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Hong Leong China unit to build new plant

SINGAPORE, July 22 (Reuters) - Singapore's Hong Leong Asia said its diesel engine unit China Yuchai International will spend S$33 million ($19 million) over the next 18 months to build a new components facility in Yulin, China.

Hong Leong, a building materials firm which owns 29 percent of China Yuchai, said in a statement the facility will make engine blocks and cylinder heads for the unit's diesel engine assembly plant.

"The capital expenditure, approved by the CYD (China Yuchai) board earlier this month, follows expectations of an increase in demand for high-powered engines as well as significant growth in sales of heavy duty trucks and buses in China," it said.

The firm's production capacity for medium duty and high horsepower engine blocks and heads will almost double to 120,000 units from 65,000 units upon completion of the facility, the statement said.

"In particular, the new foundry will be able to produce heavy duty engine components, which the company currently imports from Brazil," it said.

Hong Leong Asia shares were down 1.1 percent at S$0.905 on Monday morning. China Yuchai's shares ended down 5.7 percent at US$2.80 in New York on Friday. ($1=1.7314 Singapore dollars)