Core Viewpoint - The company is the only automotive finance company in China with a dealership background, holding a unique position in the market and benefiting from the rapid growth of the automotive finance sector [1][2]. Company Overview - Established in March 2015 with a registered capital of RMB 500 million, the company is primarily owned by Zhengtong Automobile (95%) and Dongfeng Automobile (5%) [1]. - The registered capital was increased to RMB 1.6 billion in May 2017, and after listing on the H-share market, Zhengtong and Dongfeng hold 71.04% and 3.74% of the shares, respectively, with public shareholders owning 25.22% [1]. Market Potential - The automotive finance market in China is rapidly expanding, currently exceeding RMB 1 trillion, with a penetration rate of 40%, significantly lower than the 86% in the United States, indicating substantial growth potential [2]. - The market is characterized by traditional players including commercial banks, automotive finance companies, leasing firms, and internet finance companies, where financing costs and business extension capabilities are key to profitability [2]. Business Growth - The company's main business includes automotive retail loans and dealer loans, with retail loan revenue growing by 73% year-on-year in 2018 [3]. - The sales channel network is expanding, comprising both internal dealers (113 stores) and external dealers (1,167 stores) as of the end of 2018 [3]. Competitive Advantages - The company possesses a financial license allowing interbank borrowing, ensuring ample funding at lower interest rates [4]. - Collaborative promotional products with Zhengtong dealers and manufacturers support business growth [4]. - A standardized approval process and integration of advanced technology enhance operational efficiency [4]. - A comprehensive risk management system under strict regulatory oversight ensures stable loan operations [4]. Investment Outlook - The automotive finance market is expected to grow steadily, with the company leveraging its licensing advantage to diversify service offerings and increase market penetration [5]. - Projected revenues for 2019-2021 are RMB 1.08 billion, RMB 1.63 billion, and RMB 2.39 billion, with corresponding net profits of RMB 740 million, RMB 1.12 billion, and RMB 1.67 billion, reflecting year-on-year growth rates of 63%, 52%, and 49% [5]. - The company is currently undervalued compared to the multi-financial sector in Hong Kong, with a projected PE ratio of 10x for 2019 and a target price of HKD 4.00 [5].