s management, contain all necessary adjustments, which include normal recurring adjustments, for a fair statement of the results of operations, financial position and cash flows for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2020 is derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2021. Estimation - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Foreign Currencies - China Automotive, the parent company, and HLUSA maintain their books and records in United States Dollars, “USD,” their functional currency. The Company’s subsidiaries based in the PRC and Genesis maintain their books and records in Renminbi, “RMB,” their functional currency. The Company’s subsidiary based in Brazil maintains its books and records in Brazilian real, “BRL,” its functional currency. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830, foreign currency transactions denominated in currencies other than the functional currency are remeasured into the functional currency at the rate of exchange prevailing at the balance sheet date for monetary items. Nonmonetary items are remeasured at historical rates. Income and expenses are remeasured at the rate in effect on the transaction dates. Transaction gains and losses, if any, are included in the determination of net income for the period. (b)Recent Accounting Pronouncements No accounting standards newly issued during the three months ended March 31, 2021, had a material impact on the Company’s financial statements or disclosures. (c)Significant Accounting Policies There have been no updates to the significant accounting policies set forth in the notes to the consolidated financial statements for the year ended December 31, 2020. |
Accounts and notes receivable, net |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts and notes receivable, net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts and notes receivable, net | 3. Accounts and notes receivable, net The Company’s accounts and notes receivable, net as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
Notes receivable represent accounts receivable in the form of bills of exchange for which acceptances are guaranteed and settlements are handled by banks. As of March 31, 2021 and December 31, 2020, the Company pledged its notes receivable in amounts of $8.1 million and $8.2 million, respectively, as collateral in favor of the local government for the government loans; and pledged its notes receivable in amounts of $6.3 million and $5.5 million, respectively, as collateral for banks to endorse the payment of the Company’s notes payable to the noteholders upon maturity (See Note 7). Allowance for doubtful accounts receivable reversed in the consolidated statements of operations amounted to $0.2 million and $0.02 million, respectively, for the three months ended March 31, 2021 and 2020. During the three months ended March 31, 2021, the Company’s five largest customers accounted for 43.3% of its consolidated net product sales, with one customer individually accounting for more than 10% of consolidated net sales, i.e., 16.5%. As of March 31, 2021, approximately 8.1% of accounts receivable were from trade transactions with the aforementioned customers and there was no individual customer with a receivables balance of more than 10% of total accounts receivable. During the three months ended March 31, 2020, the Company’s five largest customers accounted for 53.7% of its consolidated net product sales, with one customer individually accounting for more than 10% of consolidated net sales, i.e., 33.7%. As of March 31, 2020, approximately 8.8% of accounts receivable were from trade transactions with the aforementioned customers and there was no individual customer with a receivables balance of more than 10% of total accounts receivable. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||||||||||||||||||||||
| Inventories | 4. Inventories The Company’s inventories as of March 31, 2021 and December 31, 2020 consisted of the following (figures are in thousands of USD):
The Company recorded $1.0 million and $0.8 million of inventory write-down to cost of product sold for the three months ended March 31, 2021 and 2020, respectively. |
||||||||||||||||||||||||||||||||||||||||||
Long-term investments |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term investments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term investments | 5. Long-term investments The Company’s long-term investments at March 31, 2021 and December 31, 2020, are summarized as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment, net |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment, net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment, net | 6. Property, plant and equipment, net The Company’s property, plant and equipment, net as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | 7. Loans Loans consist of the following as of March 31, 2021 and December 31, 2020 (figures are in thousands of USD):
The Company must use the loans for the purpose as prescribed in the loan contracts. If the Company fails to do so, it will be charged penalty interest and/or trigger early repayment. The Company complied with such financial covenants as of March 31, 2021. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts and notes payable |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts and notes payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts and notes payable | 8. Accounts and notes payable The Company’s accounts and notes payable as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses and other payables |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued expenses and other payables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued expenses and other payables | 9. Accrued expenses and other payables The Company’s accrued expenses and other payables as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
For the three months ended March 31, 2021 and 2020, the warranties activities were as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other long-term payable |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Other long-term payable | |
| Other long-term payable | 10. Other long-term payable On January 31, 2018, the Company entered into an equipment sales agreement with a third party (the “buyer-lessor") and simultaneously entered into a four-year contract to lease back the equipment from the buyer-lessor. The carrying value of the equipment was RMB 91.3 million (equivalent to $13.9 million as of March 31, 2021) and the sales price was RMB 100.0 million (equivalent to $15.2 million as of March 31, 2021). Pursuant to the terms of the contract, the Company is required to pay to the buyer-lessor lease payments over four (4) years with a quarterly lease payment of approximately $1.0 million and is entitled to obtain the ownership of this equipment at a nominal price upon the expiration of the lease. The Company is of the view that the transaction does not qualify as a sale. Therefore, the transaction was accounted for as a financing transaction by the Company. As of March 31, 2021, $4.2 million was recognized as other payable (See Note 9) and $0.04 million was recognized as other long-term payable to the buyer-lessor according to the contract term. |
Redeemable non-controlling interests |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Redeemable non-controlling interests | |
| Redeemable non-controlling interests | 11. Redeemable non-controlling interests In September 2020, one of the Company’s subsidiaries issued shares to Hubei Venture Fund amounting to $0.7 million. The shares will be transferred to the Company and the other shareholder of the subsidiary on a pro rata basis at the holder’s option if the subsidiary fails to complete a qualified IPO in a pre-agreed period of time after their issuance with a transfer price of par plus 6% per year. $0.5 million of the shares are subject to purchase by the Company and are therefore accounted for as redeemable non-controlling interests in mezzanine equity and are accreted to the redemption value over the period starting from the issuance date. For the three months ended March 31, 2021, the Company recognized accretion of $0.007 million to the redemption value of the shares over the period starting from the issuance date with a corresponding reduction to retained earnings. |
Additional paid-in capital |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional paid-in capital | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional paid-in capital | 12. Additional paid-in capital The Company’s positions in respect of the amounts of additional paid-in capital for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options | 13. Stock Options The Company’s stock option plan was approved at the Annual Meeting of Stockholders held on June 28, 2005, and extended to June 27, 2025 at the Annual Meeting of Stockholders held on September 16, 2014. The maximum common shares available for issuance under this plan is 2,200,000. The stock incentive plan provides for the issuance, to the Company’s officers, directors, management and employees who served over three years or have given outstanding performance, of options to purchase shares of the Company’s common stock. The Company has issued 658,850 stock options under this plan, and there remain 1,541,150 stock options issuable in the future as of March 31, 2021. Under the aforementioned plan, the stock options granted will have an exercise price equal to the closing price of the Company’s common stock traded on NASDAQ one day before the date of grant, and will expire two to five years after the grant date. The stock options granted during the three months ended March 31, 2021 were exercisable immediately on the grant date. Stock options will be settled in shares of the Company’s common stock upon exercise and are recorded in the Company’s consolidated balance sheets under the caption “Additional paid-in capital.” As of March 31, 2021, the Company has sufficient unissued registered common stock for settlement of the stock incentive plan mentioned above. The fair value of stock options was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instruments. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. For the stock options granted during the three months ended March 31, 2021, assumptions used to estimate the fair value of stock options on the grant date is as follows:
The stock options granted during the three months ended March 31, 2021 were exercisable immediately and their fair value on the grant date using the Black-Scholes option pricing model was $0.1 million. For the three months ended March 31, 2021 and 2020, the Company recognized stock-based compensation expenses of $0.1 million and nil, respectively. The activities of stock options are summarized as follows, including granted, exercised and forfeited.
The following is a summary of the range of exercise prices for stock options that are outstanding and exercisable at March 31, 2021:
As of March 31, 2021 and December 31, 2020, the total intrinsic value of the Company’s stock options that were exercisable was $0.2 million and $0.1 million, respectively. For the three months ended March 31, 2021 and 2020, no Company’s stock options were exercised. During the three months ended March 31, 2021, the weighted average fair value of the Company’s stock options granted was $3.92. No stock option was granted during the three months ended March 31, 2020. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retained earnings |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retained earnings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retained earnings | 14. Retained earnings Appropriated Pursuant to the relevant PRC laws, the profits distribution of the Company’s subsidiaries, which are based on their PRC statutory financial statements, are available for distribution in the form of cash dividends after these subsidiaries have paid all relevant PRC tax liabilities, provided for losses in previous years, and made appropriations to statutory surplus at 10% of their respective after-tax profits each year. When the statutory surplus reserve reaches 50% of the registered capital of a company, no additional reserve is required. For the three months ended March 31, 2021 and 2020, no statutory reserve was appropriated by the subsidiaries in China. The Company’s activities in respect of the amounts of appropriated retained earnings for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
Unappropriated The Company’s activities in respect of the amounts of the unappropriated retained earnings for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | 15. Accumulated other comprehensive income The Company’s activities in respect of the amounts of accumulated other comprehensive income for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||
Treasury stock |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Treasury stock | |
| Treasury stock | 16. Treasury stock Treasury stock represents shares repurchased by the Company that are no longer outstanding and are held by the Company. Treasury stock is accounted for under the cost method. On August 13, 2020, the Board of Directors of the Company approved a share repurchase program under which the Company was permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing market prices not to exceed $3.50 per share through August 12, 2021. As of March 31, 2021, the Company had cumulatively repurchased 322,269 of the shares that were authorized to be repurchased under the program that was approved on August 13, 2020. The repurchased shares are presented as “treasury stock” on the balance sheet. |
Non-controlling interests |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-controlling interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-controlling interests | 17. Non-controlling interests The Company’s activities in respect of the amounts of the non-controlling interests’ equity for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net product sales |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Net product sales | |
| Net product sales | Revenue Disaggregation Management has concluded that the disaggregation level is the same under both the revenue standard and the segment reporting standard. Please refer to Note 25. Contract Assets and Liabilities Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. The majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory, fixed assets and intangible assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing processes. Contract liabilities are mainly customer deposits. As of March 31, 2021 and December 31, 2020, the Company has customer deposits of $1.1 million and $1.5 million, respectively, which were included in other current liabilities on the consolidated balance sheets. During the three months ended March 31, 2021, $1.0 million was received and $1.4 million (including $1.4 million from the beginning balance of customer deposits) was recognized as net product sales revenue. During the three months ended March 31, 2020, $0.3 million was received and $0.6 million (including $0.6 million from the beginning balance of customer deposits) was recognized as net product sales revenue. Customer deposits represent non-refundable cash deposits for customers to secure rights to an amount of products produced by the Company under supply agreements. When the products are shipped to customers, the Company will recognize revenue and bill the customers to reduce the amount of the customer deposit liability. |
Financial expense, net |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial expense, net | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial expense, net | 19. Financial expense, net During the three months ended March 31, 2021 and 2020, the Company recorded financial expense, net which is summarized as follows (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Income/(loss) per share |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income/(loss) per share | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income/(loss) per share | 20. Income/(loss) per share Basic income per share is computed using the weighted average number of ordinary shares outstanding during the period. Diluted income per share is computed using the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. The dilutive effect of outstanding stock options is determined based on the treasury stock method. The calculations of basic and diluted income per share attributable to the parent company for the three months ended March 31, 2021 and 2020, were as follows (figures are in thousands of USD, except share and per share amounts):
As of March 31, 2021, the exercise prices for 30,000 shares, of outstanding stock options were above the weighted average market price of the Company’s common stock during the three months ended March 31, 2021. Therefore, these stock options were excluded from the calculation of the diluted income per share for the corresponding periods presented. For the three months ended March 31, 2020, assumed conversion of the stock options has not been reflected in the dilutive calculation pursuant to ASC 260, “Earnings Per Share,” due to the anti-dilutive effect as a result of the Company’s net loss. The effects of all outstanding share options with common share equivalents of 74 shares, have been excluded from the calculation of the diluted loss per share for the three months ended March 31, 2020, due to their anti-dilutive effect. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant concentrations |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Significant concentrations | |
| Significant concentrations | 21. Significant concentrations A significant portion of the Company’s business is conducted in China where the currency is the RMB. Regulations in China permit foreign owned entities to freely convert the RMB into foreign currency for transactions that fall under the "current account", which includes trade related receipts and payments, interest and dividends. Accordingly, the Company’s Chinese subsidiaries may use RMB to purchase foreign currency for settlement of such "current account" transactions without pre-approval. China Automotive, the parent company, may depend on dividend payments from Genesis and HLUSA, which are generated from their subsidiaries in China, “China-based Subsidiaries,” after they receive payments from the China-based Subsidiaries. Regulations in the PRC currently permit payment of dividends of a PRC company only out of accumulated profits as determined in accordance with accounting standards and regulations in China. Under PRC law China-based Subsidiaries are required to set aside at least 10% of their after-tax profit based on PRC accounting standards each year to their general reserves until the cumulative amount reaches 50% of their paid-in capital. These reserves are not distributable as cash dividends, or as loans or advances. These foreign-invested enterprises may also allocate a portion of their after-tax profits, at the discretion of their boards of directors, to their staff welfare and bonus funds. Any amounts so allocated may not be distributed and, accordingly, would not be available for distribution to Genesis and HLUSA. The PRC government also imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currencies out of China. The China-based Subsidiaries may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currencies. If China Automotive is unable to receive dividend payments from its subsidiaries, including the China-based subsidiaries, China Automotive may be unable to effectively finance its operations or pay dividends on its shares. Transactions other than those that fall under the "current account" and that involve conversion of RMB into foreign currency are classified as "capital account" transactions; examples of "capital account" transactions include repatriations of investment by or loans to foreign owners, or direct equity investments in a foreign entity by a China domiciled entity. "Capital account" transactions require prior approval from China's State Administration of Foreign Exchange, or SAFE, or its provincial branch to convert a remittance into a foreign currency, such as U.S. Dollars, and transmit the foreign currency outside of China. This system could be changed at any time and any such change may affect the ability of the Company or its subsidiaries in China to repatriate capital or profits, if any, outside China. Furthermore, SAFE has a significant degree of administrative discretion in implementing the laws and has used this discretion to limit convertibility of current account payments out of China. Whether as a result of a deterioration in the Chinese balance of payments, a shift in the Chinese macroeconomic prospects or any number of other reasons, China could impose additional restrictions on capital remittances abroad. As a result of these and other restrictions under the laws and regulations of the People's Republic of China, or the PRC, the Company’s China subsidiaries are restricted in their ability to transfer a portion of their net assets to the parent. The Company has no assurance that the relevant Chinese governmental authorities in the future will not limit further or eliminate the ability of the Company’s China subsidiaries to purchase foreign currencies and transfer such funds to the Company to meet its liquidity or other business needs. Any inability to access funds in China, if and when needed for use by the Company outside of China, could have a material and adverse effect on the Company’s liquidity and its business. |
Related party transactions and balances |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related party transactions and balances | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related party transactions and balances | 22. Related party transactions and balances Related party transactions are as follows (figures are in thousands of USD): Related sales
Related purchases
Related receivables
Related advance payments
Related payables
These transactions were consummated under similar terms as those with the Company's third party customers and suppliers. As of May 12, 2021, Hanlin Chen, the chairman of the board of directors of the Company, owns 57.9% of the common stock of the Company and has the effective power to control the vote on substantially all significant matters without the approval of other stockholders. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and contingencies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and contingencies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and contingencies | 23. Commitments and contingencies Legal proceedings On January 7, 2019, three purported stockholders of the Company filed a stockholder derivative complaint on behalf of the Company against the Company’s directors Hanlin Chen, Qizhou Wu and Guangxun Xu and former directors Arthur Wong and Robert Tung in the Delaware Court of Chancery, alleging that they had (a) breached their fiduciary duties by approving and paying excessive compensation to the non-employee directors of the Company, Arthur Wong, Guangxun Xu and Robert Tung, and (b) failed to make full and accurate disclosure of all material information with respect to director qualification and director compensation paid in 2017 in the Company’s annual proxy statement on Schedule 14A filed on October 10, 2018. The directors have engaged their own counsel to answer this complaint. On April 9, 2019, the Company moved to dismiss the complaint. The motion to dismiss was denied on July 17, 2019. In November 2020, the Company reached a settlement to resolve the lawsuit for the sum of $55,998. The Company did not admit any liability in reaching the settlement. On February 5, 2021, the Court of Chancery conducted a hearing to confirm the settlement of the stockholder derivative action. The Court entered a Final Order and Judgment approving the settlement. The Court further ordered that the plaintiffs’ application for an award of attorneys’ fees and reimbursement of litigation expenses be reduced from $100,000 to $30,000. The Court’s Final Order and Judgment is publicly available on the Court of Chancery docket. As of March 31, 2021, the Company has received above settlement of $55,998 from the directors and paid the above attorneys’ fees and reimbursement of litigation expenses. Other than as described above, the Company is not a party to any pending or, to the best of the Company’s knowledge, any threatened legal proceedings and no director, officer or affiliate of the Company, or owner of record of more than five percent of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation. Other commitments and contingencies In addition to the bank loans, notes payables and the related interest, the following table summarizes the Company’s major commitments and contingencies as of March 31, 2021 (figures are in thousands of USD):
In November 2019, Hubei Henglong entered into an agreement with other parties and committed to purchase 70% of the shares of Hefei Senye Light Plastic Technology Co., Ltd. for total consideration of RMB 33.6 million, equivalent to approximately $5.0 million. As of March 31, 2021, Hubei Henglong has paid the amount of RMB 18.0 million, equivalent to approximately $2.6 million, which was reported in other non-current assets as the transfer of shares had not been consummated. According to the agreement, of the remaining consideration of RMB 15.6 million, equivalent to approximately $2.4 million, will be paid in 2021. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Off-balance sheet arrangements |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Off-balance sheet arrangements | |
| Off-balance sheet arrangements | 24. Off-balance sheet arrangements As of March 31, 2021 and December 31, 2020, the Company did not have any significant transactions, obligations or relationships that could be considered off-balance sheet arrangements. |
Segment reporting |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment reporting | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment reporting | 25. Segment reporting The accounting policies of the product sectors (each entity manufactures and sells different products and represents a different product sector) are the same as those described in the summary of significant accounting policies disclosed in the Company’s 2020 Annual Report on Form 10-K except that the disaggregated financial results for the product sectors have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting them in making internal operating decisions. Generally, the Company evaluates performance based on stand-alone product sector operating income and accounts for inter-segment sales and transfers as if the sales or transfers were to third parties, at current market prices. Each product sector is considered a reporting segment. As of March 31, 2021, the Company had 15 product sectors, six of which were principal profit makers and were reported as separate sectors and engaged in the production and sales of power steering (Henglong, Jiulong, Shenyang, Wuhu, Henglong KYB and Hubei Henglong), and one holding company (Genesis). The other nine sectors were engaged in the development, manufacturing and sale of high polymer materials (Wuhu Hongrun), R&D services (Changchun Hualong), automobile steering columns (Jielong), provision of after-sales and R&D services (HLUSA), production and sale of power steering (Chongqing Henglong), trade (Brazil Henglong), manufacture and sales of automobile electronic systems and parts (Wuhan Chuguanjie), research and development of intelligent automotive technology (Jingzhou Qingyan) and manufacture and sales of automotive motors and electromechanical integrated systems (Wuhan Hyoseong). As of March 31, 2020, the Company had 14 product sectors, six of which were principal profit makers and were reported as separate sectors and engaged in the production and sales of power steering (Henglong, Jiulong, Shenyang, Wuhu, Henglong KYB and Hubei Henglong), and one holding company (Genesis). The other eight sectors were engaged in the production and sale of modular sensors (USAI), automobile steering columns (Jielong), provision of after sales and R&D services (HLUSA), production and sale of power steering (Chongqing Henglong), trade (Brazil Henglong), manufacture and sales of automobile electronic systems and parts (Wuhan Chuguanjie), research and development of intelligent automotive technology (Jingzhou Qingyan) and manufacture and sales of automotive motors and electromechanical integrated systems (Wuhan Hyoseong). The Company’s product sector information for the three months ended March 31, 2021 and 2020, is as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation and significant accounting policies (Policies) |
3 Months Ended | ||||
|---|---|---|---|---|---|
Mar. 31, 2021 | |||||
| Basis of presentation and significant accounting policies | |||||
| Basis of Presentation |
Basis of Presentation – The accompanying condensed unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. The details of subsidiaries are disclosed in Note 1. Significant inter-company balances and transactions have been eliminated upon consolidation. The condensed unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions in Regulation S-X. Accordingly they do not include all of the information and footnotes required by such accounting principles for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2020. The accompanying interim condensed consolidated financial statements are unaudited, but in the opinion of the Company’s management, contain all necessary adjustments, which include normal recurring adjustments, for a fair statement of the results of operations, financial position and cash flows for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2020 is derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2021. Estimation - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Foreign Currencies - China Automotive, the parent company, and HLUSA maintain their books and records in United States Dollars, “USD,” their functional currency. The Company’s subsidiaries based in the PRC and Genesis maintain their books and records in Renminbi, “RMB,” their functional currency. The Company’s subsidiary based in Brazil maintains its books and records in Brazilian real, “BRL,” its functional currency. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830, foreign currency transactions denominated in currencies other than the functional currency are remeasured into the functional currency at the rate of exchange prevailing at the balance sheet date for monetary items. Nonmonetary items are remeasured at historical rates. Income and expenses are remeasured at the rate in effect on the transaction dates. Transaction gains and losses, if any, are included in the determination of net income for the period. |
||||
| Recent Accounting Pronouncements | (b)Recent Accounting Pronouncements No accounting standards newly issued during the three months ended March 31, 2021, had a material impact on the Company’s financial statements or disclosures. |
||||
| Significant Accounting Policies | (c)Significant Accounting Policies There have been no updates to the significant accounting policies set forth in the notes to the consolidated financial statements for the year ended December 31, 2020. |
Organization and business (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and business | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of equity method investments | The Company owns the following aggregate net interests in the following subsidiaries organized in the People’s Republic of China, the “PRC,” and Brazil as of March 31, 2021 and December 31, 2020.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts and notes receivable, net (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts and notes receivable, net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accounts and notes receivable | The Company’s accounts and notes receivable, net as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventories | The Company’s inventories as of March 31, 2021 and December 31, 2020 consisted of the following (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||
Long-term investments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term investments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of long-term investments | The Company’s long-term investments at March 31, 2021 and December 31, 2020, are summarized as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment, net (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment, net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property, plant and equipment | The Company’s property, plant and equipment, net as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
Interest costs capitalized for the three months ended March 31, 2021 and 2020, were $0.2 million and $0.3 million, respectively. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of loans | Loans consist of the following as of March 31, 2021 and December 31, 2020 (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts and notes payable (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts and notes payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accounts and notes payable | The Company’s accounts and notes payable as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses and other payables (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued expenses and other payables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued expenses and other payables | The Company’s accrued expenses and other payables as of March 31, 2021 and December 31, 2020 are summarized as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of product warranty liability | For the three months ended March 31, 2021 and 2020, the warranties activities were as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional paid-in capital (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional paid-in capital | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of additional paid-in capital | The Company’s positions in respect of the amounts of additional paid-in capital for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of assumptions used to estimate fair value of stock options | For the stock options granted during the three months ended March 31, 2021, assumptions used to estimate the fair value of stock options on the grant date is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of stock options activities | The activities of stock options are summarized as follows, including granted, exercised and forfeited.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of range of exercise prices for stock options | The following is a summary of the range of exercise prices for stock options that are outstanding and exercisable at March 31, 2021:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retained earnings (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retained earnings | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of appropriated retained earnings | The Company’s activities in respect of the amounts of appropriated retained earnings for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of unappropriated retained earnings | The Company’s activities in respect of the amounts of the unappropriated retained earnings for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||
| Schedule of accumulated other comprehensive income | The Company’s activities in respect of the amounts of accumulated other comprehensive income for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||
Non-controlling interests (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-controlling interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of non-controlling interests | The Company’s activities in respect of the amounts of the non-controlling interests’ equity for the three months ended March 31, 2021 and 2020, are summarized as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial expense, net (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial expense, net | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of recorded financial expense, net | During the three months ended March 31, 2021 and 2020, the Company recorded financial expense, net which is summarized as follows (figures are in thousands of USD):
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Income/(loss) per share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income/(loss) per share | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of basic and diluted income per share | The calculations of basic and diluted income per share attributable to the parent company for the three months ended March 31, 2021 and 2020, were as follows (figures are in thousands of USD, except share and per share amounts):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related party transactions and balances (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related party transactions and balances | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of related party transactions | Related party transactions are as follows (figures are in thousands of USD): Related sales
Related purchases
Related receivables
Related advance payments
Related payables
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and contingencies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of major commitments and contingencies | In addition to the bank loans, notes payables and the related interest, the following table summarizes the Company’s major commitments and contingencies as of March 31, 2021 (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment reporting (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment reporting | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of revenue by major customers by reporting segments | The Company’s product sector information for the three months ended March 31, 2021 and 2020, is as follows (figures are in thousands of USD):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and business (Details) |
Mar. 31, 2021 |
Dec. 31, 2020 |
Apr. 30, 2020 |
Mar. 31, 2019 |
Aug. 31, 2018 |
May 31, 2017 |
||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | 15.84% | |||||||||||||||||||||||||||||||||||||||
| Shashi Jiulong Power Steering Gears Co., Ltd., "Jiulong" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [1] | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||||
| Jingzhou Henglong Automotive Parts Co., Ltd., "Henglong" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [2] | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||||
| Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., "Shenyang" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [3] | 70.00% | 70.00% | |||||||||||||||||||||||||||||||||||||
| Wuhan Jielong Electric Power Steering Co., Ltd., "Jielong" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [4] | 85.00% | 85.00% | |||||||||||||||||||||||||||||||||||||
| Wuhu Henglong Automotive Steering System Co., Ltd., "Wuhu" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [5] | 77.33% | 77.33% | |||||||||||||||||||||||||||||||||||||
| Hubei Henglong Automotive System Group Co., Ltd., "Hubei Henglong" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [6] | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||||
| Jingzhou Henglong Automotive Technology (Testing) Center, "Testing Center" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [7] | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||||
| Chongqing Henglong Hongyan Automotive System Co., Ltd., "Chongqing Henglong" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [8] | 70.00% | 70.00% | |||||||||||||||||||||||||||||||||||||
| CAAS Brazil's Imports and Trade In Automotive Parts Ltd., "Brazil Henglong" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [9] | 95.84% | 95.84% | |||||||||||||||||||||||||||||||||||||
| Wuhan Chuguanjie Automotive Science and Technology Ltd., "Wuhan Chuguanjie" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [10] | 85.00% | 85.00% | |||||||||||||||||||||||||||||||||||||
| Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., "Shanghai Henglong" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [11] | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||||
| Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., "Jingzhou Qingyan" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [12] | 60.00% | 60.00% | |||||||||||||||||||||||||||||||||||||
| Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., "Henglong KYB" [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | 66.60% | [13] | 66.60% | [13] | 66.60% | |||||||||||||||||||||||||||||||||||
| Wuhan Hyoseong | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | 51.00% | [14] | 51.00% | [14] | 51.00% | |||||||||||||||||||||||||||||||||||
| Wuhu Hongrun | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | [15] | 62.00% | 62.00% | |||||||||||||||||||||||||||||||||||||
| Changchun Hualong Automotive Technology Co Ltd Changchun Hualong [Member] | ||||||||||||||||||||||||||||||||||||||||
| Organization And Principal Activities [Line Items] | ||||||||||||||||||||||||||||||||||||||||
| Percentage Interest | 100.00% | [16] | 100.00% | [16] | 100.00% | |||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Organization and business - Additional Information (Details) $ in Thousands, ¥ in Millions |
1 Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Apr. 30, 2020
CNY (¥)
|
Apr. 30, 2020
USD ($)
|
May 31, 2017
USD ($)
|
Mar. 31, 2021 |
Dec. 31, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Mar. 31, 2019 |
Aug. 31, 2018 |
|||||||||
| Organization And Principal Activities [Line Items] | |||||||||||||||||
| Equity Method Investment, Ownership Percentage | 15.84% | ||||||||||||||||
| Equity interests acquired (as a percent) | 47.90% | ||||||||||||||||
| Consideration for additional equity interest acquired | $ 0 | ||||||||||||||||
| Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., "Henglong KYB" [Member] | |||||||||||||||||
| Organization And Principal Activities [Line Items] | |||||||||||||||||
| Equity Method Investment, Ownership Percentage | 66.60% | [1] | 66.60% | [1] | 66.60% | ||||||||||||
| Wuhan Hyoseong | |||||||||||||||||
| Organization And Principal Activities [Line Items] | |||||||||||||||||
| Equity Method Investment, Ownership Percentage | 51.00% | [2] | 51.00% | [2] | 51.00% | ||||||||||||
| Changchun Hualong Automotive Technology Co Ltd Changchun Hualong [Member] | |||||||||||||||||
| Organization And Principal Activities [Line Items] | |||||||||||||||||
| Equity Method Investment, Ownership Percentage | 100.00% | 100.00% | 100.00% | [3] | 100.00% | [3] | |||||||||||
| Equity interests acquired (as a percent) | 52.10% | ||||||||||||||||
| Consideration for additional equity interest acquired | ¥ 1.2 | $ 200 | |||||||||||||||
| Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd "Wuhu Hongrun" [Member] | |||||||||||||||||
| Organization And Principal Activities [Line Items] | |||||||||||||||||
| Equity Method Investment, Ownership Percentage | 62.00% | ||||||||||||||||
| |||||||||||||||||
Basis of presentation and significant accounting policies - (Details) $ in Thousands, ¥ in Millions |
1 Months Ended | |||
|---|---|---|---|---|
|
Apr. 30, 2020
CNY (¥)
|
Apr. 30, 2020
USD ($)
|
May 31, 2017
USD ($)
|
Mar. 31, 2020
USD ($)
|
|
| Basis of presentation and significant accounting policies | ||||
| Retained earnings | $ 789 | |||
| Equity interests acquired (as a percent) | 47.90% | |||
| Consideration for additional equity interest acquired | $ 0 | |||
| Changchun Hualong Automotive Technology Co Ltd Changchun Hualong [Member] | ||||
| Basis of presentation and significant accounting policies | ||||
| Equity interests acquired (as a percent) | 52.10% | |||
| Consideration for additional equity interest acquired | ¥ 1.2 | $ 200 | ||
Accounts and notes receivable, net - Advance payments (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Accounts and notes receivable, net | ||
| Accounts receivable - unrelated parties | $ 140,944 | $ 141,018 |
| Notes receivable - unrelated parties | 86,040 | 85,354 |
| Total accounts and notes receivable - unrelated parties | 226,984 | 226,372 |
| Less: allowance for doubtful accounts - unrelated parties | (9,612) | (9,853) |
| Accounts and notes receivable, net - unrelated parties | 217,372 | 216,519 |
| Accounts and notes receivable - related parties | 19,274 | 17,622 |
| Less: allowance for doubtful accounts - related parties | (1) | (1) |
| Accounts and notes receivable, net - related parties | 19,273 | 17,621 |
| Accounts and notes receivable, net | $ 236,645 | $ 234,140 |
Accounts and notes receivable, net - Additional Information (Details) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
|
Mar. 31, 2021
USD ($)
customer
|
Mar. 31, 2020
USD ($)
customer
|
Dec. 31, 2020
USD ($)
|
|
| Financing Receivables [Line Items] | |||
| Financing receivable, net | $ 8,100 | $ 8,200 | |
| Notes receivable pledged as collateral | 6,300 | 5,500 | |
| Allowance for credit losses | $ 200 | ||
| Notes receivable pledged as collateral | 6,300 | $ 5,500 | |
| Allowance for accounts and notes receivable | $ 20 | $ 20 | |
| Customer One [Member] | |||
| Financing Receivables [Line Items] | |||
| Concentration risk (as a percent) | 16.50% | 33.70% | |
| Product Concentration Risk [Member] | |||
| Financing Receivables [Line Items] | |||
| Number of customers | customer | 5 | 5 | |
| Concentration risk (as a percent) | 43.30% | 53.70% | |
| Accounts receivable | |||
| Financing Receivables [Line Items] | |||
| Concentration risk (as a percent) | 8.10% | 8.80% | |
Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Inventories | ||
| Raw materials | $ 27,274 | $ 24,367 |
| Work in process | 10,508 | 10,098 |
| Finished goods | 51,856 | 53,860 |
| Total | $ 89,638 | $ 88,325 |
Inventories - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Inventories | ||
| Valuation Allowances and Reserves, Adjustments | $ 1.0 | $ 0.8 |
Long-term investments (Details) - USD ($) $ in Thousands |
1 Months Ended | ||
|---|---|---|---|
Jan. 31, 2021 |
Mar. 31, 2021 |
Dec. 31, 2020 |
|
| Debt Instrument [Line Items] | |||
| Long-term investments | $ 45,518 | $ 49,766 | |
| Chongqing Venture Fund | |||
| Debt Instrument [Line Items] | |||
| Long-term investments | 18,286 | 20,230 | |
| Proceeds from Partnership Contribution | $ 700 | ||
| Hubei Venture Fund | |||
| Debt Instrument [Line Items] | |||
| Long-term investments | 14,171 | 14,473 | |
| Suzhou Venture Fund | |||
| Debt Instrument [Line Items] | |||
| Long-term investments | 7,328 | 7,740 | |
| Beijing Henglong | |||
| Debt Instrument [Line Items] | |||
| Long-term investments | 3,749 | 5,241 | |
| Proceeds from Partnership Contribution | $ 1,500,000 | ||
| Henglong Tianyu | |||
| Debt Instrument [Line Items] | |||
| Long-term investments | 1,022 | 1,070 | |
| Chongqing Jinghua | |||
| Debt Instrument [Line Items] | |||
| Long-term investments | 565 | 599 | |
| Jiangsu Intelligent | |||
| Debt Instrument [Line Items] | |||
| Long-term investments | $ 397 | $ 413 |
Property, plant and equipment, net (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Total amount of property, plant and equipment | $ 329,193 | $ 326,676 |
| Less: Accumulated depreciation | (190,651) | (185,672) |
| Total amount of property, plant and equipment, net | 138,542 | 141,004 |
| Buildings | ||
| Property, Plant and Equipment [Line Items] | ||
| Total amount of property, plant and equipment | 61,432 | 61,035 |
| Machinery and equipment | ||
| Property, Plant and Equipment [Line Items] | ||
| Total amount of property, plant and equipment | 233,711 | 233,273 |
| Electronic equipment | ||
| Property, Plant and Equipment [Line Items] | ||
| Total amount of property, plant and equipment | 6,512 | 6,491 |
| Motor vehicles | ||
| Property, Plant and Equipment [Line Items] | ||
| Total amount of property, plant and equipment | 5,018 | 5,064 |
| Construction in progress | ||
| Property, Plant and Equipment [Line Items] | ||
| Total amount of property, plant and equipment | $ 22,520 | $ 20,813 |
Property, plant and equipment, net - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
| Property, plant and equipment, net | |||
| Depreciation | $ 6.4 | $ 5.0 | |
| Pledged Assets Separately Reported, Loans Pledged for Other Debt Obligations, at Fair Value | 63.0 | $ 66.1 | |
| Interest Costs Capitalized | $ 0.2 | $ 0.3 | |
Loans (Details) $ in Thousands, ¥ in Millions |
Mar. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Sep. 03, 2019
CNY (¥)
|
Sep. 03, 2019
USD ($)
|
Aug. 07, 2019
CNY (¥)
|
Aug. 07, 2019
USD ($)
|
||||
|---|---|---|---|---|---|---|---|---|---|---|
| Debt Instrument [Line Items] | ||||||||||
| Current portion of long-term government loan | $ 7,609 | $ 7,663 | ||||||||
| Subtotal | 46,193 | 44,238 | ||||||||
| Long-term government loans | [1] | 7,609 | 7,663 | |||||||
| Less: Current portion of long-term government loans | (7,609) | (7,663) | ||||||||
| Subtotal | 0 | |||||||||
| Total bank and government loans | 46,193 | 44,238 | ||||||||
| China Construction Bank [Member] | ||||||||||
| Debt Instrument [Line Items] | ||||||||||
| Short-term bank loans | [2] | $ 38,584 | $ 36,575 | |||||||
| Chinese government loan [Member] | ||||||||||
| Debt Instrument [Line Items] | ||||||||||
| Short-term bank loans | ¥ 30.0 | $ 4,600 | ¥ 20.0 | $ 3,000 | ||||||
| ||||||||||
Loans - Additional Information (Details) ¥ in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Mar. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Mar. 31, 2021
CNY (¥)
|
Mar. 31, 2021
USD ($)
|
Dec. 31, 2020
CNY (¥)
|
Dec. 31, 2020
USD ($)
|
Sep. 03, 2019
CNY (¥)
|
Sep. 03, 2019
USD ($)
|
Aug. 07, 2019
CNY (¥)
|
Aug. 07, 2019
USD ($)
|
|
| Debt Instrument [Line Items] | ||||||||||
| Short-term Debt, Weighted Average Interest Rate | 3.80% | 3.80% | 3.70% | 3.70% | ||||||
| Line of Credit Facility, Maximum Borrowing Capacity | $ 173.1 | $ 172.7 | ||||||||
| Proceeds from Lines of Credit | $ 38.6 | $ 36.6 | ||||||||
| Chinese government loan [Member] | ||||||||||
| Debt Instrument [Line Items] | ||||||||||
| Line of Credit Facility, Interest Rate at Period End | 3.80% | 3.80% | ||||||||
| Short-term bank loans | ¥ 30.0 | $ 4.6 | ¥ 20.0 | $ 3.0 | ||||||
| Debt Instrument, Collateral Amount | ¥ 53.5 | $ 8.1 | ¥ 53.5 | $ 8.2 | ||||||
Accounts and notes payable (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Accounts and notes payable | ||
| Accounts payable - unrelated parties | $ 129,099 | $ 132,349 |
| Notes payable - unrelated parties | 83,826 | 80,173 |
| Accounts and notes payable - unrelated parties | 212,925 | 212,522 |
| Accounts and notes payable - related parties | 10,984 | 12,730 |
| Total | 223,909 | 225,252 |
| Cash pledged as collateral | 30,700 | 30,800 |
| Notes receivable pledged as collateral | 6,300 | 5,500 |
| Land use right pledged as collateral | $ 49,500 | $ 43,900 |
Accrued expenses and other payables (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Accrued expenses and other payables | ||
| Warranty reserves | $ 35,985 | $ 36,215 |
| Accrued expenses | 7,870 | 8,627 |
| Current portion of other long-term payable (See Note 10) | 4,177 | 4,131 |
| Payables for overseas transportation and custom clearance | 1,956 | 3,278 |
| Dividends payable to holders of non-controlling interests | 457 | 460 |
| Accrued interest | 588 | 646 |
| Other payables | 425 | 2,250 |
| Balance at end of year | $ 51,458 | $ 55,607 |
Accrued expenses and other payables - Warranty (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Accrued expenses and other payables | ||
| Balance at beginning of the period | $ 36,215 | $ 32,907 |
| Additions during the period | 3,681 | 3,428 |
| Settlement within the period | (3,645) | (3,174) |
| Foreign currency translation gain | (266) | (520) |
| Balance at end of the period | $ 35,985 | $ 32,641 |
Other long-term payable (Details) $ in Thousands, ¥ in Millions |
3 Months Ended | |||||
|---|---|---|---|---|---|---|
|
Mar. 31, 2021
CNY (¥)
|
Mar. 31, 2021
USD ($)
|
Mar. 31, 2020
USD ($)
|
Mar. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Jan. 31, 2018 |
|
| Term of Contract | 4 years | |||||
| Payments to Acquire Property, Plant, and Equipment | $ 3,267 | $ 1,984 | ||||
| Cash | ¥ 100.0 | $ 15,200 | ||||
| Sale leaseback transaction, quarterly rental payments | 1,000 | |||||
| Other payables | 425 | $ 2,250 | ||||
| Other long-term payable | 35 | $ 1,126 | ||||
| Interest Expense | 343 | $ 365 | ||||
| Capital Lease Obligations [Member] | ||||||
| Payments to Acquire Property, Plant, and Equipment | ¥ 91.3 | $ 13,900 | ||||
| Other payables | 4,200 | |||||
| Other long-term payable | $ 40 | |||||
Redeemable non-controlling interests (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended |
|---|---|---|
Sep. 30, 2020 |
Mar. 31, 2021 |
|
| Redeemable Noncontrolling Interest [Line Items] | ||
| Percentage of interest, redemption price | 6.00% | |
| Accretion of temporary equity redemption value | $ 500 | |
| Accretion to redemption value of redeemable non-controlling interests | $ (7) | |
| Hubei Venture Fund | ||
| Redeemable Noncontrolling Interest [Line Items] | ||
| Issuance of shares by a subsidiary | $ 700 |
Additional paid-in capital (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Additional paid-in capital | ||
| Balance at beginning of the period | $ 64,273 | $ 64,466 |
| Share-based compensation | (88) | 0 |
| Acquisition of the non-controlling interest in USAI | 0 | (29) |
| Balance at end of the period | $ 64,361 | $ 64,437 |
Stock Options - Assumptions used to estimate fair value (Details) |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |
| Expected volatility | 76.91% |
| Risk-free rate (as a percent) | 0.46% |
| Expected term (years) | 5 years |
| Dividend yield (as a percent) | 0.00% |
Stock Options - Activities of stock options (Details) - $ / shares |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Stock Options | |||
| Beginning, Shares Outstanding | 22,500 | 30,000 | |
| Shares Granted | 22,500 | ||
| Shares Expired | (7,500) | ||
| Ending, Shares Outstanding | 45,000 | 22,500 | 30,000 |
| Beginning, Weighted-Average Exercise Price Outstanding | $ 4.79 | $ 4.99 | |
| Weighted-Average Exercise Price Granted | 6.26 | ||
| Weighted-Average Exercise Price Expired | 5.58 | ||
| Ending, Weighted-Average Exercise Price Outstanding | $ 5.52 | $ 4.79 | $ 4.99 |
| Weighted-Average Contractual Term (years) Outstanding | 5 years | 5 years | 5 years |
| Weighted-Average Contractual Term (years) Granted | 5 years | ||
| Weighted-Average Contractual Term (years) Expired | 5 years | ||
Stock Options - Summary of the range of exercise prices for stock options (Details) - Range of Exercise Prices From $2.00 to $10.00 |
3 Months Ended |
|---|---|
|
Mar. 31, 2021
$ / shares
shares
| |
| Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
| Range of Exercise Prices Minimum (in dollars per share) | $ 2.37 |
| Range of Exercise Prices Maximum (in dollars per share) | $ 6.95 |
| Outstanding Stock Options | shares | 45,000 |
| Weighted Average Remaining Life (in years) | 2 years 4 months 21 days |
| Weighted Average Exercise Price (in dollars per share) | $ 5.52 |
| Number of Stock Options Exercisable | shares | 45,000 |
Retained earnings - Appropriated (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
Mar. 31, 2020 |
|---|---|---|---|
| Retained earnings | |||
| Balance at beginning of the period | $ 11,303 | $ 11,265 | $ 11,265 |
| Balance at end of the period | $ 11,303 | $ 11,303 | $ 11,265 |
Retained earnings - Unappropriated (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Retained earnings | ||
| Balance at beginning of the period | $ 215,491 | $ 221,298 |
| Cumulative effect of accounting change - credit loss | (789) | |
| Net income/(loss) attributable to parent company | 3,213 | (28) |
| Accretion to redemption value of redeemable non-controlling interests | (7) | |
| Balance at end of the period | $ 218,697 | $ 220,481 |
Retained earnings (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Retained earnings | ||
| Statutory Accounting Practices Statutory Surplus Required Percentage | 10.00% | |
| Percentage Of Statutory Surplus Reserve | 50.00% | |
| Statutory Accounting Practices, Statutory Capital and Surplus Required | $ 0 | |
| Statutory Accounting Practices Statutory Capital And Surplus Reserve | $ 0 | |
Accumulated other comprehensive income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Accumulated other comprehensive income | ||
| Balance at beginning of the period | $ 17,413 | $ (3,462) |
| Foreign currency translation adjustment attributable to parent company | (2,128) | (4,508) |
| Balance at end of the period | $ 15,285 | $ (7,970) |
Treasury stock (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | ||
|---|---|---|---|
Aug. 12, 2021 |
Aug. 13, 2020 |
Mar. 31, 2021 |
|
| Equity, Class of Treasury Stock [Line Items] | |||
| Stock repurchased during period, value | $ 5.0 | ||
| Stock repurchased during period | 322,269 | ||
| Maximum [Member] | |||
| Equity, Class of Treasury Stock [Line Items] | |||
| Stock repurchase, authorized repurchase price per share | $ 3.50 |
Non-controlling interests (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Non-controlling interests | ||
| Balance at beginning of the period | $ 16,170 | $ 20,250 |
| Net income/(loss) attributable to non-controlling interests | 18 | (600) |
| Acquisition of the non-controlling interest in USAI | 0 | (29) |
| Cumulative effect of accounting change - credit loss | 0 | 102 |
| Dividends declared to non-controlling interest holders of non-wholly owned subsidiaries | 0 | (430) |
| Foreign currency translation adjustment attributable to non-controlling interests | (143) | (453) |
| Balance at end of the period | $ 16,045 | $ 18,694 |
Net product sales (Details) - USD ($) $ in Millions |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
| Contract with Customer, Liability, Current | $ 1.1 | $ 0.3 | $ 1.5 |
| Revenue from Contract with Customer, Including Assessed Tax | 1.0 | ||
| Revenue | |||
| Revenue from Contract with Customer, Including Assessed Tax | $ 1.4 | $ 0.6 | |
Financial expense, net (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Financial expense, net | ||
| Interest income | $ 313 | $ 351 |
| Foreign exchange loss, net | (469) | (711) |
| Bank fees | (83) | (171) |
| Total financial expense, net | $ (239) | $ (531) |
Income/(loss) per share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Numerator: | ||
| Net income/(loss) attributable to the parent company's common shareholders - Basic and Diluted | $ 3,206 | $ (28) |
| Denominator: | ||
| Weighted average shares outstanding | 30,851,776 | 31,174,045 |
| Dilutive effects of stock options | 5,960 | 0 |
| Denominator for dilutive income per share - Diluted | 30,857,736 | 31,174,045 |
| Net income/(loss) per share attributable to parent company's common shareholders | ||
| Basic | $ 0.10 | $ 0.00 |
| Diluted | $ 0.10 | $ 0.00 |
Income/(loss) per share - Additional Information (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2020
shares
| |
| Equity Option [Member] | |
| Earnings Per Share, Basic and Diluted [Line Items] | |
| Ordinary shares excluded from the computation of diluted net loss per ordinary share | 30,000 |
| Share options - weighted average | |
| Earnings Per Share, Basic and Diluted [Line Items] | |
| Ordinary shares excluded from the computation of diluted net loss per ordinary share | 74 |
Significant concentrations (Details) |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Significant concentrations | |
| Minimum Percentage Of Profit Allocated To Foreign Investment | 10.00% |
| Registered Capital Percentage | 50.00% |
Related party transactions and balances - Additional Information (Details) |
May 12, 2021 |
May 31, 2017 |
|---|---|---|
| Related Party Transaction [Line Items] | ||
| Equity Method Investment, Ownership Percentage | 15.84% | |
| Subsequent Event [Member] | ||
| Related Party Transaction [Line Items] | ||
| Equity Method Investment, Ownership Percentage | 57.90% |
Commitments and contingencies (Details) $ in Thousands |
Mar. 31, 2021
USD ($)
|
|||
|---|---|---|---|---|
| Commitments and Contingencies Disclosure [Line Items] | ||||
| 2021 | $ 22,551 | |||
| 2022 | 1,550 | |||
| Thereafter | 0 | |||
| Total | 24,101 | |||
| Obligations for investment contracts [Member] | ||||
| Commitments and Contingencies Disclosure [Line Items] | ||||
| 2021 | 2,678 | [1] | ||
| 2022 | 0 | [1] | ||
| Thereafter | 0 | [1] | ||
| Total | 2,678 | [1] | ||
| Obligations for purchasing and service agreements | ||||
| Commitments and Contingencies Disclosure [Line Items] | ||||
| 2021 | 19,873 | |||
| 2022 | 1,550 | |||
| Thereafter | 0 | |||
| Total | $ 21,423 | |||
| ||||
Segment reporting - Additional Information (Details) |
Mar. 31, 2021
product
item
|
Mar. 31, 2020
product
item
|
|---|---|---|
| Segment reporting | ||
| Number of product sectors | product | 15 | 14 |
| Number of principal profit makers | 6 | 6 |
| Number of holding company | 1 | 1 |
| Number of sectors engaged in production and sale of products | 9 | 8 |