Group 1 - The Hang Seng Index closed up by 0.13%, while the Tech Index fell by 0.75% [1] - Zhongsheng Holdings (00881.HK) rose nearly 5%, and AIA Group (01299.HK) increased by almost 3% [1] - WuXi Biologics (02269.HK) dropped nearly 6.7%, while Mengniu Dairy (02319.HK) and China National Pharmaceutical Group (01177.HK) both fell over 3% [1]

Group 1 - The Hong Kong automotive dealership stocks are experiencing a strong upward trend, with Zhongsheng Holdings (00881.HK) rising nearly 7.5% [1] - Yongda Automobile (03669.HK) has seen an increase of nearly 2.5% [1] - Other companies such as Harmony Auto (03836.HK) and Tuhu (09690.HK) are also following the upward trend [1]

Customer Growth and Market Position - The active customer base increased by 10.7% to 4.19 million in 2024, with a three-year compound annual growth rate (CAGR) of 9.2% from 2022 to 2024[11]. - The number of service visits reached 8.05 million in 2024, achieving a three-year CAGR of 7.5%, highlighting robust growth in after-sales services despite flat new car sales[11]. - In key cities like Chengdu, Dalian, Nanjing, and Shenzhen, the active customer count grew by 10.2% to 950,000, translating into significant operational growth[11]. - The company holds a leading position with approximately 14.1% of luxury car brand users in these 32 cities, which account for 62.7% of the national luxury car user base[10]. - The company aims to enhance its brand positioning by deepening its market presence in the 32 strategic cities, which are crucial for high-end market integration[10]. After-Sales and Service Revenue - The after-sales service revenue reached RMB 22 billion in 2024, marking a year-on-year growth of 9.6% and a three-year compound growth rate of 10.8%[16]. - The average number of service visits for core after-sales services increased to 8.05 million, reflecting a 7.8% year-on-year growth[17]. - The daily maintenance service visits in these four cities increased by 6.7%, warranty service visits grew by 16.1%, and accident repair visits rose by 18.1%[11]. - The renewal policy and used car retail volumes in these cities also saw year-on-year increases of 21.1% and 17.6%, respectively[11]. Financial Performance - The company's revenue for the year ended December 31, 2024, was RMB 168,124.2 million, a decrease of RMB 11,165.9 million or 6.2% compared to the previous year[43]. - New car sales revenue was RMB 125,325.6 million, down RMB 14,889.3 million or 10.6% year-on-year, primarily due to a decline in new car sales volume and average selling prices[46]. - The gross profit for the year was RMB 10,671.9 million, a decrease of RMB 3,092.4 million or 22.5% compared to the previous year[46]. - The company reported a net profit of RMB 3,070.9 million for the year, down from RMB 4,990.9 million in the previous year[41]. - The proportion of revenue from new car sales decreased to 74.5% in 2024 from 78.2% in 2023, while used car sales increased to 9.2% from 7.8%[44]. Inventory and Capital Management - Inventory increased from RMB 16,366.1 million as of December 31, 2023, to RMB 18,476.9 million as of December 31, 2024, primarily due to a slight increase in new car turnover days[64]. - Average inventory turnover days increased from 31.2 days in 2023 to 35.1 days in 2024, indicating adjustments to inventory levels based on market changes[65]. - Total capital expenditure for the year was RMB 1,356.7 million, slightly down from RMB 1,426.5 million in the previous year[63]. Employee and Workforce Management - The total number of employees decreased from 31,180 as of December 31, 2023, to 26,357 as of December 31, 2024[68]. - The employee turnover rate for the year was 27.63%, with a total of 10,065 employees leaving, an increase of 118 from the previous year[108]. - Female employees account for 35.70% of the total workforce, with 17.28% in management roles and 31.25% in senior management positions as of December 31, 2024[105]. - The company provided training to 94.66% of male employees and 97.24% of female employees, with an average training duration of 27 hours for males and 29 hours for females[114]. Environmental, Social, and Governance (ESG) Initiatives - The company is committed to enhancing ESG governance and has established an ESG committee to oversee its development strategies and activities[78]. - The company aims to improve employee working conditions and conduct regular satisfaction surveys[87]. - The group emphasizes employee health and safety, adhering to relevant laws and regulations, with zero work-related fatalities and zero days lost due to work injuries in 2024[117]. - The group has established a standardized waste management system, focusing on recycling and proper disposal of hazardous waste[128]. - The group has developed a "climate change policy" to mitigate operational impacts and integrate climate change into its risk management system[132]. Corporate Governance - The board consists of a balanced mix of executive and non-executive directors, ensuring strong independence for effective decision-making[161]. - The company has established an independent board evaluation mechanism to enhance efficiency and identify areas for improvement[165]. - The board has set a measurable target to appoint at least one female director by December 31, 2024, and has already appointed two female directors as of March 27, 2024[177]. - The company has adopted a disclosure policy for inside information and established a shareholder communication policy to fulfill corporate governance responsibilities[190]. - The audit committee held a total of 2 meetings during the year ended December 31, 2024, to review interim and annual financial performance and reports[172].

Investment Rating - The report maintains an "Outperform the Market" rating for the company [7]. Core Views - The new car business is under pressure, while the after-sales service and used car business are developing steadily [7]. - The company achieved a revenue of 168.1 billion yuan in 2024, a year-on-year decrease of 6.2%, and a net profit of 3.21 billion yuan, down 36% year-on-year [7]. - The company focuses on key urban areas to enhance performance resilience and has opened 37 AITO stores in collaboration with Seres for its new energy vehicle business [7]. Financial Data and Forecast - Total revenue is projected to be 183.52 billion yuan in 2023, with a slight decline of 0.3% year-on-year, followed by a forecasted revenue of 168.12 billion yuan in 2024, down 6% [6]. - Net profit is expected to decrease significantly to 3.21 billion yuan in 2024, a 36% decline, before recovering to 3.77 billion yuan in 2025, representing a 17% increase [6]. - The company’s gross margin is forecasted to improve from 6.35% in 2024 to 11.91% by 2027 [6]. - Earnings per share (EPS) are projected to be 1.35 yuan in 2024, increasing to 2.49 yuan by 2027 [6]. Business Segments - The new car sales volume in 2024 is expected to be 485,000 units, a decrease of 3.2% year-on-year, with revenue from new car sales at 125.3 billion yuan, down 10.6% [7]. - The used car business is showing robust growth, with sales expected to reach 226,000 units in 2024, a year-on-year increase of 37.9%, contributing 15.4 billion yuan in revenue [7]. - After-sales service revenue is projected to reach 22 billion yuan in 2024, a 9.6% increase, marking a historical high [7].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][12] Core Views - The company reported a revenue of 168.1 billion yuan in 2024, a year-on-year decrease of 6.2%, with a gross profit of 10.672 billion yuan, down 22.5% year-on-year, and a net profit attributable to shareholders of 3.212 billion yuan, down 36.0% year-on-year [6] - The company has a strong market position with 4.19 million active customers, a 10.7% year-on-year increase, and holds 14.1% of luxury car brand users in 32 major cities [6] - The company is expected to improve its market share despite industry challenges, with a focus on embracing new energy vehicles [6] Financial Performance Summary - In 2024, the company sold 485,300 new cars, a year-on-year decrease of 3.2%, with a gross loss of 3.208 billion yuan from new car sales [7] - The after-sales service revenue reached 22.001 billion yuan, a year-on-year increase of 9.6%, with a gross profit of 10.216 billion yuan, reflecting stable growth in after-sales business [8] - The company forecasts net profits of 3.519 billion yuan and 4.944 billion yuan for 2025 and 2026 respectively, with an estimated EPS of 1.5, 2.1, and 2.7 yuan for 2025, 2026, and 2027 [6][9]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][12] Core Views - The company reported a revenue of 168.1 billion yuan in 2024, a year-over-year decrease of 6.2%. The gross profit was 10.672 billion yuan, down 22.5% year-over-year, and the net profit attributable to shareholders was 3.212 billion yuan, down 36.0% year-over-year. Despite these challenges, the company has a strong market position with 4.19 million active customers, a 10.7% year-over-year increase, and a leading share of 14.1% in luxury car brand users across 32 major cities [6][8] - The company has signed a preliminary agreement with Seres to discuss further cooperation in distributing its electric vehicles, indicating a proactive approach to embracing the new energy sector [6] - The company is expected to improve its market share despite the pressure on new car profits, with revised net profit forecasts for 2025-2026 at 3.519 billion yuan and 4.944 billion yuan, respectively, and a new forecast for 2027 at 6.439 billion yuan [6] Summary by Sections Financial Performance - In 2024, the company sold 482,000 new cars, a decrease of 3.2% year-over-year, with a gross loss of 3.208 billion yuan and a gross margin of -2.6%. The average loss per vehicle was approximately 6,600 yuan, showing signs of stabilization in losses [7] - The after-sales service revenue reached 22.001 billion yuan, a year-over-year increase of 9.6%, with a gross profit of 10.216 billion yuan and a gross margin of 46.4%. The number of after-sales service visits reached 8.05 million, a 7.8% year-over-year increase, indicating stable growth in after-sales services [8] Financial Summary and Valuation Metrics - The company’s projected financial metrics for 2025 include revenue of 174.4 billion yuan, net profit of 3.519 billion yuan, and an EPS of 1.5 yuan. The corresponding P/E ratios are 8.9, 6.3, and 4.9 for the years 2025, 2026, and 2027, respectively [9]

Core Viewpoint - Zhongsheng Holdings (00881) reported a total revenue of 168.12 billion yuan for the year ending December 31, 2024, representing a year-on-year decrease of 6.2% [1] - The company faced challenges in new car sales, leading to a decline in profitability, while used car sales and after-sales services showed growth [1][2] Financial Performance - Total revenue decreased to 168.12 billion yuan, down 6.2% year-on-year [1] - Profit attributable to equity holders was 3.21 billion yuan, a decrease of 36% year-on-year [1] - Basic earnings per share were 1.35 yuan, with a proposed final dividend of 0.678 Hong Kong dollars per share [1] Sales Breakdown - New car sales revenue was 125.33 billion yuan, a decline of 14.89 billion yuan or 10.6% year-on-year, attributed to a drop in new car sales volume and average selling prices [1] - Used car sales revenue reached 15.42 billion yuan, an increase of 1.43 billion yuan or 10.2% year-on-year, driven by higher sales volume despite a decrease in average selling prices [1] - After-sales service revenue was 22.00 billion yuan, an increase of 1.93 billion yuan or 9.6% year-on-year, mainly due to an increase in service visits [1] Market Dynamics - In 2024, new car sales volume was 485,000 units, slightly down from 502,000 units the previous year, reflecting market volatility [2] - The industry faced challenges with negative gross margins in new car sales due to pricing pressures and delayed manufacturer subsidies [2] - Zhongsheng is focusing on maintaining local business concentration and market share to navigate cash flow issues and optimize brand and regional structures for future growth opportunities [2]

Financial Performance - For the fiscal year ending December 31, 2024, the total revenue decreased by 6.2% to RMB 168,124.2 million compared to RMB 179,290.1 million in 2023[2]. - The overall net profit for the year was RMB 3,070.9 million, a decline of 38.5% from RMB 4,990.9 million in 2023[3]. - Gross profit for the year was RMB 10,671.9 million, a decline of RMB 3,092.4 million or 22.5% compared to the previous year[27]. - The operating profit was RMB 5,674.5 million, a decrease of RMB 2,665.2 million or 32.0% compared to the previous year[34]. - The company recorded a net profit of RMB 3,070.9 million for the year, a decrease of RMB 1,920.0 million or 38.5% compared to the previous year[23]. - Basic earnings per share for the year was RMB 1.35, down from RMB 2.09 in 2023, reflecting a decline of 35.4%[67]. - The total tax expense for 2024 was RMB 1.03 billion, down from RMB 1.84 billion in 2023, indicating a reduction of about 44%[91]. Sales and Market Performance - New car sales volume fell by 3.2% to 485,307 units, while luxury brand sales decreased by 3.7% to 293,370 units[3]. - The number of used car sales surged by 37.9% to 226,231 units, indicating a strong performance in the used car market[3]. - New car sales revenue was RMB 125,325.6 million, down RMB 14,889.3 million or 10.6%, primarily due to a decline in new car sales volume and average selling prices[24]. - Used car sales revenue increased to RMB 15,417.3 million, up RMB 1,432.5 million or 10.2%, driven by higher sales volume despite a decrease in average selling prices[24]. - The sales volume of new cars priced above RMB 400,000 decreased by nearly 300,000 units to 1 million units, accounting for 4.5% of total sales[19]. - The retail sales of automobiles in 2024 showed a slight increase of approximately 1.0%, indicating downward pressure on car prices[19]. Customer Engagement and Services - Active customer count increased by 10.7% to 4.19 million, with a three-year compound annual growth rate (CAGR) of 9.2% from 2022 to 2024[6]. - In key strategic cities, the active customer base grew by 10.2%, with significant increases in service visits: maintenance up 6.7%, warranty services up 16.1%, and accident repairs up 18.1%[7]. - The company processed 8.05 million core after-sales service entries, marking a 7.8% increase from the previous year, with a three-year CAGR of 7.5%[12]. - The company provided nearly 8 million car wash services in 2024, enhancing customer engagement and service value[13]. Strategic Initiatives and Future Outlook - The company emphasizes a strategic transformation to become a well-known quality automotive service provider in China, focusing on customer-centric services[4]. - The company is strategically positioned to capitalize on the growing demand for high-quality automotive services in the post-market sector[22]. - Forward-looking statements regarding business outlook and financial performance are based on existing data and assumptions, subject to risks and uncertainties[116]. Dividends and Shareholder Information - The company plans to distribute a final dividend of HKD 0.678 per share, pending shareholder approval at the annual general meeting[3]. - The proposed final dividend for 2024 is HKD 0.678 per share, equivalent to approximately RMB 0.634, compared to HKD 0.797 in 2023[102]. - The total proposed final dividend for 2024 amounts to HKD 1,604 million, approximately RMB 1,500 million[112]. Operational Efficiency and Cost Management - Selling and distribution expenses were RMB 7,552.6 million, a decrease of RMB 184.3 million or 2.4% compared to the previous year[31]. - Administrative expenses were RMB 2,229.2 million, down RMB 189.4 million or 7.8% year-over-year due to cost control measures[32]. - The company has no significant acquisitions or future investment plans as of December 31, 2024[60][61]. Inventory and Capital Management - Inventory increased from RMB 16,366.1 million to RMB 18,476.9 million due to a slight increase in new car turnover days[56]. - Average inventory turnover days increased from 31.2 days in 2023 to 35.1 days in 2024, indicating adjustments to inventory levels[57]. - Total capital expenditure for the year ending December 31, 2024, is RMB 1,356.7 million, a decrease from RMB 1,426.5 million in the previous year[55]. Debt and Financing - The company issued zero-coupon convertible bonds with a principal amount of HKD 4,560 million, maturing in 2025, with a conversion price adjusted to HKD 43.88 per share effective from July 4, 2024[49]. - The company issued a total of $450 million 3.00% bonds due in 2026, with a purchase offer made at $966 per $1,000 principal[51]. - The bank loans and other borrowings as of December 31, 2024, amounted to RMB 32,039.2 million, an increase from RMB 28,372.8 million the previous year[46]. Employee and Governance - The number of employees decreased from 31,180 in 2023 to 26,357 in 2024, a reduction of about 15.5%[109]. - The company expressed gratitude to employees and stakeholders for their unwavering support and dedication[115]. - The company has adopted corporate governance codes and has complied with them throughout the reporting period[104].

Investment Rating - The report assigns a "Buy" rating for Zhongsheng Holdings (00881.HK) for the first time [4]. Core Views - Zhongsheng Holdings is a leading automotive dealer in China, focusing on luxury and mid-to-high-end brands, with a strategic shift towards new energy vehicles (NEVs) [4][22]. - The company is expected to see revenue growth from 2024 to 2026, with projected revenues of 1794.76 billion, 1841.02 billion, and 1807.36 billion CNY respectively, and net profits of 25.45 billion, 31.64 billion, and 49.40 billion CNY [4]. - The current price-to-earnings (P/E) ratios for 2024, 2025, and 2026 are 11.0, 8.9, and 5.7 respectively, indicating attractive valuation compared to peers [4]. Summary by Sections Company Overview - Zhongsheng Holdings ranks first in the 2024 list of China's top automotive dealers, with a focus on luxury brands such as Mercedes-Benz and Lexus [4][22]. - The company operates 419 4S dealerships across 32 major cities in China, providing comprehensive automotive services [23]. Financial Performance - In the first half of 2024, Zhongsheng achieved a revenue of 824.21 billion CNY, with a year-on-year growth of 0.6%. However, new car sales revenue decreased by 5.8% due to price competition [31]. - The net profit for the same period was 15.8 billion CNY, reflecting a significant decline of 47.5% year-on-year, primarily due to reduced gross margins from new car sales [33]. Business Segments - New car sales faced challenges, with a gross margin of -3.3% in the first half of 2024, marking the first loss in this segment [5][37]. - The after-sales and used car segments showed resilience, with after-sales revenue growing by 9.3% and used car revenue increasing by 61.6% year-on-year [31][37]. Market Position and Strategy - Zhongsheng is transitioning towards new energy vehicle sales, having partnered with Seres to enhance its offerings in this growing market [4][22]. - The company aims to improve operational efficiency through centralized management, which has already led to significant growth in after-sales and used car businesses [6][31].

Investment Rating - The report assigns a "Buy" rating for Zhongsheng Holdings (00881.HK) [4] Core Views - Zhongsheng Holdings is a leading automotive dealer in China, focusing on luxury and mid-to-high-end brands, with a strategic shift towards new energy vehicles [4][22] - The company is expected to see revenue growth from 2024 to 2026, with projected revenues of 1794.76 billion, 1841.02 billion, and 1807.36 billion CNY respectively, and net profits of 25.45 billion, 31.64 billion, and 49.40 billion CNY [4] - The current price-to-earnings (P/E) ratio is projected to be 11.0, 8.9, and 5.7 for the years 2024, 2025, and 2026, indicating a low valuation compared to peers [4] Summary by Sections Company Overview - Zhongsheng Holdings ranks first in the 2024 list of China's top automotive dealers, with a focus on brands like Mercedes-Benz and Lexus [4][22] - The company operates 419 4S outlets across 32 major cities, providing comprehensive automotive services [23] Financial Performance - In the first half of 2024, the company reported revenues of 824.21 billion CNY, with a year-on-year growth of 0.6% [31] - New car sales revenue was 608.12 billion CNY, down 5.8% year-on-year, primarily due to price competition [31] - The net profit for the first half of 2024 was 15.8 billion CNY, a decline of 47.5% compared to the previous year [33] Business Segments - The new car segment faced challenges with a gross margin of -3.3% in the first half of 2024, marking the first loss in this area [5][37] - The after-sales and used car segments showed resilience, with after-sales revenue growing by 9.3% and used car revenue increasing by 61.6% year-on-year [31][37] Market Position and Strategy - The company is transitioning towards new energy vehicle sales, having partnered with Seres to enhance its offerings [4][22] - Zhongsheng's centralized operations have improved efficiency, particularly in after-sales and used car businesses [6][31] Valuation Metrics - The projected P/E ratios for 2024, 2025, and 2026 are 11.0, 8.9, and 5.7 respectively, indicating a favorable valuation compared to industry averages [4][7]