ZHONGSHENG HLDG(00881) released its interim results with a net profit attributable to shareholders of 1.011 billion Yuan, a decrease of 36% year-on-year.

ZHONGSHENG HLDG (00881) released its financial performance for the six months ending June 30, 2025. The group's total revenue for the period was 77.322 billion yuan, a decrease of 6.2% year-on-year. The profit attributable to the owners of the company was 1.011 billion yuan, a decrease of 36% year-on-year. Earnings per share were 0.427 yuan. In the first half of 2025, the group's after-sales service revenue reached 11.45 billion yuan, an increase of 4.4% year-on-year. During the same period, the gross profit from after-sales services was 5.44 billion yuan, an increase of 8.1% year-on-year. This strong financial performance was driven by 4 million after-sales service visits from 4.54 million active customers, representing a 15.2% and 1.7% increase respectively. Since November 2024, the group has completed its largest-ever network optimization, including splitting existing stores into properties that operate multiple businesses, converting dealerships into Zhongsheng maintenance service centers, and changing the business type of existing properties. More than 20% of stores participated in this adjustment. During this period, the group added 57 new dealerships and 20 maintenance service centers, and closed 37 dealerships. Of the new dealerships, 48 were luxury brands, including 36 AITO, 1 HIMA, 1 Mercedes-Benz, 3 Lexus, 1 Audi, and 6 Volvo. These adjustments were aimed at achieving business scale growth with minimal capital expenditure and expense investment to optimize operational efficiency. While the temporary closure of some mid- to high-end brand dealerships that previously contributed higher after-sales service visits had a small impact on operations, leading to a slight increase of 1.7% in after-sales service visits compared to 15.2% in active customers, in the first half of 2025, the group's comparable store after-sales service visits actually increased by 4.5% year-on-year, with comparable store after-sales service revenue growing by 813 million yuan, a year-on-year increase of 7.9%. The additional network brought in 331 million yuan in after-sales service revenue, partially offsetting the 663 million yuan in after-sales revenue lost from the closure of 37 stores in the first half of 2024. Therefore, overall after-sales service revenue achieved a net year-on-year increase of 481 million yuan, a growth of 4.4%. In the first half of 2025, the group's new car sales volume was approximately 229,000 units, a decrease of about 4,000 units or 1.7% year-on-year. As the brand structure adjusts, AITO brand made its first contribution to the business, bringing in 11,000 units of new car sales, partly offsetting the decline in sales of other brands. The sales contribution of luxury brands rose to 62.3%, aligning with the group's strategic luxury positioning. In the first half of 2025, the group sold approximately 111,000 used cars, an increase of 9.6% year-on-year. However, the revenue from used car business decreased by 27.0% to 6.02 billion yuan, with a year-on-year decrease of 33.4% in revenue per unit. This was mainly due to the impact of the government's policy to stimulate consumption and exchange old cars for new ones, which boosted new car market sales but impacted used car market transaction prices. Most of the group's used car sources were old cars discarded by owners for new ones, as local governments strongly promoted consumer subsidies for exchanges, leading to the group acquiring a large number of old cars with long lifespans, directly reducing the revenue per unit. In the first half of the year, nearly 80% of the used cars sold by the group were 6 years or older, an increase of nearly 10 percentage points from the same period last year. At the same time, price wars in the new car market further squeezed the profit margins of the used car business. Therefore, the comprehensive profit per unit was compressed to less than 3,000 yuan, with the overall profit of this business segment at around 300 million yuan, a year-on-year decrease of 60.2%. The significant contraction in the profitability of the used car business is mainly attributed to the limited retail value of older vehicles.