Financial Performance - For the six months ended June 30, 2023, the company recorded revenue of approximately RMB 12,310 million, representing a year-on-year increase of about 11.2%[5] - The company's gross profit for the same period was approximately RMB 630 million, reflecting a year-on-year decrease of about 33.6%[5] - The group recorded a net loss of approximately RMB 386 million for the first half of 2023, compared to a profit of RMB 6 million in the same period of 2022[43] - Operating profit for the first half of 2023 was approximately RMB 153 million, down from RMB 533 million in the same period of 2022, primarily due to a decline in new car sales gross margin[41] - The group's selling and distribution expenses for the first half of 2023 were approximately RMB 566 million, an increase of about 4.4% from RMB 542 million in the first half of 2022[45] - The company's net loss for the period was RMB 386,064 thousand, compared to a profit of RMB 5,675 thousand in the previous year[158] - Basic and diluted loss per share was RMB (14.4), compared to earnings of RMB 0.3 per share in 2022[164] Sales and Market Activity - New car sales totaled 30,560 units, a year-on-year increase of approximately 17.1%, including 26,187 units of luxury and ultra-luxury brands, which grew by about 22.1%[8] - New car sales revenue for the first half of 2023 was approximately RMB 10,581 million, up about 14.0% from RMB 9,281 million in the first half of 2022, accounting for 86.0% of total revenue[37] - The used car market in China saw a cumulative transaction volume of 8.7686 million units in the first half of 2023, a year-on-year increase of 15.6%[19] - The company plans to leverage existing store resources and favorable conditions to expand its used car export business significantly[78] Service and After-Sales - The company achieved 574,600 after-sales service transactions, generating after-sales service revenue of approximately RMB 1,426 million[17] - Service revenue for the first half of 2023 reached RMB 437.841 million, a significant increase of 97.5% compared to RMB 221.635 million in the same period of 2022[127] Operational Developments - The company completed upgrades for 9 core brand stores and showrooms to enhance customer purchasing experience[6] - The company continues to optimize its online platform, enhancing customer interaction and satisfaction through various digital initiatives[10] - The company has opened two new NIO maintenance centers in the first half of 2023, furthering its presence in the new energy sector[24] - The company has established a comprehensive logistics base that integrates parts logistics, vehicle logistics, and vehicle storage, expected to be operational soon[30] Corporate Governance and Risk Management - The company has optimized its governance structure by revising 31 internal regulations and abolishing 5, enhancing decision-making and supervision processes[32] - The company has focused on risk management by establishing a risk management system and emergency response mechanisms to address operational risks[34] - The company remains committed to high standards of corporate governance, ensuring compliance with the corporate governance code[97] Financial Position and Assets - As of June 30, 2023, the group's current assets were approximately RMB 14,610 million, an increase of about RMB 780 million from RMB 13,830 million as of December 31, 2022[49] - The group's cash and cash equivalents were approximately RMB 705 million as of June 30, 2023, a decrease of about RMB 29 million from RMB 734 million as of December 31, 2022[54] - The company's inventory was approximately RMB 3,581 million, a decrease of about RMB 483 million from RMB 4,064 million on December 31, 2022, primarily due to reduced new car inventory[58] - The total assets of the group as of June 30, 2023, amounted to RMB 3,580,553 thousand, down from RMB 4,064,270 thousand as of December 31, 2022, indicating a reduction of 11.9%[108] Shareholder and Equity Information - As of June 30, 2023, the total number of issued shares is 2,867,102,420, with major shareholders holding significant stakes: Xiamen Guomao Holding Group at 28.62% and Zhang Mei at 10.01%[83] - The company has granted a total of 47,100,000 shares under the share incentive plan, representing approximately 1.92% of the issued shares as of the adoption date[89] - The company did not declare any interim dividends for the six months ended June 30, 2023[151] Future Outlook and Strategy - The company plans to focus on market expansion and new product development to improve future performance[168] - The company is actively exploring investment and collaboration opportunities in the new energy market, particularly in the stable revenue-generating maintenance sector[24] - The company will continue to focus on luxury and ultra-luxury car brands, enhancing strategic partnerships with major manufacturers, including those in the new energy sector[78]

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之內容概不負責，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。 China ZhengTong Auto Services Holdings Limited 中 國 正 通 汽 車 服 務 控 股 有 限 公 司 （根據開曼群島法律註冊成立的有限公司） （股份代號：1728） 截至2023年6月30日止六個月的中期業績公告 中國正通汽車服務控股有限公司（「本公司」）董事（「董事」）會（「董事會」）欣然宣佈本公司 及其附屬公司（統稱「本集團」）截至2023年6月30日止六個月的未經審核綜合中期業績， 連同下文所載2022年同期的比較數字。 摘要 截至2023年6月30日止六個月： • 收益增加約11.2%至約人民幣12,310百萬元，乃主要由於新車銷售數量有所增加； • 整體毛利減少約33.6%至約人民幣630百萬元，毛利率下降3.5個百分點至5.1%，乃 主要由於新車平均售價有所下降； ...

Financial Performance - In 2022, the company's revenue was RMB 22,606,790, an increase from RMB 20,985,529 in 2021, reflecting a growth of approximately 7.7%[35] - The company reported a loss attributable to equity shareholders of RMB 296,285 in 2022, a significant improvement compared to a loss of RMB 3,622,131 in 2021[35] - The total liabilities of the company increased to RMB 27,508,315 in 2022 from RMB 25,589,165 in 2021, reflecting a rise of approximately 7.5%[36] - The group's net cash inflow from operating activities for the year was approximately RMB 159 million, slightly up from RMB 156 million in 2021[19] - The group's gross profit for the year ended December 31, 2022, was approximately RMB 1,587 million, an increase of about 28.4% compared to RMB 1,236 million in 2021, primarily due to increased new car sales and controlled sales costs[84] - The net loss for the year ended December 31, 2022, was approximately RMB 297 million, a decrease of about 92.1% from RMB 3,781 million in 2021, with a loss margin of approximately 1.3%[87] Assets and Liabilities - As of December 31, 2022, the total assets of the company were RMB 27,732,759, compared to RMB 26,129,786 in 2021, indicating a growth of about 6.1%[36] - As of December 31, 2022, the group's cash and cash equivalents were approximately RMB 734 million, an increase of about RMB 525 million from RMB 209 million as of December 31, 2021[19] - The group's current assets as of December 31, 2022, were approximately RMB 13,830 million, an increase of about RMB 1,039 million from RMB 12,791 million in 2021[90] - The group's current liabilities as of December 31, 2022, were approximately RMB 18,911 million, a decrease of about RMB 2,930 million from RMB 21,841 million in 2021, mainly due to a reduction in short-term loans[90] Sales and Distribution - The group sold a total of 56,264 new vehicles in the year ended December 31, 2022, representing a year-on-year growth of approximately 9.4%, including 45,334 luxury and ultra-luxury vehicles, which grew by about 14.2%[54] - New car sales revenue was approximately RMB 18,845 million, up about 10.9% from RMB 16,989 million in 2021, accounting for 83.4% of total revenue in 2022[74] - The sales of luxury and ultra-luxury brand vehicles generated revenue of approximately RMB 17,491 million, a year-on-year increase of about 13.0% from RMB 15,483 million in 2021, representing 92.8% of new car sales revenue[74] - The group achieved a total of 1,070,313 after-sales service instances in 2022, generating after-sales service revenue of approximately RMB 3,081 million[55] Inventory and Supply Chain - The group's inventory as of December 31, 2022, was approximately RMB 4,064 million, an increase of about RMB 1,415 million from RMB 2,649 million in 2021, primarily due to increased new car inventory based on market demand[20] - The average inventory turnover days for 2022 was 48.4 days, an increase of 16.9 days from 31.5 days in 2021, attributed to expanded operational scale and increased year-end inventory due to the pandemic[20] - The group's sales cost for the year was approximately RMB 21,020 million, an increase of about 6.4% from RMB 19,750 million in 2021, consistent with the rise in new car sales[75] Strategic Initiatives - The company aims to focus on luxury and ultra-luxury car brands, enhancing strategic partnerships with major manufacturers, including those in the new energy sector[25] - The company is actively adapting to market opportunities in the automotive distribution industry, particularly in new energy and new distribution models[25] - The company plans to expand its used car business and explore opportunities in the new energy service industry, aiming for higher gross profit returns[107] - The company is actively seeking collaboration opportunities with other established new energy dealers to facilitate business transformation and upgrade[41] Corporate Governance - The board of directors consists of six members, including three executive directors and three independent non-executive directors[121] - The board has established an independence assessment mechanism to enhance board efficiency and identify areas for improvement[132] - The company has implemented a training program for newly appointed directors to ensure they understand the business and regulatory responsibilities[134] - The company has arranged directors' and officers' liability insurance to protect its executives from legal actions arising from company activities[126] Employee and Management - As of December 31, 2022, the company employed 7,181 staff, a decrease from 7,760 in the previous year, with employee costs for the year amounting to approximately RMB 985 million[104] - The company has adopted a competitive compensation and benefits plan to attract and retain high-quality employees, including a four-tier training system for staff development[110] - The company emphasizes maintaining competitiveness and risk resistance as it transitions from a private enterprise to a state-owned enterprise management mechanism[47] Market Trends - The penetration rate of new energy vehicles in the Chinese market reached nearly 30% in 2022, indicating a significant shift in consumer demand[40] - The automotive industry in China saw a year-on-year increase of 11.2% in production and 9.5% in sales, with total passenger vehicle production and sales reaching 23.83 million and 23.56 million units, respectively[40] - The company anticipates a strong rebound in automotive consumption in 2023, driven by economic recovery and increased domestic demand[111]

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之內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示概不會就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。 China ZhengTong Auto Services Holdings Limited 中 國 正 通 汽 車 服 務 控 股 有 限 公 司 （根據開曼群島法律註冊成立的有限公司） （股份代號：1728） 截至2022年12月31日止年度之全年業績公告 業績摘要 面對市場環境巨大的挑戰，在五年戰略規劃的指引和國資股東的大力支持下，本集團 在主業恢復、授權維護、業務拓展、融資授信、內控管理、人才培養等多方面取得了 良好的工作成效，在業績表現方面也實現大幅減虧，為可持續、高質量發展奠定堅實 基礎。 截至2022年12月31日止年度： • 本集團收益約為人民幣22,607百萬元，同比2021年約人民幣20,986百萬元增長7.7%。 • 總體毛利約為人民幣1,587百萬元，較2021年的約人民幣1,236百萬元，上升約為 28.4%。總體毛利率約為7.0%，同比2021年約5.9%上升1.1個百分點。 ...

Financial Performance - For the six months ended June 30, 2022, the company recorded revenue of approximately RMB 11,069 million, representing a year-on-year growth of about 15.2%[4] - The gross profit for the same period was approximately RMB 949 million, showing a significant year-on-year increase of approximately 2,961.3%[4] - The group's revenue for the six months ended June 30, 2022, was approximately RMB 11,069 million, an increase of about 15.2% compared to RMB 9,612 million in the same period of 2021[30] - Revenue from new car sales was approximately RMB 9,281 million, up about 22.7% from RMB 7,566 million in the first half of 2021, accounting for 83.8% of total revenue[30] - The group's gross profit for the six months ended June 30, 2022, was approximately RMB 949 million, a significant increase of about 2,961.3% compared to RMB 31 million in the same period of 2021, with a gross margin of 8.6%[32] - Operating profit for the six months ended June 30, 2022, was approximately RMB 533 million, compared to an operating loss of approximately RMB 762 million in the same period of 2021[36] - The net profit for the six months ended June 30, 2022, was approximately RMB 6 million, a turnaround from a loss of approximately RMB 1,519 million in the first half of 2021[39] - The company reported a net profit of RMB 5,675 for the period, a significant turnaround from a net loss of RMB 1,518,695 in 2021[114] - The company reported a net profit of RMB 8,150,000 for the six months ended June 30, 2022, compared to a loss in the previous period[132] Sales and Market Performance - The company sold a total of 26,100 new vehicles, reflecting a year-on-year growth of approximately 6.9%, including 21,452 luxury and ultra-luxury vehicles, which grew by approximately 17.9%[6] - The after-sales service segment achieved a total of 573,615 service instances, generating after-sales service revenue of approximately RMB 1,468 million[8] - The company plans to focus on the automotive sales service business in the second half of 2022, particularly enhancing its luxury brand agency operations, aiming for continuous high-speed growth[53] - The company intends to expand its used car business significantly, improving the scale and profitability of certified used car retail operations, while also enhancing the market influence of its used car brand[53] - Revenue from after-sales services was RMB 1,467,521 thousand, a decrease of 9.0% from RMB 1,613,169 thousand in the previous year[149] Operational Efficiency and Strategy - The company is focusing on enhancing customer experience through digital management systems and personalized services, aiming to increase customer retention and expand its customer base[8] - The company is strategically closing underperforming outlets and transitioning brands to improve overall profitability while enhancing brand image and customer experience[12] - The company is focusing on optimizing brand structure and dealership profitability while exploring market opportunities in new energy and new dealership models[14] - The company is committed to enhancing its operational efficiency and cost advantages through digitalization and standardization of processes[53] - The company has adopted a restricted share award plan, with a total of 47,100,000 shares awarded since the adoption date, accounting for approximately 1.92% of the issued shares at that time[83] Financial Position and Assets - The group's cash and cash equivalents as of June 30, 2022, were approximately RMB 1,005 million, an increase of about RMB 796 million from RMB 209 million as of December 31, 2021[41] - The average inventory turnover days increased to 40.8 days for the first half of 2022, up from 27.5 days in the same period of 2021[47] - The group's current assets as of June 30, 2022, were approximately RMB 13,343 million, an increase of about RMB 552 million from RMB 12,791 million as of December 31, 2021[40] - The total assets as of June 30, 2022, amounted to RMB 13,610,174, compared to RMB 13,338,841 at the end of 2021, reflecting growth in asset base[121] - The total liabilities decreased to RMB 7,132,778,000 as of June 30, 2022, from RMB 7,140,928,000 at the end of the previous period[132] Governance and Compliance - The company has implemented a comprehensive governance structure to enhance decision-making and internal controls[26] - The company has established a risk management framework to identify and mitigate operational risks effectively[27] - The company is committed to high standards of corporate governance to protect shareholder interests and enhance corporate value and accountability[88] - The company has complied with the corporate governance code, with the roles of chairman and CEO being separated since March 10, 2022[96] - The audit committee, composed entirely of independent non-executive directors, reviewed the unaudited interim financial statements for the six months ended June 30, 2022[100] Challenges and Market Conditions - The supply chain segment reported a revenue of approximately RMB 220 million in the first half of 2022, a decrease of 24.4% year-on-year due to pandemic impacts and supply chain disruptions[23] - The second-hand car market saw a total transaction volume of 758.52 million units in the first half of 2022, a year-on-year decrease of 10.07%, but June alone saw a month-on-month increase of 19.20%[9] - The company has not engaged in any significant acquisitions or disposals of subsidiaries or joint ventures in the first half of 2022[61] Future Outlook - The company is actively developing new products and technologies, including a series of digital projects aimed at enhancing customer lifecycle management[27] - The company is actively collaborating with new energy vehicle brands to expand its service offerings in the new energy vehicle sector, leveraging its resources for rapid network expansion[53] - The company has plans for market expansion and new product development, although specific details were not disclosed in the report[110]

Financial Performance - In 2021, the company reported revenue of RMB 20,985.5 million, a 24.8% increase from RMB 16,880.9 million in 2020[10] - The company experienced a loss before tax of RMB 2,213.6 million in 2021, compared to a loss of RMB 10,395.4 million in 2020, indicating an improvement[10] - The gross profit for 2021 was approximately RMB 1,236 million, a significant recovery from a gross loss of RMB 5,173 million in 2020[29] - The net loss attributable to equity holders was approximately RMB 3,622 million, reduced from RMB 8,579 million in 2020, marking a decrease of about 57.8%[29] - The basic loss per share improved to approximately RMB 133.8 cents, down from RMB 334.8 cents in 2020, reflecting a reduction of about 60.1%[29] - The company reported a revenue of RMB 601 million for its supply chain business in 2021, representing a year-on-year growth of 3.72%[53] - New car sales revenue was approximately RMB 16,989 million, up about 34.8% from RMB 12,606 million in 2020, accounting for 81.0% of total revenue in 2021[70] - The net loss for the year was approximately RMB 3,781 million, a reduction of about 56.0% from RMB 8,589 million in 2020, with a loss margin of 18.0%[79] Operational Expansion - The company expanded its operational network to 118 locations across 40 cities in 17 provinces and municipalities by the end of 2021, adding 4 new outlets during the year[5] - The group opened 4 new operational outlets in 2021, bringing the total to 118 outlets across 40 cities in 17 provinces and municipalities[44] - The group has been authorized to establish 5 new dealership outlets for luxury brands, including Porsche and Mercedes-Benz, with plans for rapid development[44] - The company expanded its dealership network by adding one Porsche and one Mercedes-Benz dealership during the reporting period[29] Market Trends and Strategy - The luxury car sales segment showed significant growth, with the company focusing on high-end brands such as Porsche, BMW, and Mercedes-Benz[5] - The overall automotive market in China is shifting towards a concentration of leading dealers, with increased competition in the used car and after-sales service sectors[17] - The Chinese automotive market is projected to continue growing, with domestic brands capturing over 40% market share and significant increases in export volumes[17] - The company is strategically positioned to leverage the dual circulation model of the economy, enhancing its market presence amid changing consumer behaviors[17] - The company aims to enhance its after-sales service to meet the growing demand in the automotive market, emphasizing high-quality and rapid service[7] Technological Investment - The company is investing in new technologies and services to adapt to the evolving automotive ecosystem, including electric vehicles and integrated service offerings[17] - The group is actively pursuing digital transformation to drive innovation, focusing on customer lifecycle management and operational efficiency improvements[39] Customer Experience and Service - The group achieved a total of 1,352,572 after-sales service instances in 2021, generating after-sales service revenue of approximately RMB 3,105 million[33] - The company aims to enhance operational capabilities and customer experience through brand upgrades and increased interaction with manufacturers[44] - The company is actively entering the new energy vehicle market and enhancing its service experience in this sector[29] Corporate Governance - The company has committed to high standards of corporate governance to protect shareholder interests and enhance corporate value[113] - The board has delegated daily management responsibilities to the CEO and senior management while retaining oversight of strategic decisions[126] - The company has adopted a set of securities trading rules that are at least as stringent as the standard rules outlined in the listing rules[118] - The company has established three committees: remuneration, nomination, and audit, each with clear written terms of reference to oversee specific aspects of the company's affairs[149] ESG Commitment - The ESG report for 2021 highlights the company's commitment to environmental and social responsibilities, addressing key ESG issues of concern to stakeholders[185] - The group has identified key ESG issues including product health and safety, supply chain management, and customer privacy, focusing on performance improvement in these areas[194] - The group is committed to sustainable development, integrating ESG principles into all operational activities to minimize negative environmental impacts[197] - The group has established a top-down ESG governance structure, with the board overseeing environmental and social matters, including risk assessment and management[198]

Financial Performance - In the first half of 2021, the company recorded revenue of approximately RMB 9,612 million, representing a year-on-year increase of about 8.23%[7] - The company reported a loss attributable to equity holders of approximately RMB 1,455 million, with a basic loss per share of approximately RMB 0.54, representing a year-on-year increase of about 6.59%[7] - The group's revenue for the first half of 2021 was approximately RMB 9,612 million, an increase of about 8.2% compared to RMB 8,881 million in the same period of 2020[41] - The company reported a net loss of approximately RMB 1,519 million for the first half of 2021, compared to a loss of RMB 1,323 million in the first half of 2020[50] - The company incurred a net loss of 1,455,474 for the six months ended June 30, 2021, compared to a loss of 1,518,695 in the same period of the previous year[149] - The total comprehensive loss for the six months ended June 30, 2021, was RMB 1,516,106, compared to RMB 1,328,152 in 2020, indicating an increase in loss of about 14.2%[129] Vehicle Sales and Market Performance - The company sold a total of 24,424 new vehicles in the first half of 2021, reflecting a year-on-year growth of approximately 13.2%, including 18,198 luxury and super-luxury vehicles, which grew by about 3.6%[8] - The luxury car market in China saw sales of approximately 1.472 million units in the first half of 2021, a year-on-year increase of 39.7%[4] - New car sales revenue was approximately RMB 7,566 million, up 12.0% from RMB 6,758 million in the first half of 2020, accounting for 78.7% of total revenue[41] - Revenue from passenger vehicle sales was RMB 7,566,395 thousand, up from RMB 6,757,976 thousand, indicating a growth of about 11.9%[166] After-Sales and Service Revenue - The after-sales service business recorded a total of 592,551 service instances in the first half of 2021, a year-on-year decrease of approximately 3.5%, with service revenue of RMB 1,613 million, down 8.9% year-on-year[11] - The company’s revenue from after-sales services decreased to RMB 1,613,169 thousand from RMB 1,769,919 thousand, a decline of approximately 8.8%[166] - The gross profit from after-sales services was approximately RMB 568 million, a decline of 24.4% compared to the same period last year, resulting in a gross margin of 35.2%[11] Financial Services and Loans - Dongzheng Automotive Finance's loan scale decreased by 29% from RMB 57.5 billion on December 31, 2020, to RMB 41.1 billion by June 30, 2021[16] - Net interest income for Dongzheng Automotive Finance was RMB 164 million, a decrease of 43% compared to the same period in 2020[16] - Dongzheng Automotive Finance reported a net loss of RMB 260 million for the first half of 2021, compared to a net profit of RMB 143 million in the same period of 2020[16] - The non-performing loan ratio for Dongzheng Automotive Finance was 10.7% as of June 30, 2021[17] Operational Developments - The company opened one new Mercedes-Benz store and one new Porsche store during the reporting period, further expanding its advantageous brand network[7] - The company actively engaged in the new energy vehicle market, attempting new business operation models and accumulating service experience[7] - The company implemented differentiated sales strategies based on brand market performance to expand sales scale and profitability[9] - The company has restored credit limits with financial institutions to support rapid business development following the resolution of liquidity risks[9] Inventory and Cash Flow - Inventory as of June 30, 2021, was approximately RMB 2,090 million, an increase of about RMB 288 million from RMB 1,802 million at the end of 2020[56] - Operating cash flow for the six months ended June 30, 2021, was negative at -60,069, compared to positive 569,205 for the same period in 2020[149] - Cash and cash equivalents were reported at RMB 319,390 thousand, a decrease from RMB 395,119 thousand at the end of 2020[136] Shareholder and Equity Information - The company completed a supplementary agreement with Xiamen Guotai Holdings, adjusting the number of shares to be transferred to 820,618,184 shares, representing 29.9% of the total issued share capital, for a total consideration of HKD 1,427,875,640.16, equivalent to HKD 1.74 per share[71] - As of June 30, 2021, the total number of issued shares was 2,744,542,420 shares, with the largest shareholder, Yidu, holding 50.41% of the shares[75] - The company has a stock option plan that allows for the issuance of up to 200,000,000 shares, which is approximately 7.29% of the total issued share capital as of the report date[83] - The company has established a trust for the shares granted under the stock incentive plan, ensuring that the beneficiaries are properly managed[74] Strategic Initiatives and Future Plans - The group plans to introduce strategic investment partners to eliminate liquidity risks and improve operational efficiency in the short term[66] - The group aims to enhance its luxury brand network and provide high-value services to improve market competitiveness in the mid-term[66] - The group is committed to transforming and upgrading its operations to create greater value for shareholders, employees, and society in the long term[66] - The group is actively exploring new marketing models, utilizing multiple online platforms for customer interaction to enhance marketing channels and improve business development efficiency[38]

Company Overview [Company Profile](index=4&type=section&id=Company%20Profile) China ZhengTong Auto Services Holdings Limited is a leading 4S dealership group in China, operating 125 outlets across 40 cities and offering comprehensive automotive solutions for luxury and ultra-luxury brands - The company is a leading 4S dealership group in China, primarily distributing luxury and ultra-luxury automobile brands such as **Porsche, Mercedes-Benz, BMW, and Audi**[5](index=5&type=chunk) - As of **December 31, 2020**, the Group owned **125 operating outlets** across **40 cities** in **17 provinces and municipalities** nationwide[6](index=6&type=chunk) - In addition to car dealership and after-sales services, the Group actively develops financial businesses including **auto finance, financial leasing, and insurance agency** to achieve strategic transformation and sustainable growth[6](index=6&type=chunk) Five-Year Financial Summary [Five-Year Financial Summary](index=5&type=section&id=Five-Year%20Financial%20Summary) The company experienced a severe performance decline in 2020, with revenue plummeting to **RMB 16.88 billion** and a substantial loss of **RMB 8.59 billion**, alongside significant reductions in total assets and equity Five-Year Performance Summary | Indicator (RMB Thousand) | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 31,519,255 | 35,474,325 | 37,455,510 | 35,137,794 | 16,880,923 | | **(Loss)/Profit Before Tax** | 790,798 | 1,753,791 | 1,889,488 | 1,163,064 | (10,395,426) | | **(Loss)/Profit for the Year** | 508,359 | 1,211,462 | 1,254,782 | 766,705 | (8,588,604) | | **(Loss)/Profit Attributable to Equity Holders of the Company** | 493,282 | 1,190,795 | 1,224,065 | 663,862 | (8,579,106) | Five-Year Assets and Liabilities Summary | Indicator (RMB Thousand) | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | 27,728,910 | 36,939,130 | 44,199,218 | 44,857,974 | 27,995,953 | | **Total Liabilities** | (18,786,749) | (26,585,498) | (31,873,772) | (31,217,677) | (22,683,053) | | **Equity Attributable to Equity Holders of the Company** | 8,858,331 | 10,200,811 | 12,143,276 | 12,418,268 | 4,108,094 | Chairman's Statement [Chairman's Statement](index=8&type=section&id=Chairman%27s%20Statement) In 2020, the company navigated dual challenges of COVID-19 and liquidity risks by reducing expenses and exploring online marketing, with a strategic cooperation with Xiamen C&D significantly improving operations despite a 6.0% decline in the overall passenger vehicle market - In **2020**, China's economy grew by **2.3%**, while national passenger vehicle sales decreased by **6.0%** year-on-year, but the luxury car market grew by **6.5%**, with its market share increasing to **16.0%**[16](index=16&type=chunk)[17](index=17&type=chunk) - Facing the **COVID-19 pandemic** and **liquidity risks**, the Group adopted measures including **cost reduction, adjustment of operating strategies, and exploration of new marketing models** to mitigate losses[20](index=20&type=chunk) - In **October 2020**, the Group reached a cooperation intention with **Xiamen C&D Co., Ltd.**, which fundamentally improved the Group's operating environment, with most outlets resuming normal operations by year-end[20](index=20&type=chunk) Management Discussion and Analysis [Business Review](index=12&type=section&id=Business%20Review) In 2020, the company's performance was severely impacted by COVID-19 and liquidity risks, resulting in a **50.7% revenue decrease** and a **RMB 8.58 billion loss** attributable to equity holders, despite counter-trend growth in the supply chain business Key Performance Indicators for 2020 | Indicator | Amount | Year-on-Year Change | | :--- | :--- | :--- | | **Revenue** | Approx. RMB 16.881 Billion | -50.7% | | **Gross Loss** | Approx. RMB 5.173 Billion | -252.0% | | **Loss Attributable to Equity Holders** | Approx. RMB 8.579 Billion | -1,392.0% | | **Basic Loss Per Share** | Approx. RMB 334.8 Cents | -1,335.4% | [New Car Sales Business](index=12&type=section&id=New%20Car%20Sales%20Business) New car sales significantly declined in 2020, with total sales down **59.9%** to **41,394 units** and gross profit margin dropping to **-52.4%** due to reduced manufacturer rebates, prompting a shift to online marketing and enhanced inventory management New Car Sales Performance | Indicator | 2020 | Year-on-Year Change | | :--- | :--- | :--- | | **Total Sales Volume** | 41,394 Units | -59.9% | | **Luxury and Ultra-Luxury Brand Sales Volume** | 31,565 Units | -61.4% | | **New Car Sales Gross Profit Margin** | -52.4% | -56.4 Percentage points | - To cope with the pandemic and liquidity risks, the Group actively experimented with new marketing models such as **online live streaming**, strengthened **inventory management**, improved turnover efficiency, and reduced capital occupation[29](index=29&type=chunk) [After-Sales Services Business](index=13&type=section&id=After-Sales%20Services%20Business) After-sales service revenue decreased by **29.3%** to **RMB 3.373 billion** in 2020, with gross profit down **39.6%** to **RMB 1.291 billion** and a gross profit margin of **38.3%**, as the company focused on customer retention and derivative product penetration After-Sales Services Performance | Indicator | 2020 | Year-on-Year Change | | :--- | :--- | :--- | | **Service Sessions** | 1,245,486 Service Sessions | -17.9% | | **After-Sales Service Revenue** | RMB 3.373 Billion | -29.3% | | **Gross Profit** | RMB 1.291 Billion | -39.6% | | **Gross Profit Margin** | 38.3% | N/A | [Auto Finance Technology Segment](index=13&type=section&id=Auto%20Finance%20Technology%20Segment) Dongzheng Auto Finance faced severe challenges in 2020, with its loan portfolio decreasing by **42.5%** to **RMB 5.75 billion** and net profit plummeting **85.9%** to **RMB 55 million**, yet maintained a low non-performing loan ratio of **0.36%** through upgraded risk control Dongzheng Auto Finance Performance | Indicator | End of 2020 | Year-on-Year Change | | :--- | :--- | :--- | | **Loan Portfolio** | RMB 5.75 Billion | -42.5% | | **Net Profit** | RMB 55 Million | -85.9% | | **Non-Performing Loan Ratio** | 0.36% | N/A | - Dongzheng Auto Finance achieved a dual reduction in **non-performing loan ratio** and **non-performing loan balance** by upgrading its big data risk control model, strengthening risk monitoring, and improving asset preservation strategies[38](index=38&type=chunk) [Supply Chain Business](index=15&type=section&id=Supply%20Chain%20Business) Despite early 2020 pandemic impacts, the supply chain business (Shengzejietong) achieved strong performance with total vehicle delivery volume increasing by **33.98%** to **479,300 units**, driven by new contracts and expanded partnerships, while also advancing new logistics base construction - In **2020**, the supply chain business cumulatively delivered **479,300 vehicles**, a year-on-year increase of **33.98%**, primarily benefiting from new business contracts with **Dongfeng Group** and **FAW Group**[42](index=42&type=chunk) - The company successfully signed a cooperation agreement with **Geely Auto**, entering the logistics system of China's top domestic automobile brand, and plans to further construct a new logistics base in **Hannan District, Wuhan**, to enhance core competitiveness[43](index=43&type=chunk)[47](index=47&type=chunk) [Network Development](index=16&type=section&id=Network%20Development) As of **2020 year-end**, the Group operated **125 outlets** across **40 cities**, strategically closing **7 underperforming 4S stores** and converting some dealerships to self-operated outlets, while **8 new luxury brand stores** remain under preparation Outlet Details (As of December 31, 2020) | Outlet Type | Opened | Authorized Pending Opening | Total | | :--- | :--- | :--- | :--- | | **Luxury and Ultra-Luxury Brand 5S/4S Stores** | 75 | 6 | 81 | | **Mid-to-High-End Brand 4S Stores** | 13 | 0 | 13 | | **Luxury Brand City Showrooms** | 10 | 0 | 10 | | **Used Car Centers** | 1 | 0 | 1 | | **Luxury Brand Authorized Service Centers** | 6 | 2 | 8 | | **Self-Operated Outlets** | 20 | 0 | 20 | | **Total** | 125 | 8 | 133 | - In **2020**, the Group strategically closed **7 underperforming brand 4S stores** and **3 city showrooms**, with some dealership authorizations terminated and converted to self-operated outlets[52](index=52&type=chunk) [Financial Review](index=20&type=section&id=Financial%20Review) The company's financial situation sharply deteriorated in 2020, with total revenue down **50.7%** to **RMB 16.88 billion**, a shift from gross profit to a **RMB 5.17 billion gross loss** (30.6% gross loss margin) due to reduced manufacturer rebates and significant impairment losses, resulting in a **RMB 9.34 billion operating loss** and reduced cash Revenue Composition (RMB Million) | Revenue Source | 2020 | 2019 (Restated) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **New Car Sales** | 12,606 | 28,564 | -55.9% | | **After-Sales Services** | 3,373 | 4,771 | -29.3% | | **Total Revenue** | 16,881 | 34,258 | -50.7% | - The main reasons for the revenue decline were the impact of the **COVID-19 pandemic** (approximately **RMB 7 billion**) and **liquidity constraints** leading to manufacturers canceling dealership rights (approximately **RMB 9 billion**)[72](index=72&type=chunk)[76](index=76&type=chunk) - A **gross loss of RMB 5.17 billion** (gross loss margin of **30.6%**) was recorded in **2020**, compared to a gross profit of **RMB 3.4 billion** in **2019**, primarily due to a significant reduction in manufacturer rebates and a **RMB 4.318 billion provision** for rebates receivable due to disputes with automobile manufacturers[78](index=78&type=chunk)[83](index=83&type=chunk) - Due to business interruptions and declining financial performance, the company recognized impairment losses of **RMB 1.241 billion** for goodwill and **RMB 906 million** for automobile dealership rights[88](index=88&type=chunk) - The controlling shareholder entered into an agreement with **Xiamen C&D**, which intends to acquire **29.9% of the company's shares**, becoming the largest single shareholder and providing financial support upon completion of the transaction[103](index=103&type=chunk) - As required by the **China Banking and Insurance Regulatory Commission**, the company committed to selling its entire equity interest in **Shanghai Dongzheng Auto Finance**, which was classified as a disposal group held for sale and a discontinued operation at the end of **2020**[104](index=104&type=chunk) [Future Outlook and Strategies](index=26&type=section&id=Future%20Outlook%20and%20Strategies) The company anticipates continued growth in China's luxury car market and has outlined a three-step strategy: short-term, introduce strategic investors to resolve liquidity risks; medium-term, deepen cultivation of the luxury car market and optimize network layout; long-term, integrate resources to build a world-class automotive service brand - Short-term strategy: Introduce **strategic investment partners** to eliminate the Group's **liquidity risks** and improve the operating environment[111](index=111&type=chunk) - Medium-term strategy: Continue to be rooted in the **luxury car market**, further improve the **luxury brand network layout**, and enhance market competitiveness[111](index=111&type=chunk) - Long-term strategy: Based on the **luxury car market**, integrate advantageous resources, form a business closed-loop around the customer's entire vehicle lifecycle, and build a **world-class automotive service brand**[111](index=111&type=chunk) Corporate Governance Report [Corporate Governance Report](index=27&type=section&id=Corporate%20Governance%20Report) This report details the company's compliance with the Hong Kong Stock Exchange's Corporate Governance Code in 2020, outlining the **seven-member Board of Directors** (including **three independent non-executive directors**), its three committees, and practices in risk management, internal control, and shareholder communication - The Board of Directors consists of **seven directors**, including **four executive directors** and **three independent non-executive directors**, meeting the listing rule requirement that independent non-executive directors shall not be less than one-third[118](index=118&type=chunk)[122](index=122&type=chunk) - The Board of Directors has established a **Remuneration Committee, a Nomination Committee, and an Audit Committee**, and has formulated clear written terms of reference[142](index=142&type=chunk) - The Board of Directors is responsible for maintaining sound and effective **risk management** and **internal control systems**, and has completed a review of their effectiveness for the year ended **December 31, 2020**[161](index=161&type=chunk) Auditor's Remuneration for 2020 (RMB Yuan) | Service Type | Fees Paid/Payable | | :--- | :--- | | **Audit Services** | 13,800 | | **Non-Audit Services** | 200 | | **Total** | 14,000 | Environmental, Social and Governance (ESG) Report [Environmental, Social and Governance (ESG) Report](index=36&type=section&id=Environmental%2C%20Social%20and%20Governance%20%28ESG%29%20Report) This report outlines the company's ESG practices, including efforts to reduce waste and resource consumption through eco-friendly repair processes, focus on employee welfare, anti-corruption, supply chain management, customer experience, and active community support during the pandemic - In terms of environmental protection, the company reduces the generation of hazardous waste by adopting measures such as using **water-based paints** instead of oil-based paints and **dry grinding processes** instead of wet grinding, and cooperates with qualified companies for hazardous waste disposal[197](index=197&type=chunk) - As of **2020 year-end**, the Group had **7,997 employees**, focusing on training through the "Zhengtong Academy" online learning platform with over **180 internal lecturers** and over **1,340 online courses**[213](index=213&type=chunk)[228](index=228&type=chunk) - The company strictly complies with **anti-corruption regulations**, preventing corrupt behavior through institutional building and promotional education, with **no corruption incidents** found during the reporting period[229](index=229&type=chunk)[232](index=232&type=chunk) - During the **COVID-19 pandemic**, the company actively participated in community anti-epidemic efforts, providing **car purchase discounts and conveniences for medical personnel**, and organizing car clubs to participate in transporting medical personnel and supplies[250](index=250&type=chunk) Directors' Report [Directors' Report](index=59&type=section&id=Directors%27%20Report) The Directors' Report details the company's 2020 principal businesses, financial position, and governance, including the decision to **forego dividends** due to the pandemic, disclosure of **continuing connected transactions** (primarily property leases), adoption of a **restricted share award scheme**, and an overview of key risks such as macroeconomic and market competition factors - Given the uncertain economic impact of the **COVID-19 pandemic**, the Board decided **not to declare a dividend for 2020** to maximize the Group's liquidity[304](index=304&type=chunk)[316](index=316&type=chunk) - The Group has **continuing connected transactions** with several companies controlled by **Mr. Wang Muqing's family**, primarily involving lease agreements for **offices, 4S stores, and logistics warehouses**, with an annual cap of **RMB 121 million**[328](index=328&type=chunk)[338](index=338&type=chunk) - The company adopted a **restricted share award scheme** on **June 12, 2020**, granting a total of **47,100,000 awarded shares** to **40 participants**, including three executive directors[358](index=358&type=chunk)[362](index=362&type=chunk) - The report identified the main risks faced by the company, including **macroeconomic environment, changes in industry policies, manufacturer policies, intense competition, supply chain disruptions, information systems, and market risks**[396](index=396&type=chunk) - The **China Banking and Insurance Regulatory Commission** accused the company of obtaining administrative permits for establishing its subsidiary **Dongzheng Auto Finance** through improper means and demanded the divestment of its equity, with the company's administrative review being rejected[393](index=393&type=chunk)[394](index=394&type=chunk) Independent Auditor's Report [Independent Auditor's Report](index=79&type=section&id=Independent%20Auditor%27s%20Report) KPMG issued an unmodified opinion on the 2020 consolidated financial statements but highlighted "Material Uncertainty Related to Going Concern" due to significant losses and short-term debts, emphasizing reliance on **Xiamen C&D's financial support** and future cash flow generation, with key audit matters including **goodwill impairment**, **vendor rebate recognition**, and **financial services receivables provisions** - The auditor's report includes an emphasis of matter paragraph on **"Material Uncertainty Related to Going Concern,"** noting that the company incurred significant losses (**RMB 8.59 billion**) during the year and had substantial short-term debts, raising significant doubt about its ability to continue as a going concern[424](index=424&type=chunk) - The company's ability to continue as a going concern depends on **financial support from strategic investor Xiamen C&D**, the **renewal of bank borrowings**, and the ability of future operations to generate sufficient cash inflows[424](index=424&type=chunk) - Key audit matters include: - **Impairment of goodwill and intangible assets**: Impairment assessment involves significant management judgment due to intense market competition and volatile performance of the 4S dealership business[428](index=428&type=chunk) - **Recognition of vendor rebates**: Rebate agreements are complex, and calculations involve significant management estimates, posing uncertainty risks[435](index=435&type=chunk) - **Loss provisions for financial services operating receivables**: The calculation of expected credit loss models relies on several key parameters and assumptions, involving management judgment[442](index=442&type=chunk) Consolidated Financial Statements [Consolidated Statement of Profit or Loss](index=89&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For 2020, revenue from continuing operations significantly decreased by **50.7%** to **RMB 16.88 billion**, resulting in a **RMB 5.17 billion gross loss** and a **RMB 9.34 billion operating loss**, with the total loss for the year reaching **RMB 8.59 billion** after including discontinued operations Consolidated Statement of Profit or Loss Summary (RMB Thousand) | Item | 2020 | 2019 (Restated) | | :--- | :--- | :--- | | **Revenue (Continuing Operations)** | 16,880,923 | 34,258,232 | | **Gross (Loss)/Profit** | (5,173,447) | 3,403,705 | | **Operating (Loss)/Profit** | (9,340,566) | 1,800,887 | | **(Loss)/Profit Before Tax** | (10,395,426) | 788,013 | | **(Loss)/Profit for the Year** | (8,588,604) | 766,705 | | **(Loss)/Profit Attributable to Equity Holders of the Company** | (8,579,106) | 663,862 | [Consolidated Statement of Financial Position](index=91&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of **December 31, 2020**, total assets significantly decreased by **37.6%** to **RMB 28.0 billion**, total liabilities decreased to **RMB 22.68 billion**, and total equity sharply dropped to **RMB 5.31 billion**, resulting in **net current liabilities of RMB 3.49 billion** and indicating liquidity pressure Consolidated Statement of Financial Position Summary (RMB Thousand) | Item | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | 27,995,953 | 44,857,974 | | **Total Liabilities** | 22,683,053 | 31,217,677 | | **Total Equity** | 5,312,900 | 13,640,297 | | **Current Assets** | 13,955,163 | 24,135,613 | | **Current Liabilities** | 17,440,187 | 25,819,015 | | **Net Current Liabilities** | (3,485,024) | (1,683,402) | [Consolidated Statement of Cash Flows](index=94&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) In 2020, net cash inflow from operating activities significantly decreased to **RMB 346 million**, while net cash outflow from financing activities was **RMB 1.359 billion**, leading to a **RMB 1 billion reduction** in cash and cash equivalents, ending the year at **RMB 491 million** Consolidated Statement of Cash Flows Summary (RMB Thousand) | Item | 2020 | 2019 | | :--- | :--- | :--- | | **Net Cash From Operating Activities** | 346,230 | 2,546,021 | | **Net Cash From (Used In) Investing Activities** | 22,414 | (969,281) | | **Net Cash Used In Financing Activities** | (1,359,266) | (2,995,404) | | **Net Decrease in Cash and Cash Equivalents** | (990,622) | (1,418,664) | | **Cash and Cash Equivalents at Year-End** | 490,540 | 1,497,400 |

Financial Performance - For the first half of 2020, the company recorded revenue of approximately RMB 9,241 million, a year-on-year decrease of about 47.0%[8] - The group's revenue for the first half of 2020 was approximately RMB 9,241 million, a decrease of about 47.0% compared to RMB 17,431 million in the same period of 2019[45] - New car sales revenue was approximately RMB 6,758 million, down 52.1% from RMB 14,099 million in the first half of 2019, accounting for 73.1% of total revenue[45] - After-sales service revenue was approximately RMB 1,770 million, a decrease of 27.3% from RMB 2,435 million in the first half of 2019, representing 19.2% of total revenue[45] - The group's gross profit for the first half of 2020 was approximately RMB 1,230 million, down 40.0% from RMB 2,051 million in the same period of 2019, with a gross margin of 13.3%[47] - The company reported a net loss of RMB 1,323 million for the six months ended June 30, 2020, compared to a profit of RMB 520 million in the same period of 2019[121] - The company recorded an impairment loss on goodwill and intangible assets of approximately RMB 916 million and RMB 549 million, respectively[51] - The total comprehensive loss for the period was RMB 1,328.15 million, compared to a total comprehensive income of RMB 518.69 million in the same period of 2019[121] Sales and Operations - The company sold a total of 21,572 new vehicles in the first half of 2020, representing a year-on-year decline of approximately 58.6%[9] - The luxury and ultra-luxury brand vehicle sales amounted to 17,570 units, down approximately 57.0% year-on-year[9] - The after-sales service business experienced a decline, with 613,815 service instances, a year-on-year decrease of about 13.0%[12] - The average replacement rate in key first-tier cities approached 40%, indicating stable growth in vehicle replacement despite declining new car sales[13] - The company faced significant challenges due to COVID-19, particularly with 16 of its 4S stores located in Hubei province, which had slower recovery rates[8] - The company implemented new marketing strategies, including online interactions and competitive marketing plans, to mitigate the impact of the pandemic[10] Financial Services - As of June 30, 2020, Dongzheng Automotive Finance's loan scale decreased by 18.5% to RMB 8.15 billion from RMB 10 billion at the end of 2019[16] - The net interest income for Dongzheng Automotive Finance was RMB 289 million, an increase of 30.1% compared to the same period in 2019[16] - The net profit for Dongzheng Automotive Finance was RMB 143 million, a decrease of 29.2% compared to RMB 202 million in the same period of 2019[16] - The total registered capital of Dongzheng Automotive Finance was RMB 2.14 billion, providing strong financial support for its loan business[19] - The company has established a full-cycle automotive financial ecosystem, integrating various financial services including retail loans and dealer financing[16] Cost Management and Efficiency - The company is focusing on optimizing procurement channels and enhancing parts turnover to control costs effectively[12] - The group implemented a tiered management system for dealerships, significantly improving resource allocation efficiency and overall profitability[42] - The group launched a new cloud platform management system in collaboration with Tencent to enhance service capabilities and operational quality[41] - The company has implemented stricter cost control measures and limited discretionary capital expenditures to improve its financial condition[152] Employee and Operational Changes - The total employee cost was approximately RMB 375 million, a decrease from approximately RMB 453 million for the same period in 2019, with 9,023 employees in China[67] - The company offered 122 courses on its learning platform, with over 30,000 total learning sessions by employees in the first half of 2020[43] - Employee costs decreased to RMB 375,028,000 in the first half of 2020, down 17.3% from RMB 453,420,000 in the same period of 2019[166] Future Outlook and Strategy - The company anticipates a rapid recovery in macroeconomic conditions and automotive consumption in China as the COVID-19 pandemic is effectively controlled, with a focus on the luxury car market[68] - The company plans to introduce strategic investment partners in the short term to mitigate negative impacts from COVID-19 and restore business operations quickly[68] - The long-term strategy includes integrating resources and enhancing external cooperation to create a world-class automotive service brand, focusing on the entire lifecycle of customer vehicle usage[68] Shareholder and Governance Information - As of June 30, 2020, the total number of issued shares was 2,452,220,420, with major shareholder Yidu Holdings Limited holding 56.42%[71] - The company has adopted a stock option plan effective from December 10, 2010, allowing the issuance of up to 200,000,000 shares, which represents approximately 7.41% of the company's issued share capital as of the report date[82] - The company has adopted the corporate governance code and has complied with its provisions throughout the reporting period[108] Impairment and Financial Challenges - The company incurred an impairment loss of RMB 1,465.41 million on goodwill and intangible assets, which was not present in the previous year[118] - The company experienced significant operational and financial impacts due to COVID-19, particularly in regions with higher concentrations of 4S dealerships[191] - The company is focusing on generating sufficient cash inflows and securing financing to address its liquidity challenges in the upcoming year[115]

Financial Performance - In 2019, the total revenue of China Zhengtong Auto Services Holdings Limited was RMB 35,137.8 million, a decrease of 3.5% compared to RMB 37,455.5 million in 2018[10] - The company's profit before tax for 2019 was RMB 1,163.1 million, down 38.4% from RMB 1,889.5 million in 2018[10] - The net profit attributable to equity shareholders for 2019 was RMB 663.9 million, a decline of 45.5% from RMB 1,224.1 million in 2018[10] - The gross profit for 2019 was approximately RMB 3,818 million, down about 14.9% compared to the previous year[31] - Profit attributable to equity holders was approximately RMB 664 million, with basic earnings per share of RMB 0.271, representing declines of approximately 45.8% and 45.7% respectively[31] - New car sales revenue was approximately RMB 28,564 million, down about 9.4% from RMB 31,529 million in 2018, accounting for 81.3% of total revenue in 2019[89] - Revenue from luxury and ultra-luxury brand car sales was approximately RMB 25,986 million, a decrease of about 8.4% from RMB 28,383 million in 2018, representing 91.0% of new car sales revenue in 2019[89] - After-sales service revenue increased by approximately 10.2% to RMB 4,771 million from RMB 4,331 million in 2018, accounting for 13.6% of total revenue, up by 2.0 percentage points year-on-year[89] Operational Highlights - As of December 31, 2019, the total assets of the company were RMB 44,858.0 million, a slight increase from RMB 44,199.2 million in 2018[11] - The company operated 135 dealerships across 41 cities in 17 provinces and municipalities in China by the end of 2019[6] - The company plans to enhance its brand structure and network layout, focusing on the development of new energy vehicle services[31] - The company is committed to increasing investment in information technology research and employee training to improve operational efficiency and service quality[31] - The company aims to optimize inventory management through a data-driven approach, enhancing the efficiency of working capital usage[37] - The company will continue to explore innovative service models and improve customer service processes to enhance overall operational quality[30] - The group strategically closed 7 underperforming outlets to enhance operational competitiveness and profitability[72] - The group has been authorized to establish 10 new dealership outlets for core luxury brands, expanding its competitive advantage in traditional provinces and entering rapidly developing regions[72] Market Trends - The luxury car market in China saw a 6.5% increase in sales, with major luxury brands selling 2.98 million vehicles in 2019[19] - BMW sales in China reached 724,000 units in 2019, representing a growth of 13.1% year-on-year[19] - By the end of 2019, the total number of privately owned vehicles in China was 22.635 million, reflecting a year-on-year growth of 9.2%[24] - In 2019, the national used car transaction volume reached 14.92 million units, an increase of 8.0% year-on-year, indicating a slowing growth rate as the industry enters a new adjustment phase[42] After-Sales Services - The after-sales service business achieved a total of 1,517,701 service instances, an increase of approximately 17.1% year-on-year, with after-sales revenue of approximately RMB 4,771 million, up 10.2%[38] - The after-sales gross profit was approximately RMB 2,138 million, resulting in an after-sales gross margin of about 44.8%[38] - The after-sales service business focuses on customer needs, enhancing customer satisfaction through optimized business processes and personalized service offerings[39] - The company is exploring new business models and revenue growth points around the entire customer lifecycle to ensure sustainable growth in after-sales services[39] Financial Services - The loan portfolio of Dongzheng Automotive Finance increased by 18.7% to RMB 10,004 million as of December 31, 2019, compared to RMB 8,426 million at the end of 2018[43] - Net interest income for Dongzheng Automotive Finance rose by approximately 22.1% to RMB 536 million in 2019[43] - The non-performing loan ratio for Dongzheng Automotive Finance was 0.44% in 2019, with a loan provision ratio of 1.89% and a coverage ratio of 423.97%[43] - Dongzheng Automotive Finance's registered capital was increased to RMB 2.14 billion in 2019, enhancing its capital adequacy ratio to support loan operations[48] - The dealer network for Dongzheng Automotive Finance exceeded 900 dealers by December 31, 2019, covering over 172 cities and nearly 200 mid-to-high-end 4S stores[48] Corporate Governance - The board consists of eight members, including five executive directors and three independent non-executive directors[135] - The company has adopted a securities trading code that complies with the standards set out in the listing rules[134] - The board has confirmed compliance with the securities trading code for the year ended December 31, 2019[134] - The company has established a diversity policy for board members, considering various factors such as professional experience, gender, and age[153] - The company provides formal training for newly appointed directors to ensure they understand the business and regulatory requirements[157] - The board has authorized the executive committee to manage daily operations, which includes the CEO and four other executive directors[144] Risk Management - The company has established a comprehensive risk management system to enhance credit risk management and optimize risk management capabilities[50] - The company has developed and launched a full-process transaction system, with a big data risk control system enabling online business approval in seconds[54] - The company has established a strategic cooperation agreement with China People's Insurance Company, providing real-time coverage for loan performance insurance, reducing funding risks[54] - The board is responsible for maintaining a robust risk management and internal control system, with a commitment to review its effectiveness at least once a year[183] Environmental, Social, and Governance (ESG) - This report is the fourth ESG report published by the group since its first release in 2017[198] - The report focuses on the sales, after-sales service, and supply chain business of luxury and ultra-luxury brand vehicles in China, covering all business segments for social data and significant environmental impact from vehicle sales and after-sales services[199] - The group has begun systematically collecting environmental data and vehicle recall information, selecting 29 representative stores as pilot collection sites to accumulate experience for future expansion[199]