Zhongsheng Group (881) H1 2024 earnings summary

Executive summary

• Revenue grew 0.6% year-over-year to RMB82,421.4 million for 1H2024, driven by strong after-sales and pre-owned segments despite a decline in new car sales revenue.

• Net profit dropped 50.3% year-over-year to RMB1,500.0 million, with gross profit margin falling to 6.0% from 8.5% due to intense price competition in the new car market.

• Strategic focus shifted to premium, brand-agnostic, digitalized auto services and pre-owned vehicle business, with significant customer base growth in core cities.

• Achieved 1H2024 new car sales volume of 233,000 units and used car sales of 102,000 units, with luxury brands accounting for 61.3% of new car sales volume.

• Active customer base increased to 3.94 million, and Zhongsheng GO subscribers reached 3.12 million in 1H2024.

Financial highlights

• Total revenue for 1H2024 was RMB82,421.4 million (+0.6% YoY); new car sales revenue down 5.8%, after-sales up 13.8%, pre-owned up 61.6%.

• Gross profit: RMB4,926.2 million (-29.3% YoY); net profit: RMB1,500.0 million (-50.3% YoY); net margin: 1.8%.

• Operating profit: RMB2,755.8 million (-42.2% YoY); operating margin: 3.3%.

• After-sales services revenue grew 13.8% YoY to RMB10,964 million; used car revenue surged 61.6% YoY to RMB13,369 million.

• Basic and diluted EPS: RMB0.662 (-47.2% YoY).

Outlook and guidance

• Focus remains on expanding after-sales and pre-owned business, leveraging centralized operations, digital platforms, and density in core cities and brands.

• Sufficient liquidity and credit facilities to support future growth and debt obligations.

• No interim dividend declared for the period.