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China ZhengTong Auto Services Holdings Limited, 01728.HK - Company Profile
Chairman	WANG Muqing
Share Issued (share)	2,697,000,000
Par Currency	Hong Kong Dollar
Par Value	0.1
Industry	Automobile Retailing, Maintenance & Repair
Corporate Profile	Business Summary: The group is principally engaged in 4S dealership business, supply chain business, financial services and comprehensive properties business in the People’s Republic of China (the “PRC”). Performance for the year: For the year ended 31 December 2019, the Group recorded revenue and gross profit of approximately RMB35,138 million and RMB3,818 million, respectively, representing decrease of approximately 6.2% and 14.9% as compared to the corresponding year, respectively. Profit attributable to equity shareholders of the Company was approximately RMB664 million and the basic earnings per share was approximately RMB27.1 cents, representing decrease of approximately 45.8% and approximately 45.7% as compared to the corresponding year, respectively. Business Review The Group acts as a core dealer of various luxury and ultra-luxury automobile brands, and a strategic partner that maintains close collaboration with the manufacturers of those luxury automobile brands. The Group keeps abreast of the latest industry trend and market changes, analyses the changes in customers’ preference and explores innovative services. Leveraging its diversified brand portfolio, reasonable sales network, comprehensive operation platform and advanced service philosophy, the Group has determined to be a world-class automobile servicing brand. In 2019, the Group was committed to developing luxury and ultra-luxury auto brand sales and after-sales services, strengthening the upgrade of our existing dealership stores and performance capacity, and expanding the prestigious brand portfolios and the dealership networks of affluent areas. Furthermore, the Group identified and utilized the values of customer data and assets by expediting the development of network information and cloud-based platform technologies. By fully utilizing its advantages in financing and supply chains to strengthen its core competitiveness, the Group continued to optimize its business scope covering the entire life cycle of vehicles from sales of new cars to maintenance and repair, finance and insurance, and automobile replacement and leasing so as to manifest synergies among different business segments. In the meantime, we pursued the practice of streamlined management, optimized the customer service processes, and improved our performance assessment and incentive mechanism so that our operating efficiency was enhanced with lowered operating costs. Driven by the further intensifying competition in the luxury brand market, coupled with our strategic realignment of some brand operations based on market conditions, the results of the Group for 2019 had a slight decrease as compared to last year. For the year ended 31 December 2019, the Group recorded revenue and gross profit of approximately RMB35,138 million and RMB3,818 million, respectively, representing decrease of approximately 6.2% and 14.9% as compared to the corresponding year, respectively. Profit attributable to equity shareholders of the Company was approximately RMB664 million and the basic earnings per share was approximately RMB27.1 cents, representing decrease of approximately 45.8% and approximately 45.7% as compared to the corresponding year, respectively. (I) Sales of new automobiles business In 2019, under our prudent brand and network development strategy, we expanded our distribution network for selected luxury and ultra-luxury brands to maintain the proportion of brands with higher profitability. The revenue and profit of Group remained stable. The Group managed to strike a balance between “quantity” and “quality” in the fierce market competition. For the year ended 31 December 2019, the Group recorded sales volume of new automobiles of 103,220 units, representing a year-on-year decrease of approximately 8.3%, including 81,735 units luxury and ultra-luxury branded automobiles with a year-on-year decrease of approximately 5.4%. During the year, major luxury automobile brands under the Group’s dealership, including BMW, Mercedes-Benz, and Porsche, launched new models that offer much more competitive prices in response to the market needs, including the launch of BMW X5 and X7, Benz A-Class and S-Class, Porsche Cayenne, and other new series of luxury brands. This initiative provided the Group with tremendous support to stabilize its profitability. It is expected that the luxury vehicle market will continue to see an intensifying competition. To enhance the overall profitability of new automobile sales, the Group will maintain good collaboration with the automobile manufacturers to improve their rebate rate, and further strengthen our service standard of the extended businesses for sales of new automobiles, including finance and insurance, modification sales, and dealership licensing. Despite the objective for further improving market share and profitability of new energy vehicles, the Group remains highly conscious of the practices of environmental protection and energy conservation. With our focus on new energy vehicles, we strengthened the promotion and sales of new energy vehicles under our licensed brands, and continued to enhance the sales proportion of new energy vehicles. To better accommodate the market, the Group conducted in-depth research on the automobile market and customers’ changing needs, and actively explored new models of automobile retailing. We redoubled our efforts to reform the collection of internet leads of potential customers, carried out marketing and promotion based on market highlights in an attempt to acquire more potential customers, and boosted the telephone and internet marketing capability. With more attractive sales service and product mix in place, the customers’ order conversion rate increased. The Group was committed to utilizing advanced technology. By further developing and applying informationized and intelligent management platform (cloud platform/OMS2.1), we established a data-centric alert mechanism to carry out multi-dimensional analysis, monitor the operation of dealership stores and follow up problems in the course of operation on a real-time basis. By using the intelligent data management system to control the manufacturing quotas and available-for-sales resources in advance, we were able to adjust the sales progress and monitor the changes in inventory vehicles timely. We analyzed and adjusted the inventory structure so to ensure the reasonable scale and structure of new vehicles. As such, utilization of funds on inventories was optimized, utilization efficiency of working capital was improved, and inventory cost was reduced effectively. We also made good use of the internet technology to establish an operation management system that is more scientific and efficient for collecting accurate and visible data based on facts in a timely manner. The Group continued to streamline the processes, improved its decision-making relevance and timeliness, and accelerated the response to customers’ needs. As a result, the Group constantly improved its overall operation management quality. (II) After-sales services business In 2019, after-sales services business of the Group (including repair and maintenance services and automobile augmented products and services) achieved sound and rapid growth. The Group served 1,517,701 units of automobiles in aggregate, representing an increase of approximately 17.1% compared to the previous year. Revenue of after-sales services of the Group amounted to approximately RMB4,771 million with an increase of 10.2% as compared to the previous year, and the gross profit was approximately RMB2,138 million with gross profit margin of after-sales services of approximately 44.8%. With the outburst of automotive after-sales market, automobile users have become more mature, supporting the development of a more professional and branded automotive after-sales market. The after-sales service business of the Group focused on addressing customers’ needs, and pursued the fundamental services quality. The Group continued to improve its customer information management and implemented classified customer management. Throughout the car ownership cycle, the Group streamlined the business procedures, and offered more customised services in order to enhance the satisfaction of customers. The Group endeavoured to satisfy the personal, exquisite and differentiated needs of customers. Sales guidelines for frontline staff were issued and “Service Contracts” for after-sales services were secured to further improve the customer retention rate. Through the advancement and upgrade of management system, the efficiency and effectiveness of business processes were enhanced and customer experience has become the sole criterion for the evaluation of procedures, model, management and control, which therefore achieved positive growth in after-sales service scale and profitability. Throughout the life cycle of customers, we continued to explore the potential demand, new business models and revenue growth drivers, while engaging in active expansion of service products or product mix. By detailing product and service categories, we fulfilled various customer demands to ensure the rapid growth of after-sales services in a right direction. (III) Pre-owned automobile business During 2019, a total of 14,920,000 units of pre-owned automobiles were traded, representing a year-on-year increase of 8.0%. The growth of pre-owned automobile market slowed down and the industry entered a new adjustment cycle. As one of the Group’s important strategic business segments, we attached great importance to the sound and rapid development of the pre-owned automobile business. While closely tracking the trend of the pre-owned automobile market, we also integrated internal resources to fully utilize the strengths of an authorized brand dealer in automobile assessment and certification, and continued to enrich and modify the offerings of our pre-owned automobile services. Comprehensive services including automobile evaluation, retail, insurance agency, extended warranty and financial mortgage were provided, further increasing the customer service values. In 2019, the Group focused on the promotion of automobile trade-in when selling new cars by providing competitive offers to encourage the replacement of pre-owned automobiles. The Group provided tailored services and products in accordance with their requirement of individual customers, resulting in a constant growth in average used car replacement rate in major first-tier cities. Upon the launch of the “Zhengtong Auction” online platform, the advanced information platform and regulated business procedures are utilized to deliver open and transparent vehicle information. By bidding, the automobile pricing became more reasonable, while the operating efficiency and profitability of the used cars segment was effectively improved. (IV) Auto finance technology segment Shanghai Dongzheng Automotive Finance Co., Ltd. (“Dongzheng AFC”), a subsidiary of the Company, is an automotive finance Company regulated by the China Banking and Insurance Regulatory Commission (the “CBIRC”, formerly known as “China Banking Regulatory Commission”) focusing on the luxury vehicle market. It is principally engaged in retail loan and dealer loan businesses. Dongzheng AFC commenced listing on the Main Board of the Stock Exchange of Hong Kong Limited on 3 April 2019 and raised net proceeds of approximately HK$1,529 million from global offering (equivalent to RMB1,309 million). Owing to the strategy of focusing on the luxury vehicle market, as at 31 December 2019, the loan portfolio of Dongzheng AFC grew to RMB10,004 million from RMB8,426 million as at 31 December 2018, representing an increase of 18.7%. In 2019, net interest income increased by approximately 22.1% to RMB536 million, while net profit of RMB389 million decreased by 14.1% as compared to 2018. In 2019, Dongzheng AFC’s non-performing loan ratio was 0.44%, the loan provision rate was 1.89%, and the provision coverage ratio was 423.97%. In addition, a completely closed-loop auto finance technology ecosystem developed by the Group has taken into shape, aiming to provide customers with one-stop auto finance and related services and offer automobile related financial products covering new automobiles and pre-owned automobiles. The platform involves services provided by the Company’s subsidiaries as follows: • Dongzheng AFC holding an auto financial license granted by the CBIRC is the only auto finance company with a dealership background in China; • Shenzhen Zhengyuan Automobile Technology Co., Ltd. (“Zhengyuan Technology”) specializing in big-data risk control and ABS cloud finance technology; • Xiamen International Financial Asset Exchange Co., Ltd. (“Xiamen International Financial Asset Exchange”) providing an online asset transaction platform; and • Shanghai Zhengtong Dingze Financial Leasing Co., Ltd. (“Dingze Leasing”) and Dingze Insurance Agency Co., Ltd. (“Dingze Insurance Agency”) providing financial leasing, insurance brokerage and other related services. The Group has been more mature and clearer in exploring the model of automobile finance consumer loan and future development direction. The burgeoning growth of auto finance market has provided a broader development for financial institutions. Under the guidance of enhanced regulatory policies, the market environment has been further purified, and the licensed financial institutions benefited from the standardization of operation. The market reshuffle will facilitate the “good money drives out the bad” for the auto finance service institutions, and will also be helpful for the licensed financial institutions’ business to remain reasonable and healthy. Covering National Offline Auto Finance Channels by Licensed Financial Institution Dongzheng AFC obtained the financial business permit from the CBIRC and commenced its operation in March 2015. In 2019, Dongzheng AFC increased its registered capital to RMB2.14 billion and further improved its capital adequacy ratio which provided strong financial support to its loan business. Dongzheng AFC has established a dealer network with a broad geographical coverage in China. The number of dealers within the sales network exceeded 900 as of 31 December 2019. Capitalizing on the advantages of 4S automobile distribution channels of the Group, as well as the well-established external dealership network, Dongzheng AFC has proactively expanded its business to cover over 200 mid- to high-end 4S stores in over 172 cities and cooperated with over 900 dealers. The distribution channels of Dongzheng AFC mainly focus on mid- to high-end brands and target customer base with high consumption power. Leveraging on the network advantages and reasonable marketing strategies, Dongzheng AFC provides consumers with satisfactory customers’ experiences and services. Product Design Principal businesses of Dongzheng AFC include: (i) retail loan business, whereby retail loans, direct leasing products and other financial services will be provided to end customers, major clients, and corporate clients for purchase of vehicles; (ii) dealer loan business, whereby inventory financing services will be provided to dealers to facilitate their procurement and sale of vehicles to their end customers. Risk Control As regards risk management, a comprehensive risk management system has been established. In particular, the Company has formulated the relevant risk management system and operating procedures with respect to admission review, approval requirements, disbursement process, post-loan monitoring and other procedures to manage the credit risk. To constantly optimize risk management and prevent risk, the capability to identify and assess risk is enhanced by implementing measures related to staff training, screening mechanism, client visits, data analysis, etc. Creating Comprehensive Auto Finance Fintech Platform by Professional Team Zhengyuan Technology, established in December 2017, was committed to exploring the online auto finance Fintech field and establishing a comprehensive loan support platform, on which financial assets and capitals are highly-efficient connected to the financial technology. Zhengyuan Technology has focused its Fintech technology core on system connection for assets-end and capital-end: by empowering the B-end, the big-data risk management system will shortlist high quality customers, and connect to insurance institutions and online electronic certifications to refine the performance guarantee of a single trade, while the ABS cloud technology ensures the high speed transfer of auto financial assets that were in line with standardized ABS among financial institutions. The fully connected systems and the information-sharing streams will allow funds with different returns and risk preferences to match quickly, and will generate a unique technology power for the auto finance industry. Zhengyuan Technology has fully developed and launched the trading systems for the entire trading process. The core system has been fully constructed, and will enable the big-data risk management system to achieve the speedy trading approvals online. Meanwhile, end-customers were able to enjoy the speedy approval and contracted lending service on distant system because of the successful connection between systems and the China Financial Certification Authority. Zhengyuan Technology was introducing financial institutions to carry out business linkage based on the support of Dongzheng AFC. With more capital injected, the increase of loan assets will not only be helpful in market expansion, but the increase in the number of end-customer samples will also drive the improvement of the database for its own risk control system. Currently, various trusts of the financial institutions have been integrated while account consolidation is in process. Within the entire closed-loop financial ecosystem, trading performance guarantee is crucial in the fundamental credit enhancement step, so Zhengyuan Technology has signed a strategic cooperation agreement with the People’s Insurance Company of China during the year. While the system docking is in progress, the electronic policy implements performance insurance with real-time full coverage for each loan business, and has effectively reduced the risk of capital loss, in addition to laying a foundation for subsequent assets transfer. After Zhengyuan Technology has accomplished its assets and capital accumulation, it will empower other subsidiaries of the Group with Fintech. In an effort to realize information sharing and integrate different operations, the Group will create a multi-win situation amid the financial closed-loop ecology. As the financial asset transaction circulation platform, Xiamen International Financial Asset Exchange is also a key part of the closed-loop. The cumulative acceptance of assets has exceeded RMB100 billion. Fundraising through ABS platform has a lower cost and higher efficiency. In order to quickly enlarge its coverage of end-customers and to create a new high in the field of inclusive auto finance industry, the Group will expand the channels of auto financing asset securitization, and accelerate assets circulation. Financial Leasing and Insurance Brokerage have been further refined Under the synergy effect of the Group, Dingze Leasing has made substantial progress in its business. In response to the development trend and industry rules of the small B-end of the automotive industry chain, the Company has created and launched the OCF financial concept and new financial service product U-car (U享車) at the same time. It has been recognised by the market dealer groups and 4S stores, and has achieved a great performance. As regards the insurance brokerage, the Group further consolidated the online new insurance and renewal insurance businesses, the profitability of which is further strengthened. Meanwhile, by pursuing the “customer-oriented” business philosophy, we will provide our customers with a diversified product mix to provide various insurance demands at different stages for our vehicle consumers. At the internal level, we will scale up the integration of management and optimize the staffing structure to significantly enhance management efficiency. (V) Supply chain business In 2019, Shengze Jietong Supply Chain Co., Ltd. (“Shengze Jietong”), in accordance with the Group’s business strategic development plan, actively put its efforts in the tender of transportation business for the next three years in respect of the transportation for various automobile brands of our major customers, FAW and Dongfeng Group, the specific results of which are as follows: i. Tender results of vehicle logistics business In 2019, Shengze Jietong obtained an overall transportation volume of approximately 609,000 vehicles for the next year, representing a strong growth of 60% year-on-year, including: 1. in December 2019, obtained an average annual transportation volume of 480,000 vehicles of Dongfeng Nissan brands (including Infiniti and Dongfeng Venucia) for the next three years, with an average annual growth rate of nearly 100%. 2. in December 2019, obtained an average annual transportation volume of 41,000 vehicles of Dongfeng Renault brands for the next three years, with an average annual growth rate of over 100%. 3. from April to September 2019, obtained an average annual transportation volume of total 85,000 vehicles of FAW Logistics (including FAW-Volkswagen, FAW Benteng, FAW Hongqi and FAW Mazda brands) for the next three years, with an average annual growth rate of over 100%. 4. in October 2019, obtained an average annual transportation volume of 9,800 vehicles in respect of Dongguan distribution business of FAW Toyota. Securing this business marks the first time that Shengze Jietong has entered the Toyota transportation system, which also means the full coverage of the three major Japanese brands, namely Nissan, Honda and Toyota. As the management standard of Toyota brand is relatively high, it provides Shengze Jietong the advantage of management technology reference for future development of other auto brand businesses, and also establishes a cooperative foundation for the expansion into the transportation business of Toyota production bases in the future. Through the above-mentioned development of logistics business, Shengze Jietong will accelerate the achievement of the management goal of establishing a national fast logistics channel. In the meantime, due to the expansion of the logistics network, it will be easier to attract other brands to join and form a larger logistics and transportation platform. ii. Expansion of warehousing and logistics lease area In December 2019, FAW Logistics Co., Ltd. (“FAW Logistics”) and Shengze Jietong signed an agreement to expand the vehicle warehousing lease area by 25%. The increase in warehousing area reflects that FAW Logistics strengthens the importance of the transfer and distribution in Central China for production bases across China, which also lays foundation for business communication in respect of Shengze Jietong’s Wuhan base cooperation project in the future. iii. Construction of Wuhan logistics base The land purchase procedures and business design standards and other processes for the Wuhan logistics base have been completed in 2019, and the construction commenced in November 2019. It is planned that the main construction of office buildings, dormitory buildings, and spare parts warehouse structures will be completed in 2020. The whole project will consist of four dock berths, a 6-storey vehicle warehouse, an automated spare parts warehouse and two spare parts mechanized warehouses, office and living facilities. It will increase its investments in logistics facilities, which will further increase its core competitiveness and cost advantages, and get well-prepared for the expansion of the integrated logistics business of terminal operations, warehousing, PDI and transportation. iv. Opportunities arising from the establishment of Dongfeng Logistics by Dongfeng Motor Group Dongfeng Motor Corporation (東風汽車公司) and China Dongfeng Motor Industry Imp. & Exp. Co., Ltd. established a joint venture (i.e. Dongfeng Logistics (Wuhan) Co., Ltd. (東風物流（武漢）股份有限公司)) on 15 January 2020. Shengze Jietong holds the interests of the joint venture through its 20% equity interests in Fengshen Logistics Co., Ltd.. By taking this opportunity, Shengze Jietong could obtain better business resources and commercial conditions from Dongfeng in the future, and may have the priority to expand into the logistics sector of Dongfeng brands (vehicle, parts, warehousing, etc.). v. Construction of informationized management In June 2019, Shengze Jietong increased its efforts in informationized construction and planned to achieve the systematic coverage of whole process and all elements (personnel, vehicle, cargo, and warehouse) within three years. It aims to realize digital transformation and online business operation through building a vehicle transportation system which covers all customers and supports coordination among various parties including suppliers, improving the application of the spare parts WMS system and promoting projects such as the automated warehouse in Wuhan base in the future. Shengze Jietong plans to build smart operation cockpits and logistics control towers and utilize visual means and digital management to assist decision-making and scientific operation, boosting the replacement of “personnel” with “equipment” and the transformation from “sweat logistics” to “smart logistics” in the future. In respect of sales of lubricant oil business, in the 2019, the revenue from sales was RMB329 million, representing a year-on-year increase of 20.7%. In 2020, the Company will strive to maintain steady growth amid the material impact caused by the COVID-19 epidemic and uncertainties of the market. (VI) Comprehensive properties business To fully utilize on the potential value of the land held by it, the Group planned to conduct construction of comprehensive property projects for its existing 4S dealership stores in 2019, which are located in Kunming and Dalian respectively. Both of these two comprehensive property projects are service apartments, which are nearly completed and have obtained the pre-sale permits for sales. The inventory cost related to real estate of the Group reflect construction costs of the above two comprehensive property projects. The Group believes that the said arrangement is a reasonable arrangement to improve the efficiency of capital utilisation and bring higher return for the shareholders of the Company (the “Shareholders”). (VII) Network development Balanced and reasonable deployment of the nationwide dealership network for luxury brands complemented by ongoing optimization of the brand portfolio and dealership store network, and stable development As a leading dealership group of luxury brands in China, the Group focuses on dealership of luxury and ultra-luxury branded automobiles, including Porsche, Mercedes-Benz, BMW, Audi, Jaguar and Land Rover, Volvo, Cadillac and Infiniti. The Group also operates dealership stores of mid-end market brands, including FAW-Volkswagen, Buick, Nissan, Toyota, Honda and Hyundai. As at 31 December 2019, the Group operated 135 dealership stores in 41 cities across 17 provinces and municipalities in China. During the year of 2019, the Group opened a Benz 4S store in Kunming, Yunnan, while opening a Leapmotor 4S store in Tongzhou, Beijing. In the meantime, to enhance the market competitive strength and profitability of our dealership stores, the Group strategically shut down 7 dealership stores to improve our dealership store presence based on those showrooms with an underperforming profitability. As at the date of this report, there are 10 dealership stores under development, which are franchised by core luxury automobile brands, including Porsche, Mercedes-Benz, BMW, and Audi. Authorized dealership stores to be opened can enhance our competitive advantages in traditional provinces and regions, including Guangdong, Hubei, Zhejiang and Sichuan, as well as regions with potential for rapid development, such as Chongqing, Jiangsu and Liaoning. The expansion in geographical coverage will further enhance the Group’s advantages in terms of scale and channels. In addition, in response to the development trend of the automobile market, the Group paid close attention to new energy vehicle projects and repair centers and other dealership stores in order to explore new growth drivers. As a leading strategic partner of manufacturers of luxury brands and ultra-luxury brands in the PRC, the Group will continue its network expansion strategies with its focus on a balanced layout of dealership stores of core luxury brands and a refined brand structure in its pursuit of prudent development. Meanwhile, the Group will integrate industry resources by seeking appropriate strategic merger and acquisition opportunities and innovative strategic operation cooperation scheme to rapidly enlarge its business scale and enhance its profitability. (VIII) Innovation of management and improvement of operational quality In response to the industrial development trend in 2019, the Group accelerated its transformation and upgrading of automobile dealership management. We developed and utilized information technology in corporate operation and management and refined our management. The Group improved its management through innovative ideas and measures to streamline the business processes for enhancing the Group’s core competitiveness. Establishment of smart 4S stores The Group has been committed to enhancing customer experiences with the aid of internet and information technology. To this end, the Group cooperated with Tencent Technology. The Group independently developed a new generation of Cloud Platform (雲平台) operation management intermediary system enabled by Tencent Industry, integrating data analysis, customer service, product deployment, and business management through technological means. By linking information islands and building up communication channels between front line business at stores and back office management, the order, door-to-door delivery and online payment by customers, all through one click, can be realized. The scope of business and service have been expanded and the customer experience has been greatly enhanced. Establishment of expertise-driven organization The Group always recognizes the importance of employee training and development. By enhancing the employees’ expertise and comprehensive capability in an excellent workplace conditions and environment, we believe the employees will stay focused on providing premiere customer services. In 2019, the Group officially established the Zhengtong Academy as the learning platform for all employees, which aimed at further promoting the transformation and upgrade of dealership management, as well as providing a source of expertise and creativity for business transformation, and management and business innovation. Improvement in operational quality In continuing to improve service quality and customer satisfaction in 2019, the Group further enhanced the operating standard of branded dealership stores, and streamlined sales and aftersales business procedures. In addition, the Group explored new social media as a new point of contact for customers in order to continue the improvement of customer service experiences. Furthermore, the Group integrated corporate resources to rationalize the allocation of required resources based on the actual conditions and various requirements of the brand operations, which aimed at enhancing the overall operating efficiency and quality, as well as improving the asset utilization rate. Classification management of stores In 2019, the Group continued to optimise the operation assessment system of stores so as to conduct a scientific analysis and assessment of all key operation figures. The results can allow the managers to manage their stores at different levels. With specific measures in place, the Group optimized cost control, identified business potential, and further expanded the authority of outstanding stores in resources allocation, performance management, and decision-making so as to stimulate the initiative and motivation of the stores and enhance customers’ satisfaction by offering better services. The results were very positive. Prospects: In the coming few years, China’s macroscopic economy will maintain its moderate growth with a steady increase in both household disposable income and consumer spending. Given the fact that the government continues with the release of the potential domestic demand, and introduces policies to develop new formats and models of consumption, we believe that the domestic consumer market will continue to grow expeditiously. As regards the automobile industry, in line with new records of registered car ownership, a mature domestic automobile market becomes increasingly noticeable, with market players seeking business growth in quality rather than quantity, as well as the market demand manifesting geographic and structural changes. As a result, the consumption upgrade is expected to become evident, while the luxury vehicle demand will continue to grow in the midst of increasingly fierce competition. In this case, consumers will pursue higher quality demand and expectation for automobile products and services, and auto dealers are required to constantly improve their business management and service standard amid the growing demands for professionalism and product diversity. Keeping abreast of the automobile development trend, the Group will be committed to customer services for luxury and ultra-luxury automobile brands in the domestic market by continuing to improve brand structure and strategic network, invest in the development of management and operation information systems, and focusing on employee training and development. Our business transformation will be accelerated by knowledge and information technologies, and innovative management approaches will be adopted to optimize the operating efficiency and enhance the profitability. In doing so, the Company will achieve steady and flexible operation in response to various uncertainties and risks arising from the external environment. The Group will also utilize the advantages of our financial business to develop our core competitive strengths. By upholding the fundamental business quality, as well as considering customer demands, the Group will proactively enrich service and product contents, expand service channels, and enhance service quality, with a view to providing better consumer experiences. Besides continuing to increase the percentage of maintenance and repair, finance and insurance services, modification sales, and other businesses in the profitability structure, the Group will vigorously improve the pre-owned vehicle services and quality standards, and explore the contents and models of marketing, sales, and services for new energy vehicles. These initiatives will assist the Company with rationalize its business structure in parallel with customer demands, to create higher value for Shareholders, staff and the community.

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Public company info - China ZhengTong Auto Services Holdings Limited , 01728.HK