Zhongsheng Group (881) H2 2025 earnings summary

Executive summary

• Revenue declined 2.2% year-over-year to RMB164.4 billion, with gross profit down 17.2% to RMB8.84 billion due to margin compression and intensified competition.

• Net loss attributable to owners was RMB1.67 billion, compared to a profit of RMB3.21 billion last year, driven by negative new car margins, lower commission income, and significant asset impairments.

• After-sales services remained a bright spot, with revenue up 4.1% and gross profit up 8.2% year-over-year, offsetting some weakness in new and pre-owned vehicle segments.

Financial highlights

• New car sales volume rose 2.5% year-over-year to 497,316 units, with luxury brands up 6.2%.

• Gross loss from new automobile sales increased 15.6% to RMB3.71 billion due to price wars and insufficient OEM rebates.

• Pre-owned vehicle sales volume fell 2.2%, with gross profit down 56.5% due to lower average prices.

• Commission income dropped 38.7% year-over-year, mainly from reduced auto finance rebates.

• Operating loss was RMB522 million (vs. RMB5.67 billion profit last year); basic EPS was -RMB0.71 (vs. RMB1.35).

Outlook and guidance

• Plans to further optimize store network, close underperforming outlets, and focus on high-margin brands and NEV expansion.

• Targeting multiple-fold increase in NEV stores by end-2026, leveraging partnerships with Huawei and Geely ecosystems.

• Continued emphasis on digitalization, cost efficiency, and asset utilization to support long-term growth.