Zhongsheng Group (881) H1 2024 earnings summary

Executive summary

• Revenue grew 0.6% year-over-year to RMB82,421.4 million for the six months ended 30 June 2024, driven by strong pre-owned and aftersales 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 brand-agnostic, digitalized auto services and pre-owned vehicle business, with significant customer base growth in core cities.

Financial highlights

• Revenue: RMB82,421.4 million (+0.6% YoY); new car sales revenue down 5.8%, aftersales up 9.3%, 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%.

• Basic and diluted EPS: RMB0.662 (vs. RMB1.253 and RMB1.245 in 2023).

• Operating cash flow: RMB2,925.6 million.

Outlook and guidance

• Focus on expanding density in core cities and brands, with continued investment in pre-owned and aftersales businesses.

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

• Ongoing market consolidation expected to benefit large dealership groups.

• No interim dividend declared for the period.