China Zenix Auto International Limited Reports 2019 First Quarter Results

ZHANGZHOU,China,May 16,2019 -- China Zenix Auto International Limited (OTC: ZXAIY) ("Zenix Auto" or "the Company"),the largest commercial vehicle wheel manufacturer in China in both the aftermarket and OEM market by sales volume,today announced its unaudited financial results for the first quarter ended March 31,2019.

Financial Highlights

First Quarter 2019:

Revenue was RMB669.4 million (US$99.7 million),down 18.0% year-over-year

Sales to the Chinese OEM market decreased by 24.7% year-over-year

Sales of aluminum wheels accounted for 9.0% of total sales

Gross margin was 12.1%

Net loss and total comprehensive loss was RMB4.5 million (US$0.7 million) with basic and diluted loss per American Depositary Share ("ADS") of RMB0.09 (US$0.01) compared with net income and total comprehensive income of RMB26.1 million for the first quarter of 2018 with basic and diluted income per ADS of RMB0.51 in the first quarter of 2018.

Mr. Junqiu Gao,Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto,commented,"Our lower sales reflect a challenging environment with slower economic growth. We have proactively adjusted our pricing policies to address market demand and our cost structure."

Mr. Martin Cheung,CFO of Zenix Auto,"We maintained our strong liquid assets base of a mix of bank balances and fixed bank deposits of approximately US$189 million. As our production capacity is sufficient for the current market opportunities,we didn't need to deploy capital for additional capital equipment in the first quarter of 2019."

2019 First Quarter Results

Revenue for the first quarter of 2019 was RMB669.4 million (US$99.7 million) compared to RMB816.2 million in the first quarter of 2018. The decrease in revenue on a year-over-year basis was mainly due to a weaker domestic truck OEM market in a sluggish economic environment,and lower demand following the Company's selling price increases in the domestic aftermarket and international markets.

Sales to the Chinese OEM market were RMB350.4 million (US$52.2 million) compared to RMB465.1 million in the same quarter of 2018. Total unit sales in the OEM market decreased by 20.4% year-over-year during the first quarter of 2019.

Aftermarket sales in China were RMB240.5 million (US$35.8 million) from RMB253.9 million in the first quarter of 2018. Total unit sales in the aftermarket decreased by 6.9% year-over-year as the demand was slightly affected in the aftermarket wheel segment after the Company increased selling prices to address the high raw material costs.

International sales were RMB78.5 million (US$11.7 million) compared to sales of RMB97.2 million in the first quarter of 2018. Total unit sales in the international sales decreased by 26.6% year-over-year in the first quarter of 2019 mainly due to the Company's price increase policy associated with high raw material costs,which led to weaker demand in Southeastern Asian countries.

In the first quarter of 2019,domestic OEM sales,domestic aftermarket sales and international sales contributed 52.4%,35.9% and 11.7% of revenue,respectively.

Sales of tubed steel wheels comprised 42.7% of 2019 first quarter revenue compared to 45.7% in the same quarter in 2018. Tubeless steel wheel sales represented 43.6% of 2019 first quarter revenue compared to41.3% in the same quarter of 2018. Sales of aluminum wheels accounted for 9.0% of first quarter revenue as compared to 9.5% in the same quarter a year ago.

First quarter gross profit was RMB81.2 million (US$12.1 million)compared toRMB125.9 million in the same quarter in 2018. Gross margin was 12.1%,compared with 15.4% in the first quarter of 2018. The decrease in gross margin on a year-over-year basis was mainly due to the weaker total sales volume and lower selling price in the OEM market. The Company raised selling prices in the domestic aftermarket and international market during the first quarter,but they were not high enough to offset the negative impact of the total volume decline and the weaker OEM demand.

Selling and distribution expenses decreased by 12.3% to RMB39.5 million (US$5.9 million) from RMB45.0 million in the first quarter of 2018. The decrease in selling and distribution costs was primarily due to lower sales in the first quarter of 2019 compared with the same quarter last year. As a percentage of revenue,selling and distribution costs were 5.9% in the first quarter of 2019,compared to 5.5% in the same quarter a year ago.

Research and development ("R&D") expenses increased by 3.7% to RMB13.3 million (US$2.0 million),compared to RMB12.9 million in the first quarter of 2018. R&D as a percentage of revenue was 2.0% in the first quarter of 2019 compared to 1.6% in the same quarter a year ago. The higher R&D expenses are mainly due to increased product development programs associated with new material development,new product design,and new production equipment development.

Administrative expenses decreased by 6.8% to RMB28.6 million (US$4.3 million) from RMB30.7million in the first quarter of 2018.As a percentage of revenue,administrative expenses were 4.3%,compared to 3.8% of revenue in the first quarter of 2018.

Net loss and total comprehensive loss was RMB4.5 million (US$0.7 million) in the first quarter of 2019 compared to net income and total comprehensive income of RMB26.1 million for the first quarter of 2018.

Basic and diluted loss per ADS were RMB0.09 (US$0.01) compared to basic and diluted income per ADS of RMB0.51 in the first quarter of 2018.

In the first quarter of 2019,the Company recorded net cash outflow from operating activities of RMB37.6 million (US$5.6 million). Days Sales Outstanding (DSO) remained at 61 days in the first quarter of 2019,slightly increased from 54 days during the full year of 2018. Capital expenditures for the purchase of property,plant and equipment in the first quarter were nil.

During the first quarter of 2019 and 2018,the weighted average number of ordinary shares was 206.5 million and the weighted average number of ADSs was 51.6 million.

As of March 31,2019,Zenix Auto had bank balances and cash of RMB977.2 million (US$145.6 million) and fixed bank deposits with a maturity period over three months of RMB290.0 million (US$43.2 million). Account receivables were RMB523.6 million (US$78.0) compared to RMB527.0 million at the end of 2018. Total bank borrowings were RMB558.0 million (US$83.1 million). Total equity attributable to owners of the Company was RMB2,534.1 million (US$377.6 million).

Conference Call Information

The Company will host a conference call,to be simultaneously webcast,on Thursday,2019 at 8:00 a.m. EDT/ 8:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-877-407-0782 (U.S. Toll Free) or +1-201-689-8567 (International),or Mainland China toll free +86-400-120-2840. Please dial in five minutes before the call start time and ask to be connected to the "China Zenix Auto" conference call.

A replay will be available shortly after the conclusion of the conference call through June 16,at 11:59 p.m. EDT. Interested parties may access the replay by dialing +1-877-481-4010 (U.S. Toll Free) or +1-919-882-2331 (International) and using Conference ID 48119to access the replay.

Exchange Rate Information

The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. All translations from RMB to U.S. dollars are made at a rate of RMB6.7112 to US$1.00,the effective noon buying rate as of March 31,2019 in The City of New York,and for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board. The percentages stated are calculated based on RMB amounts.

About China Zenix Auto International Limited

China Zenix Auto International Limited is the largest commercial vehicle wheel manufacturer in China in both the aftermarket and OEM market by sales volume. The Company offers more than 834series of aluminum wheels,tubed steel wheels,tubeless steel wheels,and off-road steel wheels in the aftermarket and OEM markets in China and internationally. The Company's customers include large PRC commercial vehicle manufacturers,and it also exports products to over 78 distributors in more than 28 countries worldwide. With six large,strategically located manufacturing facilities in multiple regions across China,the Company has a designed annual production capacity of approximately 15.5 million units of steel and aluminum wheels as of March 31,2019. For more information,please visit:www.zenixauto.com/en.

Safe Harbor

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. The Company may make written or oral forward-looking statements in its periodic reports to the SEC,in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees. Statements that are not historical facts,including statements about the Company's beliefs and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding these risks is included in our filings with the SEC. The Company does not undertake any obligation to update any forward-looking statement,except as required under applicable law. All information provided in this press release and in the attachments is as of the date of the press release,and the Company undertakes no duty to update such information,except as required under applicable law.

For more information,please contact

Kevin Theiss

Investor Relations

Awaken Advisors

Tel: +1-(212) 521-4050

Email: Kevin.Theiss@awakenlab.com

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China Zenix Auto International Limited

Unaudited Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the three months ended March 31,2019 and 2018

(RMB and US$ amounts expressed in thousands,except number of shares and per share data)

Three Months Ended March 31,

2018

2019

2019

RMB' 000

RMB' 000

US$' 000

Revenue

816,207

669,350

99,736

Cost of sales

(690,294)

(588,197)

(87,644)

Gross profit

125,913

81,153

12,092

Other operating income

4,174

2,906

433

Net exchange gain(loss)

(2,457)

(1,260)

(188)

Selling and distribution costs

(45,015)

(39,469)

(5,881)

Research and development expenses

(12,855)

(13,335)

(1,987)

Administrative expenses

(30,707)

(28,624)

(4,265)

Finance costs

(5,670)

(5,892)

(878)

Profit before taxation

33,383

(4,521)

(674)

Income tax expense

(7,235)

22

4

Profit and total comprehensive

income for the period

26,148

(4,499)

(670)

Earnings per share

Basic

0.13

(0.02)

(0.00)

Diluted

0.13

(0.02)

(0.00)

Earnings per ADS

Basic

0.51

(0.09)

(0.01)

Diluted

0.51

(0.09)

(0.01)

Shares

206,500,000

206,000

ADSs

51,625,000

51,000

China Zenix Auto International Limited

Unaudited Condensed Consolidated Statements of Financial Position

(RMB and US$ amounts expressed in thousands)

December 31,2018

March 31,2019

March 31,2019

RMB'000

RMB'000

US$' 000

ASSETS

Current Assets

Inventories

172,111

228,396

34,032

Trade and other receivables and

prepayments

776,473

771,315

114,930

Prepaid lease payments

9,425

9,425

1,404

Pledged bank deposits

33,500

31,900

4,753

Fixed bank deposits with maturity

period over three months

290,000

290,000

43,211

Bank balances and cash

933,250

977,239

145,613

Total current assets

2,214,759

2,308,275

343,943

Non-Current Assets

Property,plant and equipment

1,099,003

1,064,722

158,649

Prepaid lease payments

357,599

355,243

52,933

Deferred tax assets

40,272

42,422

6,321

Intangible assets

17,000

17,000

2,533

Total non-current assets

1,513,874

1,479,387

220,436

Total assets

3,728,633

3,787,662

564,379

EQUITY AND LIABILITIES

Current Liabilities

Trade and other payables and

accruals

611,463

590,526

87,991

Amount due to a shareholder

9,911

9,924

1,479

Taxation payable

2,477

2,400

358

Short-term bank borrowings

473,000

558,000

83,145

Total current liabilities

1,096,851

1,160,850

172,973

Deferred tax liabilities

86,239

85,967

12,809

Deferred income

6,903

6,704

999

Total non-current liabilities

93,142

92,671

13,808

Total liabilities

1,189,993

1,253,521

186,781

EQUITY

Share capital

136

136

20

Paid in capital

392,076

392,076

58,421

Reserves

2,146,428

2,141,929

319,157

Total equity attributable to owners of

the company

2,538,640

2,534,141

377,598

Total equity and liabilities

3,379

China Zenix Auto International Limited

Unaudited Condensed Consolidated Statements of Cash Flows

For the three months ended March 31,2019

(RMB and US$ amounts expressed in thousands)

Three Months Ended

March 31,2019

RMB' 000

US$' 000

OPERATING ACTIVITIES

Loss before taxation

(4,521)

(674)

Adjustments for:

Amortization of prepaid lease payments

2,356

351

Depreciation of property plant and equipment

34,232

5,101

Release of deferred income

(199)

(30)

Finance costs

5,892

878

Loss on disposal of property,plant and equipment

1

-

Interest income

(2,345)

(349)

Operating cash flows before movements in working capital

35,416

5,277

Increase in inventories

(56,285)

(8,387)

Increase in trade and other receivables and prepayments

3,709

553

Decrease in trade and other payables and accruals

(21,050)

(3,137)

Cash used in operations

(38,210)

(5,694)

Interest received

3,109

463

PRC income tax paid

(2,477)

(369)

NET CASH USED IN OPERATING ACTIVITIES

(37,578)

(5,600)

INVESTING ACTIVITIES

Withdrawal of pledged bank deposits

1,600

238

Proceeds on disposal of property,plant and equipment

48

7

Placement of fixed bank deposits with maturity periods over

three months

(240,000)

(35,761)

Withdrawal of fixed bank deposits with maturity periods over

three months

240,000

35,761

NET CASH FROM INVESTING ACTIVITIES

1,648

245

FINANCING ACTIVITIES

New bank borrowings raised

340,000

50,662

Repayment of bank borrowings

(255,000)

(37,996)

Interest paid

(5,779)

(861)

Repayment to a shareholder

13

2

NET CASH FROM FINANCING ACTIVITIES

79,234

11,807

NET INCREASE IN CASH AND CASH EQUIVALENTS

43,304

6,452

Cash and cash equivalents at beginning of the period

933,250

139,059

Effect of foreign exchange rate changes

685

102

Cash and cash equivalents at end of the period

977,613

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