Part 1 Review of 2015

1. Economic condition

1

9.5% 7.7% 7.7% 7.3% 6.9%

0.0%

5.0%

10.0%

2011年 2012年 2013年 2014年 2015年

Growth rate of gross domestic product (GDP) in China

23.8% 20.6% 19.6%

15.7%

10.0%

0.0%

10.0%

20.0%

30.0%

2011年 2012年 2013年 2014年 2015年

Growth rate of fixed asset investment in China

Under the impact of factors such as shrinking foreign

demand, weak domestic demand and market adjustments,

growth in fixed asset investments in China dropped

significantly in 2015.

Fixed asset investments

Under the impact of factors such as slower economic growth,

excessive production capacity and state control, the raw coal

production in China continued to drop in 2015.

Production of raw coal

In 2015, economic development in China entered a new

normal. The growth in the gross domestic product (GDP)

dropped and the economic operation faced strong

downward pressure.

GDP

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

Growth rate of raw coal production in China

Affected by the declining growth in imports and exports.

Throughputs growth in major ports in China slowed down in

2015

Port throughput 61.6 66.5

72.8 77.0 78.4

50

75

100

2011年 2012年 2013年 2014年 2015年

Throughputs of Major Ports in China (100 million tonnes)

2011 2012 2013 2014 2015

(The above date is sourced from the website of

National Bureau of Statistics)

2. Major operating indicators

2

In RMB

No. Financial indicators 2015FY YoY Change

1 Sales revenue (million) 2,201.8 +1.2%

2 Gross profit margin (%) 28.6% -4.0ppts

3 Net profit attributable to parent

(RMB million) 18.1 -89.3%

4

Profit attributable to parent

(excluding one-off items and

revaluation items) (RMB million)

18.1 +125.0%

5 Earnings per share (RMB) 0.01 -89.3%

6 Net operating cash flows

(RMB million) 152.8 +65.6%

No. Financial indicators 2015FY YoY Change

7 Total assets (RMB million) 11,331.2 -11.2%

8 Asset to liability ratio（%） 40.1% -6.9ppts

9 Net assets (RMB million) 6,789.0 +0.4%

3

3. Composition of revenue 2015 Sales revenue (by region) 2015 Sales revenue (by product)

The sales structure of the Group showed a diverse trend. In 2015, the sales revenue of port machinery was

RMB1,195.9 million, accounting for 54.3%. Under the impact of continuous adjustments of the industry, the

contribution from coal mining machinery dropped. At the moment, the Group is vigorously expanding the market

of mining and excavation products which has a promising prospect.

International sales of the Group grew rapidly. Breaking down by regions of the end users, sales revenue of

international customers was RMB672.2 million, accounting for 30.5% of the total; of which, the sales revenue of

port machinery was RMB429.1 million, accounting for 19.5% of the total; and the sales revenue of mining vehicle

was RMB209.8 million, accounting for 9.5% of the total.

(Note: Outer ring - 2015, Inner ring - 2014)

4

4. Costs control

Through measures such as business negotiation, research and innovation and craftmanship improvement, the

Group began cost reduction aggressively. In 2015, the Group achieved significant results in cost reduction. Cost

reduction for energy machinery and portable port machinery products was significant. The profitability of

products was enhanced.

In 2015, given lower market prices, the gross profit margin of portable port machinery grew steadily to 38.6%, up

3.0 percentage points from 2014. In 2015, the gross profit margin of mining vehicle increased by 5.8 percentage

points from 2014.

Statistics on cost reduction for products in 2015

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

5.5%

8.3% 7.9%

10.8%

2.5%

Reachstacker Stacker Heavy-duly forklift truck Roadheader Coal mining machine Mining vehicle

7.6%

29.4%

12.5% 9.9%

7.0%

30.9%

14.4%

8.7% 7.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

三项费用 销售费用 管理费用 研发费用

2015年 2014年

5

The Group set profit target according to the scale of sales and suppressed expenses. It allocated resources

reasonably, strived to increase labour productivity and strictly controlled various expenses. In 2015, the three

major cost items totaled RMB647.8 million, representing a decrease of RMB23.8 million from 2014. The

expense ratio of the three major cost items was 29.4%, down 1.5 percentage points from 2014.

The administrative expenses of the Group was RMB217.4 million, representing a year-on-year increase of

RMB27.9 million, which was mainly attributable to the increase in administrative expenses as the new industrial

park area for port machinery in Zhuhai began operation after the consolidation of port machinery business.

RMB million

5. Expense control

647.8

276.1

217.4

154.3

671.6

312.9

189.5 169.2

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

三项费用 销售费用 管理费用 研发费用

2015年 2014年

Statistics of the sum of three major costs Statistics of rate of the three major cost items

Three items of costs Sales expenses Management R&D expenses expenses

2015 2015 2014

Three items of costs Sales expenses Management R&D expenses expenses

6

Unit: RMB million

The growth in business of the port machinery segment was stable and it became the major revenue

source of the Group. Its net profit was RMB241.0 million in 2015.

The profitability of the energy equipment segment dropped, mainly attributable to the continuous

adjustments in the coal mining industry and the reduction in sales and price of coal mining

machinery. Meanwhile, accounts receivables of RMB144.1 million was determined on prudent

consideration.

6.Business segments

Financial

indicators

Energy

equipment

segment

Port machinery

segment

Other

unallocated Total

Sales revenue 1,005.9 1,195.9 - 2,201.8

Total assets 5,176.0 4,451.2 1,704.0 11,331.2

Total liability 607.4 3,561.8 373.0 4,542.2

Net assets 4,568.6 889.4 1,331.0 6,789.0

Profit -222.4 241.0 - 18.6

Sales profit

margin -22.1% 20.1% - 0.8%

Return on total

assets -4.3% 5.4% - 0.2%

Return on net

assets -4.9% 27.1% - 0.3%

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7. Credit management

备注

In the second half of the year, the Group strengthened management of trade receivables. The Group handled

orders and credit according to the “Five Principles” and developed recovery strategies. “Sunshine Action” was

launched. The Group management was present on location and participated in developing strategies and

recovered loans in person. There were frequent tracking of customer visits, daily monitoring and daily updates

of changes in trade receivables.

In the second half of 2015, repayment to the Group increased significantly. The rate of sales repayment was

129.9%, representing an increase of 44.9 percentage points compared with the first half of 2015.

At the end of 2015, the original value of receivables of the Group was RMB3,559.2 million, representing a

decrease of 8.9% as compared to RMB3,906.5 million at the end of June 2015.

Unit: RMB million

85%

129.9%

0.0%

30.0%

60.0%

90.0%

120.0%

150.0%

first half of 2015 second half of 2015

Change in sales repayment rate

3,906.5

3559.2

3,200.0

3,400.0

3,600.0

3,800.0

4,000.0

At the end of June 2015 At the end of December 2015

Change in the original value of receivables

Part 2 Prospects for 2016

1.Projection on macro environment

8

Establishing Yangtze River Economic Belt is one of the strategic

planning stated in the “Thirteenth Five-year Plan”. The primary

objective is to increase the shipping capacity of the golden

waterway along Yangtze River, which directly boosts the market

demand for port machinery.

Regional strategic planning of

the 13th 5-year plan in China

One belt and one road: building the

“Silk Road Economic Belt”

“One Belt, One Road” will create excellent opportunity and platform

for China’s equipment manufacturing industry. The implementation

of “Building Silk Road Economic Belt” will bring another golden age

for the internationalization progress of port machinery and coal

mining machinery.

The Chinese Academy of Science predicts that the growth in the

annual fixed asset investment will remain stable at approximately

10.0% in 2016.

Yangtze River Economic Belt

Fixed asset investments

One Belt, One Road

19.6% 15.7%

10.0% 10.0%

0.0%

15.0%

30.0%

2013年 2014年 2015年 2016年预计

Growth rate of fixed assets investments in China

2013 2014 2015 2016 Projection

2. Market outlook

9

2016 is the inaugural year of the “Thirteenth Five-Year” plan. The main theme for the economy in China is “to promote

investment and maintain steady growth”. Given the macroeconomic background, including deepening reform by the

Central Government and stable growth of GDP, the throughput of China’s ports will maintain a stable growth in 2016.

Meanwhile, reaping benefits from “One Belt, One Road” and continuous exploration in the international markets, it is

anticipated that the sales of portable port machinery products will achieve a rapid growth.

Mobile Port Machinery

Excavators

Coal Mining

Machinery

In 2016, fixed asset investments in China will grow steadily. As the 13th Five-Year Plan is being implemented step by

step, a batch of major construction projects including tunnels, subways and water conservancy construction will

gradually launch, brining favourable market opportunities for excavator products. Sales of the excavator are expected to

grow significantly in 2016.

In 2016, the output of raw coal is expected to show a downward trend. However, it will remain at about 3.6 billion tons in

order to maintain the stable growth of macro economy. The market demand for coal mining machinery will stop heading

downward and the market demand for accessories and services will stay within a reasonable range. In addition, coal

mining companies tend to upgrade to the new generation technology and equipment. Thus, it is expected that the sales

of coal mining machinery will remain stable in 2016.

10

In 2016, the Group will adhere to a “dual-driver transformation” strategy in order to expand its market share in

international market.

While maintaining market position of the coal mining machinery business, develop the non-coal machinery

product such as port machinery and excavation equipment, to achieve growths in both sale volume and market

share, exploit synergies for port machinery products, non-coal-machinery products and coal machinery products,

so as to expand from a single-segment focus on energy machineries to port machineries and non-coal-

machinery products.

On the basis of maintaining domestic market shares, actively develop “Surround Africa” and “One Belt, One

Road” regional markets

Coal mining

machinery Project mining

and

mining vehicle

Port Machinery

New energy

equipment

Domestic market

Domestic

market

International

market

3. Persistently pursue “dual-driver

transformation” strategy

3.1 Expand market layout

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Coal mining

machinery

Non-coal

products

Stabilize market prices of coal mining machinery; Secure sales of

coal mining machinery products through enhancing service

capacity and further improvements in product quality

Leveraging the advantage in resources, develop port machinery, strengthen the sales capability of port machinery with the high quality services in order to maintain market leadership in small-scale port machinery in the market. Concentrate efforts to strike breakthroughs in the sales of large-scale port machinery. Make efforts in upgrades in scale, generation and automation of port machineries, provide total solution equipment which combines software with hardware, in order to enhance market competitiveness and expand market share.

Port machinery

Leveraging the advantages in current resources and build 3

professional sales teams for coal mining machinery,

excavators and LNG; grow sales revenue and market share

through technology-driven sales, marketing campaigns,

establishing sample projects, enhancing sales of coal mining

machinery, excavation projects and LNG.

3.2 Explore international markets

12

树牌

Taking advantage of the rapid growth of India’s economy, and the growing increase in demand of

energy, the Group will focus on explore the Indian market and implement India strategy, in order to

promote sale growth of port machinery products and coal machinery products in India. At the same

time, the Group will also seek strategic partnerships to achieve spare capacity transformation in

coal machinery products, thus to replicate the success of “Sany Coal Machinery”.

Development Strategy in India

Leveraging rapid development in marine economy and port

construction in African countries to explore market shares

Pan-African market

4. Continue to reinforce internal control

13

Strong

promotion

Subtraction Reduction

Addition

Industry 4.0 factory

Upgrading to smart

production

Digital design

Reducing inventory

Remove excessive

capacity

Reducing costs

Reducing expenses

Reducing trade

receivables

Profitability of

products

Competitiveness of

products

In 2016, the Group will continue to reinforce internal control and implement

the operation strategy of “Addition, subtraction, reduction and promotion”

in order to control costs and enhance risk control.

4.1 “Addition” strategy

14

Speed up the construction progress of Industry 4.0 factory in Zhuhai

to shorten the production cycle by 20% and realize smart division of

labour.

Industry 4.0

factory

Upgrading to

smart

production

Digital design

Realizing virtual assembly in digital design to match with real

measurements. In 2016, all of the new projects will adopt

digital design.

Realize product smart upgrade to meet the requirement of

launching mobile APP for port machinery product management,

and complete the testing and calibration of upgrade package for

single unit transtainer 2.0.

4.2 “Subtraction” strategy

15

Redesign and optimize production capacity and save costs

and expenses. Lease out idle factories, research and

development facilities and staff dormitories. Reduce

redundant capacity by activating idle equipment through

internal allocation, transformation and relocation to India

etc..

Reducing

inventory

Removing

excessive

capacity

Reduce inventory by running sales promotion and adjusting policies; reduce R&D inventory

by adhering to “one machine for one policy” strategy; reduce inventory of raw materials by

adopting “one batch of material for one policy”.

16

4.3 “Reduction” strategy

Follow “Five Completion Principle” to establish a annual target for

repayment, let subsidiaries and each staff to share the responsibility of

recovering receivables and daily monitor the recoverability based on

“one client one credit policy" to enhance recovery of receivables.

Reducing costs

Reducing expenses

Reducing trade receivables

Set up profit target based on sales volume, bargaining fees and charges and assessment indicators

in each level. Reduce administrative costs and expenses by consolidating resources and increasing

efficiency across the organization. Through raising product standards and R&D quality and tighten

testing and verification to reduce R&D costs. Reduce operational costs through reasonable

allocation on marketing and service resources and cancellation on unproductive expense.

Reduce costs through R&D and technology innovation, technique upgrade, commercial procurements,

and product quality enhancement.

4.4 “Strong promotion”

17

Promotion in

profitability

Increase the gross profit margin through cost control; Reduce cost and further improve profitability

through tight internal control.

Promotion in

competitiveness

Develop distinctive products through technology innovation;

Enhance product quality by improving manufacturing

craftsmanship and product quality; Further promote product

competitiveness and enhance brand image by leveraging the

Group’s advantage in services

18

In 2016, the economic environment will remain complicated and fickle.

With the leadership of the Board, all staff of the Group will unite together and face

challenges with no fears while striving for a better governance and success with their

diligence and intelligence so as to build a bright future for Sany International.

5. Strive for better governance and move

forward under difficult market condition

QUALITY CHANGES THE WORLD

IR Hotline: 86-24-89318000 89318111

IR E-mail: tanglin@sany.com.cn

Website: www.sanyhe.com.cn

Address:No.25,16Kaifa Road, Shenyang Economic and Technological

Development Zone, Shenyang, Liaoning Province, PRC

Appendix: display of partial products