永达汽车(03669) - 2025 - 中期业绩

Company Information and Financial Highlights Company Overview China Yongda Automobile Services Holdings Limited and its subsidiaries primarily engage in automobile sales, after-sales services, operating leases, and distribution of automotive insurance and financial products in China - The Company was incorporated in the Cayman Islands, and its shares are listed on the Hong Kong Stock Exchange[2] - Principal businesses include automobile sales, after-sales services, automobile operating leases, and distribution of automotive insurance and financial products[29] Financial Highlights For H1 2025, the Group's revenue decreased by 12.8% to RMB 27.072 billion, with new car sales and adjusted net profit (non-IFRS) declining, while net cash from operating activities significantly improved by 66.9% H1 2025 Key Financial Highlights | Indicator | H1 2025 (RMB billion) | H1 2024 (RMB billion) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 27.072 | 31.036 | -12.8% | | New Car Dealership Revenue | 18.777 | 22.911 | -18.0% | | Maintenance-Related Revenue | 4.660 | 4.654 | Largely Flat | | Used Car Transaction Volume (units) | 30,427 | 35,236 | -13.6% | | Total Selling, Administrative & Finance Costs | 2.382 | 2.568 | -7.3% | | Adjusted Net Profit (non-IFRS) | 0.054 | 0.101 | -46.3% | | Adjusted Net Profit Attributable to Owners (non-IFRS) | 0.063 | 0.111 | -43.8% | | Net Cash Generated from Operating Activities | 1.167 | 0.699 | +66.9% | | Net Gearing Ratio | 9.8% (2025/6/30) | 10.2% (2024/12/31) | -0.4 percentage points | - Inventory turnover days remained at 26.3 days, a decrease of 0.4 days compared to the same period last year[7] Management Discussion and Analysis Market Review In H1 2025, China's automotive market maintained steady growth amid fierce competition, driven by a 10.8% increase in passenger vehicle sales and NEV penetration exceeding 50.2%, despite significant price pressure and an 11.4% average new car price reduction - Domestic passenger vehicle sales reached 10.902 million units in H1 2025, a year-on-year increase of 10.8%[5] - NEV penetration rate reached 50.2%, an 8.4 percentage point year-on-year increase, with the monthly penetration rate exceeding 53.3% for the first time in June[5] - Chinese brands' market share surpassed 64%, a 7.5 percentage point year-on-year increase, with new forces like Xiaomi and HarmonyOS Smart Mobility rapidly emerging[5] - The average new car price decreased by 11.4% in H1, leading to immense industry profitability pressure, with competition shifting from price to technology, ecosystem, and user experience[6] - Industry competition intensity is expected to ease marginally in H2, with the market likely to find a new equilibrium driven by "policy support + technological iteration + export upgrades"[8] Business Review In H1 2025, the Group's revenue decreased by 12.8% and gross profit by 8.3% due to market competition and macroeconomic factors, alongside a RMB 3.539 billion non-cash, one-off asset impairment primarily targeting underperforming 4S store goodwill and long-term assets - H1 2025 revenue was RMB 27.072 billion, a year-on-year decrease of 12.8%[9] - Gross profit was RMB 2.370 billion, a year-on-year decrease of 8.3%, with new car sales and related services gross profit decreasing by 46.4%[9] - Total selling expenses, administrative expenses, and finance costs amounted to RMB 2.382 billion, a year-on-year decrease of 7.3%[9] - A non-cash, one-off asset impairment of approximately RMB 3.539 billion was recognized, primarily for goodwill, intangible assets, and long-term assets of underperforming 4S stores, impacting consolidated profit and total equity[10] - This impairment did not involve cash outflow, does not affect daily operations or business profitability, and large future impairments are not anticipated[10] - After deducting the impairment impact, adjusted net profit and adjusted net profit attributable to owners of the Company were RMB 54 million and RMB 63 million, respectively[11] - As of June 30, 2025, in-transit inventory balance decreased by 6.8% to RMB 4.986 billion, with average inventory turnover days at 26.3 days[12] - Net cash generated from operating activities was RMB 1.167 billion, a year-on-year increase of 66.9%[12] - The asset-liability ratio was 59.5%, largely flat compared to year-end 2024[12] New Car Sales Business In H1 2025, new car sales volume decreased by 13.4% and related revenue by 14.4%, with gross margin falling to 1.03%, as the Group shifted its strategy from volume to balanced profitability, enhancing lead conversion and inventory management - New car sales volume was 72,501 units, a year-on-year decrease of 13.4%[13] - New car sales and related services revenue was RMB 20.532 billion, a year-on-year decrease of 14.4%[13] - New car sales and related services gross margin was 1.03%, a year-on-year decrease of 0.61 percentage points[13] - Operating strategy adjusted to "balanced profitability," enhancing lead conversion through new media customer acquisition and process management[13] - New car turnover days remained at 26.4 days, with a mandatory liquidation mechanism for new car inventory exceeding 60 days implemented[14] New Energy Vehicle Business In H1 2025, the NEV market maintained rapid growth, with independent NEV brand sales increasing by 49.0% to 10,312 units, average selling price reaching RMB 267,300, and comprehensive gross margin above 4%, while after-sales revenue grew by 75.8% - Independent NEV brand sales volume was 10,312 units, a year-on-year increase of 49.0%[15] - Sales volume included 4,455 units under dealership model and 5,857 units under direct sales model[15] - Average new car selling price was RMB 267,300, with comprehensive gross margin per new car maintained above 4%[15] - Nearly six thousand independent NEV brand retained orders lay a foundation for H2 growth[15] - After-sales business revenue was RMB 215.59 million, a year-on-year increase of 75.8%[16] - Average single-vehicle output value was RMB 3,447, a year-on-year increase of 16.5%[16] - Independent NEV brand after-sales customer base reached 72,281, an increase of 25.9% from year-end 2024[16] After-Sales Services In H1 2025, after-sales service revenue was RMB 4.784 billion, with maintenance revenue remaining stable and gross margin at 40.35%, while the parts and service absorption rate increased by 5.6 percentage points to 84.2% - After-sales service revenue was RMB 4.784 billion, of which maintenance revenue was RMB 4.660 billion, largely flat compared to the same period last year[17] - Maintenance business gross margin was 40.35%, largely flat compared to the same period last year[17] - Parts and service absorption rate was 84.2%, a year-on-year increase of 5.6 percentage points[17] - User operations enhanced by launching sticky products, participating in NEV power battery maintenance equipment R&D, and developing customer resources from exited dealers[17] - Insurance business focused on strengthening renewal management, ensuring renewal volume and premium scale increase by over 5% year-on-year[17] - Accident vehicle business improved operational quality through all-staff marketing, vehicle-related insurance products, and digital management, with paint and body repair volume increasing by 4.8% year-on-year[18] - Inventory value of parts and supplies decreased by 6.8% compared to year-end 2024[18] Used Car Business In H1 2025, used car transaction volume reached 30,427 units with revenue of RMB 2.164 billion, achieving a gross margin of 5.21% and improved inventory turnover, as the Group actively leveraged subsidies, new retail models, and NEV used car market expansion - Used car transaction volume was 30,427 units, with used car revenue of RMB 2.164 billion[19] - Used car gross margin was 5.21%, a sequential increase of 0.81 percentage points; gross profit was RMB 113 million, a sequential increase of 8.2%[19] - Turnover days were 17.7 days, a year-on-year decrease of 2.5 days and a sequential decrease of 4.0 days[19] - Actively leveraging trade-in subsidy policies and deepening the new retail model integrating OEM and Yongda dual-brand channels with online platforms[20] - Accelerating the layout of new NEV used car channels, exploring open, market-oriented, platform-based operations, and promoting used car exports[20] Sales Network Changes In H1 2025, the Group actively adjusted its network by closing 19 stores and opening 7 new leading NEV outlets, acquiring 30 new NEV brand authorizations, resulting in 209 operating outlets with luxury brands accounting for 64.6% and independent NEV brands for 16.7% - In H1, 7 new leading NEV outlets were self-built, including 5 HarmonyOS Smart Mobility outlets[21] - Acquired 30 new NEV brand authorizations, with 14 NEV outlets under construction (13 HarmonyOS Smart Mobility)[21] - 19 outlets were closed or merged, including 12 traditional brand and 7 NEV brand outlets[21] - As of H1 2025, there were 209 operating outlets and 17 authorized outlets pending opening[21] - Brand structure: 64.6% luxury brands, 16.7% independent NEV brands, 12.5% mid-to-high-end brands, and 6.2% Yongda Used Car Malls[21] Operating Outlets Details and Changes (As of June 30, 2025) | Brand Type | Dec 31, 2024 (Operating Outlets) | June 30, 2025 (Operating Outlets) | Outlet Change | | :--- | :--- | :--- | :--- | | Luxury & Ultra-Luxury Brand 4S Stores | 129 | 119 | -10 | | Luxury Brand City Showrooms | 16 | 16 | 0 | | Subtotal Luxury & Ultra-Luxury Brand Outlets | 145 | 135 | -10 | | Mid-to-High-End Brand 4S Stores | 27 | 25 | -2 | | Mid-to-High-End Brand City Showrooms | 1 | 1 | 0 | | Subtotal Mid-to-High-End Brand Outlets | 28 | 26 | -2 | | Independent NEV Brand 4S Stores | 29 | 29 | 0 | | Independent NEV Brand Service Centers | 6 | 6 | 0 | | Subtotal Independent NEV Brand Outlets | 35 | 35 | 0 | | Yongda Used Car Mall Outlets | 13 | 13 | 0 | | Total Outlets | 221 | 209 | -12 | Key Financial Indicators Analysis This section provides a detailed analysis of the Group's H1 2025 revenue, costs, gross profit, expenses, non-IFRS adjusted profit, cash flow, inventory, capital expenditure, borrowings, and liabilities, highlighting a decline in overall revenue and profit due to market competition and impairment, but improved operating cash flow and strong NEV business performance Revenue In H1 2025, total revenue decreased by 12.8% to RMB 27.072 billion, primarily due to lower sales volume and average selling prices of luxury and ultra-luxury new cars, while independent NEV brand direct sales volume grew by 123.1% H1 2025 Revenue Breakdown by Business Segment | Business Segment | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Revenue | 27,071,934 | 31,035,834 | -12.8% | | Subtotal New Car Sales and Related Services Revenue | 20,531,578 | 23,983,885 | -14.4% | | Luxury & Ultra-Luxury Brand New Car Sales | 15,667,841 | 19,106,328 | -18.0% | | Mid-to-High-End Brand New Car Sales | 1,890,174 | 2,714,040 | -30.4% | | Independent NEV Brand New Car Sales (Dealership) | 1,219,443 | 1,090,529 | +11.8% | | Commission Income Related to New Car Sales | 1,511,678 | 747,761 | +102.2% | | Subtotal Used Car Sales and Related Services Revenue | 1,576,350 | 2,087,418 | -24.4% | | Maintenance-Related Services Revenue | 4,659,958 | 4,653,952 | Largely Flat | | After-Sales Service Commission Income | 124,521 | 124,015 | Largely Flat | | Automobile Operating Lease Services | 196,795 | 221,028 | -11.0% | - Passenger vehicle sales and services segment new car dealership sales volume was 66,644 units, a year-on-year decrease of 17.8%[67] - Independent NEV brand direct sales volume was 5,857 units, a year-on-year increase of 123.1%[68] Sales and Service Costs In H1 2025, sales and service costs decreased by 13.2% to RMB 24.702 billion, aligning with the revenue decline, with new car and used car related costs decreasing, while after-sales service costs remained largely flat H1 2025 Sales and Service Costs Breakdown | Cost Type | H1 2025 (RMB million) | H1 2024 (RMB million) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Sales and Service Costs | 24,701.6 | 28,451.6 | -13.2% | | Passenger Vehicle Sales and Services Segment New Car Sales Costs and Related Service Costs | 20,320.5 | 23,590.1 | -13.9% | | Used Car Sales Costs and Related Service Costs | 1,463.6 | 1,948.0 | -24.9% | | Passenger Vehicle Sales and Services Segment After-Sales Service Costs | 2,779.5 | 2,760.3 | Largely Flat | | Automobile Operating Lease Services Segment Costs | 151.2 | 182.2 | -17.0% | Gross Profit and Gross Margin In H1 2025, gross profit decreased by 8.3% to RMB 2.370 billion, but the overall gross margin increased by 0.43 percentage points to 8.76%, driven by improved margins in used car and operating lease services despite a significant decline in new car gross profit H1 2025 Gross Profit and Gross Margin | Indicator | H1 2025 | H1 2024 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Gross Profit (RMB million) | 2,370.4 | 2,584.2 | -8.3% | | Total Gross Margin | 8.76% | 8.33% | +0.43 percentage points | | New Car Sales and Related Services Gross Profit (RMB million) | 211.1 | 393.8 | -46.4% | | New Car Sales and Related Services Gross Margin | 1.03% | 1.64% | -0.61 percentage points | | Used Car Sales and Related Services Gross Profit (RMB million) | 112.8 | 139.4 | -19.1% | | Used Car Dealership Gross Margin | 6.22% | 5.61% | +0.61 percentage points | | After-Sales Service Gross Profit (RMB million) | 2,005.0 | 2,017.6 | Largely Flat | | Maintenance Gross Margin | 40.35% | 40.69% | Largely Flat | | Automobile Operating Lease Services Gross Profit (RMB million) | 45.6 | 38.8 | +17.4% | | Automobile Operating Lease Services Gross Margin | 23.15% | 17.56% | +5.59 percentage points | Other Income, Gains and Losses In H1 2025, other income, gains, and losses resulted in a net gain of RMB 22.0 million, a 63.5% year-on-year decrease, primarily due to losses from property and equipment disposals and reduced fair value gains on financial assets - Net gain of RMB 22.0 million, a year-on-year decrease of 63.5%[75] - Government grants were RMB 7.765 million (2024: RMB 10.077 million)[43] - Interest income from bank deposits was RMB 24.729 million (2024: RMB 21.982 million)[43] - Loss on disposal of property, plant and equipment and other intangible assets was RMB 11.796 million (2024: gain of RMB 3.655 million)[43] - Fair value gain on financial assets at fair value through profit or loss was RMB 0.297 million (2024: loss of RMB 11.278 million)[43] Expense Analysis In H1 2025, distribution, selling, and administrative expenses totaled RMB 2.264 billion, a 6.5% decrease, but the expense ratio rose by 0.56 percentage points to 8.36%, while finance costs decreased by 20.5% to RMB 117.6 million - Total distribution and selling expenses and administrative expenses were RMB 2.264 billion, a year-on-year decrease of 6.5%[76] - Selling and administrative expense ratio was 8.36%, a year-on-year increase of 0.56 percentage points[76] - Finance costs were RMB 117.6 million, a year-on-year decrease of 20.5%[77] - Finance cost ratio was 0.43%, a year-on-year decrease of 0.05 percentage points[77] - Total staff costs were RMB 961.768 million, a year-on-year decrease of 2.2%[45] - Total depreciation and amortization expenses were RMB 591.695 million, a year-on-year decrease of 3.9%[45] Non-IFRS Measurement Adjustments The Group provided non-IFRS adjustments to exclude non-cash, one-off asset impairments and their tax and non-controlling interest impacts, revealing an adjusted profit of RMB 54.4 million and adjusted profit attributable to owners of RMB 62.7 million for H1 2025, down 46.3% and 43.8% year-on-year, respectively H1 2025 Non-IFRS Measurement Adjustments | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Loss for the Period (IFRS) | (3,484.6) | 101.5 (Profit) | N/A | | Loss for the Period Attributable to Owners (IFRS) | (3,331.4) | 111.5 (Profit) | N/A | | Impairment Loss Adjustment | 3,552.8 | - | N/A | | Reversal of Deferred Tax Liabilities Adjustment | (314.3) | - | N/A | | Reversal of Deferred Tax Assets Adjustment | 300.5 | - | N/A | | Adjusted Profit (non-IFRS) | 54.4 | 101.5 | -46.3% | | Adjusted Profit Attributable to Owners (non-IFRS) | 62.7 | 111.5 | -43.8% | - Adjusted income tax expense was RMB 7.0 million, a year-on-year decrease of 71.7%[79] - Non-IFRS measures should not be considered as a substitute for operating results or financial position analysis reported under IFRS[81] Cash Flow In H1 2025, net cash from operating activities increased by 66.9% to RMB 1.167 billion, while net cash used in investing activities was RMB 260.3 million, and net cash used in financing activities was RMB 5.1 million, primarily for net borrowings, dividends, and share repurchases H1 2025 Cash Flow Overview | Cash Flow Type | H1 2025 (RMB million) | H1 2024 (RMB million) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 1,166.7 | 699.2 | +66.9% | | Net Cash Used in Investing Activities | 260.3 | 229.9 | +13.2% | | Net Cash Used in Financing Activities | 5.1 | 1,045.5 | -99.5% | - Improvement in operating cash flow was primarily due to increased cash from changes in working capital[82] - Cash outflow from investing activities was mainly for capital expenditure, partially offset by proceeds from asset disposals[83] - Cash outflow from financing activities significantly decreased, mainly due to an increase in net borrowings and net repayment of borrowings in the prior year[84] Inventory As of June 30, 2025, inventory balance decreased by 28.4% to RMB 2.972 billion compared to year-end 2024, with average inventory turnover days remaining stable at 26.3 days Inventory Balance and Turnover Days | Indicator | June 30, 2025 (RMB million) | Dec 31, 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Inventory Balance | 2,971.7 | 4,149.9 | -28.4% | | Average Inventory Turnover Days | 26.3 days | 26.7 days | -0.4 days | - Inventory primarily includes passenger vehicles and spare parts[85] Capital Expenditure and Investments In H1 2025, total capital expenditure was RMB 291.1 million, primarily for acquiring test drive and operating lease vehicles, constructing and upgrading sales and service outlets, and intangible assets, partially offset by asset disposals H1 2025 Capital Expenditure Breakdown (RMB million) | Item | Amount | | :--- | :--- | | Expenditure on Property, Plant and Equipment (test drive and operating lease vehicles) | 382.8 | | Expenditure on Property, Plant and Equipment and Right-of-Use Assets (new and upgraded outlets) | 241.5 | | Expenditure on Intangible Assets (vehicle licenses and software) | 32.0 | | Disposal of Property, Plant and Equipment, Intangible Assets and Right-of-Use Assets | (365.2) | | Total | 291.1 | Borrowings and Liabilities As of June 30, 2025, total borrowings increased by 16.6% to RMB 3.397 billion compared to year-end 2024, with the net gearing ratio decreasing to 9.8%, and certain borrowings secured by inventory, property, plant, and equipment, land use rights, and subsidiary equity Borrowings Balance and Maturity (As of June 30, 2025) | Maturity Period | Amount (RMB million) | | :--- | :--- | | Total Borrowings | 3,397.1 | | Within one year | 1,591.7 | | One to two years | 845.4 | | Two to five years | 960.0 | - Borrowings balance increased by 16.6% compared to year-end 2024[87] - Net gearing ratio was 9.8%, a decrease of 0.4 percentage points from 10.2% at year-end 2024[89] - Assets pledged or mortgaged include inventory, property, plant and equipment, land use rights, and equity interests in subsidiaries[89] Contingent Liabilities, Interest Rate and Foreign Exchange Risks As of June 30, 2025, the Group provided a RMB 125 million guarantee for Shanghai Yongda Financial Leasing Co., Ltd.'s principal borrowings, faces interest rate risk from LPR-linked borrowings, but has low foreign exchange risk as most transactions are RMB-denominated with no foreign currency financial borrowings - Provided a RMB 125 million guarantee for the principal borrowings of Shanghai Yongda Financial Leasing Co., Ltd[90] - Faces interest rate risk as some borrowings are linked to the Loan Prime Rate (LPR)[91] - Foreign exchange risk is low as most business is denominated in RMB, with no foreign currency financial borrowings[91] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss In H1 2025, the Group reported a pre-tax loss of RMB 3.491 billion and a loss for the period of RMB 3.485 billion, primarily due to RMB 3.553 billion in impairment losses, resulting in a basic and diluted loss per share of RMB 1.78 Condensed Consolidated Statement of Profit or Loss Summary (For the six months ended June 30, 2025) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 27,071,934 | 31,035,834 | | Cost of Sales and Services | (24,701,567) | (28,451,590) | | Gross Profit | 2,370,367 | 2,584,244 | | Impairment Losses | (3,552,837) | – | | (Loss) Profit Before Tax | (3,491,405) | 126,176 | | (Loss) Profit for the Period | (3,484,629) | 101,451 | | (Loss) Profit for the Period Attributable to Owners of the Company | (3,331,377) | 111,450 | | Basic (Loss) Earnings Per Share | RMB (1.78) | RMB 0.06 | Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income In H1 2025, total comprehensive expenses amounted to RMB 3.482 billion, primarily driven by the loss for the period, with total comprehensive expenses attributable to owners of the Company being RMB 3.329 billion Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary (For the six months ended June 30, 2025) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | (Loss) Profit for the Period | (3,484,629) | 101,451 | | Fair Value Gain (Loss) on Equity Instruments at Fair Value Through Other Comprehensive Income ("FVOCI") | 2,441 | (1,603) | | Total Comprehensive (Expense) Income for the Period | (3,482,188) | 99,848 | | Total Comprehensive (Expense) Income for the Period Attributable to Owners of the Company | (3,328,936) | 109,847 | Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets decreased by 22.5% to RMB 25.969 billion compared to year-end 2024, with both non-current and current assets declining, including a 28.4% reduction in inventory, and total equity decreasing by 26.1% to RMB 10.512 billion Condensed Consolidated Statement of Financial Position Summary (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Non-Current Assets | 10,870,222 | 14,888,752 | -27.0% | | Property, Plant and Equipment | 4,258,161 | 5,336,096 | -20.2% | | Goodwill | 314,428 | 1,590,421 | -80.2% | | Other Intangible Assets | 1,609,902 | 2,902,044 | -44.6% | | Current Assets | 15,098,802 | 20,157,511 | -25.1% | | Inventories | 2,971,698 | 4,149,925 | -28.4% | | Bank Balances and Cash | 2,358,967 | 1,457,667 | +61.8% | | Current Liabilities | 11,756,417 | 17,138,557 | -31.4% | | Trade and Other Payables | 7,770,683 | 12,934,471 | -39.9% | | Non-Current Liabilities | 3,700,498 | 3,691,028 | +0.26% | | Total Equity | 10,512,109 | 14,216,678 | -26.1% | Notes to the Condensed Consolidated Financial Statements General Information This section outlines China Yongda Automobile Services Holdings Limited's registration, listing, investment holding nature, and its subsidiaries' primary business scope in China, including automobile sales, after-sales services, operating leases, and distribution of automotive insurance and financial products - The Company was incorporated as a public limited company in the Cayman Islands on November 7, 2011, with its shares listed on the Hong Kong Stock Exchange[29] - The Group's principal businesses include automobile sales, after-sales services, automobile operating lease services, and distribution of automotive insurance and financial products[29] - The condensed consolidated financial statements are presented in RMB[30] Accounting Policies The condensed consolidated financial statements are prepared on a historical cost basis, adhering to IAS 34 'Interim Financial Reporting' and HKEX Listing Rules disclosure requirements, with the first-time adoption of IAS 21 amendment 'Lack of Exchangeability' having no material impact on financial position or performance - Financial statements are prepared on a historical cost basis, with certain financial instruments measured at fair value[31] - Compliance with International Accounting Standard 34 and Appendix 16 of the HKEX Listing Rules disclosure requirements[30] - First-time adoption of the amendment to IAS 21 "Lack of Exchangeability" had no material impact[32][33] Disaggregation of Revenue from Contracts with Customers The Group's revenue primarily derives from new car sales and related services, used car sales and related services, and after-sales services; in H1 2025, new car sales revenue declined, but commission income related to new car sales significantly increased, while after-sales service revenue remained stable Disaggregation of Revenue from Contracts with Customers (For the six months ended June 30, 2025) | Revenue Type | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | New Car Sales and Related Services Revenue | 20,520,162 | 23,956,258 | | - Luxury & Ultra-Luxury Brand New Car Sales | 15,663,412 | 19,100,028 | | - Mid-to-High-End Brand New Car Sales | 1,883,519 | 2,692,713 | | - Independent NEV Brand New Car Sales | 1,219,111 | 1,090,529 | | - Commission Income Related to New Car Sales | 1,511,678 | 747,761 | | Used Car Sales and Related Services Revenue | 1,576,350 | 2,087,418 | | After-Sales Services | 4,782,700 | 4,776,474 | | Total | 26,879,212 | 30,820,150 | - New car sales revenue is recognized when control of the vehicle is transferred, while after-sales service revenue is recognized over time[35][37] - Commission income related to new car sales primarily originates from the distribution of automotive financial products and new car brokerage business[37] - Used car sales revenue is recognized on a gross basis under the dealership model and a net basis under the brokerage model[37] Operating Segments The Group has two primary reportable segments: passenger vehicle sales and services, and automobile operating lease services, both of which experienced a slight revenue decline in H1 2025 Operating Segment Revenue and Gross Profit (For the six months ended June 30, 2025) | Segment | 2025 Revenue (RMB thousand) | 2025 Gross Profit (RMB thousand) | 2024 Revenue (RMB thousand) | 2024 Gross Profit (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Passenger Vehicle Sales and Services | 26,892,407 | 2,328,875 | 30,849,270 | 2,550,771 | | Automobile Operating Lease Services | 196,795 | 45,565 | 221,028 | 38,817 | | Total | 27,071,934 | 2,370,367 | 31,035,834 | 2,584,244 | - Passenger vehicle sales and services segment revenue includes new car sales, used car sales, and after-sales service revenue[42] - Segment results represent pre-tax loss/profit earned by each segment, excluding unallocated other income, expenses, and profit from associates and joint ventures[41] Other Income, Other Gains and Losses In H1 2025, the Group's total other income, gains, and losses significantly decreased by 63.5% to RMB 21.97 million from RMB 60.14 million in the prior year, primarily due to losses on property and equipment disposals and reduced fair value gains on financial assets Other Income, Other Gains and Losses (For the six months ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Government Grants | 7,765 | 10,077 | | Interest Income from Bank Deposits | 24,729 | 21,982 | | (Loss) Gain on Disposal of Property, Plant and Equipment and Other Intangible Assets | (11,796) | 3,655 | | Fair Value Gain (Loss) on Financial Assets at Fair Value Through Profit or Loss | 297 | (11,278) | | Compensation Income | – | 28,707 | | Total | 21,971 | 60,143 | Loss Before Tax In H1 2025, the Group reported a pre-tax loss of RMB 3.491 billion, primarily driven by RMB 3.553 billion in impairment losses recognized on goodwill, property, plant and equipment, right-of-use assets, and other intangible assets Loss Before Tax Components (For the six months ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Staff Costs | 961,768 | 983,495 | | Depreciation of Property, Plant and Equipment | 338,915 | 359,705 | | Depreciation of Right-of-Use Assets | 186,274 | 189,921 | | Amortization of Other Intangible Assets | 66,506 | 59,780 | | Impairment Losses (Total) | 3,552,837 | – | | - Goodwill | 1,275,992 | – | | - Property, Plant and Equipment | 964,791 | – | | - Right-of-Use Assets | 54,907 | – | | - Other Intangible Assets | 1,257,147 | – | - Of the impairment losses, RMB 702 million was attributed to distribution and selling expenses, and RMB 1.575 billion to administrative expenses[45] Income Tax (Credit) Expense In H1 2025, the Group recorded an income tax gain of RMB 6.78 million, compared to an expense of RMB 24.73 million in the prior year, primarily due to deferred tax credits recognized and the reversal of deferred tax assets for tax losses from previous years Income Tax (Credit) Expense (For the six months ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Tax | 97,154 | 45,687 | | Deferred Tax (Credit for the Period) | (404,440) | (20,962) | | Write-off of Previously Recognized Deferred Tax | 300,510 | – | | Income Tax (Credit) Expense for the Period | (6,776) | 24,725 | - The tax rate for Chinese subsidiaries is 25%, with some lower-profit subsidiaries enjoying a preferential tax rate of 5%[48] - During the period, deferred tax assets for tax losses recognized in prior years amounting to RMB 300,510,000 were reversed[47] Dividends The Company declared and paid a 2024 final dividend of RMB 0.069 per share, totaling approximately RMB 129 million, and the Board has decided to declare an H1 2025 interim dividend of RMB 0.070 per share, higher than the prior year's RMB 0.059 - 2024 final dividend of RMB 0.069 per share, totaling approximately RMB 128,813,000[49] - H1 2025 interim dividend of RMB 0.070 per share (H1 2024: RMB 0.059 per share)[49] Loss Per Share In H1 2025, the loss for the period attributable to owners of the Company was RMB 3.331 billion, resulting in a basic and diluted loss per share of RMB 1.78, compared to a profit per share of RMB 0.06 in the prior year Loss Per Share (For the six months ended June 30, 2025) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | (Loss) Profit for the Period Attributable to Owners of the Company (RMB thousand) | (3,331,377) | 111,450 | | Basic (Loss) Earnings Per Share | RMB (1.78) | RMB 0.06 | | Diluted (Loss) Earnings Per Share | RMB (1.78) | RMB 0.06 | | Weighted Average Number of Ordinary Shares (thousand shares) | 1,871,540 | 1,927,921 | Changes in Property, Plant and Equipment, Right-of-Use Assets, Goodwill and Other Intangible Assets In H1 2025, the Group acquired property, plant, and equipment worth approximately RMB 610 million and disposed of assets with a carrying value of approximately RMB 377 million, while recognizing RMB 3.553 billion in impairment losses due to intensified automotive industry competition and macroeconomic impacts on traditional fuel vehicle dealerships' profitability - Acquisition of property, plant and equipment amounted to approximately RMB 609,872,000[51] - Disposal of property, plant and equipment with a carrying value of approximately RMB 376,571,000 resulted in a loss on disposal of approximately RMB 11,796,000[51] - Total impairment losses of RMB 3,552,837,000 were recognized, including goodwill, property, plant and equipment, right-of-use assets, and other intangible assets[54] - Primary reasons for impairment: intensified competition in the automotive industry, macroeconomic impacts, declining new car sales, and lower gross margins for traditional fuel vehicle brand dealerships[54] - In the impairment assessment, future revenue growth rates and gross margin expectations were lowered, with a pre-tax discount rate ranging from 11% to 12%[55][56] Inventories As of June 30, 2025, inventory balance decreased by 28.4% to RMB 2.972 billion compared to year-end 2024, with vehicle inventory down 28.4% and parts and accessories inventory down 6.8% Inventory Composition (As of June 30, 2025) | Inventory Type | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Vehicles | 2,521,244 | 3,666,464 | -31.2% | | Parts and Accessories | 450,454 | 483,461 | -6.8% | | Total | 2,971,698 | 4,149,925 | -28.4% | Trade and Other Receivables As of June 30, 2025, trade and other receivables totaled RMB 6.224 billion, remaining largely flat compared to year-end 2024, with trade receivables and bills receivable amounting to RMB 776 million, and prepayments and other receivables at RMB 5.448 billion Trade and Other Receivables (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade Receivables | 771,369 | 852,203 | | Bills Receivable | 5,089 | 1,368 | | Prepayments to Suppliers | 2,014,498 | 1,197,228 | | Rebates Receivable from Suppliers | 2,169,031 | 2,749,556 | | Financial and Insurance Commissions Receivable | 453,114 | 542,272 | | Total | 6,224,309 | 6,218,622 | - Trade receivables and bills receivable had an aging of 0 to 90 days[59] - No credit period is generally granted for car sales, after-sales services are usually settled in cash, and corporate customers are granted a credit period not exceeding 60 days[60] Trade and Other Payables As of June 30, 2025, trade and other payables significantly decreased by 39.9% to RMB 7.771 billion compared to year-end 2024, primarily due to a substantial reduction in bills payable Trade and Other Payables (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Trade Payables | 615,504 | 725,649 | -15.2% | | Bills Payable | 6,635,980 | 11,622,602 | -42.9% | | Other Payables | 519,199 | 586,220 | -11.4% | | Total | 7,770,683 | 12,934,471 | -39.9% | - Bills payable are primarily for the purchase of passenger vehicles, with a credit period of one to six months[64] - Trade payables are mainly related to the purchase of parts and accessories, with a credit period not exceeding 90 days[64] - The vast majority of trade payables and bills payable have an aging of 0 to 90 days[65] Future Outlook and Strategies Market Trends and Industry Background China's automotive market is entering a new phase of restructuring, with rapid NEV development as a core driver, while traditional fuel vehicles remain resilient; the industry is shifting from price wars to technology competition and compliant operations, with policy adjustments expected to aid profit recovery and market consolidation - China's automotive market is entering a new stage of restructuring and iteration, with rapid NEV development and continuously rising penetration rates[92] - The industry is shifting from price wars to technology competition and compliant operations, with policy adjustments expected to drive profit recovery[92] - Traditional fuel vehicle brands are optimizing production capacity and channel networks, while NEV brands focus on enhancing outlet efficiency[92] - The market is returning to rational competition, aiming for high-quality development centered on technological innovation and user experience[92] Overall Strategic Direction The Group will actively respond to market changes by strengthening key NEV brands, optimizing luxury pillar brands, ensuring stable after-sales services, and upgrading used car operations to improve business structure and profitability, while focusing on cost reduction, operational efficiency, and exploring battery recycling and AI-powered smart robotics - Continuously strengthen and expand key NEV brands, and focus on optimizing luxury pillar brands[93] - Ensure stable after-sales services and develop and upgrade used car businesses to improve business structure and enhance profitability[93] - Prioritize cost reduction and control, focus on operational efficiency, and ensure healthy core financial indicators and operating cash flow[93] - Continuously expand into battery recycling and smart robotics industries, and research AI technology empowerment[93] Optimizing Network Structure The Group will increase investment to expand its NEV business, deepen cooperation with leading brands like HarmonyOS Smart Mobility to achieve scale, and continuously optimize its traditional luxury brand network by closing underperforming outlets and focusing on high-quality stores in core regions to enhance single-store and overall profitability - Increase investment to strengthen and expand NEV business, deepening cooperation with key brands like HarmonyOS Smart Mobility[94] - Optimize the network layout of traditional luxury brands, closing or merging underperforming outlets[94] - Focus on high-quality stores in core regions to improve single-store operational quality and overall profitability[94] Business Quality and Efficiency Improvement, Cost Reduction and Control The Group aims to improve new car profitability, maintain stable after-sales maintenance, upgrade used car operations, and enhance customer retention through diverse services, while implementing cost control measures, optimizing human resource efficiency, streamlining organizational structure, and accelerating shared management models to reduce administrative expenses - Improve new car profitability, maintain stable after-sales maintenance business, and develop and upgrade used car businesses[95] - Enhance customer retention and satisfaction through diversified services, solidifying the customer base[95] - Implement various cost and expense control measures, adjusting management around key selling and administrative expenses such as human resources costs[95] - Streamline organizational structure, optimize personnel efficiency, and accelerate shared management models to reduce management costs[95] Ensuring Cash Flow and Financial Stability The Group will strengthen cash flow management by ensuring inventory turnover efficiency, diligently collecting receivables, shortening collection cycles, and strictly controlling operating cash flow, while also strictly managing capital expenditure, optimizing financing channels and structure, and enhancing risk resilience to maintain healthy core financial indicators like the asset-liability ratio - Strengthen cash flow management, ensure inventory turnover efficiency, diligently collect receivables, shorten collection cycles, and strictly control operating cash flow[96] - Strictly control capital expenditure, optimize financing channels and structure, and enhance risk resilience[96] - Ensure core financial indicators such as asset-liability ratio, current asset coverage of liabilities, and net asset coverage of long-term assets remain healthy[96] Talent Development, New Business Layout, and New Technology Empowerment The Group will strengthen talent development and reserves to support business transformation, continuously expand into battery recycling and smart robotics, and accelerate digital transformation by fully embracing AI technology to inject new vitality into business development - Strengthen talent development and reserves in relevant fields to support business transformation[97] - Continuously expand into "battery recycling industry" and "smart robotics" business areas[97] - Accelerate digital transformation and fully embrace AI technology to empower business development[97] - Actively participate in national "low-carbon" strategies, fulfill ESG responsibilities, and adopt active dividend and share repurchase policies to reward shareholders[97] Corporate Governance and Other Information Compliance with Corporate Governance Code The Company adopted and complied with the Corporate Governance Code set out in Appendix C1 of the HKEX Listing Rules during H1 2025 - The Company adopted and complied with the Corporate Governance Code set out in Appendix C1 of the Hong Kong Stock Exchange Listing Rules[98] Model Code for Securities Transactions by Directors The Company adopted and confirmed that all directors complied with the Model Code for Securities Transactions by Directors set out in Appendix C3 of the Listing Rules during H1 2025, which also applies to employees with unpublished inside information - The Company adopted and confirmed that directors complied with the Model Code for Securities Transactions by Directors set out in Appendix C3 of the Listing Rules[99] - Employees who may possess unpublished inside information are also required to comply with the code[100] Purchase, Sale or Redemption of the Company's Listed Securities In H1 2025, the Company repurchased 30,860,000 ordinary shares on the HKEX for approximately HKD 74.825 million, which were subsequently cancelled to benefit shareholders by enhancing net asset value and/or earnings per share, with no repurchased but uncancelled shares held as of the reporting date - In H1 2025, a total of 30,860,000 ordinary shares were repurchased on the HKEX for approximately HKD 74,825,230.80[101] - The repurchased shares were cancelled on April 10, 2025, and August 18, 2025[101] - The repurchases aimed to benefit the Company and its shareholders by enhancing net asset value and/or earnings per share[101] - As of June 30, 2025, the Company did not hold any treasury shares[102] Audit and Compliance Committee The Company's Audit and Compliance Committee, comprising three independent non-executive directors, reviewed the Group's accounting policies, internal controls, and financial reporting, confirming that the interim financial results comply with relevant standards and regulations, with the condensed consolidated financial statements reviewed by independent auditors - The Audit and Compliance Committee comprises three independent non-executive directors, complying with Listing Rules requirements[103] - The Committee reviewed the Group's accounting policies, internal controls, and financial reporting, deeming the interim financial results compliant with relevant standards[104] - Independent auditors Deloitte Touche Tohmatsu have reviewed the condensed consolidated financial statements[104] Events After the Reporting Period The Company has no material events after the reporting period requiring shareholders' attention - No material events after the reporting period[105] Interim Dividend The Board decided to declare an H1 2025 interim dividend of RMB 0.070 per share (equivalent to HKD 0.07678 per share), payable around October 30, 2025, to shareholders registered on September 15, 2025, with the total interim dividend estimated at approximately HKD 142 million - H1 2025 interim dividend of RMB 0.070 per share (H1 2024: RMB 0.059 per share)[106] - The dividend payable per share is HKD 0.07678 after exchange rate conversion[106] - Total interim dividend is estimated at approximately HKD 142 million[106] - Dividends will be paid on or about October 30, 2025, to shareholders registered on September 15, 2025[106] Closure of Register of Members To determine eligible shareholders for the interim dividend, the Company will suspend its register of members from September 10 to September 15, 2025 - The register of members will be closed from September 10 to September 15, 2025, to determine eligible shareholders for the interim dividend[107] Publication of Results Announcement and Interim Report This announcement has been published on the HKEX and the Company's website, and the interim report will be dispatched to shareholders and posted on the aforementioned websites in due course - The results announcement has been published on the HKEX and the Company's website[108] - The interim report will be dispatched to shareholders and published on the aforementioned websites in due course[108] Acknowledgements and Forward-Looking Statements The Board expresses gratitude to shareholders, management, employees, business partners, and customers for their support and contributions; this announcement contains forward-looking statements based on current information and assumptions, involving risks and uncertainties, and should not be unduly relied upon - The Board expresses gratitude for the support and contributions from all parties[109] - This announcement contains forward-looking statements based on subjective expectations, assumptions, and premises, involving risks and uncertainties[111] - Forward-looking statements should not be taken as assurances that plans and objectives will be achieved, and should not be unduly relied upon[111]