正通汽车(01728) - 2018 - 年度财报

Company Overview Company Profile China ZhengTong Auto Services Holdings Limited is a leading 4S dealership group in China focusing on luxury and ultra-luxury automobile brands[5] - The company's core business is the distribution of luxury and ultra-luxury car brands, including Porsche, Mercedes-Benz, BMW, and Audi[5] - As of December 31, 2018, the company operated 140 outlets in 40 cities across 16 provinces and municipalities, covering first, second, and third-tier cities[5] - The company is actively promoting financial services such as auto finance, financing leases, and insurance agencies to achieve strategic transformation and sustainable growth[6] Five-Year Financial Summary Five-Year Financial Summary The company demonstrated steady growth from 2014 to 2018, with revenue increasing from RMB 30.9 billion to RMB 37.5 billion and total assets expanding significantly Five-Year Performance Summary (2014-2018) | Metric (RMB in thousands) | 2014 | 2015 | 2016 | 2017 | 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 30,910,087 | 29,361,499 | 31,519,255 | 35,474,325 | 37,455,510 | | Profit Before Tax | 1,175,055 | 921,779 | 790,798 | 1,753,791 | 1,889,488 | | Profit for the Year | 823,538 | 628,662 | 508,359 | 1,211,462 | 1,254,782 | | Profit Attributable to Equity Shareholders of the Company | 803,792 | 618,530 | 493,282 | 1,190,795 | 1,224,065 | Five-Year Asset and Liability Summary (2014-2018) | Metric (RMB in thousands) | 2014 | 2015 | 2016 | 2017 | 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 22,182,690 | 23,679,650 | 27,728,910 | 36,939,130 | 44,199,218 | | Total Liabilities | 13,885,582 | 14,990,312 | 18,786,749 | 26,585,498 | 31,873,772 | | Equity Attributable to Shareholders of the Company | 8,172,075 | 8,588,632 | 8,858,331 | 10,200,811 | 12,143,276 | Chairman's Statement Chairman's Statement The Chairman highlighted the luxury car market's growth despite an overall market decline, crediting the Group's brand portfolio and expansion into auto FinTech - In 2018, China's passenger vehicle sales decreased by 4.1% year-on-year, but the luxury car market maintained rapid growth[14] Sales Performance of Major Agency Luxury Brands in China for 2018 | Brand | Sales in China (units) | YoY Growth | | :--- | :--- | :--- | | BMW (incl MINI & Rolls-Royce) | 639,953 | +7.7% | | Audi | 660,888 | +11.0% | | Mercedes-Benz | 652,996 | +11.1% | | Volvo | 130,593 | +14.1% | | Porsche | 80,108 | +12.0% | | Jaguar Land Rover | 114,777 | -21.6% | - The Group's strategic focus is on expanding innovative businesses, particularly in financial services, to build a comprehensive auto FinTech platform[18] - The Group will continue to expand its network, accelerate new store profitability, and enhance service innovation to provide richer auto life services[19] Management Discussion and Analysis Business Review In 2018, the Group's revenue and gross profit grew steadily, driven by strong performance in new car sales, after-sales, and auto FinTech segments Key Performance Indicators for 2018 | Metric | 2018 Amount (RMB) | YoY Change | | :--- | :--- | :--- | | Revenue | 37,456 million | +5.6% | | Gross Profit | 4,487 million | +19.1% | | Profit Attributable to Equity Holders of the Company | 1,224 million | +2.8% | | Basic Earnings Per Share | 49.9 cents | -7.2% | New Car Sales Business New car sales volume and gross margin increased in 2018, driven by strong demand for luxury models like the BMW 5 Series and Mercedes-Benz GLC New Car Sales Data for 2018 | Metric | 2018 Data | YoY Growth | | :--- | :--- | :--- | | Total Sales Volume | 112,574 units | +3.3% | | Luxury & Ultra-luxury Brand Sales Volume | 86,400 units | +8.0% | | New Car Sales Gross Margin | 6.1% | +1.2 pp | After-Sales Service Business The after-sales service business achieved stable growth in revenue and gross profit, with a significant increase in the number of vehicles serviced After-Sales Service Data for 2018 | Metric | 2018 Data (RMB) | YoY Growth | | :--- | :--- | :--- | | After-sales Revenue | 4,331 million | +11.1% | | After-sales Gross Profit | 2,003 million | +8.9% | | Vehicles Serviced | 1,295,657 units | +14.8% | Used Car Business The Group is developing its used car business by focusing on trade-in rates and launching a digital platform to enhance operational efficiency - The focus is on increasing the used car trade-in rate for new car sales, with the average rate exceeding 30% in key first-tier cities[31] - A digital information platform and management system for used cars was launched to standardize business processes and improve operational efficiency[31] Automotive FinTech Segment The auto FinTech segment achieved rapid growth in revenue and profit, driven by the expansion of its core subsidiary Dongzheng Automotive Finance Financial Services Business Key Data for 2018 | Metric | 2018 Data (RMB) | YoY Growth | | :--- | :--- | :--- | | Interest and Service Income | 844 million | +61.7% | | Reportable Profit | 621 million | +64.3% | | Reportable Assets | 9,714 million | +34.2% | - Subsidiary Dongzheng Automotive Finance's net customer loans and advances grew by 43.6% to RMB 8.426 billion, with a low non-performing loan ratio of 0.27%[33] - Dongzheng Automotive Finance's partner dealer network expanded significantly from 351 at the end of 2017 to 1,280 by the end of 2018, covering 182 cities[37] Supply Chain Business The supply chain business expanded its services by adding rail transport to create a multimodal logistics model and entering the new energy vehicle sector - Subsidiary Shengze Jietong added rail transport services, establishing a multimodal transport model combining road, rail, and water[45] - The business expanded into new energy vehicle supply chain logistics and established one-stop transport channels for imported cars in Tianjin and Shanghai ports[45] Network Development The Group expanded its network to 140 operating outlets by year-end 2018, with a continued focus on opening new luxury brand dealerships Outlet Details at Year-End 2018 | Outlet Type | Opened | Authorized for Construction | Total | | :--- | :--- | :--- | :--- | | Luxury & Ultra-luxury 5S/4S Stores | 100 | 11 | 111 | | Mid-to-high-end 4S Stores | 14 | 0 | 14 | | Luxury Brand City Showrooms | 18 | 0 | 18 | | Luxury Brand Authorized Service Centers | 7 | 1 | 8 | | Used Car Centers | 1 | 0 | 1 | | Total | 140 | 12 | 152 | Innovative Management Models to Enhance Operational Quality The Group implemented several refined management measures, including a "Cloud Platform" system and centralized marketing, to improve operational quality - Developed a proprietary "Cloud Platform" operational management system to create "Smart 4S Stores" and enhance customer experience[58] - Integrated marketing operations to establish a unified customer acquisition channel media library, effectively reducing customer acquisition costs[59] - Introduced a performance evaluation system to manage dealerships by tier, helping key stores improve profitability[61] Financial Review The Group's 2018 financial performance was solid, with increased revenue and gross margin, though administrative expenses rose due to exchange losses Financial Summary for 2018 | Metric | 2018 (RMB) | 2017 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 37,456 million | 35,474 million | +5.6% | | Gross Profit | 4,487 million | 3,768 million | +19.1% | | Gross Profit Margin | 12.0% | 10.6% | +1.4pp | | Operating Profit | 2,763 million | 2,426 million | +13.9% | | Profit for the Year | 1,255 million | 1,211 million | +3.6% | | Administrative Expenses | 1,650 million | 733 million | +125.1% | | Net Cash from Operating Activities | 776 million | (866) million | N/A | | Net Gearing Ratio | 130.7% | 102.2% | +28.5pp | - The gross profit margin for new car sales increased from 4.9% to 6.1%, with the margin for luxury and ultra-luxury brands rising from 5.2% to 6.7%[66] - Average inventory turnover days increased from 41.1 days to 44.0 days[75] Future Outlook and Strategy The Group will leverage its brand portfolio, network, and FinTech platform to address the market shift from volume to value-based competition - The strategy will address the market's shift from incremental growth to a stock market, where consumers demand higher quality products and services[83] - The strategy will leverage three core advantages: a diversified luxury brand portfolio, a nationwide network, and a leading auto FinTech platform[83] - The Group will vigorously develop its used car business and explore new marketing models to prepare for competition in the stock market[83] Corporate Governance Report Corporate Governance Report The company complied with the Corporate Governance Code during 2018, maintaining a clear governance structure with defined board and committee roles - The company adopted and complied with the applicable code provisions of the Corporate Governance Code of the Hong Kong Stock Exchange throughout 2018[88] - The Board of Directors consists of nine members, including six executive directors and three independent non-executive directors, meeting listing rule requirements[92][94] - The roles of Chairman (Mr. Wang Muqing) and Chief Executive Officer (Mr. Koh Chee Choon) are separate, ensuring a balance of power[108] - The Board has established a Remuneration Committee, a Nomination Committee, and an Audit Committee, each with clear written terms of reference[113] - The Board reviewed the company's risk management and internal control systems for the year ended December 31, 2018, and confirmed their soundness and effectiveness[128] Environmental, Social and Governance (ESG) Report Environmental, Social and Governance (ESG) Report The Group's 2018 ESG report details its commitment to environmental protection, employee welfare, product responsibility, and community investment - Environmental Protection: The Group insists on using water-based paint in spray booths and ensures waste is handled by licensed suppliers[151] - Employment and Labor: The company had 12,353 employees at year-end 2018 and emphasized training, organizing 214 new employee training sessions[157][167][168] - Health and Safety: A total of 98 fire drills were conducted during the year, and no major safety accidents occurred[166] - Product Responsibility: The Group actively promoted new energy vehicles and assisted automakers with the recall of 11,637 vehicles during the year[176][181][183] - Community Investment: The Group actively participates in public welfare activities organized by car brands and encourages local community engagement[187][188] Directors and Senior Management Profile Directors and Senior Management Profile The core management team is led by experienced industry veterans, including the Group's founder, a former CEO, and a former BMW (China) executive - Mr. Wang Muqing, age 68, is the founder of the Group and has served as Chairman of the Board since 2013[249] - Mr. Wang Kunpeng, age 47, is the Vice Chairman of the Board and former CEO, with extensive experience in auto sales, after-sales, and logistics[250] - Mr. Koh Chee Choon, age 60, is the CEO and previously served as Vice President of Sales and President of BMW (China)[251] - Mr. Li Zhuobo, age 49, is the CFO, with nearly 24 years of financial management experience in the auto distribution industry[251] Report of the Directors Report of the Directors This report covers statutory disclosures for 2018, including business performance, dividend proposals, connected transactions, and share placements - The Board recommends a final dividend of HK$0.14 per share for the year ended December 31, 2018[266] - In 2018, the Group's largest supplier and top five suppliers accounted for 18.48% and 63.48% of total purchases, respectively[272] - The Group engaged in non-exempt continuing connected transactions, including leasing agreements, with entities controlled by the family of the controlling shareholder, Mr. Wang Muqing[284][285] - The company repurchased shares in April and November 2018 and completed two new share placements, raising net proceeds of approximately HK$377 million and HK$1.727 billion[344][346][347] - The report identifies macroeconomic conditions, industry policies, intense competition, and supply chain issues as the Group's principal risks and uncertainties[328] Independent Auditor's Report Independent Auditor's Report KPMG issued an unmodified audit opinion on the 2018 financial statements, highlighting three key audit matters requiring significant management judgment - The auditor, KPMG, issued an unmodified opinion on the consolidated financial statements[353] - Key Audit Matter 1: Impairment of goodwill and intangible assets (vehicle distribution rights), due to their material value and the complex judgments involved[358] - Key Audit Matter 2: Recognition of vendor rebates, due to the complexity of numerous rebate agreements and the risk of premature recognition[360] - Key Audit Matter 3: Loss allowance for receivables from financial services operations, due to the inherent uncertainty and significant management judgment in the expected credit loss model[363] Consolidated Financial Statements Consolidated Statement of Profit or Loss For the year ended December 31, 2018, the Group's revenue and gross profit increased, resulting in a profit for the year of RMB 1.255 billion Consolidated Statement of Profit or Loss Summary for 2018 | Item (RMB in thousands) | 2018 | 2017 | | :--- | :--- | :--- | | Revenue | 37,455,510 | 35,474,325 | | Gross Profit | 4,486,827 | 3,768,346 | | Operating Profit | 2,762,965 | 2,425,754 | | Profit Before Tax | 1,889,488 | 1,753,791 | | Profit for the Year | 1,254,782 | 1,211,462 | | Profit Attributable to Equity Shareholders of the Company | 1,224,065 | 1,190,795 | Consolidated Statement of Financial Position As of December 31, 2018, the Group's total assets and liabilities grew in tandem, reflecting the continued expansion of its business operations Consolidated Statement of Financial Position Summary at Year-End 2018 | Item (RMB in thousands) | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | Total Assets | 44,199,218 | 36,939,130 | |    Non-current Assets | 19,259,362 | 14,383,828 | |    Current Assets | 24,939,856 | 22,555,302 | | Total Liabilities | 31,873,772 | 26,585,498 | |    Non-current Liabilities | 8,071,955 | 5,646,559 | |    Current Liabilities | 23,801,817 | 20,938,939 | | Total Equity | 12,325,446 | 10,353,632 | Consolidated Statement of Cash Flows In 2018, the Group's net cash from operating activities improved significantly, turning from a net outflow to a net inflow of RMB 776 million Consolidated Statement of Cash Flows Summary for 2018 | Item (RMB in thousands) | 2018 | 2017 | | :--- | :--- | :--- | | Net cash from/(used in) operating activities | 776,342 | (866,418) | | Net cash used in investing activities | (2,999,635) | (1,854,451) | | Net cash from financing activities | 2,405,062 | 3,817,595 | | Net increase in cash and cash equivalents | 181,769 | 1,096,726 | | Cash and cash equivalents at end of year | 2,911,395 | 2,716,220 | Notes to the Consolidated Financial Statements The notes provide detailed explanations of accounting policies and breakdowns of financial statement items, including the impact of adopting new IFRS standards