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Baoxin Auto Announces 2014 Annual Results
Steady outgrowth while seizing market opportunities
Expand profitability channels and develop potential extended services
HONG KONG, Mar 31, 2015 - (ACN Newswire) - Baoxin Auto Group Limited, a leading luxury 4S dealership group in China, announced its annual results for the year ended 31 December 2014. During the year under review, as a series of automobile policies had introduced, China's auto industry was facing market and structural adjustment on multiple aspects, which rebalanced the interests between manufacturers, distributors and consumers. Market demands gradually attribute to luxury automobiles and after-sales extended services and Baoxin Auto actively swift its business development strategy and achieved satisfying results. For the year ended 31 December 2014, The Group's total revenue increased by 2.1% to RMB 30,723.4 million, in which the after-sales revenue increased by 13.2% to RMB 3,059.5 million, accounted for 10.0% of the total revenue. The commission income from vehicle value-added services amounted to RMB 371.4 million, representing a significant increase of 60.4%. The Group's gross profit was RMB 2,787.6 million and the gross profit margin was 9.1%. The EBITDA was RMB 1,989.2 million, representing an EBITDA margin of 6.5%. In the year under review, profit attributable to owners of the parent was RMB 706.6 million and earnings per share attributable to ordinary equity holders of the parent were RMB 0.28. The Baoxin board of directors proposed a final dividend of HK$0.05 per ordinary share.
Executive Director and Chairman of Baoxin Auto, Mr. YANG Aihua said, "There are both opportunities and challenges in 2014, and it is an important year of transformation for the Group's business strategy. We still maintained our leading position in major luxury automobile brands in the year, and obtained substantial breakthroughs in the after-sales extended business. The focus of operation and development has been extended from new car sales to the after-sales services sector. We also gradually extended focus from purely dealer store expansion and acquisition to a more diversified sales network and channel development to enhance the quality of customer service, launch more products and service items, and emphasize the high quality of management."
Consolidating luxury and ultra-luxury brands, steadily expand the business scale of the Group
In the year under review, the Group continued to refine its industry positioning during the year under review, and further strengthened strategic cooperation with a number of world-leading luxury and ultra-luxury automobile manufacturers. For the year ended 31 December 2014, the revenue from the automobile sales increased approximately RMB 285 million to RMB 27.66 billion. In terms of sales volume, the Group sold 72,709 units of automobiles during the year under review. Sales of luxury and ultra-luxury automobiles surged by 9.7% year-on-year to 60,767 units, and accounted for 83.6% of total automobile sales volume. The new car sales of BMW and MINI, and Jaguar & Land Rover represent about 10% total sales volume of the corresponding Groups in China market. Baoxin Auto continued to be one of their most important strategic joint ventures, ranked as the largest distributor in terms of sale volume in China. In terms of Ferrari/Maserati, benefitted from the expansion of the new stores in 2013, the Group had a year-on-year growth of 355.3% during 2014, representing and contributed 6.8% of the brands total sales in China. This has significantly increased the brand's market share in China and made the Group a significant partner of and leading dealership group for luxury automobile brands in China.
Meanwhile, the Group further developed and optimized the dealership network through opening new stores and upgrading existing dealerships. The Group has added 4 new luxury and ultra-luxury 4S stores and one mid-to-upper brand 4S stores in respect of brands such as Rolls Royce, Jaguar & Land Rover, Volvo and FAW-Volkswagen. Moreover, three MINI showrooms were added and 13 luxury and ultra-luxury 4S stores are under construction. In addition, the Group has relocated and renovated two mid-to-upper brand 4S stores (including one Honda store and one Nissan store) located in prime region in Shanghai in 2014. The original store locations were renovated as trading and exhibition centre for pre-owned automobiles and luxury 4S stores, in order to leverage the geographical advantage to enhance operating efficiency and overall profitability.
After-sales repair and maintenance business remained robust growth
Driven by the steady growth of new vehicle sales business, the increasing market share of luxury and ultra-luxury brands in after-sales repair and maintenance business, and the gradual ramp up of 4S stores that were newly opened in the past few years, the after-sales repair and maintenance business achieved robust growth and maintained a stable gross profit margin. Revenue from the after-sales services, including repair, maintenance and decoration operations of the Group amounted to RMB3,059.5 million, an increase of 13.2% as compared to the previous year, accounted for 10.0% of the total revenue and was 1.0 percentage point higher as compared to 2013. The revenue from after-sales service of luxury and ultra-luxury brands amounted to RMB2,850.3 million, increased by 15.7% as compared to the same period in 2013 and accounted for 93.2% of the total revenue of after-sales services. In 2014, the gross profit margin of the Group's after-sales services business was 47.3% and remained a stable level as compared to the same period last year. In 2014, gross profit generated from after-sales repair and maintenance business contributed 51.9% of the Group's gross profit, and has increased by 7.9 percentage points, becoming the major pillar for the stable profit and sustained profit growth of the Group against the challenging and volatile market that affects the profitability of new vehicle sales.
Establishing diversified networks and channels
Vehicle value-added services become the driver of profit growth
While steadily developing the new vehicle sales and after-sales repair and maintenance business, the Group has put more effort in the development of vehicle value-added services business, including certain break-through in the development of automobile insurance, extended warranty, automobile finance, pre-owned automobile and automobile decoration business. In the year under review, the commission income from vehicle value-added services amounted to RMB371.4 million, representing a significant increase of 60.4% as compared to the same period in 2013. The Group continued its intensive cooperation with insurance companies and automobile manufacturers, such as BMW, Jaguar & Land Rover and other manufacturers in respect of finance while expanding its strategic cooperation with commercial banks such as China Merchants Bank, China CITIC Bank, Ping An Bank and others. Leveraging on the automobile finance policy offered by the commercial banks and manufacturers, the Group can provide its customers with fast, more convenient and personalized credit finance service. The Group set up Shanghai Dingxin Financial Leasing Co., Ltd branches across 19 major cities throughout China in 2014 and became the pioneer in the automobile dealer industry who successfully launched and implemented paperless management design and operation of the centralized cross-border online approval system. In addition to the traditional consumer auto loan service, the stores also offer online application and approval of finance leasing service to satisfy diversified finance demands of various customers. Regarding pre-owned automobile business, there is a significant increase in the replacement and trade volume of pre-owned automobile. The Group set up pre-owned automobile division and engaged experienced pre-owned automobile appraisers in all our 4S stores, showrooms and after-sales maintenance stores. The Group also explored replacement demand of pre-owned automobiles during the sales process and identified customers for pre-owned mobiles from the bulk list of repair and maintenance customers.
In September 2014,"Autostreets" (Autostreets.com), a fully integrated platform for both online and offline auto service led and organized by the Group, was officially launched. It provides Chinese automobile owners with one-stop auto-related services, enabling customers to enjoy traditional offline services covering all cycles of automobile business, including searching and trading of new vehicles and pre-owned vehicles, reservation for repairs and maintenance, auto financing, auto insurance and extended warranty, etc. The off-line pre-owned vehicles centres comprise first class showrooms and driveway for on-site auction, providing customers with integrated services including assessment, trading, transfer and financing of pre-owned vehicles.
Parallel importing business will be the new growth point for sales of new vehicles. The Group was among one of the first tranche of officially authorized automobile parallel importers. As the parallel importing will not be subjected to any authorization limit of the manufacturers, the importers are allowed to sell imported automobiles which are popular among consumers based on the market demand. In addition to sale of new vehicles, the Group will also provide customers with comprehensive value-added after-sale services at a high standard, including repair and maintenance, insurance for automobile financing and replacement of pre-owned automobiles. Meanwhile, the Group will maintain its relationship with automobile manufacturers in order to commence the parallel importing business without prejudice to the operation of licensed brands with the manufacturers. On March 17, 2015, HSBC announced that it will release US$ funding from overseas through its free trade accounting units. This will provide the Group's subsidiaries in the free trade zone with trade financing loans of approximately US$10 million for its parallel importing business, the cost of which will be lower than that of the financing cost of borrowing funds from domestic commercial banks.
Looking forward, Mr. YANG concluded, "we will live up with the trend and the rapidly-changing market, formulate our strategy prudently and pragmatically so as to seize the market opportunities for the long-term interests. We will continue to enhance our strategic cooperation relations with automobile manufacturers and strengthen the cooperation in terms of automobile finance business, pre-owned automobile market, customer service and human resource development in order to develop diversified sales and marketing channels and improve the competitiveness of the business for after-sales market. In addition, by enhancing the cooperation with major insurance companies and commercial banks, we will expand the automobile finance and insurance businesses and continue to vigorously develop the emerging businesses such as extended automobile warranty and financial lease. Regarding the internal operation, we will endeavor to increase the retention rate of the customers by repairs and maintenance service and increase the market penetration and profit margin of the automobile finance, insurance and pre-owned automobile businesses. We will continue to strictly control the inventory level and costs of operation and management and expand the income sources under the volatile market environment, aiming to enhance cost-effectiveness. We will innovate and diversify our products with sophisticated management. We will customize services and products, providing customers with professional, efficient and cost-effective services. At the same time, the Group will further explore the value of the after-sales market industry chain, combine internet and offline business to enhance development of the offline industry and improve transparency of the sector and the overall service quality of the industry, and lead the innovation and transformation of the industry. Baoxin Auto will further expand the Group's profit in different channels and continue to consolidate our leading position in the auto industry.
Source: Grand Baoxin Auto Group Limited
Sectors: Daily Finance
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