Core Viewpoint - Dongzheng Automotive Finance is set to officially list on the Hong Kong Stock Exchange on March 26, 2023, after pricing on March 19, 2023, potentially becoming the first automotive finance company in China to go public [4]. Industry Overview - The automotive finance market in China has significant growth potential, with a current penetration rate of only 30%, compared to 90% in the U.S. and 79% in the U.K. The market is projected to reach a capacity of 525 billion yuan by 2025 [3]. - As of now, there are 25 licensed automotive finance companies in China, with Dongzheng being the only one with a dealership background [6]. Company Background - Dongzheng Automotive Finance was established in March 2015, with a 95% stake held by Zhengtong Automotive and 5% by Dongfeng Motor [7]. - The company primarily offers retail loans to consumers and dealer loans to facilitate purchases from manufacturers [8]. Financial Performance - From 2015 to 2018, Dongzheng's operating income grew from 77.97 million yuan to 816 million yuan, with a compound annual growth rate (CAGR) of 143.4%. Net profit increased from 24.8 million yuan to 453 million yuan, with a CAGR of 224.4% [10]. - As of the end of 2018, the company reported a net profit of 453 million yuan, a year-on-year increase of 73.53% [10]. Risk and Challenges - Despite strong revenue growth, Dongzheng has faced negative operating cash flow, with figures of -315 million yuan in 2017 and -158 million yuan in the first half of 2018, indicating challenges in loan recovery [11]. - The automotive finance market is characterized by weak risk control capabilities, leading to potential fraud and operational risks [12]. Future Plans - The company plans to use 70% of the IPO proceeds to expand its external dealer network and retail loan offerings, with 65% allocated for loans to external customers [11].