Core Viewpoint - Zhongsheng Holdings (00881) reported a total revenue of RMB 77.322 billion for the six months ending June 30, 2025, representing a year-on-year decrease of 6.2% [1] - The net profit attributable to shareholders was RMB 1.011 billion, down 36% year-on-year, with basic earnings per share of RMB 0.427 [1] Revenue and Profit Analysis - The after-sales service revenue reached RMB 11.45 billion, an increase of 4.4% year-on-year, with after-sales gross profit rising to RMB 5.44 billion, up 8.1% [1] - The strong financial performance was driven by 4.54 million active customers, leading to 4 million after-sales service visits, which grew by 15.2% and 1.7% respectively [1] Network Optimization and Store Adjustments - Since November 2024, the company has completed its largest network optimization, involving the restructuring of existing stores and the establishment of new service centers [1] - Over 20% of stores participated in this adjustment, resulting in the addition of 57 dealerships and 20 service centers, while 37 dealerships were closed [1] Sales Performance - New car sales totaled approximately 229,000 units, a decrease of about 4,000 units or 1.7% year-on-year [2] - The AITO brand contributed 11,000 new car sales, partially offsetting declines in other brands, with luxury brand sales accounting for 62.3% of total sales [2] Used Car Market Dynamics - The company sold approximately 111,000 used cars, a year-on-year increase of 9.6%, but used car revenue fell by 27% to RMB 6.02 billion, with a 33.4% drop in revenue per vehicle [3] - The decline in used car prices was influenced by government policies promoting trade-in programs, leading to a higher proportion of older vehicles in the company's inventory [3] - Nearly 80% of the used cars sold were over six years old, which negatively impacted profitability, resulting in a 60.2% decline in the used car segment's overall profit [3]

Core Insights - 中升控股 reported a total revenue of RMB 77.322 billion for the six months ending June 30, 2025, a decrease of 6.2% year-on-year [1] - The profit attributable to the parent company was RMB 1.011 billion, down 36% year-on-year, with basic earnings per share at RMB 0.427 [1] Revenue and Profit Analysis - The group's after-sales service revenue reached RMB 11.45 billion, an increase of 4.4% year-on-year, with after-sales gross profit at RMB 5.44 billion, up 8.1% [1] - The strong financial performance was driven by 4.54 million active customers, resulting in 4 million after-sales service visits, which grew by 15.2% and 1.7% respectively [1] Network Optimization and Store Adjustments - Since November 2024, the company has completed its largest network optimization, involving the restructuring of existing stores and the establishment of new service centers [1] - Over 20% of stores participated in this adjustment, with 57 new dealerships and 20 new service centers opened, while 37 dealerships were closed [1] Sales Performance - New car sales for the first half of 2025 totaled approximately 229,000 units, a decrease of about 4,000 units or 1.7% year-on-year [2] - The AITO brand contributed 11,000 new car sales, partially offsetting declines in other brands, with luxury brand sales accounting for 62.3% of total sales [2] Used Car Market Dynamics - The company sold approximately 111,000 used cars, a year-on-year increase of 9.6%, but used car revenue fell by 27% to RMB 6.02 billion, with a 33.4% drop in revenue per vehicle [3] - The decline in used car prices was influenced by government policies promoting trade-in programs, leading to a higher proportion of older vehicles in the company's inventory [3] - Nearly 80% of the used cars sold were over six years old, which negatively impacted profitability, resulting in a comprehensive profit of approximately RMB 300 million, down 60.2% year-on-year [3]

Core Insights - The company reported a revenue of RMB 77,322.1 million for the six months ending June 30, 2025, representing a year-on-year decrease of 6.2% [1] - The profit attributable to the parent company was RMB 1,011.4 million, a decline of RMB 568.2 million or 36.0% compared to the previous year [1] Financial Performance - The after-sales service revenue reached RMB 11.45 billion, showing a year-on-year growth of 4.4% [1] - The gross profit from after-sales services was RMB 5.44 billion, which is an increase of 8.1% year-on-year [1] - The strong financial performance was supported by 4.54 million active customers, leading to 4 million after-sales service visits, both of which increased by 15.2% and 1.7% year-on-year, respectively [1]

[Report Overview](index=1&type=section&id=Report%20Overview) [Financial Summary](index=1&type=section&id=Financial%20Summary) For the six months ended June 30, 2025, total revenue decreased by 6.2% year-on-year to CNY 77.32 billion, primarily due to a decline in automobile sales revenue, with gross profit down 14.6% and profit attributable to owners of the parent company significantly decreasing by 36.0% - Financial Performance (CNY million) | Indicator (CNY million) | H1 2025 | H1 2024 | YoY Change | | :------------------ | :----------- | :----------- | :------- | | Total Revenue | 77,322.1 | 82,421.4 | (6.2)% | | Automobile Sales Revenue | 63,945.6 | 69,052.3 | (7.4)% | | Boutique and After-sales Service Revenue | 13,376.5 | 13,369.1 | 0.1% | | Of which After-sales Service Revenue | 11,445.3 | 10,964.1 | 4.4% | | Total Gross Profit | 4,209.3 | 4,926.2 | (14.6)% | | Automobile Sales Gross Profit | (2,130.8) | (1,372.1) | 55.3% | | Boutique and After-sales Service Gross Profit | 6,340.1 | 6,298.3 | 0.7% | | Of which After-sales Service Gross Profit | 5,440.5 | 5,035.0 | 8.1% | | Profit for the Year | 924.1 | 1,500.0 | (38.4)% | | Profit Attributable to Owners of the Parent Company| 1,011.4 | 1,579.6 | (36.0)% | | Basic Earnings Per Share (CNY)| 0.427 | 0.662 | (35.5)% | [Operating Parameters](index=2&type=section&id=Operating%20Parameters) During the reporting period, new car sales slightly decreased, but used car sales increased, reflecting changes in market structure - Operating Metrics (Units) | Indicator (Units) | H1 2025 | H1 2024 | YoY Change | | :-------- | :----------- | :----------- | :------- | | New Car Sales | 228,649 | 232,543 | (1.7)% | | Luxury Brand Sales| 142,406 | 142,634 | (0.2)% | | Used Car Sales| 111,244 | 101,525 | 9.6% | [Strategic Update](index=3&type=section&id=Strategic%20Update) [Strategic Focus and Market Dynamics](index=3&type=section&id=Strategic%20Focus%20and%20Market%20Dynamics) The company maintains its core strategy focusing on business density in central cities, brand concentration, customer service, and operational efficiency, while government policies aim to curb industry "involution" and high-interest car loans - The company's strategic focus emphasizes optimizing **business density in central cities**, **brand concentration in local markets**, **customer service**, and **operational efficiency within properties**[5](index=5&type=chunk) - Favorable government policies address industry "involution" and regulate "high-interest, high-rebate" car loan products, alleviating downward pressure on retail prices[5](index=5&type=chunk) [Building a Premium Automotive Service Brand](index=3&type=section&id=Building%20a%20Premium%20Automotive%20Service%20Brand) Since June 2023, the company has strategically transformed to become a premium automotive service brand in China, adapting to the market shift from new car sales to existing car ownership, with after-sales service as the primary profit source - Strategic transformation since June 2023 aims to establish a **premium automotive service brand in China**, adapting to the market shift from new car (incremental) to existing car (stock) market[6](index=6&type=chunk) - After-sales service, driven by the customer base, has become the **primary profit source** with the development of new energy vehicles[6](index=6&type=chunk) - The strategic focus is on the **luxury customer segment**, with an estimated **20.1 million luxury car owners** in 32 central cities, of which Zhongsheng serves **14.6%**[6](index=6&type=chunk) [Strengthening Local Market Business Density and Brand Concentration](index=4&type=section&id=Strengthening%20Local%20Market%20Business%20Density%20and%20Brand%20Concentration) Through extensive network optimization, the company enhances business density and brand dominance in central cities to improve bargaining power and customer loyalty, resulting in significant growth in active customer numbers - Over the past 12 months, the company completed its largest network optimization, closing **37 authorized dealerships** while adding **57 new authorized dealerships** and **20 repair service centers**[5](index=5&type=chunk) - More than **46% of stores (203 out of 439)** are brand-dominant dealers in their local markets, with **89 being exclusive dealers**[8](index=8&type=chunk) - As of June end 2025, **active customers reached 4.54 million**, a **15.2% year-on-year increase**, with **3.8 million subscribers** on the Zhongsheng GO WeChat membership platform[7](index=7&type=chunk) - The Zhongsheng GO membership system and direct WeChat Work connection (covering **10.5 million customers**) are core initiatives driving **digital and intensive operations**[7](index=7&type=chunk) [Business Review and Outlook](index=4&type=section&id=Business%20Review%20and%20Outlook) [After-sales Service Business](index=4&type=section&id=After-sales%20Service%20Business) After-sales service business performed strongly, with both revenue and gross profit increasing, driven by a rise in active customers and workshop visits, despite temporary impacts from network adjustments on overall visits - After-sales Service Performance (CNY) | Indicator (CNY) | H1 2025 | H1 2024 | YoY Change | | :------------ | :----------- | :----------- | :------- | | After-sales Service Revenue | 11.45 billion | 10.96 billion | 4.4% | | After-sales Service Gross Profit | 5.44 billion | 5.035 billion | 8.1% | | Active Customers | 4.54 million individuals | - | 15.2% | | After-sales Visits | 4 million visits | - | 1.7% | | Same-store After-sales Visits | - | - | 4.5% | | Same-store After-sales Revenue | 813 million | - | 7.9% | - Large-scale network optimization (adding 57 stores, exiting 37 stores) had a **temporary impact on overall after-sales visit growth**, but same-store performance was strong[10](index=10&type=chunk) - The second half of the year is expected to see **continued ramp-up of new networks** and deepening market consolidation, driving sustained growth in after-sales service, especially in the luxury market[11](index=11&type=chunk) - The company brokered **990,000 car insurance renewal policies**, a **10.6% year-on-year increase**, bringing total policies to **1.2 million** (including new car policies), up **8.6% year-on-year**[11](index=11&type=chunk) [New Car Business](index=6&type=section&id=New%20Car%20Business) New car sales slightly decreased, but the AITO brand contributed to growth, and the proportion of luxury brand sales increased, with the company confident in a full-year gross profit recovery despite current margin pressure - Sales and Structure: New car sales were **229,000 units**, a **1.7% year-on-year decrease**; the AITO brand contributed **11,000 units** of growth, and luxury brand sales proportion increased to **62.3%**[12](index=12&type=chunk) - Gross Margin Pressure: New car gross margin entered negative territory, with the average comparable transaction price per vehicle decreasing by **12.5% (approximately CNY 33,000)**; OEMs provided additional subsidies of approximately **CNY 19,000 (7.0%) per vehicle** to alleviate pressure[12](index=12&type=chunk) - Future Outlook: New car gross profit is expected to recover due to **AITO sales ramp-up**, enhanced local market dominance, new product cycles from major OEMs, and government efforts to curb "involution"[13](index=13&type=chunk) - Brand Portfolio: The company operates **439 authorized dealerships**, with Toyota (107), Lexus (58), and Mercedes-Benz (108) as key partners; the luxury brand portfolio includes AITO, HIMA, Audi, Volvo, BMW, and Jaguar Land Rover[13](index=13&type=chunk) [Used Car Business](index=7&type=section&id=Used%20Car%20Business) Used car sales increased year-on-year, but revenue and gross profit significantly declined due to "trade-in" policies and new car price wars, compressing per-unit comprehensive profit - Sales Growth: Approximately **111,000 used cars were sold**, a **9.6% year-on-year increase**[14](index=14&type=chunk) - Revenue and Profit Decline: Used car business revenue decreased by **27.0% to CNY 6.02 billion**, with average revenue per vehicle down **33.4% year-on-year**; comprehensive profit was approximately **CNY 300 million**, a **60.2% year-on-year decrease**[14](index=14&type=chunk) - Key Reasons: Government "trade-in" policies led to the acquisition of a large number of older vehicles (nearly **80% over 6 years old**), lowering average revenue per vehicle; new car market price wars squeezed profit margins[14](index=14&type=chunk) - Future Outlook: Short-term profit contribution growth is limited, but the company believes in the long-term immense value and will prudently manage with a focus on **high-turnover wholesale models**[15](index=15&type=chunk) [Market Review](index=7&type=section&id=Market%20Review) The passenger car market experienced sales growth but declining average prices and severe "involution," with traditional brands rebounding, luxury brands declining but entering new product cycles, and AITO performing strongly amidst market consolidation [Passenger Car Market Overview](index=7&type=section&id=Passenger%20Car%20Market%20Overview) In the first half of the year, China's passenger car new car sales grew, but total retail sales of automotive consumer goods remained almost flat, with average transaction prices continuing to fall, indicating severe industry "involution" - Sales Growth: New passenger car insurance registrations reached **10.72 million units** in the first half, a **7.9% year-on-year increase**, primarily stimulated by "trade-in" policies[17](index=17&type=chunk) - Price Decline: Total retail sales of automotive consumer goods remained almost flat, with sales in the **over CNY 250,000 price segment declining by 440,000 units**, and average transaction prices continuing to fall[17](index=17&type=chunk) - Government Regulation: Official media called for addressing "involution," and the State Administration for Market Regulation strengthened oversight[17](index=17&type=chunk) [Performance of Traditional and Luxury Brands](index=8&type=section&id=Performance%20of%20Traditional%20and%20Luxury%20Brands) Traditional mid-to-high-end brands like Toyota and Volkswagen saw sales rebound, and Lexus maintained growth, while German luxury brands generally experienced sales declines but are about to launch new product cycles - Traditional Brands Rebound: Toyota and Volkswagen sales rebounded, growing by **7.7% and 0.5% respectively**, with new models catching up in intelligent cockpit and assisted driving features[18](index=18&type=chunk) - Lexus: Insurance registrations increased by **7.1% year-on-year** in the first half, maintaining stable growth due to strong synergy between the brand and dealers[19](index=19&type=chunk) - German Luxury Brands Decline: Mercedes-Benz sales decreased by **14.5%**, BMW by **19.5%**, and Audi by **15.0%**, primarily affected by entry-level and EQ series models[19](index=19&type=chunk) - New Product Cycle: New Audi A5L and Mercedes-Benz CLA, among others, will be launched in the second half, featuring localized software technology[19](index=19&type=chunk) [New Energy Brands and Market Consolidation](index=9&type=section&id=New%20Energy%20Brands%20and%20Market%20Consolidation) The AITO brand performed remarkably, with sales surging, especially in the high-end price segment, while market consolidation continues to offer opportunities for leading dealer groups to attract customers and expand their markets - AITO Performance: Delivered **11,000 new cars** in the first half, with sales in the **over CNY 300,000 price segment surging by nearly 80% year-on-year**, benefiting from the M9 facelift and new M8 models[20](index=20&type=chunk) - Market Consolidation Opportunities: Ongoing dealer consolidation presents significant opportunities for leading dealer groups like Zhongsheng to **attract customers from exiting dealers**[20](index=20&type=chunk) - Audi Cooperation Model: Zhongsheng will expand its regional market under a cooperation model similar to Audi's, with more favorable terms than usual, and **11 new Audi dealerships** will commence operations in the second half[20](index=20&type=chunk) - Used Car Market: Transaction volume slightly increased by **2.0%** in the first half, but transaction prices remained low, with expectations for a restorative growth once new car market order is normalized[20](index=20&type=chunk) [Financial Performance Analysis](index=42&type=section&id=Financial%20Performance%20Analysis) [Revenue Analysis](index=42&type=section&id=Revenue%20Analysis) Total revenue decreased by 6.2% year-on-year during the reporting period, primarily due to declining new and used car sales, while after-sales service revenue maintained growth, with new car sales remaining the main revenue source - Revenue Breakdown (CNY million) | Revenue Type (CNY million) | H1 2025 | H1 2024 | YoY Change | Primary Reason | | :-------------------- | :----------- | :----------- | :------- | :------- | | New Car Sales | 57,931.0 | 60,812.0 | (4.7)% | Sales volume decline and average price decrease | | Used Car Sales | 6,014.6 | 8,240.3 | (27.0)% | Average price decrease | | After-sales Service | 11,445.3 | 10,964.1 | 4.4% | Increase in visits and average value per visit | | Boutiques, etc. | 1,931.2 | 2,405.0 | (19.7)% | Decrease in maintenance package sales | | Total Revenue | 77,322.1 | 82,421.4 | (6.2)% | - | - Revenue Composition: **New car sales accounted for 74.9%** of total revenue, used car sales for 7.8%, and boutique and after-sales services for 17.3%[83](index=83&type=chunk) - Major Brand Contribution: **Mercedes-Benz was the highest-contributing brand** to new car sales revenue, accounting for **35.1%** of total new car sales[83](index=83&type=chunk) [Cost and Gross Profit Analysis](index=43&type=section&id=Cost%20and%20Gross%20Profit%20Analysis) Sales and service costs decreased, but total gross profit declined by 14.6% year-on-year, with gross margin falling to 5.4%, as new car sales recorded an increased gross loss and used car gross profit significantly decreased - Sales and Service Costs: **CNY 73.113 billion**, a **5.7% year-on-year decrease**, primarily due to lower new car sales volume, increased OEM rebates, and reduced used car procurement prices[84](index=84&type=chunk) - Gross Profit Breakdown (CNY million) | Gross Profit Type (CNY million) | H1 2025 | H1 2024 | YoY Change | Primary Reason | | :-------------------- | :----------- | :----------- | :------- | :------- | | New Car Sales | (2,387.8) | (1,990.1) | 20.0% | Sales volume decline, intensified market competition leading to increased gross loss | | Used Car Sales | 257.0 | 618.0 | (58.4)% | Decrease in per-unit value, compressed profit margins | | After-sales Service | 5,440.5 | 5,035.0 | 8.1% | Increase in visits, higher average value per visit, optimized cost structure | | Boutiques, etc. | 899.6 | 1,263.3 | (28.8)% | Decrease in maintenance package sales, lower gross margin | | Total Gross Profit | 4,209.3 | 4,926.2 | (14.6)% | - | - Gross Margin: Total gross margin was **5.4%**, compared to 6.0% in the prior year period[88](index=88&type=chunk) [Other Income and Gains, Net](index=44&type=section&id=Other%20Income%20and%20Gains,%20Net) Other income and gains, net, decreased by 5.9% year-on-year, with commission income falling due to lower new car sales, but interest income increasing due to higher average cash balances - Total: **CNY 2.229 billion**, a **5.9% year-on-year decrease**[89](index=89&type=chunk) - Commission Income: **CNY 1.845 billion**, a **5.0% year-on-year decrease**, primarily affected by lower new car sales[89](index=89&type=chunk) - Interest Income: **CNY 301.8 million**, a **34.6% year-on-year increase**, mainly due to higher average cash balances during the period[91](index=91&type=chunk) [Expenses and Operating Profit](index=45&type=section&id=Expenses%20and%20Operating%20Profit) Sales and distribution expenses and administrative expenses remained stable, but operating profit significantly decreased by 30.9% year-on-year due to increased new car sales gross loss and decreased used car gross profit - Sales and Distribution Expenses: **CNY 3.434 billion**, a **0.4% year-on-year decrease**, remaining stable[92](index=92&type=chunk) - Administrative Expenses: **CNY 1.099 billion**, a **0.8% year-on-year increase**, remaining stable[93](index=93&type=chunk) - Operating Profit: **CNY 1.905 billion**, a **30.9% year-on-year decrease**; operating profit margin was **2.5%**, compared to 3.3% in the prior year period[94](index=94&type=chunk) [Finance Costs and Income Tax](index=45&type=section&id=Finance%20Costs%20and%20Income%20Tax) Finance costs decreased due to lower financing interest rates, and income tax expense also decreased due to lower operating profit - Finance Costs: **CNY 681.4 million**, a **14.0% year-on-year decrease**, primarily due to lower financing interest rates[95](index=95&type=chunk) - Income Tax Expense: **CNY 296.9 million**, a **36.1% year-on-year decrease**, primarily due to lower operating profit[97](index=97&type=chunk) [Profit Attributable to Owners of the Parent Company](index=46&type=section&id=Profit%20Attributable%20to%20Owners%20of%20the%20Parent%20Company) Profit attributable to owners of the parent company was CNY 1.0114 billion, a significant year-on-year decrease of 36.0% - Profit Attributable to Parent: **CNY 1.0114 billion**, a **36.0% year-on-year decrease**[98](index=98&type=chunk) [Liquidity and Financial Resources](index=46&type=section&id=Liquidity%20and%20Financial%20Resources) [Cash Flow](index=46&type=section&id=Cash%20Flow) Cash balance decreased at the end of the reporting period, primarily due to financing activities, with net cash inflow from operating activities significantly increasing and net cash outflow from financing activities also increasing - Cash and Cash Equivalents (CNY million) | Indicator (CNY million) | June 30, 2025 | Dec 31, 2024 | Change | | :------------------ | :------------ | :------------- | :--- | | Cash and Cash Equivalents | 12,859.3 | 18,687.5 | (5,828.2) | | Cash in Transit | 123.7 | 60.0 | 63.7 | | Time Deposits and Pledged Bank Deposits | 7,054.2 | 4,256.5 | 2,797.7 | | Total Cash | 20,037.2 | 23,004.0 | (2,966.8) | - Net Cash Inflow from Operating Activities: **CNY 5.9484 billion**, a **CNY 3.0228 billion increase year-on-year**, primarily due to reduced inventories and increased trade and bills payables[101](index=101&type=chunk) - Net Cash Outflow from Investing Activities: **CNY 941.0 million**, primarily for the acquisition of property, plant, and equipment[102](index=102&type=chunk) - Net Cash Outflow from Financing Activities: **CNY 10.8302 billion**, primarily for repayment of bank loans, redemption of convertible bonds, payment of lease liabilities, and finance interest[103](index=103&type=chunk) [Bank Loans and Other Borrowings](index=47&type=section&id=Bank%20Loans%20and%20Other%20Borrowings) Total bank loans and other borrowings decreased, mainly due to a reduction in inventory financing scale as inventory decreased, and the company continued to optimize its financing channel structure - Total: **CNY 28.6016 billion**, a decrease from CNY 32.0392 billion at the end of 2024[104](index=104&type=chunk) - Reason: Inventory financing scale decreased due to **reduced inventory**, and the company continued to **optimize its inventory financing channel structure**[104](index=104&type=chunk) - Annual Interest Rate: Ranged from **1.0% to 6.0%**[104](index=104&type=chunk) [Convertible Bonds](index=47&type=section&id=Convertible%20Bonds) The company redeemed and cancelled all outstanding zero-coupon convertible bonds due in 2025 on May 21, 2025 - Redemption: On May 21, 2025, the company redeemed and cancelled all outstanding 2025 convertible bonds totaling **HKD 3.124 billion** at **117.49% of their principal amount**[107](index=107&type=chunk) - Status: As of the date of this announcement, there are **no outstanding 2025 convertible bonds**[107](index=107&type=chunk) [Bonds](index=48&type=section&id=Bonds) The company redeemed and cancelled all outstanding 3.00% bonds due in 2026 on August 27, 2025, and issued USD 600 million of 5.98% bonds due in 2028 in July 2024 - 2026 Bonds: The company redeemed and cancelled all outstanding **3.00% bonds due in 2026** on August 27, 2025[109](index=109&type=chunk) - 2028 Bonds: In July 2024, the company issued bonds with a total principal amount of **USD 600 million**, due in January 2028, with a coupon rate of **5.98%**[110](index=110&type=chunk) [Panda Bonds](index=49&type=section&id=Panda%20Bonds) The company has been approved to register Panda Bonds with a total amount not exceeding CNY 5 billion and completed the first issuance of CNY 1 billion in August 2024 - Registration Approval: Approved by the National Association of Financial Market Institutional Investors to register Panda Bonds with a total amount not exceeding **CNY 5 billion**[111](index=111&type=chunk) - First Issuance: The first issuance of **CNY 1 billion** was completed in August 2024, with a coupon rate of **3.5%** and a three-year term[111](index=111&type=chunk) [Other Financial Information](index=50&type=section&id=Other%20Financial%20Information) [Capital Expenditure and Investments](index=50&type=section&id=Capital%20Expenditure%20and%20Investments) Total capital expenditure increased year-on-year during the reporting period, primarily for property, plant, and equipment, land use rights, and business acquisitions - Total Capital Expenditure: **CNY 818.7 million**, an increase from CNY 618.7 million in the prior year period[113](index=113&type=chunk) - Usage: Primarily for **property, plant, and equipment (excluding automobiles)**, **land use rights**, and **business acquisitions**[113](index=113&type=chunk) [Inventory Analysis](index=50&type=section&id=Inventory%20Analysis) Total inventory decreased, but average inventory turnover days increased, and the company is taking measures to optimize its inventory structure - Total Inventory: **CNY 17.0196 billion**, a decrease from CNY 18.4769 billion at the end of 2024[114](index=114&type=chunk) - Average Inventory Turnover Days: **38.3 days**, an increase from 36.2 days in the prior year period, mainly due to the company adjusting inventory levels based on market changes[115](index=115&type=chunk) [Interest Rate Risk and Foreign Exchange Risk](index=51&type=section&id=Interest%20Rate%20Risk%20and%20Foreign%20Exchange%20Risk) The company does not use derivative instruments to hedge interest rate risk but uses cross-currency interest rate swaps to hedge foreign exchange risk - Interest Rate Risk: **No hedging for interest rate risk**, primarily related to floating-rate debt obligations[116](index=116&type=chunk) - Foreign Exchange Risk: Uses **cross-currency interest rate swaps to hedge foreign exchange risk**[116](index=116&type=chunk) [Pledge of Assets](index=51&type=section&id=Pledge%20of%20Assets) The company pledged assets as collateral for bank and other loans, totaling CNY 13.2 billion - Pledged Assets Amount: **CNY 13.2 billion**, an increase from CNY 12.2 billion at the end of 2024[117](index=117&type=chunk) [Capital Gearing Ratio](index=51&type=section&id=Capital%20Gearing%20Ratio) The capital gearing ratio slightly decreased, remaining at 42.1% - Capital Gearing Ratio: **42.1%**, a slight decrease from 42.5% at the end of 2024[120](index=120&type=chunk) [Share Option Scheme](index=51&type=section&id=Share%20Option%20Scheme) The share option scheme expired in 2020, but existing share options can still be exercised according to the scheme terms, with no share options granted, exercised, cancelled, or lapsed during the reporting period - Scheme Status: The share option scheme expired on March 25, 2020, but **existing share options remain valid**[121](index=121&type=chunk) - Outstanding Share Options: As of June 30, 2025, there were **5,500,000 outstanding share options** with an exercise price of **HKD 22.60**[62](index=62&type=chunk)[122](index=122&type=chunk) [Financial Statements](index=10&type=section&id=Financial%20Statements) [Interim Condensed Consolidated Statement of Profit or Loss](index=10&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the company's revenue, gross profit, operating profit, and profit for the period all decreased year-on-year - Interim Condensed Consolidated Statement of Profit or Loss (CNY thousand) | Indicator (CNY thousand) | H1 2025 | H1 2024 | | :---------------- | :----------- | :----------- | | Revenue | 77,322,084 | 82,421,409 | | Cost of Sales and Services| (73,112,804) | (77,495,184) | | Gross Profit | 4,209,280 | 4,926,225 | | Other Income and Gains, Net| 2,229,015 | 2,367,526 | | Sales and Distribution Costs | (3,434,209) | (3,447,486) | | Administrative Expenses | (1,099,038) | (1,090,505) | | Operating Profit | 1,905,048 | 2,755,760 | | Finance Costs | (681,412) | (792,249) | | Profit Before Tax | 1,220,972 | 1,964,449 | | Income Tax Expense | (296,903) | (464,422) | | Profit for the Period | 924,069 | 1,500,027 | | Profit Attributable to Owners of the Parent Company| 1,011,351 | 1,579,552 | [Interim Condensed Consolidated Statement of Comprehensive Income](index=11&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Total comprehensive income for the reporting period was CNY 782 million, a year-on-year decrease, primarily due to lower profit for the period and exchange differences - Interim Condensed Consolidated Statement of Comprehensive Income (CNY thousand) | Indicator (CNY thousand) | H1 2025 | H1 2024 | | :---------------- | :----------- | :----------- | | Profit for the Period | 924,069 | 1,500,027 | | Other Comprehensive Loss | (141,887) | (105,195) | | Total Comprehensive Income for the Period | 782,182 | 1,394,832 | | Attributable to Owners of the Parent Company | 869,464 | 1,474,357 | [Interim Condensed Consolidated Statement of Financial Position](index=12&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets and total liabilities both decreased, while net assets slightly increased - Interim Condensed Consolidated Statement of Financial Position (CNY thousand) | Indicator (CNY thousand) | June 30, 2025 | Dec 31, 2024 | | :---------------- | :------------ | :------------- | | Total Non-current Assets | 44,465,540 | 44,590,820 | | Total Current Assets | 63,465,403 | 65,579,729 | | Total Current Liabilities | 38,630,268 | 40,018,779 | | Total Non-current Liabilities | 21,624,435 | 23,233,953 | | Net Assets | 47,676,240 | 46,917,817 | | Total Equity | 47,676,240 | 46,917,817 | [Interim Condensed Consolidated Statement of Changes in Equity](index=15&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) During the reporting period, equity attributable to owners of the parent company increased, primarily due to profit for the period, but partially offset by exchange fluctuations and convertible bond redemption - Interim Condensed Consolidated Statement of Changes in Equity (CNY thousand) | Indicator (CNY thousand) | H1 2025 | H1 2024 | | :---------------- | :----------- | :----------- | | Equity Attributable to Owners of the Parent Company at Beginning of Period | 46,829,441 | 45,797,296 | | Profit for the Year | 1,011,351 | 1,579,552 | | Other Comprehensive Loss for the Year | (141,887) | (105,195) | | Total Comprehensive Income for the Year | 869,464 | 1,474,357 | | Redemption of Convertible Bonds | (20,884) | - | | Equity Attributable to Owners of the Parent Company at End of Period | 47,675,771 | 45,487,875 | [Interim Condensed Consolidated Statement of Cash Flows](index=16&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) During the reporting period, net cash inflow from operating activities significantly increased, net cash outflow from investing activities increased, and net cash outflow from financing activities significantly increased, leading to a net decrease in cash and cash equivalents - Interim Condensed Consolidated Statement of Cash Flows (CNY thousand) | Indicator (CNY thousand) | H1 2025 | H1 2024 | | :---------------- | :----------- | :----------- | | Net Cash from Operating Activities | 5,948,368 | 2,925,583 | | Net Cash Used in Investing Activities | (940,993) | (433,293) | | Net Cash Used in Financing Activities | (10,830,217) | (942,448) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (5,822,842) | 1,549,842 | | Cash and Cash Equivalents at End of Period | 12,859,286 | 17,146,435 | [Notes to the Interim Condensed Consolidated Financial Information](index=20&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) [1. General Information](index=20&type=section&id=1.%20General%20Information) Zhongsheng Group Holdings Limited and its subsidiaries primarily engage in automobile sales and services in mainland China, incorporated in the Cayman Islands and listed on the Main Board of the Hong Kong Stock Exchange - Main Business: **Automobile sales and services in mainland China**[32](index=32&type=chunk) - Place of Incorporation and Listing: Incorporated in the **Cayman Islands** and listed on the **Main Board of the Hong Kong Stock Exchange**[32](index=32&type=chunk)[33](index=33&type=chunk) [2. Basis of Preparation and Accounting Policies](index=20&type=section&id=2.%20Basis%20of%20Preparation%20and%20Accounting%20Policies) The interim condensed consolidated financial information is prepared in accordance with HKAS 34 and should be read in conjunction with the annual consolidated financial statements, with no significant impact from the newly adopted HKAS 21 amendment - Basis of Preparation: **HKAS 34 "Interim Financial Reporting"**[35](index=35&type=chunk) - Changes in Accounting Policies: The first-time adoption of **HKAS 21 (Amendment) "Lack of Exchangeability"** has no impact on the financial information[36](index=36&type=chunk)[38](index=38&type=chunk) [3. Operating Segment Information](index=21&type=section&id=3.%20Operating%20Segment%20Information) The Group operates as a single business unit, namely the automobile sales and related services segment, with no geographical segment information presented as over 90% of its operations are in mainland China - Single Operating Segment: **Automobile sales and related services**[39](index=39&type=chunk) - Geographical Concentration: Over **90% of revenue, operating profit, and non-current assets** (excluding deferred tax assets) are derived from mainland China, thus no geographical segment information is presented[41](index=41&type=chunk) [4. Revenue, Other Income and Gains, Net](index=22&type=section&id=4.%20Revenue,%20Other%20Income%20and%20Gains,%20Net) A detailed classification of revenue and other income and gains is provided, including automobile sales, boutique and after-sales services, commission income, and interest income - Revenue (CNY thousand) | Revenue Type (CNY thousand) | H1 2025 | H1 2024 | | :-------------------- | :----------- | :----------- | | Automobile Sales | 63,945,559 | 69,052,326 | | Boutique and After-sales Services | 13,376,525 | 13,369,083 | | Total | 77,322,084 | 82,421,409 | - Other Income and Gains, Net (CNY thousand) | Other Income and Gains, Net (CNY thousand) | H1 2025 | H1 2024 | | :---------------------------- | :----------- | :----------- | | Commission Income | 1,845,060 | 1,941,569 | | Interest Income | 301,848 | 224,321 | | Government Subsidies | 1,150 | 65,897 | | Total | 2,229,015 | 2,367,526 | [5. Profit Before Tax](index=24&type=section&id=5.%20Profit%20Before%20Tax) Profit before tax was CNY 1.221 billion, a year-on-year decrease, primarily affected by factors such as staff welfare expenses, cost of inventories sold, and depreciation and amortization - Profit Before Tax Components (CNY thousand) | Item (CNY thousand) | H1 2025 | H1 2024 | | :---------------- | :----------- | :----------- | | Staff Welfare Expenses | 2,797,547 | 2,644,648 | | Cost of Inventories Sold | 70,827,726 | 75,762,131 | | Depreciation and Impairment of Property, Plant and Equipment | 867,930 | 1,022,091 | | Depreciation of Right-of-Use Assets | 442,878 | 393,382 | | Promotion and Advertising | 495,938 | 210,961 | | Write-down of Inventories to Net Realizable Value | 44,991 | 13,006 | [6. Finance Costs](index=25&type=section&id=6.%20Finance%20Costs) Finance costs were CNY 681 million, a year-on-year decrease, primarily comprising interest on bank borrowings, convertible bonds, other borrowings, and lease liabilities - Finance Costs Breakdown (CNY thousand) | Item (CNY thousand) | H1 2025 | H1 2024 | | :---------------- | :----------- | :----------- | | Interest Expense on Bank Borrowings | 381,664 | 561,868 | | Interest Expense on Convertible Bonds| 21,399 | 54,146 | | Interest Expense on Other Borrowings | 149,530 | 53,198 | | Interest Expense on Lease Liabilities | 159,944 | 160,404 | | Total | 681,412 | 792,249 | [7. Income Tax](index=25&type=section&id=7.%20Income%20Tax) Income tax expense was CNY 297 million, a year-on-year decrease, primarily consisting of current PRC enterprise income tax and deferred tax - Income Tax Breakdown (CNY thousand) | Item (CNY thousand) | H1 2025 | H1 2024 | | :---------------- | :----------- | :----------- | | Current PRC Enterprise Income Tax | 541,654 | 358,736 | | Deferred Tax | (244,751) | 105,686 | | Total | 296,903 | 464,422 | [8. Dividends](index=25&type=section&id=8.%20Dividends) The Board does not propose to declare any interim dividend for the six months ended June 30, 2025 - Interim Dividend: **No interim dividend proposed**[48](index=48&type=chunk) [9. Earnings Per Share Attributable to Ordinary Equity Holders of the Parent Company](index=26&type=section&id=9.%20Earnings%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent%20Company) Both basic and diluted earnings per share decreased year-on-year, reflecting the reduction in profit for the period - Earnings Per Share (CNY) | Indicator (CNY) | H1 2025 | H1 2024 | | :-------------- | :----------- | :----------- | | Basic EPS | 0.427 | 0.662 | | Diluted EPS | 0.427 | 0.662 | - Calculation Basis: Based on profit for the period attributable to ordinary equity holders of the parent company and the weighted average number of ordinary shares outstanding[49](index=49&type=chunk) [10. Inventories](index=27&type=section&id=10.%20Inventories) Inventories primarily consist of automobiles, spare parts, and others, with total value decreasing and an inventory provision recognized - Inventories Breakdown (CNY thousand) | Inventory Type (CNY thousand) | June 30, 2025 | Dec 31, 2024 | | :-------------------- | :------------ | :------------- | | Automobiles | 14,923,220 | 16,311,581 | | Spare Parts and Others | 2,207,823 | 2,231,755 | | Inventory Provision | (111,466) | (66,475) | | Total | 17,019,577 | 18,476,861 | [11. Trade Receivables](index=27&type=section&id=11.%20Trade%20Receivables) Net trade receivables slightly increased, and the company maintains strict control over credit risk, with an aging analysis disclosed - Trade Receivables (CNY thousand) | Indicator (CNY thousand) | June 30, 2025 | Dec 31, 2024 | | :---------------- | :------------ | :------------- | | Net Carrying Amount | 4,660,900 | 4,653,569 | - Credit Concentration Risk: **20.4% of trade receivables** are from the top five customers[52](index=52&type=chunk) - Aging Analysis: **CNY 4,399,628 thousand** are within three months[53](index=53&type=chunk) [12. Bank Loans and Other Borrowings](index=29&type=section&id=12.%20Bank%20Loans%20and%20Other%20Borrowings) Total bank loans and other borrowings decreased, including bank loans, other borrowings, and syndicated term loans - Bank Loans and Other Borrowings (CNY thousand) | Borrowing Type (CNY thousand) | June 30, 2025 | Dec 31, 2024 | | :-------------------- | :------------ | :------------- | | Bank Loans and Overdrafts | 17,923,634 | 19,993,567 | | Other Borrowings | 8,157,183 | 9,531,920 | | Syndicated Term Loans | 2,520,793 | 2,513,682 | | Total Bank Loans and Other Borrowings| 28,601,610 | 32,039,169 | [13. Trade and Bills Payables](index=30&type=section&id=13.%20Trade%20and%20Bills%20Payables) Total trade and bills payables increased, primarily composed of trade payables and bills payable, with an aging analysis disclosed - Trade and Bills Payables (CNY thousand) | Type (CNY thousand) | June 30, 2025 | Dec 31, 2024 | | :---------------- | :------------ | :------------- | | Trade Payables | 3,953,363 | 2,907,697 | | Bills Payable | 12,340,901 | 9,700,103 | | Total | 16,294,264 | 12,607,800 | - Aging Analysis: **CNY 15,568,223 thousand** are within three months[56](index=56&type=chunk) [14. Convertible Bonds](index=31&type=section&id=14.%20Convertible%20Bonds) The company redeemed all zero-coupon convertible bonds due in 2025 during the reporting period, with the liability component reduced to zero - Redemption: On May 21, 2025, all unconverted 2025 convertible bonds were redeemed at **117.49% of their principal amount**[57](index=57&type=chunk) - Liability Component: The liability component was **zero** at the end of the period[58](index=58&type=chunk) [15. Share Capital](index=32&type=section&id=15.%20Share%20Capital) The company's authorized share capital is 1 trillion shares of HKD 0.0001 each, with 2,385,668,363 ordinary shares issued and fully paid - Authorized Share Capital: **1,000,000,000,000 shares** of **HKD 0.0001 each**[59](index=59&type=chunk) - Issued Share Capital: **2,385,668,363 ordinary shares**[59](index=59&type=chunk) [16. Share Option Scheme](index=32&type=section&id=16.%20Share%20Option%20Scheme) The share option scheme expired in 2020, but there are still 5,500,000 outstanding share options with an exercise price of HKD 22.60 - Outstanding Share Options: **5,500,000 options** with an exercise price of **HKD 22.60**, exercisable until April 25, 2028[62](index=62&type=chunk)[63](index=63&type=chunk) - Period Changes: **No share options were granted, exercised, cancelled, or lapsed** during the period[62](index=62&type=chunk) [17. Business Combinations](index=34&type=section&id=17.%20Business%20Combinations) During the reporting period, the company acquired 100% equity in three automobile sales and service companies for a total consideration of CNY 79.23 million, resulting in goodwill - Acquisitions: Acquired **100% equity in Beijing Zhongsheng Jiefeng, Wuhan Zhongsheng Lexus, and Shaoxing Zhongsheng Lexus**[66](index=66&type=chunk)[67](index=67&type=chunk) - Total Consideration: **CNY 79.23 million**[68](index=68&type=chunk) - Financial Impact: Contributed **CNY 195.067 million in revenue** and **CNY 850 thousand in profit**, resulting in **goodwill of CNY 43.82 million**[68](index=68&type=chunk) [18. Contingent Liabilities](index=36&type=section&id=18.%20Contingent%20Liabilities) As of June 30, 2025, the Group and the Company had no significant contingent liabilities - **No significant contingent liabilities**[69](index=69&type=chunk) [19. Commitments](index=36&type=section&id=19.%20Commitments) As of the end of the reporting period, the Group had contractual commitments related to buildings - Building Contractual Commitments: **CNY 14.237 million**[70](index=70&type=chunk) [20. Related Party Transactions and Balances](index=37&type=section&id=20.%20Related%20Party%20Transactions%20and%20Balances) Disclosed transactions with joint ventures and associates, including sales and purchases of goods, loan repayments, and interest income, as well as related receivables and payables balances - Related Party Transactions (CNY thousand) | Transaction Type (CNY thousand) | H1 2025 | H1 2024 | | :-------------------- | :----------- | :----------- | | Sales of Goods to Joint Ventures | 20,000 | 79,859 | | Purchases of Goods or Services from Joint Ventures | 37,537 | 64,521 | | Purchases of Goods from Associates | 796 | 4,609 | - Related Party Balances (CNY thousand) | Balance Type (CNY thousand) | June 30, 2025 | Dec 31, 2024 | | :-------------------- | :------------ | :------------- | | Amounts Due from Related Parties | 7,750 | 7,712 | | Amounts Due to Related Parties | 3,221 | 6,319 | - Key Management Personnel Remuneration: **CNY 30.728 million**[74](index=74&type=chunk) [21. Fair Value and Fair Value Hierarchy of Financial Instruments](index=39&type=section&id=21.%20Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) Disclosed the carrying amounts and fair values of financial assets and liabilities, classified by fair value hierarchy - Financial Assets (CNY thousand) | Financial Assets (CNY thousand) | June 30, 2025 (Unaudited) | Dec 31, 2024 (Audited) | | :-------------------- | :------------------- | :-------------------- | | Financial Assets at FVTPL | 104,751 | 124,669 | | Financial Assets at FVOCI | — | 20,674 | | Total | 104,751 | 145,343 | - Financial Liabilities (CNY thousand) | Financial Liabilities (CNY thousand) | June 30, 2025 (Unaudited) | Dec 31, 2024 (Audited) | | :-------------------- | :------------------- | :-------------------- | | Financial Liabilities at FVOCI | 81,768 | — | - Fair Value Hierarchy: Listed equity investments are based on **active market quotes (Level 1)**, while cross-currency interest rate swaps use **significant observable inputs (Level 2)**[77](index=77&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Corporate Governance and Other Information](index=53&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Compliance with Corporate Governance Code](index=53&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company has adopted and complied with the Corporate Governance Code in Appendix C1 of the Listing Rules - Compliance Status: **Adopted and complied with the Corporate Governance Code**[125](index=125&type=chunk) [Standard Securities Dealing Code for Directors of Listed Issuers](index=53&type=section&id=Standard%20Securities%20Dealing%20Code%20for%20Directors%20of%20Listed%20Issuers) The company has adopted and complied with the Standard Securities Dealing Code for Directors in Appendix C3 of the Listing Rules - Compliance Status: **Adopted and complied with the Standard Securities Dealing Code**[126](index=126&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=53&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20Listed%20Securities) During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities, and the company holds 18,674,500 treasury shares - **No purchase, sale, or redemption of listed securities**[127](index=127&type=chunk) - Treasury Shares: Holds **18,674,500 treasury shares**, which were not sold[127](index=127&type=chunk) [Employees and Remuneration Policy](index=53&type=section&id=Employees%20and%20Remuneration%20Policy) The company values its employees as precious assets, committed to providing a harmonious and efficient work environment, diverse training, and attractive remuneration packages, incentivizing employees through performance-based compensation - Employee Count: **28,943 employees**, an increase from 26,357 at the end of 2024[128](index=128&type=chunk) - Remuneration Policy: Provides **attractive remuneration packages**, incentivizing employees with performance-based compensation, cash bonuses, and awards[128](index=128&type=chunk) [Audit Committee](index=54&type=section&id=Audit%20Committee) The Audit Committee, composed of three independent non-executive directors, has reviewed the Group's accounting policies, internal controls, and interim financial statements, deeming them compliant with relevant regulations - Composition: Composed of **three independent non-executive directors**[129](index=129&type=chunk) - Responsibilities: Reviewed accounting policies, internal controls, and interim financial statements, deeming them **compliant with regulations**[129](index=129&type=chunk) [Interim Dividend](index=54&type=section&id=Interim%20Dividend) The Board recommends not to declare any interim dividend for the six months ended June 30, 2025 - **No interim dividend declared**[130](index=130&type=chunk) [Events After Reporting Period](index=52&type=section&id=Events%20After%20Reporting%20Period) No significant events affecting the Group occurred after the reporting period - **No significant events after the reporting period**[124](index=124&type=chunk) [Acknowledgements and Forward-Looking Statements](index=54&type=section&id=Acknowledgements%20and%20Forward-Looking%20Statements) The Board expresses gratitude to employees, management, shareholders, and partners, noting that the report contains forward-looking statements based on existing information and assumptions, involving risks and uncertainties, and should not be unduly relied upon - Acknowledgements: Expresses gratitude to **employees, management, shareholders, and partners**[133](index=133&type=chunk) - Forward-Looking Statements: Based on existing information and assumptions, involving **risks and uncertainties**, and **should not be unduly relied upon**[134](index=134&type=chunk)

Group 1 - The company, Zhongsheng Holdings (00881.HK), announced the early redemption of bonds that were due on August 27, 2025 [1] - As of the announcement date, the company has no outstanding bonds [1] - The company has applied to the Hong Kong Stock Exchange to withdraw the listing status of the bonds, with the expected withdrawal effective after market hours on September 5, 2025 [1]

本公告僅作參考用途，並不構成收購、購買或認購證券的邀請或要約。債券（定義 見下文）並無且不會根據一九三三年美國證券法（經修訂）（「證券法」）或美國任何州 份或其他司法權區的證券法登記，且債券不得在美國境內或向美國人士提呈要約或 出售。 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責， 對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何 部份內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 茲提述本公司日期為二零二五年七月二十八日的公告，內容有關本公司提早贖回 （「提早贖回」）未償還債券。 本公司謹此宣佈，提早贖回已於二零二五年八月二十七日完成。 截至本公告日期，本公司並無已發行未償還債券。本公司已向香港聯合交易所有限 公司申請撤回債券的上市地位。預期有關撤銷上市將於二零二五年九月五日營業時 間結束後生效。 承董事會命 中升集團控股有限公司 主席 黃毅 香港，二零二五年八月二十七日 Zhongsheng Group Holdings Limited 中升集團控股有限公司 （於開曼群島註冊成立的有限公司） （股份代號：881） （「本公司」） 於二零二六年到期 ...

Market Overview - The Hong Kong stock market failed to maintain its strong performance from the previous day, with all three major indices experiencing a collective adjustment. The Hang Seng Index fell by 1.18% or 304.99 points, closing at 25,524.92 points, with a total trading volume of HKD 31.78 billion. The Hang Seng China Enterprises Index decreased by 1.07% to 9,148.66 points, while the Hang Seng Tech Index dropped by 0.74% to 5,782.24 points [1] Blue-Chip Stocks Performance - CSPC Pharmaceutical Group (01093) led the decline among blue-chip stocks, falling by 4.33% to HKD 10.38, with a trading volume of HKD 1.797 billion, contributing a loss of 6.04 points to the Hang Seng Index. Bank of America Securities reported a 14.3% year-on-year decline in total revenue for CSPC in Q2, with attributable net profit down 24% to RMB 1.1 billion. The firm revised its revenue forecasts for 2025 to 2027 down by 25%, 2%, and 11% respectively [2] Sector Highlights - Large technology stocks mostly declined, with Alibaba down 2.57% and Tencent down 0.81%. Gold stocks surged, with China Gold International rising over 10%. Apple is expected to initiate a three-year innovation cycle, boosting related stocks like Lens Technology, which rose over 5%. Gaming stocks and some new consumption concepts performed well, with Melco International Development up over 9% [3][5] Federal Reserve Insights - Federal Reserve Chairman Jerome Powell indicated rising downside risks in the U.S. labor market, suggesting a potential policy adjustment could be appropriate. This statement is seen as a strong signal for a possible interest rate cut as early as September. The market reacted positively, particularly for precious metals, with expectations for further increases in gold prices [4] Gaming Sector Performance - The gaming sector continued its upward trend, with Melco International Development rising 9.27% to HKD 5.54. According to JPMorgan, Macau's gaming revenue for the first 24 days of August reached MOP 17.65 billion, with a daily average of MOP 735 million, reflecting a 9% increase from the previous week [6] Pharmaceutical Sector Challenges - The pharmaceutical sector faced pressure, with several stocks declining. Notably, CStone Pharmaceuticals (09966) fell 6.74% to HKD 10.24. U.S. President Trump's announcement to drastically reduce drug prices could create significant challenges for the global pharmaceutical industry, presenting both opportunities and risks for Chinese biotech stocks [6] Notable Stock Movements - Double Ended Co. (06960) debuted with a 31.29% increase, closing at HKD 19.05. The company focuses on energy storage solutions in the data and communication sectors, with a projected market share of 11.1% by 2024 [7] - Kingsoft Holdings (03918) reached a new high, rising 17.94% to HKD 5.72, reporting a 16.76% year-on-year revenue increase to USD 342 million [8] - Angelalign Technology (06699) saw a 10.28% increase to HKD 75.1, with a 33.1% year-on-year revenue growth reported [9] - Meitu Inc. (01357) rose 7.9% to HKD 11.47 after being included in the MSCI China Index, with Morgan Stanley expressing confidence in its long-term growth potential [10] - Xintai Medical (02291) experienced a significant drop of 12.75% to HKD 23.96 following a major shareholder's sale of shares [11]

Market Overview - The Hong Kong stock market experienced a decline, with the Hang Seng Index falling by 0.24% to close at 25,104.61 points, and a total trading volume of HKD 239.49 billion [1] - The Hang Seng Tech Index was the worst performer, dropping 0.77% to 5,498.5 points [1] - Huatai Securities noted that the market is in a critical phase with a lack of trading themes and awaiting verification of significant domestic and overseas events, suggesting a window for position adjustment [1] Blue-Chip Stocks Performance - China Resources Power (00836) led the blue-chip decline, falling 5.9% to HKD 18.51, contributing a loss of 3.86 points to the Hang Seng Index [2] - The company reported a revenue of HKD 50.267 billion for the first half of 2025, a decrease of 1.67% year-on-year, and a profit attributable to shareholders of HKD 7.872 billion, down 15.92% [2] - Other notable blue-chip movements included China Biologic Products (01177) rising 3.49% and China Unicom (00762) increasing by 3.39% [2] Sector Highlights High-Speed Rail Infrastructure - Major technology stocks generally weakened, while high-speed rail infrastructure stocks performed well, with China CNR (01766) rising 5.85% and Times Electric (03898) increasing by 5.43% [3] - The National Railway Group announced a tender for 210 high-speed train sets, exceeding market expectations, indicating a positive outlook for the sector [3] Pharmaceutical Sector - The pharmaceutical sector saw most stocks rise, with Basilea Pharmaceutica (02616) increasing by 12.87% and Akeso (01167) rising by 10.04% [4] - The Chinese Premier emphasized the need for high-quality technological support and policy backing for the biopharmaceutical industry, aiming to enhance innovation and production of effective medicines [4] Stablecoin Concept Stocks - Stablecoin-related stocks were active, with ZhongAn Online (06060) rising 6.98% and Yao Cai Securities (01428) increasing by 5.75% [4] - Goldman Sachs reported a new expansion cycle for the stablecoin market, potentially reaching trillions of dollars, with payment applications being a key growth driver [6] Notable Stock Movements - Crystal International (02232) reached a new high, closing up 12.66% at HKD 6.85, reporting a revenue of USD 1.229 billion, a 12.4% increase year-on-year [7] - Hong Kong Robotics (00370) surged 12.86% after signing a significant order for 10,000 humanoid robots, marking a milestone in the industry [8] - Huazhu Group (01179) reported a total revenue of RMB 6.426 billion for Q2 2025, a 4.52% increase, with a net profit of RMB 1.544 billion, up 44.7% [9] - Great Wall Motors (02333) saw a rise of 6.45% following the launch of its new PHEV model, which received over 21,856 orders within 24 hours [10] - ZTE Corporation (00763) increased by 5.38%, with analysts highlighting its underestimated progress in AI and network business [11]

Core Insights - The automotive dealership industry in China is facing intensified competition, leading to increased pressure on dealers to transform their business models [1][3][7] - A significant portion of dealerships are experiencing financial losses, with 52.6% reporting losses in the first half of the year and new car gross profit contribution at -22.3% [1][5][6] Market Performance - Passenger car sales reached 10.901 million units in the first half of the year, reflecting a year-on-year growth of 10.8% [3] - Only 30.3% of dealerships met their sales targets, with 29% of dealers achieving less than 70% of their goals [3][4] Dealer Satisfaction and Profitability - Overall dealer satisfaction scores dropped to 64.7, indicating a significant decline [4] - The majority of dealers (74.4%) reported varying degrees of price inversion, with 43.6% experiencing price inversions exceeding 15% [5][6] Shift in Revenue Sources - After-sales and financial services are becoming crucial for profitability, contributing 63.8% and 36.2% to gross profit, respectively, compared to new car sales [7][8] - Dealers are exploring new service offerings, such as car cleaning and maintenance, to enhance customer loyalty and revenue [8] Transition to New Energy Vehicles - Profitability among independent new energy vehicle dealers stands at 42.9%, while traditional fuel vehicle dealers show only 25.6% profitability [9][10] - The retail penetration rate of new energy vehicles reached 53.3% in June, with total retail sales of new energy vehicles at 5.468 million units, a 33.3% increase year-on-year [9][10] Strategic Partnerships and Brand Adjustments - Traditional dealerships are increasingly partnering with new energy vehicle brands, with companies like 中升集团 (Zhongsheng Group) adjusting their brand portfolios to include electric vehicle offerings [10] - New energy brands are shifting from direct sales to collaborations with top dealerships, indicating a strategic pivot in the market [10]

Core Insights - The automotive market in China is facing intensified competition, leading to increased pressure on dealers who are now seeking transformation and adaptation strategies [1][3][6] - The report indicates that the loss ratio among automotive dealers has risen to 52.6% in the first half of 2025, with new car gross profit contribution at -22.3% [5][6] - Dealers are increasingly focusing on after-sales services and financial products to enhance profitability, as traditional new car sales become less viable [7][9] Market Performance - Passenger car sales reached 10.901 million units in the first half of the year, reflecting a year-on-year growth of 10.8% [3] - Only 30.3% of automotive dealers met their sales targets, with 29% of dealers achieving less than 70% of their goals [3][4] - The satisfaction score among automotive dealers dropped significantly to 64.7 points, indicating a decline in overall dealer morale [4] Profitability Challenges - The report highlights that 74.4% of dealers experienced varying degrees of price inversion, with 43.6% facing price inversions exceeding 15% [5][6] - The increasing price inversion is eroding profit margins, pushing many dealers into a state of loss and liquidity challenges [6] Shift in Business Strategy - Dealers are pivoting towards after-sales and financial services, which contributed 63.8% and 36.2% to gross profit respectively, far exceeding the contribution from new car sales [7][8] - Some dealers are exploring additional services such as car washing and maintenance to enhance customer engagement and loyalty [8] New Energy Vehicle (NEV) Focus - The profitability ratio for independent NEV dealers stands at 42.9%, compared to 25.6% for traditional fuel vehicle dealers [9][10] - NEV dealers are benefiting from a significant market demand, with NEV retail sales reaching 5.468 million units, a 33.3% increase year-on-year [9] Brand Transformation - Traditional dealers are increasingly transitioning to sell NEV models, with some forming partnerships with NEV brands to adapt to market changes [10][11] - Major automotive groups are adjusting their brand portfolios to include more NEV options, reflecting a strategic shift in response to evolving consumer preferences [10]