Core Insights - The Hong Kong stock market indices saw significant gains in the afternoon, with the Hang Seng Index rising over 2%, the Hang Seng Tech Index increasing by 2.7%, and the Hang Seng China Enterprises Index up by 1.8% [1] Company Performance - Kuaishou (快手-W) experienced a rise of 6.56% with a year-to-date increase of 66.79%, and a total market capitalization of 294.57 billion [2] - NetEase (网易-S) increased by 6.26%, with a year-to-date gain of 61.57%, and a market cap of 688.29 billion [2] - Alibaba (阿里巴巴-W) rose by 5.42%, showing a year-to-date increase of 93.41%, with a total market value of 2.97 trillion [2] - WuXi AppTec (药明康德) saw a 4.14% increase, with a year-to-date rise of 93.30%, and a market capitalization of 315.38 billion [2] - Baidu (百度集团-SW) increased by 4.10%, with a year-to-date gain of 35.07%, and a market cap of 307.19 billion [2] - Hansoh Pharmaceutical (翰森制药) rose by 4.03%, with a remarkable year-to-date increase of 134.85%, and a market capitalization of 240.51 billion [2] - Zhongsheng Holdings (中升控股) increased by 3.58%, but has a year-to-date decline of 12.81%, with a market cap of 27.41 billion [2] - China Overseas Development (中国海外发展) rose by 3.37%, with a year-to-date increase of 19.16%, and a market cap of 154.54 billion [2] - Longfor Group (龙湖集团) increased by 3.54%, with a year-to-date rise of 6.20%, and a market cap of 72.18 billion [2] - BYD (比亚迪股份) rose by 3.34%, with a year-to-date increase of 9.64%, and a market cap of 873.88 billion [2] - WuXi Biologics (药明生物) increased by 3.34%, with a year-to-date rise of 79.84%, and a market cap of 129.71 billion [2] - Midea Group (美的集团) rose by 2.92%, with a year-to-date increase of 26.14%, and a market cap of 690.12 billion [2] - Meituan (美团-W) increased by 2.88%, but has a year-to-date decline of 35.20%, with a market cap of 600.76 billion [2] - Alibaba Health (阿里健康) rose by 2.87%, with a year-to-date increase of 72.59%, and a market cap of 92.68 billion [2]

Core Viewpoint - The automotive dealership industry in China is facing significant challenges, with a notable decline in the number of authorized dealerships, while Zhongsheng Group is expanding its network by opening new service points amidst this downturn [2][4]. Industry Overview - The number of authorized dealerships in China is projected to decrease by 1.9% in the first half of 2025 compared to the end of 2024, with a net reduction of approximately 625 dealerships this year [2]. - In the first half of this year, the total number of 4S dealerships in China fell from 32,000 to 31,400, a net decrease of over 600, with 2,749 dealerships closing [4]. Zhongsheng Group's Expansion Strategy - Zhongsheng Group opened 15 new service points in the third quarter, collaborating with major brands such as Mercedes-Benz, Audi, Volvo, AITO, and Toyota [3]. - The new service points are strategically located across various provinces, including Hainan, Guangdong, Shandong, and others, with a significant focus on traditional brands despite the overall industry trend towards contraction [3][4]. Market Dynamics - The closure of traditional dealerships has created gaps in certain regions, prompting new investors like Zhongsheng Group to establish a presence to serve existing brand loyal customers [4][5]. - Zhongsheng Group's expansion includes a mix of traditional and new energy vehicle dealerships, with a notable emphasis on the AITO brand, which is part of their strategy to capture the growing market for electric vehicles [6][7]. Financial Performance - Zhongsheng Group reported a revenue of 168.12 billion yuan in the first half of the year, a decrease of 6.23% year-on-year, with net profit dropping by 35.99% [8]. - Despite the decline in vehicle sales, the after-sales service segment achieved a revenue of 11.445 billion yuan, marking a 4.4% increase, indicating a shift in focus towards service offerings [9]. Service Innovation - The company is innovating its service model by introducing digital showrooms and immersive experience zones to enhance customer engagement and streamline the purchasing process [8][10]. - Zhongsheng Group is also diversifying its service offerings, including a new energy vehicle maintenance service package priced between 7,667 and 29,778 yuan, aimed at new car owners [9][10]. Ecosystem Development - The company is building a comprehensive user ecosystem by integrating high-frequency consumer services, such as coffee shops and car wash services, into its dealership model to enhance customer loyalty and brand recognition [10].

Investment Rating - The report suggests a focus on cloud vendors and companies with exceeding expectations in the current market environment [3]. Core Insights - The report highlights a divergence in market performance, with consumer companies facing pressure while AI technology companies continue to show mixed results. Concerns about AI valuation bubbles persist, but leading tech companies like Microsoft, Google, and Meta maintain strong cash flows, suggesting a stable outlook for cloud vendors [3]. - The gaming demand remains robust, although there is a short-term lack of new game releases. Attention is drawn to the progress of key game tests and launches, which could drive revenue growth for related companies [3]. - The report emphasizes the importance of monitoring quarterly reports from major Chinese companies like Tencent, JD, Baidu, and Alibaba, as well as the ongoing value in sectors like PDD and the gaming industry [3]. Summary by Sections 1.1 Consumer & Internet - **Education**: The education index fell by 3.59%, with notable performance differences among companies. The implementation of a spring and autumn break system in Sichuan is expected to impact the sector positively [11][18]. - **Luxury & Gaming**: The luxury goods and gaming sectors are closely tied to macroeconomic conditions. Recent Q3 earnings from major gaming companies exceeded expectations, benefiting from a longer holiday schedule in 2026 [19][24]. - **Coffee & Tea**: The coffee sector remains vibrant, while the tea sector faces challenges due to reduced delivery platform subsidies and seasonal competition [3][27]. - **E-commerce**: The e-commerce sector is under pressure, with a lackluster performance during the Double Eleven shopping festival [3][35]. 1.2 Platform & Technology - **Streaming Platforms**: The streaming sector is driven by domestic demand, with platforms like Spotify reporting better-than-expected earnings [3][42]. - **Virtual Assets & Internet Brokers**: The cryptocurrency market is experiencing volatility, with a significant drop in global market value. However, there are potential buying opportunities following recent corrections [3][43]. - **Automotive Services**: The automotive aftermarket is projected to decline, with a year-over-year decrease of 4% expected by October 2025 [3][61]. 1.3 Media - The media sector is experiencing mixed performance, with streaming services facing challenges but also opportunities for growth through strategic partnerships and content offerings [3][41].

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年10月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: 中升集團控股有限公司 呈交日期: 2025年11月3日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00881 | 說明 | | | | | | | | | | | | 法定/註冊股份數目 | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 1,000,000,000,000 | HKD | | 0.0001 | HKD | | 100,000,000 | | 增加 / 減少 (-) | | | | 0 | | | HKD | | 0 | | 本月底結存 | | | 1,000,000,000,000 | HKD | | 0.0001 | HKD | | 100, ...

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年9月30日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: 中升集團控股有限公司 呈交日期: 2025年10月2日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 不適用 | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00881 | 說明 | | | | | | | | | | 法定/註冊股份數目 | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | 1,000,000,000,000 | HKD | | 0.0001 | HKD | | 100,000,000 | | 增加 / 減少 (-) | | | 0 | | | HKD | | 0 | | 本月底結存 | | 1,000,000,000,000 | HKD | | 0.0001 | HKD | | 100,000,000 | 本月底法定/註冊股 ...

Customer Base and Market Presence - As of June 30, 2025, the active customer base reached 4.54 million, representing a year-on-year growth of 15.2% and an increase of 8.3% compared to the end of 2024[12]. - The subscription members of the WeChat platform Zhongsheng GO reached 3.8 million, with nearly 10.5 million customers connected through corporate WeChat[12]. - The company has closed 37 authorized dealerships since November 2024 and opened 57 new authorized dealerships and 20 service centers, primarily new stores[9]. - In the 32 key cities where the company operates, there is an average of 15 dealerships and service centers per city, serving approximately 137,000 active customers[13]. - Over 46% of the company's stores are the leading dealers for their brands in local markets, with 89 stores being exclusive dealers[13]. Business Strategy and Transformation - The company aims to transform into a high-end automotive service brand, focusing on after-sales services driven by the existing customer base[10]. - The company is focusing on digitalization and centralized operations as part of its transformation into a customer-centric automotive service provider[12]. - The company is enhancing local market business density and brand concentration to support its cross-brand operational strategy[13]. - The company has implemented a significant network optimization, marking the largest scale in its history since November 2024[9]. Financial Performance - The company's revenue for the six months ended June 30, 2025, was RMB 77,322.1 million, a decrease of RMB 5,099.3 million or 6.2% compared to the same period in 2024[36]. - New car sales revenue was RMB 57,931.0 million, down 4.7% from RMB 60,812.0 million in the previous year, while used car sales revenue fell by 27.0% to RMB 6,014.6 million[36]. - The after-sales service segment saw a revenue increase of 4.4%, reaching RMB 11,445.3 million, indicating a positive trend in this area[36]. - Gross profit for the six months ended June 30, 2025, was RMB 4,209.3 million, a decrease of RMB 716.9 million or 14.6% compared to the previous year[42]. - Operating profit was RMB 1,905.1 million, a decrease of RMB 850.7 million or 30.9% compared to the previous year, with an operating profit margin of 2.5%[49]. Vehicle Sales and Market Trends - In the first half of 2025, the company sold approximately 229,000 new vehicles, a decrease of about 4,000 units or 1.7% year-on-year, with luxury brand sales accounting for 62.3% of total sales[21]. - The average transaction price of new vehicles decreased by approximately RMB 33,000, a decline of 12.5% compared to the previous year, while manufacturers provided an average subsidy of RMB 19,000 per vehicle, representing 7.0% of the price[21]. - The company sold approximately 111,000 used vehicles in the first half of 2025, a year-on-year increase of 9.6%, but revenue from used vehicles fell by 27.0% to RMB 6.02 billion[23]. - The average profit per used vehicle was compressed to less than RMB 3,000, with overall profit for the used vehicle segment declining by 60.2%[24]. - The company expects continued growth in after-sales service revenue, particularly in the luxury market, as local competitors exit and market consolidation deepens[18]. Cash Flow and Financial Position - As of June 30, 2025, the company's cash balance was RMB 20,037.2 million, a decrease of RMB 2,966.8 million from December 31, 2024, primarily due to cash outflows from financing activities[55]. - The company generated free cash flow of RMB 3,973.0 million for the six months ended June 30, 2025, with net cash inflow from operating activities amounting to RMB 5,948.4 million[55]. - Cash used in financing activities for the six months ended June 30, 2025, was RMB 10,830.2 million, mainly for repaying bank loans and redeeming convertible bonds[60]. - The company's total capital expenditure for the six months ended June 30, 2025, was RMB 818.7 million, compared to RMB 618.7 million for the same period in 2024[62]. - The average inventory turnover days increased from 36.2 days in 2024 to 38.3 days in 2025, reflecting adjustments in inventory levels[65]. Shareholder Information and Corporate Governance - The company declared a final dividend of RMB 1,734,665,000 for the year 2023, reflecting a commitment to returning value to shareholders despite fluctuations in comprehensive income[77]. - The company has issued zero-coupon convertible bonds with a face value of HKD 4,560,000,000, maturing in 2025, with the conversion price adjusted to HKD 43.88 per share as of July 4, 2024[105]. - Major shareholders, including Blue Natural Development Ltd. and Light Yield Ltd., collectively own 49.66% of the company's shares[133]. - The company has a total of 505,816,116 shares held by Jardine Strategic Limited, representing 21.20% of the total shares[134]. - The company’s board members are considered to have interests in the treasury shares due to their voting rights[129]. Environmental and Social Responsibility - The group has implemented multiple measures to reduce emissions and enhance energy efficiency in daily operations, including improving emission testing equipment and wastewater treatment[167]. - The group encourages employees to use public transportation and replace business travel with phone or video conferencing when feasible to reduce carbon emissions[167]. - The group is committed to corporate social responsibility by providing employment opportunities for local residents and disabled individuals through its national dealer network[168].

Summary of Zhongsheng Holdings Conference Call Company Overview - **Company**: Zhongsheng Holdings - **Date**: September 26, 2025 Industry Insights - **Impact of Price Wars**: Traditional brands such as Mercedes-Benz, Lexus, and Toyota are experiencing increased losses due to price wars. However, there are signs of recovery in industry discount rates, with the average price drop for domestic passenger cars in August rising by 0.1% to 20.2% compared to the previous month, which may improve Zhongsheng's new car business margins [2][4]. Key Points - **New Car Business Performance**: - New car sales in the first half of the year were approximately 210,000 units, a year-on-year decrease of 5%. - The gross margin per vehicle was negative 11,300 yuan, worsening from negative 8,900 yuan in the previous year [4]. - The company expects an improvement in new car business margins due to a faster payment schedule from dealers and a decrease in fuel vehicle discount rates [4][2]. - **Huawei Seres Brand Development**: - Zhongsheng has established 36 stores for the Seres brand, achieving a market share of 8%. - In major cities, the market share reaches 18%, double the national average. - Although sales were only about 20,000 units in the first half, growth in sales and profitability is anticipated as the store ramp-up phase concludes [5][2]. - **After-sales Maintenance and Services**: - The after-sales maintenance business is performing robustly, with approximately 8 million visits annually, and 4 million visits in the first half of the year. - The average gross profit per visit is around 1,580 yuan, maintaining a gross margin of about 47%. - This segment has not been negatively impacted by the decline in new car sales and contributed 6.3 billion yuan in gross profit in the first half, accounting for a significant portion of the total gross profit of 4.2 billion yuan [6][2]. - **Profit Forecast**: - The company expects a total profit of approximately 3 billion yuan for the year, with significant improvement in the second half. - Profits are projected to approach 4 billion yuan next year. The current valuation is around 10 times earnings, expected to drop below 8 times next year, coupled with a high dividend yield, indicating strong value [7][2]. Risks - **Key Risks**: - The main risks facing Zhongsheng include lower-than-expected automotive consumption and significant increases in raw material prices, which could adversely affect the company's performance [3][8]. Additional Insights - **Market Trends**: The penetration rate of new energy vehicles is high, but the existing stock remains low, limiting the impact on after-sales maintenance services. The company's focus on major cities is expected to drive overall growth due to favorable foot traffic trends [6][2].

Industry Overview - Morgan Stanley's research report indicates that capacity reductions in the mainland automotive industry are driving industry consolidation, with luxury car dealers expected to benefit first [1] - The report anticipates a significant acceleration in dealership closures from 2025 to 2026, as the overall profit margin for new cars fell below 1% in the first half of this year, making it unattractive for smaller dealers [1] - Car manufacturers plan to reduce their dealership networks in mainland China by 10% to 30% by the end of 2026, which will favor financially stable dealers [1] Company Insights - Zhongsheng Holdings is expected to experience a turning point after four years of decline, with a projected 67% year-on-year rebound in profits to 4 billion yuan by 2026, driven by a recovery in new car profit margins and increased market share in the unexpected repair sector [1] - The decrease in capital expenditure requirements suggests that the expected dividend yield of 5% in 2026 has room for growth; the target price has been raised from 15 HKD to 21 HKD, with a rating of "Overweight" [1] - Tuhu has also been given an "Overweight" rating, with an expected annual compound growth rate of 25% in profits from 2025 to 2027, based on user growth from its app and expansion of franchise stores; the target price has been increased from 20 HKD to 23 HKD [1]

Group 1: Industry Overview - Morgan Stanley reports that capacity reductions in the mainland automotive industry are driving industry consolidation, with luxury car dealers expected to benefit first [1] - It is anticipated that from 2025 to 2026, there will be an acceleration in dealership closures, as the overall profit margin for new cars fell below 1% in the first half of this year, making it unattractive for small dealers [1] - Automakers plan to reduce their dealership networks in mainland China by 10% to 30% by the end of 2026, which will favor financially stable dealers [1] Group 2: Company Insights - Zhongsheng Holdings (00881) is expected to continue dominating the automotive accident repair business, while independent repair shops like Tuhu-W (09690) will capture market share in maintenance and minor repairs [1] - Excluding the pandemic impact from 2020 to 2021, Zhongsheng Holdings' repair service gross profit has a compound annual growth rate of 14% from 2017 to 2024, which is expected to support core profitability in the future [1] - After four years of a downward cycle, Zhongsheng Holdings is believed to be at a turning point, with a projected 67% year-on-year rebound in profit to 4 billion RMB by 2026, driven by the recovery of new car profit margins and increased market share in accident repair [1] Group 3: Financial Projections - The decline in capital expenditure needs suggests that the expected dividend yield of 5% in 2026 still has upside potential; the target price for Zhongsheng Holdings has been raised from 15 HKD to 21 HKD with an upgrade to "overweight" rating [1] - Tuhu is also rated "overweight," with an expected compound annual growth rate of 25% in earnings from 2025 to 2027, based on user growth in its app and expansion of franchise stores; the target price has been increased from 20 HKD to 23 HKD [2] - For Meidong Automotive (01268), the target price has been lowered from 2.2 HKD to 2.1 HKD, maintaining a "market perform" rating [2]

Core Viewpoint - The opening of the AITO Authorized User Center in Jinan marks a significant step for Zhongsheng Group in the new energy vehicle sector, enhancing consumer experience with intelligent automotive services [3][10]. Company Summary - Zhongsheng Group is a leading automotive dealership group in China, committed to providing high-quality automotive services [9]. - The new AITO Authorized User Center integrates Zhongsheng's mature service system into the sales and after-sales processes of the AITO brand [9]. Industry Summary - The opening of the AITO Authorized User Center is expected to contribute to the promotion and development of new energy vehicles, injecting new vitality into the industry [10]. - The center aims to enhance the consumer experience by offering a range of high-quality new energy vehicle options and services [10].