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Public company info - Grand Baoxin Auto Group Limited , 01293.HK

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Grand Baoxin Auto Group Limited, 01293.HK - Company Profile
Chairman Lu Wei
Share Issued (share) 2,838,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Automobile Retailing, Maintenance & Repair
Corporate Profile Business Summary: The Group is principally engaged in the sale and service of motor vehicles. Performance for the year: As of 31 December 2020, the Group’s revenue amounted to approximately RMB35,134.3 million, a decrease of 3.6%, year-on-year; gross profit amounted to RMB1,750.1 million, a decrease of 38.5%; profit attributable to equity holders amounted to RMB211.4 million, a decrease of 66.4%, and earnings per share recorded RMB0.07. Business Review: New automobile sales In the full year of 2020, affected by the everchanging business environment, the Group adopted more prudent operational strategies and slowed down the pace of bulk purchasing in order to diminish inventory pressure. As of 31 December 2020, the Group sold a total of 101,511 units of new automobiles, representing a year-on-year decrease of 8.6%, and the Group achieved a new automobile sales revenue of RMB30,829.2 million, representing a year-on-year decrease of 2.7%, in which the sales revenue of luxury and ultra-luxury cars was RMB28,078.6 million, representing a year-on-year decrease of 0.9%, which accounted for 91.1% of new automobile sales revenue. In the full year of 2020, the overall gross profit margin of new automobiles of the Group was 1.2%. During the Reporting Period, due to the impact of the spread of COVID-19 pandemic, the Group’s sales volume of new automobiles was evidently impacted in the first quarter. The customer traffic and the sales volume of new automobiles from various dealing stores dropped considerably, while other areas such as the number of admissions from after-sales services and the Group’s derivative business were being indirectly affected as well. With the COVID-19 pandemic gradually being under control in the second quarter, the market has steadily recovered, and the Group’s production and operation also resumed to normal level and gradually reduced the losses arising from the impact of the pandemic at the early phase. Moreover, during the Reporting Period, the Group has made strategic adjustments targeting on certain operating stores which had low operational efficiency and/or were loss-making for a long time, with higher operating costs and not in line with its longterm strategies, whereby indirectly affected the Group’s sales volume of new automobiles. After-sales services During the Reporting Period, the revenue of after-sales services was RMB4,270.0 million, representing a year-on-year decrease of 9.8%, accounting for 12.2% of the total revenue of the Group. The gross profit of after-sales services was RMB1,364.5 million, representing a year-onyear decrease of 34.3%, and the gross profit margin of after-sales services was 32.0%. In 2020, as the decrease in the Company’s sales volume of new automobiles has led to a decrease in the business volume of car decoration, the Group’s performance in after-sales services was therefore affected. During the Reporting Period, the Group continued to strengthen its cost control while increasing its income sources and reducing expenditure, and leveraged the advantages of its business scale to centralize procurement and allocation of parts and components in various regions. While ensuring the quality of its services and products, the Group further controlled its procurement costs in order to minimize the adverse impact of the COVID-19 pandemic. Derivative business During the Reporting Period, the Group promptly adjusted its operating strategies according to the changes in market environment, so as to deal with the impact of pandemic on the derivative business. Meanwhile, the Group further improved the customer solicitation system, expanded internal customer maintenance and development of external after-sales customers, and actively launched sales activities for various products that helped to increase customer loyalty, and these enabled the derivative business to achieve stable growth. As of 31 December 2020, the Group recorded a revenue of RMB1,048.5 million from automobile derivative business, representing a year-on-year increase of 40.7%. • Automobile finance business During the Reporting Period, the Group recorded an income of financial services business of RMB249.8 million, which was basically the same when compared with the same period in 2019. Meanwhile, the penetration rate of automobile finance in the new automobile business increased from 60.0% in 2019 to 65.4% during the Reporting Period. During the Reporting Period, the Group adhered to the development concept of stable operations by steadily promoting the strategic adjustment of finance business, integrating existing resources and promoting the replacement and repurchase of financial customers to maintain the stability of the Company’s financial service business. • Secondhand automobile business During the Reporting Period, the penetration rate of the Group’s secondhand automobile business was 32.0%. During the Reporting Period, the Group leveraged its existing offline 4S stores, and by linking with new car sales, integrating the supply chain finance, as well as actively expanding the evaluation, replacement and retail business of secondhand automobiles, the Group ensured its continuous expansion of the existing customer base and provision of quality retail resources of secondhand automobiles, so as to respond to the impacts brought to the secondhand automobile business by external factors. • Insurance business During the Reporting Period, the commission income of the Group’s insurance business was RMB694.3 million, representing an increase of 91.5% as compared to that of RMB362.5 million in 2019. During the Reporting Period, the Company constantly improved the management system and operating model of its insurance business. Supplemented by the “specialized and refined” services, the Company increased the market share (penetration rate) of its extended warranty business. Meanwhile, the Company vigorously launched the innovative insurance service products (non-automobile insurance, Hassle-free Double Insurances), thus ensuring the increase of both the penetration rate and quality of insurance renewal. In addition, responding to the comprehensive insurance reforms and the different rules being implemented in various regions, the Company adopted certain targeted professional response measures in order to ensure the continuous expansion of the Company’s premium scale. Network layout As a leading domestic dealer of luxury automobiles, the Group’s business mainly concentrates in the eastern part of China, which acts as the axis for expanding into the northern, central and southern part of China and also the northeast and northwest regions of China, thus covering the majority of the mainstream market for luxury and ultra-luxury automobiles in China as of now. During the Reporting Period, the Group implemented its strategic policy that emphasized on internal adjustment based on the changes in the business environment, adopted a cautious attitude towards network expansion, focused on the improvement on management optimization and operational efficiency of existing stores, enhanced the concentration on high-quality brands and eliminated weaker brands, so as to achieve the objectives of cost reduction and optimization. During the Reporting Period, the Group sold and/or adjusted 5 stores that had weaker profitability. Meanwhile, the Group also rebuilt and improved its existing stores, and managed to reduce capital expenditure of the Company while further raised the efficiency of capital usage, thus allowing itself to have a steady transition throughout the current industry adjustment period. As of 31 December 2020, the Group operated a total of 111 stores and owned a diversified car brand portfolio comprising 10 luxury and ultra-luxury automobile brands (namely BMW (including MINI), Audi, Jaguar & Land Rover, Volvo, Cadillac, Infiniti, Alfa Romeo, Porsche, Rolls Royce and Maserati). Prospects: Year 2021 is the first year of China’s “14th Five-Year Plan”. At such special period of time, being a core pillar industry of China’s economic development, the automobile industry will certainly be in a year of innovation and reform. In order to adapt to the new development pattern of “dual circulation economy”, the major theme of the automobile industry will be achieved accordingly on the basis of main principles of “Focus on strategy; Enhance quality; Expand demand”, setting the development philosophy of “Support the competent and eliminate the weak; Focus on internal strengths”, and striving to promote its three modernizations “electrification, computerization and networking” in the industry upgrading process. The Group will continue to position itself as a dealer and service provider of luxury brand automobiles, concentrate on creating “quality + services” properties, keep abreast with the trends, and undertake the mission of “leading industry management and service standards; promoting industry reforms”. While strengthening and improving existing luxury brands, it will also revitalize its existing assets, optimize brand structure and network distribution. Moreover, while continuing the marketing and services of traditional luxury brand new energy vehicle models, the Company will also seize the opportunity to rearrange the new energy service industry chain, actively explore a new service model, so as to adapt to the new development trend of future automobile industry In the future, the Group will rely on its core competitiveness including industry status, resources and advantages to organically combine technology application with automobile service industry, as well as leverage the establishment of “digitalization” and “digital intelligence” platforms, so as to strengthen the effective relationship between customers and their automobiles. The Group will focus on being customer experience-oriented, and with the use of core customers data storage, acquire in-depth data based on all-round marketing perspectives such car models, users, interests, grades and advertisements. By integrating information technology such as big data and artificial intelligence, the Group will create a more customized interactive new marketing model, with the aim to build a connection among car manufacturers, dealers and end-users, thereby forming an internet ecosystem in the automobile industry. Facing the challenges and opportunities brought by the transformation and upgrading of China’s automobile market, the Group will continue to adhere to the management philosophy of “peopleoriented, customers first” and enhance in-depth cooperation with the upstream and downstream industry chain. Through constantly optimizing the refined management system, increasing operational management efficiency, consolidating core brand advantages, and fully promoting digital transformation both internally and externally, while being market-oriented with the goal of providing high-quality services and a focus on achieving the Group’s healthy, sustainable and stable long-term development, the Group strives to become a luxury car dealer and service provider in China with efficient operation management and long-term sustainable development.

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