Zhongsheng Group (881) H1 2025 earnings summary

Executive summary

• Revenue for 1H2025 was RMB77.32 billion, down 6.2% year-over-year, mainly due to declines in new and pre-owned automobile sales revenue.

• Net profit attributable to owners was RMB1.01 billion, a 36.0% decrease year-over-year, with basic EPS at RMB0.427.

• Gross profit fell 14.6% to RMB4.21 billion, and gross margin declined to 5.4% from 6.0% a year earlier.

• After-sales services revenue grew 4.4% to RMB11.45 billion, with gross profit up 8.1% to RMB5.44 billion and gross profit margin in this segment reaching 47.4%.

• The company continued its strategic focus on premium auto services, local market density, and brand concentration.

Financial highlights

• New automobile sales revenue dropped 4.7% to RMB57.93 billion; pre-owned sales revenue fell 27.0% to RMB6.01 billion.

• EBITDA for 1H2025 was RMB3.17 billion, down from RMB4.21 billion in 1H2024.

• Operating profit was RMB1.91 billion, down 30.9% year-over-year; operating margin was 2.5%.

• Free cash flow improved to RMB3.97 billion in 1H2025 from RMB1.70 billion in 1H2024.

• Net cash generated from operating activities was RMB5.95 billion, up significantly due to working capital release.

Outlook and guidance

• Management expects new car margin improvement in the second half of 2025 as OEMs introduce new products and market consolidation continues.

• After-sales services and premium segment growth are expected to drive future profitability.

• Ongoing facility reshuffling is expected to normalize, with 19 new stores in the pipeline, mainly premium brands.