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Baoxin Auto Announces its 2015 Interim Results
Actively Swift Its Business Development Strategy; Stable Growth in After-sales Services
HONG KONG, Aug 31, 2015 - (ACN Newswire) - Baoxin Auto Group Limited, a leading luxury 4S dealership group in China, announced the unaudited consolidated interim results for the six months ended 30 June 2015 ("period under review").
In the first half of 2015, there was still imbalance supply and demand of the automobile market and the overall economy continued to show a downward trend. The overall sales trend of the automobile industry has been under the negative influence of these various factors. Market demands gradually attribute to after-sales extended services and Baoxin Auto actively swift its business development direction and took defensive strategies on new car sales and dealer network expansion. For the six months ended 30 June 2014, the Group's revenue was RMB 14,037.3 million, and the after-sales revenue increased by 4.6 % to RMB1,758.7 million and accounted for 12.5% of the total revenue. After-sales gross profit accounted for 63.3% of the total gross profit increased 12.7 percentage points. Gross profit amounted to RMB 1,299.9 million, and the gross profit margin is 9.3%. Profit attributable to owners of the parent for the review period reached RMB 401.3 million, and earnings per share attributable to ordinary equity holders of the parent were RMB 0.16.
Executive Director and Chairman of Baoxin Auto, Mr. YANG Aihua said, "In the first half of 2015, despite the gradual slowdown of sales growth of new automobiles, the after-sale services market and pre-owned car sales will continue to maintain its strong momentum. With the popular use of internet and the concept of "Internet+" promoted by the government, apart from engaging in the traditional after-sales market focusing on the car repair and accessory industry, the automobile after-sales market will also capture new investment opportunities arising from automobile O2O business. "
Stable Growth in After-sales Services
During the first six months of 2015, the Group further refined and implemented the growth strategies for after-sales services and consolidated and renovated a number of outlets. The after-sales repair and maintenance business experienced strong rebound as compared to the second half of 2014. For the six months ended June 30, 2015, revenue from the after-sales services amounted to RMB1,758.7 million, representing an increase of 4.6% and 27.7% as compared to the same period of 2014 and the second half of 2014 respectively, and accounted for 12.5% of the total revenue. The revenue generated from after-sales services for luxury and ultra-luxury brands amounted to RMB1,692.7 million, representing an increase of 7.4% as compared to RMB1,575.5 million of the same period in 2014, and accounted for 96.2% of the total revenue of after-sales services. While the after-sales services market was experiencing a stable growth, the gross profit margin remained as high as 46.8%.
Steadily Increased Commission Income
For the six months ended June 30, 2015, despite a decrease in new cars sales, vehicle value-added service businesses, including automobile insurance, auto financing and trading of pre-owned vehicles, continued to grow at a stable pace. As at June 30, 2015, the commission income from vehicle value-added services amounted to RMB176.0 million, representing an increase of 3.2% as compared to the same period in 2014.
In terms of insurance business, the Group proactively strengthened its efforts in business tracking, enhanced the assessment mechanisms and fostered the cooperation and synergy with insurance companies to launch promotion projects, thereby achieving a YoY growth of 4.8% in commission income In particular, the business of renewal of insurances and extended warranty showed significant increase. The YoY volume growth of renewal of insurance and the growth in premium of insurance renewal were both 20%.
With regards to automobile financing, the automobile financing penetration rate within the Group's new automobile transactions was 33%, significantly increased by 7 percentage point as compared to the same period in 2014 and the YoY growth of financial service throughputs was 9.3%; the commission income derived from automobile financing grew by 6.9% YoY. Under the solid supports from manufacturers, the Group is actively expanding the strategic cooperation with major commercial banks and enhancing the training for employees on financial products and marketing. The Group will fully leverage the automobile financing policy offered by the commercial banks and manufacturers to provide its customers with fast, convenient and more personalized credit finance products, thereby generating more commission income.
Regarding pre-owned automobile business, the business opportunities in the Chinese pre-owned automobile market is huge and it is growing at a much higher pace than the new automobile market. By developing and utilizing the auction platform for pre-owned automobiles, the gross profit margin of the Group's pre-owned automobiles has achieved notable increase, and volume of pre-owned automobile was 25% higher as compared to the same period last year.
Enhancing Efforts in Cost Control, Improving Capital Efficiency and Optimizing Organizational Structure
Given the continuous volatile macro-economy, the Group strived for delivering maximum profit for the shareholders by enhancing its efforts in various measures on cost control. For the six months ended June 30, 2015, sales and marketing costs, administrative costs and financing costs of the Group amounted to RMB971.6 million, representing a year-on-year decrease of 6.6%; and accounted for 6.9% of the total revenue.
As for financing costs, the Group minimized the increasing funding costs resulted from the slowdown of inventory turnover by strictly controlling the inventory level. As at June 30, 2015, the Group's inventory turnover days is 40.3, which was well below industry average level. Meanwhile, the Group further enhanced capital utilization, reduced the proportion of security deposits kept in banks and the usage of bank notes. In August 2015, the Group successfully further obtained a US$242 million syndicated loan in Hong Kong, with a three-year term and low interest rate at Libor+3.7%, which is considerably lower than on-shore funding costs. By progressively adjusting its debt structure, the Group has been effectively controlling its financial gearing and debt level.
In the second half of the year, affected by various favorable factors such as solid support from BMW Finance to the general cooperation with the Group's wholesale business, the BMW stores of the Group will officially commence its auto financing business with BMW Finance in September 2015. This is a special project set up by the BMW manufacturer and BMW Finance, which aims to support the dealers by providing them with low-cost and convenient financing proposals. BMW Finance, being an established company, allows shorter approval time to provide financing for wholesale business. This project will gradually help solving and partly overcome the impediment of the requirements of high security deposit ratio in bank loans and high-cost loan businesses, enabling the Company to further control and lower its financial cost.
Source: Grand Baoxin Auto Group Limited
Sectors: Daily Finance, Automotive
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