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Public company info - China Rundong Auto Group Limited , 01365.HK
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China Rundong Auto Group Limited, 01365.HK - Company Profile
Chairman Yang Peng
Share Issued (share) 979,000,000
Par Currency U.S. Dollar
Par Value 5.0E-7
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: For the year ended 31 December 2019, the Group recorded a consolidated revenue amounted to approximately RMB7,635.9 million, representing a decrease of approximately RMB5,076.7 million or 39.9% as compared to that of 2018 of approximately RMB12,712.6 million. The loss attributable to owners for the year ended 31 December 2019 amounted to approximately RMB5,843.8 million (for the year ended 31 December 2018: approximately RMB1,513.8 million). Business Review For the year ended 31 December 2019, the Group recorded an operating income of approximately RMB7,635.9 million, representing a year-on-year decrease of 39.9%, and realized gross loss of approximately RMB1,041.6 million, representing a year-on-year decrease of 352.7%. Loss attributable to owners of the parent company increased by 286.0% year-on-year to approximately RMB5,843.8 million. Sales of New Automobiles In 2019, due to the decline in the overall automobile market and the Group’s reassessment of its business strategies, internal reorganization and adjustment were made to part automobile brands and regional businesses, part of automobile dealership stores were shut down, which led to the significant decrease in new automobile sales of the Group. During the Reporting Period, revenue from new automobile sales amounted to approximately RMB6,462.0 million, representing a year-on-year decrease of 41.0%, among which, revenue from sales of luxury and ultra-luxury automobiles reached approximately RMB4,708.7 million, representing a year-on-year decrease of 43.5% and accounting for 72.9% of the revenue from sales of new automobiles. In terms of sales volume, the Group sold a total of 31,337 vehicles during the Reporting Period, a decrease of 36.8%, of which, sales volume of luxury and ultra-luxury brand automobiles totaled 16,431 units, a decrease of 38.0%. After-sales Service In 2019, due to the decline in the overall automobile market and gradual marketization of vehicle parts and accessories distribution channel and other factors, both market attractiveness and profitability of maintenance business in 4S stores have declined accordingly. Meanwhile, the reduction of vehicle accident frequency due to the reform of commercial auto insurance policies, as well as the shutdown of part of automobile dealership stores, caused increasing pressures on the business of after-sales business. During the Reporting Period, the revenue from after-sales service amounted to approximately RMB1,174.0 million, representing a year-on-year decrease of 33.5% and accounted for 15.4% of the total revenue of the Group. The gross profit of The Group’s after-sales service amounted to approximately RMB279.3 million, representing a year-on-year decrease of 44.5%, and the gross profit margin of after-sales service was 23.8%. Value-added Business During the Reporting Period, the revenue from financial agency service and revenue from insurance agency service of the Group also decreased in line with the decrease of sales of new automobiles. During the Reporting Period, the revenue from financial agency service was approximately RMB68.4 million, representing a decrease of 44.0% in 2018, and the revenue from insurance agency service was approximately RMB83.6 million, representing a decrease of 43.0% in 2018. Brand and Network Layout Considering the impacts of overall negative growth of the automobile market and the integration after acquisition of stores acquired didn’t meet the expectation of the Group, and the tightening of funds in general and increasing pressure of liquidity, the Group has adjusted the business strategies and continuously optimized the business operation in 2019. The Group reassessed the economic development level, power of consumption of the area where the stores are located, as well as taking into consideration of the automobile brands, operation scale of stores and operation capability, comprehensively summarized the Group’s stores and shut down part of stores with poor performance, and consolidated stores of same brand in the same city, and focused on those with better performance in developed areas. As at 31 December 2019, the Group operated 38 stores in total, and the Group’s brand portfolio includes 12 brands, namely BMW, Audi, Lexus, Maserati, Ferrari, Buick, Shanghai-Volkswagen, Kia, Dongfeng Honda, FAWToyota, Nissan and FAW Volkswagen. Prospects: Before and after the Spring Festival in 2020, the epidemic of novel coronavirus (“COVID-19”) raged, affecting the Chinese economy and people’s lives as a whole in the short term, disrupting the recovery rhythm of the Chinese automobile market, which will have a further downward impact on the automobile market in China. However, the basic trend of China’s economic stability and long-term improvement has not changed. The Group expect that the automobile market in China will return to the growth track in the next three to five years. In response to the negative impact of any uncertainty on the pace of industry recovery, the Group will consider and size up the situation and actively promote the implementation of its business strategies and plans, including continuous optimization of the automobile brand structure, reassessment of the operation scale of regional business, analysis of operations performance of stores and other applicable measures, so as to optimize the overall operating structure and management of the Group. Meanwhile, in order to coordinate with the streamlined network layout, the Group will carry out significant organizational restructuring, further streamline the organization, flatten the management of the Company, to improve management efficiency, reduce costs and improve operations. The Group intends to lease unused exhibition halls or parking lots to other third-parties for a short term to further revitalize assets, optimize asset utilization, and increase other operation income. Besides, the management will actively seek out external potential investors, discuss and seek possible cooperation opportunities, including various possible strategic investment cooperation and operation cooperation, so as to further promote the operation and management of the Company. Although The Group are still operating in a more challenging market environment, The Group will actively face up to it with strong confidence towards future.

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