美东汽车(01268) - 2025 - 中期业绩

Financial Summary Performance Overview The Group recorded decreased revenue, a significant decline in gross profit, and a loss for the period due to goodwill and intangible asset impairment in the six months ended June 30, 2025 Key Financial Indicators for H1 2025 | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 10,134.7 | 10,655.9 | -4.9% | | Gross Profit | 475.7 | 806.4 | -41.0% | | Gross Profit Margin | 4.7% | 7.6% | -2.9 percentage points | | Impairment of Goodwill and Intangible Assets | 867.9 | 151.3 | +473.6% | | Loss for the Period | 818.2 | 22.9 | +3477.3% | Consolidated Statement of Comprehensive Income Performance for the Period The Group reported a significant loss in H1 2025, primarily due to decreased revenue, a substantial reduction in gross profit, and a surge in impairment losses on goodwill and intangible assets Key Data from Consolidated Statement of Comprehensive Income (Six Months Ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 10,134,666 | 10,655,863 | | Cost of Sales | (9,658,922) | (9,849,442) | | Gross Profit | 475,744 | 806,421 | | Other Gains and Income, Net | 41,024 | 105,799 | | Distribution Costs | (259,769) | (295,440) | | Administrative Expenses | (258,216) | (324,395) | | Impairment Loss on Goodwill and Intangible Assets | (867,874) | (151,304) | | Operating (Loss)/Profit | (869,091) | 141,081 | | Finance Costs | (156,259) | (131,035) | | Share of Profit of Joint Ventures | 4,405 | 8,287 | | (Loss)/Profit Before Tax | (1,020,945) | 18,333 | | Income Tax | 202,795 | (41,264) | | Loss for the Period | (818,150) | (22,931) | | Loss Attributable to Equity Holders of the Company | (814,662) | (26,998) | | Basic Loss Per Share (RMB cents) | (60.51) | (2.01) | | Diluted Loss Per Share (RMB cents) | (60.51) | (2.01) | Consolidated Statement of Financial Position Assets and Liabilities Overview As of June 30, 2025, the Group's total assets and liabilities decreased, mainly due to impairment of intangible assets and goodwill, convertible bond redemption, and reduced cash and cash equivalents, leading to a significant decrease in net assets Key Data from Consolidated Statement of Financial Position (As of June 30) | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | | | | Intangible Assets | 245,948 | 1,129,773 | | Goodwill | – | 17,527 | | Total Non-current Assets | 3,299,017 | 4,368,248 | | Current Assets | | | | Inventories | 845,035 | 760,711 | | Trade and Other Receivables | 1,158,833 | 1,587,709 | | Pledged Bank Deposits | 845,513 | 2,108,108 | | Cash and Cash Equivalents | 868,781 | 2,644,539 | | Total Current Assets | 3,741,162 | 7,113,067 | | Current Liabilities | | | | Loans and Borrowings | 673,764 | 709,785 | | Trade and Other Payables | 2,668,101 | 4,056,458 | | Convertible Bonds | – | 1,759,170 | | Total Current Liabilities | 3,551,269 | 6,788,394 | | Net Current Assets | 189,893 | 324,673 | | Non-current Liabilities | | | | Deferred Tax Liabilities | 74,420 | 293,905 | | Total Non-current Liabilities | 1,413,494 | 1,736,138 | | Net Assets | 2,075,416 | 2,956,783 | | Total Equity | 2,075,416 | 2,956,783 | Notes to the Unaudited Interim Financial Report 1 General Information and Basis of Presentation The Group primarily engages in 4S dealership business in China, with interim financial reports prepared under HKEX Listing Rules and HKAS 34, reviewed by KPMG - The Company is incorporated in the Cayman Islands and primarily engages in 4S dealership business in China[10] - The interim financial report is prepared in accordance with the HKEX Listing Rules and HKAS 34, and has been reviewed by KPMG[11][12] 2 Changes in Accounting Policies HKAS 21 amendments were applied this period, but had no significant impact as the Group did not engage in foreign currency non-exchangeable transactions - The Group has applied the amendments to HKAS 21, but there was no significant impact on the interim report as no foreign currency non-exchangeable transactions were conducted[13] 3 Revenue and Segment Reporting The Group's revenue primarily derives from passenger vehicle sales and after-sales and mortgage application services, all generated in mainland China with a diversified customer base Revenue Breakdown (Six Months Ended June 30) | Product or Service Line | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Sales of Passenger Vehicles | 7,929,796 | 8,569,387 | | After-sales and Mortgage Application Services | 2,204,870 | 2,086,476 | | Total Revenue | 10,134,666 | 10,655,863 | - All revenue is recognized at a single point in time and is entirely generated from mainland China[16][18] - The Group has only one operating segment, which is the sale of new passenger vehicles and the provision of after-sales and mortgage application services[17] - The customer base is diversified, with no single customer transaction exceeding 10% of total revenue[19] 4 Other Gains and Other Income, Net Net other gains and income significantly decreased this period, mainly due to reduced bank interest and commission income, and the absence of gains from convertible bond repurchases in the prior year Other Gains and Other Income, Net (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Commission Income | 26,823 | 43,954 | | Bank Interest Income | 7,173 | 55,745 | | Management Service Income | 1,317 | 2,316 | | Net Loss on Disposal of Property, Plant and Equipment | (4,866) | (5,863) | | Net Exchange Loss | (1,364) | (9,173) | | Gain on Repurchase of Convertible Bonds | – | 11,227 | | Others | 11,941 | 7,593 | | Total | 41,024 | 105,799 | 5 (Loss)/Profit Before Tax Pre-tax profit turned into a substantial loss this period, primarily due to a significant increase in impairment losses on goodwill and intangible assets, higher finance costs, and reduced other income Components of (Loss)/Profit Before Tax (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Finance Costs | | | | Interest on Loans and Borrowings | 19,224 | 33,033 | | Interest on Convertible Bonds | 2,975 | 50,608 | | Interest on Lease Liabilities | 36,131 | 40,230 | | Loss on Redemption of Convertible Bonds | 92,315 | – | | Other Finance Costs | 5,614 | 7,164 | | Total Finance Costs | 156,259 | 131,035 | | Staff Costs | | | | Salaries, Wages and Other Benefits | 344,742 | 315,776 | | Share-based Payment Expenses | 1,061 | 4,434 | | Contributions to Defined Contribution Retirement Plans | 13,917 | 13,998 | | Total Staff Costs | 359,720 | 334,208 | | Other Items | | | | Cost of Inventories | 9,469,146 | 9,739,231 | | Write-down of Inventories | 52,595 | 14,977 | | Depreciation Expense (Owned Property, Plant and Equipment) | 113,776 | 119,294 | | Depreciation Expense (Right-of-use Assets) | 67,551 | 72,038 | | Impairment Loss (Goodwill) | 17,527 | 104,762 | | Impairment Loss (Intangible Assets) | 850,347 | 46,542 | | Amortization of Intangible Assets | 33,478 | 90,507 | | Short-term Lease Expenses | 996 | 4,277 | | Net Exchange Loss | 1,364 | 9,173 | - The Group's contributions to defined contribution retirement plans are non-refundable, with no other significant retirement benefit payment obligations[22][23] 6 Income Tax Income tax shifted from an expense to a credit this period, primarily due to the reversal of deferred tax liabilities resulting from intangible asset impairment Income Tax (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current tax: Provision for PRC income tax for the period | 25,826 | 113,583 | | Deferred tax: Origination and reversal of temporary differences | (228,621) | (72,319) | | Total | (202,795) | 41,264 | - The Group's PRC subsidiaries are subject to a statutory income tax rate of 25%, with some subsidiaries enjoying preferential tax rates[26] - Dividends distributed from PRC enterprise profits are subject to a 5% withholding tax due to the Company's Hong Kong resident status[27] 7 Loss Per Share Both basic and diluted loss per share significantly increased this period, reflecting the expanded loss attributable to equity holders of the Company Loss Per Share (Six Months Ended June 30) | Indicator | 2025 (RMB cents) | 2024 (RMB cents) | | :--- | :--- | :--- | | Basic Loss Per Share | (60.51) | (2.01) | | Diluted Loss Per Share | (60.51) | (2.01) | - Basic loss per share is calculated based on the loss attributable to equity holders of the Company of RMB 814,662,000[28] - Diluted loss per share is equal to basic loss per share due to the anti-dilutive effect of share options and convertible bonds[29] 8 Property, Plant and Equipment Acquisitions of property, plant and equipment remained stable year-on-year, while the net book value of disposals decreased, leading to a slight reduction in disposal losses - Acquisitions of property, plant and equipment at original cost were RMB 81,198,000 this period, similar to RMB 81,396,000 in the prior period[30] - Property, plant and equipment with a net book value of RMB 59,397,000 were disposed of, resulting in a loss on disposal of RMB 4,866,000[30] 9 Right-of-use Assets The increase in right-of-use assets significantly decreased this period, reflecting a substantial reduction in the scale of new lease agreements - Right-of-use assets increased by RMB 332,000 this period, a significant decrease from RMB 62,423,000 in the prior period[31] 10 Intangible Assets and Goodwill Impairment losses on goodwill and intangible assets significantly increased this period due to heightened macroeconomic uncertainty, intense automotive industry competition, and new policies on super luxury car consumption tax and reduced mortgage application commission rates - The estimated useful life of automotive dealership rights is 20 years, with fair value determined using the multi-period excess earnings method[32] Impairment Loss on Goodwill and Intangible Assets (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Impairment Loss on Goodwill | 17,527 | 104,762 | | Impairment Loss on Intangible Assets | 850,347 | 46,542 | - Impairment reasons include macroeconomic uncertainty, intensified price competition, the introduction of super luxury car consumption tax policies, and a decrease in mortgage application commission rates[33] - Management has further lowered future performance expectations, leading to additional impairment losses[34] Key Input Data and Assumptions for Impairment Test | Input Data | 2025 (Annual Revenue Growth Rate) | 2026 (Annual Revenue Growth Rate) | 2027-2030 (Annual Revenue Growth Rate) | | :--- | :--- | :--- | :--- | | June 30, 2025 | -17.6%0.5% | -1.6%-1.1% | 0.0%~2.9% | | December 31, 2024 | -3.5%~2.0% | 0%~0.3% | 0%~0.3% | | Input Data | 2025 (Gross Profit Margin) | 2026 (Gross Profit Margin) | 2027-2030 (Gross Profit Margin) | | :--- | :--- | :--- | :--- | | June 30, 2025 | 2.5%~5.8% | 2.8%~4.3% | 4.1%~10.8% | | December 31, 2024 | 4.2%~11.4% | 4.2%~11.4% | 4.2%~11.4% | - The pre-tax discount rate applied in the impairment test ranged from 13.0% to 14.2% (December 31, 2024: 13.5% to 15.9%)[39] 11 Inventories Total inventories increased this period, primarily driven by higher vehicle inventories, while inventory write-downs significantly rose Inventory Composition (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Vehicles | 701,526 | 610,835 | | Others | 143,509 | 149,876 | | Total | 845,035 | 760,711 | Amount of Inventories Recognized as Expense (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Carrying amount of inventories sold | 9,469,146 | 9,739,231 | | Write-down of inventories | 52,595 | 14,977 | 12 Trade and Other Receivables Total trade and other receivables significantly decreased this period, mainly due to reductions in prepayments and other receivables Ageing Analysis of Trade and Other Receivables (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 255,947 | 317,892 | | Over 3 months | 1,999 | 1,946 | | Trade Receivables | 257,946 | 319,838 | | Prepayments | 163,477 | 290,147 | | Other receivables and deposits | 735,696 | 973,122 | | Amounts due from third parties | 1,157,119 | 1,583,107 | | Amounts due from related parties | 1,714 | 4,602 | | Total Trade and Other Receivables | 1,158,833 | 1,587,709 | - Trade receivables primarily refer to mortgages granted by financial institutions to customers, typically repaid within one month[43] 13 Pledged Bank Deposits Total pledged bank deposits significantly decreased this period, mainly due to a substantial reduction in restricted bank deposits pledged for bills payable Pledged Bank Deposits (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Pledged for loans and borrowings | 38,993 | 20,073 | | Pledged for bills payable | 806,520 | 2,088,035 | | Others | 24,778 | – | | Total | 870,291 | 2,108,108 | - Pledged bank deposits will be released upon settlement of related loans, borrowings, and bills payable[44] 14 Cash and Cash Equivalents and Bank Time Deposits Cash and cash equivalents significantly decreased this period, while bank time deposits with maturities over three months at the time of placement increased Cash and Bank Time Deposits (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank time deposits with original maturity over three months when placed | 23,000 | 12,000 | | Cash at bank and in hand | 868,781 | 2,644,539 | 15 Loans and Borrowings Total loans and borrowings slightly decreased this period, with short-term loans remaining the primary component, and most loans secured by assets or guaranteed by related parties Repayment Period of Loans and Borrowings (As of June 30) | Repayment Period | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within one year or on demand | 673,764 | 709,785 | | After one year but within two years | 267,800 | 47,800 | | After two years but within five years | – | 243,900 | | Total | 941,564 | 1,001,485 | Collateralization of Loans and Borrowings (As of June 30) | Type of Collateral | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Secured bank loans - supplier financing | 149,020 | 96,098 | | Other secured borrowings from financial institutions - supplier financing | 61,422 | 71,201 | | Other secured bank loans | 731,122 | 834,186 | | Total | 941,564 | 1,001,485 | - Loans and borrowings are secured by property, plant and equipment, right-of-use assets, inventories, trade and other receivables, and pledged bank deposits, with some guaranteed by related parties[46] 16 Trade and Other Payables Total trade and other payables significantly decreased this period, mainly due to reductions in trade payables and bills payable Ageing Analysis of Trade and Other Payables (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total trade payables and bills payable | 1,612,508 | 3,039,785 | | Contract liabilities | 759,536 | 721,004 | | Other payables and accruals | 286,609 | 286,590 | | Amounts due to third parties | 2,658,653 | 4,047,379 | | Amounts due to related parties | 9,448 | 9,079 | | Total Trade and Other Payables | 2,668,101 | 4,056,458 | - Bills payable primarily relate to supplier financing arrangements, some secured by related party guarantees or asset pledges[47] - All trade and other payables are expected to be settled within one year[47] 17 Convertible Bonds The Group fully redeemed all outstanding convertible bonds this period, resulting in zero convertible bond liabilities and equity components, and recognizing a redemption loss - Sail Vantage Limited, a subsidiary of the Company, issued guaranteed zero-coupon convertible bonds with a principal amount of HKD 2,750,000,000 in January 2022, maturing in January 2027[48] - The Group redeemed all outstanding convertible bonds on January 13, 2025, at 106.9428% of the principal amount, resulting in a loss on settlement of the liability component of RMB 92,315,000[49][51] Movements in Convertible Bonds (As of June 30) | Item | Liability Component (RMB thousand) | Equity Component (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | | January 1, 2024 | 2,206,781 | 203,976 | 2,410,757 | | Interest expense | 90,834 | – | 90,834 | | Repurchase | (579,606) | (17,623) | (597,229) | | Exchange adjustment | 41,161 | – | 41,161 | | December 31, 2024 and January 1, 2025 | 1,759,170 | 186,353 | 1,945,523 | | Interest expense | 2,975 | – | 2,975 | | Redemption | (1,757,640) | (186,353) | (1,943,993) | | Exchange adjustment | (4,505) | – | (4,505) | | June 30, 2025 | – | – | – | 18 Capital, Reserves and Dividends No interim dividend was declared this period, but the final dividend for the previous fiscal year was approved; some share options lapsed, but a significant number remain unexercised - No interim dividend was declared for the period[52] Final Dividend Approved for Prior Fiscal Year (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | RMB 0.0445 per ordinary share | 59,908 | 44,426 | - Dividends of RMB 4,783,000 were paid by subsidiaries to non-controlling shareholders this period[53] Number of Share Options and Weighted Average Exercise Price | Item | June 30, 2025 (Number of Share Options) | December 31, 2024 (Number of Share Options) | | :--- | :--- | :--- | | Outstanding at beginning of period/year | 12,478,250 | 15,605,750 | | Forfeited during period/year | (427,000) | (3,127,500) | | Outstanding at end of period/year | 12,051,250 | 12,478,250 | | Exercisable at end of period/year | 12,051,250 | 10,712,750 | - As of June 30, 2025, the weighted average remaining contractual life of outstanding share options was 5.29 years[56] 19 Commitments As of June 30, 2025, the Group's outstanding capital commitments not provided for in the interim financial report significantly decreased to zero Outstanding Capital Commitments (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Contracted | – | 15 | 20 Comparative Figures Certain comparative figures have been reclassified to conform with the current period's presentation - Certain comparative figures have been reclassified to conform with the current period's presentation[58] Management Discussion and Analysis Market Overview In H1 2025, China's auto market recovered with policy support, driven by NEVs, but the luxury car market faced deep adjustments due to competition and NEV substitution, leading to squeezed dealer profits and network exits - In H1 2025, domestic passenger vehicle sales increased by 10.8% to 10.902 million units, with NEV sales rising by 33.3% to 5.469 million units, achieving a market penetration rate of 50.2%[59] - The luxury car market experienced deep adjustments, with significant brand sales declines, an average discount rate of 20.7%, and widespread dealer profit inversions[59][60] - A wave of dealer network exits occurred, with the national 4S dealership network size decreasing by 2.7% in 2024, totaling 4,419 exited stores[60] - Dealers are shifting strategic focus to efficient operations, cash flow management, and cost control, while "trade-in" policies and NEV hybrid model transformation offer new business opportunities[61] Performance and Financial Review The Group's H1 2025 performance was impacted by macroeconomic uncertainty, intensified competition, and policy changes, resulting in decreased revenue, significantly reduced gross profit, and substantial impairment losses on goodwill and intangible assets, yet after-sales services performed well and operating expenses were controlled - New passenger vehicle sales saw slight growth, while after-sales and mortgage application services achieved good revenue and profit growth, with absorption rate rising to 257.9%[62] - All convertible bonds with a principal amount of HKD 1,873.0 million were fully redeemed and delisted during the period[62] - Due to macroeconomic uncertainty, intensified price competition, super luxury car consumption tax policies, and reduced mortgage application commission rates, further non-cash impairment of goodwill and dealership rights of approximately RMB 870 million was recognized[63] - The impairment test used value in use as the recoverable amount, with a pre-tax discount rate ranging from 13.0% to 14.2%[64] Revenue for the Period Total revenue decreased by 4.9% year-on-year this period, mainly due to a decline in the average selling price of new passenger vehicles, though after-sales and mortgage application service revenue increased Revenue Composition for the Period | Business Type | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | New Passenger Vehicle Sales | 7,929.8 | 8,569.4 | -7.5% | 78.2% | | After-sales and Mortgage Application Services | 2,204.9 | 2,086.5 | +5.7% | 21.8% | | Total Revenue | 10,134.7 | 10,655.9 | -4.9% | 100% | Cost of Sales Cost of sales decreased by 1.9% year-on-year, primarily due to lower new passenger vehicle sales revenue and increased manufacturer rebates, while after-sales service costs grew in line with revenue - Cost of sales decreased by 1.9% to RMB 9,658.9 million year-on-year, mainly due to lower new passenger vehicle sales revenue and increased manufacturer rebates[66] - Cost of sales for after-sales and mortgage application services increased by 3.5% year-on-year, broadly in line with revenue growth[66] Gross Profit Gross profit significantly decreased by 41.0% year-on-year this period, with the overall gross profit margin falling by 2.9 percentage points, and new passenger vehicle sales gross profit margin turning negative Gross Profit and Gross Profit Margin | Indicator | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Gross Profit (RMB million) | 475.7 | 806.4 | -41.0% | | Overall Gross Profit Margin | 4.7% | 7.6% | -2.9 percentage points | | New Passenger Vehicle Sales Gross Profit Margin | -10.8% | -5.1% | -5.7 percentage points | Expenses Impairment of goodwill and dealership rights significantly increased this period, but the Group reduced overall operating expenses (distribution, administrative) through prudent cost control, while finance costs rose due to convertible bond redemption losses - Impairment of goodwill and dealership rights of approximately RMB 867.9 million was incurred during the period, a significant increase from RMB 151.3 million in the prior period[68] Operating Expenses (Six Months Ended June 30) | Item | H1 2025 (RMB million) | H1 2024 (RMB million) | % of Total Revenue (2025) | % of Total Revenue (2024) | | :--- | :--- | :--- | :--- | :--- | | Distribution Costs | 259.8 | 295.4 | 2.6% | 2.8% | | Administrative Expenses | 258.2 | 324.4 | 2.5% | 3.0% | | Finance Costs | 156.3 | 131.0 | 1.5% | 1.2% | - The increase in finance costs was mainly due to a loss of approximately RMB 92.3 million on the repurchase of convertible bonds[69] Taxation Income tax shifted from an expense to a credit this period, primarily due to the reversal of deferred tax liabilities resulting from intangible asset impairment - Income tax credit for the period was RMB 202.8 million, compared to an income tax expense of RMB 41.3 million in the prior period[70] - The change was mainly due to the reversal of deferred tax liabilities resulting from intangible asset impairment, leading to a reversal of deferred tax expense of approximately RMB 212.6 million[70] Loss for the Period and Loss Attributable to Equity Holders Loss for the period significantly widened, and net profit margin substantially decreased, primarily due to squeezed gross profit from new passenger vehicle sales and impairment of goodwill and dealership rights Loss for the Period | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Loss for the Period | 818.2 | 22.9 | Widened | | Net Profit Margin | -8.1% | -0.2% | Decreased 7.9 percentage points | | Loss Attributable to Equity Holders | 814.7 | 27.0 | Widened | Dividends The Board resolved not to declare an interim dividend due to the widened loss for the period - The Board resolved not to declare an interim dividend for the period[72] Joint Ventures Share of profit of joint ventures decreased by nearly half year-on-year this period - Share of profit of joint ventures for the period was RMB 4.4 million, a decrease of approximately 46.8% from RMB 8.3 million in the prior period[73] Operating Review In H1 2025, the Group's new passenger vehicle sales increased, but revenue decreased due to lower average selling prices; after-sales and mortgage application services achieved good growth in both revenue and service counts; the number of operating stores slightly decreased New Passenger Vehicle Sales Benefiting from "two new policies," new passenger vehicle sales saw slight growth, but revenue decreased due to lower average selling prices, with luxury brands remaining the core revenue source - New passenger vehicle sales totaled 28,214 units for the period, an increase of 7.8% year-on-year[74] - New passenger vehicle sales revenue decreased by 7.5% year-on-year to RMB 7,929.8 million, mainly dragged by lower average selling prices[74] - Luxury brands accounted for approximately 85.4% of total new passenger vehicle sales revenue, with Porsche, BMW, and Lexus being the main contributors[74] After-sales and Mortgage Application Services After-sales and mortgage application service revenue and service counts both achieved good growth this period, benefiting from an expanding customer base and increased adoption of mortgage application services - After-sales and mortgage application service revenue for the period was RMB 2,204.9 million, an increase of 5.7% year-on-year[75] - Service counts reached 384,324 units, an increase of 5.7% year-on-year[75] Existing Network As of June 30, 2025, the Group operated 74 self-owned stores, a decrease of 4 from the prior period, mainly reducing Porsche, Toyota, Audi, and Tesla after-sales service centers - As of June 30, 2025, the Group operated 74 self-owned stores, including one joint venture and one Tesla after-sales service center[76] Number of Operating Stores | Brand | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Porsche | 15 | 16 | -1 | | BMW | 27 | 27 | – | | Lexus | 20 | 20 | – | | Toyota | 11 | 12 | -1 | | Audi | 0 | 1 | -1 | | Tesla After-sales Service | 1 | 2 | -1 | | Total | 74 | 78 | -4 | Liquidity, Financial Resources and Position The Group's total equity and net current assets both decreased, mainly due to reduced cash and bank deposits from convertible bond redemption and bills payable repayment; total loans and borrowings slightly decreased, and financial resources are sufficient to meet operational needs Liquidity and Financial Resources | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Total Equity | 2,075.4 | 2,956.8 | | Current Assets | 3,741.2 | 7,113.1 | | Current Liabilities | 3,551.3 | 6,788.4 | | Net Current Assets | 189.9 | 324.7 | | Loans and Borrowings | 941.6 | 1,001.5 | | Outstanding Convertible Bonds | – | 1,759.2 | | Cash and cash equivalents, time deposits, pledged bank deposits | 1,762.1 | – | - The decrease in current assets was mainly due to the early full redemption of convertible bonds and repayment of bills payable, leading to a 67.1% and 59.9% reduction in cash and cash equivalents and pledged bank deposits, respectively, at period-end[78] - The Group's primary transactions are denominated in RMB, with limited foreign exchange risk, and no significant financial instruments are used to hedge foreign exchange risk[80] - The Group possesses sufficient financial resources to meet all contractual obligations and operational needs[81] Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[82] Material Investments, Acquisitions and Disposals The Group held no material investments and conducted no material acquisitions or disposals this period - The Group held no material investments and conducted no material acquisitions or disposals of subsidiaries, associates, or joint ventures during the period[83] Pledges of the Group's Assets Total pledged assets of the Group significantly decreased this period, primarily used for certain bills payable, loans, and borrowings - As of June 30, 2025, the Group's total pledged assets were approximately RMB 1,700.3 million, a decrease from RMB 3,053.2 million as of December 31, 2024[84] - Pledged assets include property, plant and equipment, right-of-use assets, inventories, trade and other receivables, and pledged bank deposits[84] Outlook In the second half, the auto dealership industry will face ongoing challenges; the Group will maintain a prudent approach by reducing debt, maintaining ample cash, exploring NEV opportunities, and developing after-sales services to navigate market uncertainties, while carefully evaluating store performance to control costs - The industry is expected to face challenges in the second half, including insufficient consumer spending, intensified price wars, expanded luxury car tax scope, reduced mortgage commission rates, and dealer network adjustments[85] - The Group will address challenges by reducing debt, maintaining ample cash, exploring NEV opportunities, and promoting the development of after-sales and mortgage application services[85] - Store performance will be carefully evaluated, and strict cost control maintained, aiming to survive the market reshuffle[85] Material Events and Other Information Staff Training and Development The Group's employee count slightly increased, staff costs rose, and it is committed to providing competitive compensation, career development paths, and mentorship to attract and retain talent - As of June 30, 2025, the Group had 3,763 employees, with total staff costs of RMB 359.7 million[86] - The Group promotes a simple, direct, and data-driven corporate culture, offering competitive remuneration, discretionary bonuses, and share options, while prioritizing employee satisfaction and career development[86] Non-Competition Undertaking The Company's controlling shareholder confirmed compliance with the non-competition undertaking, and independent non-executive directors found no breaches during the period - The controlling shareholder confirmed compliance with the non-competition undertaking, and independent non-executive directors found no breaches during the period[87] Update on Rectification of Property Title Defects The Group had no updates on property title defects this period and will announce progress in a timely manner according to regulations - The Group had no updates on property title defects during the period and will announce progress in a timely manner according to relevant regulations[88] Use of Proceeds from Previous Placing and Subscription The Company decided to change the use of the remaining unutilized net proceeds of approximately HKD 506 million, allocating them entirely to working capital and other general corporate purposes to flexibly respond to market challenges - Net proceeds from the January 2023 placing amounted to approximately HKD 1,012 million[89] Change in Intended Use of Net Proceeds | Original Use | % of Total Net Proceeds | Unutilized as of June 30, 2025 (HKD million) | | :--- | :--- | :--- | | Business expansion (including strategic investments and acquisitions) | 50% | 506 | | Working capital and other general corporate purposes | 50% | 0 | | Total | 100% | 506 | - The Directors resolved to reallocate the remaining unutilized net proceeds of approximately HKD 506 million entirely to working capital and other general corporate purposes, expected to be fully utilized by the end of 2028[89][90] Material Events and Other Information The Group completed the full redemption and delisting of convertible bonds, approved a new share option scheme, and made changes to company secretary and nomination committee members, while maintaining compliance with corporate governance codes Full Redemption of Convertible Bonds Issued by Sail Vantage Limited The Group fully redeemed all outstanding convertible bonds on January 13, 2025, which have been cancelled, and their listing status has been withdrawn - As of January 1, 2025, convertible bonds with a principal amount of HKD 1,873 million remained outstanding[92] - The Group redeemed all outstanding convertible bonds on January 13, 2025, at 106.9428% of the principal amount, and they have been cancelled[92] - The listing status of the convertible bonds on the Stock Exchange was withdrawn on January 22, 2025[92] Share Option Scheme The Company approved a new 2025 Share Option Scheme, aimed at incentivizing directors and employees, which has received shareholder approval - The 2023 November Share Option Scheme expired, and the Company announced a proposed adoption of the 2025 Share Option Scheme on February 18, 2025[93] - The 2025 Share Option Scheme was approved by shareholders at an EGM held on June 10, 2025[93] - As of June 30, 2025, 12,051,250 share options remained unexercised under the previous share option scheme[94] Change of Company Secretary and Authorised Representative Ms. Chan Cheuk Man replaced Mr. Wong Cheung Ki as Company Secretary and Authorised Representative effective February 18, 2025 - Ms. Chan Cheuk Man replaced Mr. Wong Cheung Ki as Company Secretary, Authorised Representative under Listing Rule 3.05, and other positions, effective February 18, 2025[95] Change in Composition of Nomination Committee Ms. Law Lau Yuk and Mr. Chan Kwai Yick were appointed as Nomination Committee members effective August 27, 2025, to enhance corporate governance - Executive Director Ms. Law Lau Yuk and Independent Non-executive Director Mr. Chan Kwai Yick were appointed as members of the Nomination Committee effective August 27, 2025[96] - This change aims to further enhance the diversity of the Nomination Committee and the Company's overall corporate governance standards[96] Purchase, Sale or Redemption of Listed Securities Except for the convertible bond redemption disclosed, neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities this period - Save as disclosed in this announcement, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period and up to the date of this announcement[97] - As of June 30, 2025, the Company held no treasury shares[97] Corporate Governance The Company complied with the applicable provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules during the period - The Company complied with the applicable code provisions in Part 2 of the Corporate Governance Code set out in Appendix C1 of the Listing Rules in effect during the period[98] Standard of Dealings in Securities by Directors The Company adopted the Standard Code in Appendix C3 of the Listing Rules, and all Directors confirmed compliance during the period - The Company adopted the Standard Code set out in Appendix C3 of the Listing Rules, and all Directors confirmed compliance with the code during the period[99] Audit Committee and External Auditor Review The interim results and this announcement were reviewed by the Company's Audit Committee and by external auditor KPMG - The interim results and this announcement have been reviewed by the Company's Audit Committee[100] - The Group's external auditor, KPMG, has reviewed the interim financial report for the period[100] Publication of Interim Report The Company's interim report will be made available on the HKEX and Company websites in due course - The Company's interim report for the period will be made available on the HKEX website and the Company's website in due course[101] Acknowledgement The Board expresses gratitude to all employees, management, shareholders, and investors for their contributions and support - The Board expresses its gratitude to all employees, management team, shareholders, and investors for their unwavering support[102]