ZHONGSHENG HLDG(00881)2023-04-27 08:41Company Performance and Growth - The company has successfully navigated uncertainties in 2022, achieving a customer base exceeding 7 million, with rapid growth ongoing[9]. - The company secured approximately RMB 67 billion in automotive financing and facilitated over 2 million insurance contracts, becoming a key partner for major banks and insurance companies in China[9]. - The company is the second-largest dealer for Mercedes-Benz and the largest for Lexus in terms of new car sales in China, with a total of around 140,000 used cars sold during the year[9]. - The group sold 520,396 new cars in 2022, with luxury brand sales reaching 307,434 units, a year-on-year increase of 2.7%, accounting for 59.1% of total new car sales[21]. - Sales of new energy vehicles increased by 69.4% year-on-year, attributed to the strong dealership network for core brand electric models[21]. - The group sold 140,121 used cars, with retail sales accounting for 25.3% or 35,450 units[21]. Financial Performance - The company's revenue for the year ended December 31, 2022, was RMB 179,857.0 million, an increase of RMB 4,753.9 million or 2.7% compared to the previous year[32]. - New car sales revenue was RMB 145,419.9 million, growing by RMB 2,954.2 million or 2.1% year-over-year[32]. - The gross profit for the year was RMB 16,031.6 million, a decrease of RMB 2,438.0 million or 13.2% compared to the previous year[36]. - The gross profit margin for the year was 8.9%, down from 10.5% in the previous year[37]. - Operating profit for the year was RMB 10,168.8 million, a decline of RMB 2,448.4 million or 19.4% year-over-year[39]. - Net profit for the year was RMB 6,614.4 million, down RMB 1,792.9 million or 21.3% compared to the previous year[40]. Market Trends and Strategy - The company is focusing on customer and business partner unmet needs to drive long-term growth, shifting from macro-driven new car sales to a more customer-centric approach[12]. - The company has launched multiple OEM brand showrooms in urban shopping areas and its first branded used car market, aligning with changing customer behaviors[10]. - The company has a strategic focus on high-quality brand portfolios across 32 major cities, with over half of its stores located in economically developed areas[9]. - The used car market in China experienced a transaction volume of 9.52 million units in 2022, a decline of 10.1% year-on-year, indicating a growing but challenging market[17]. - The ratio of used car sales to new car sales in China was 0.7 in 2022, compared to 2.5 in the more mature U.S. market, indicating significant growth potential[17]. Operational Efficiency and Management - The company has implemented a detailed management system to maintain operational flexibility and efficiency amid challenging market conditions[10]. - The group established eight centralized used car centers, with an average turnover time of 12.4 days for used cars[25]. - The centralized procurement platform managed a total procurement amount of RMB 3 billion, covering various automotive parts and capital expenditures[28]. - The average monthly after-sales revenue per employee increased by 25%, while monthly expenses decreased by RMB 18 million, a year-on-year decline of 16%[28]. - The group plans to continue enhancing operational efficiency and adapting to changing customer demands, focusing on market consolidation opportunities[29]. Employee and Workforce Management - The total number of employees decreased from 39,668 in 2021 to 32,943 in 2022, indicating a focus on optimizing human resources[54]. - The group has received the "2022 China Best Employer" award, highlighting its commitment to employee development and retention strategies[90][92]. - The group has implemented strict data privacy policies, ensuring that only a limited number of employees have access to customer data, and conducts annual third-party audits of its information security policies[86]. - Employee turnover for the year reached 15,508, an increase of 8,587 from the previous year, resulting in a turnover rate of 32.01%[96]. - The company emphasizes the importance of employee retention and offers competitive compensation packages to attract high-quality talent[54]. Environmental, Social, and Governance (ESG) Initiatives - The group aims to enhance its ESG governance and has established an ESG committee to oversee its sustainability strategies and initiatives[67]. - The company will continue to actively undertake corporate social responsibility and achieve sustainable development, supporting low-carbon development and energy conservation initiatives[68]. - The company has implemented a risk management system for environmental, social, and governance (ESG) risks, with a dedicated team for risk assessment[70]. - The company has established various ESG working groups, including employee care, energy conservation, and supply chain management, to oversee and implement ESG initiatives[71]. - The company has established a "Climate Change Policy" to mitigate the impact of climate change on its operations and aims to integrate climate change considerations into its risk management system[125]. Corporate Governance - The company has adhered to the corporate governance code principles throughout the fiscal year ending December 31, 2022[155]. - The board consists of executive directors, non-executive directors, and independent non-executive directors, ensuring a balance of skills, experience, and diversity[159]. - The company has established an independence assessment mechanism for the board to ensure strong independence and effective decision-making[166]. - The company has implemented a policy for disclosing inside information and planning shareholder communications to fulfill governance responsibilities[194]. - The board aims to maintain a balanced diversity perspective related to business growth and ensure appropriate recruitment processes at all levels[182].