Zhongsheng (881 HK) Eye-catching Performance for After-sales Business and Second-hand Car Business

Investment Summary
High Prosperity of Premium Cars Continued, with the Greatly Increased 2021H Result YoY
and the Earning of 60% More
Zhongsheng issued the interim results of 2021, reporting RMB87.36 billion in revenue, up
50.1% yoy; the net profit attributable to the parent company stood at RMB3.7 billion, up
61% yoy, with an EPS of RMB1.609. The main reasons of the increase in H1 are 1) The gross
margin of new car sales increased due to the increase in the trading volume of new cars,
especially that of the new brand premium cars, as well as the favorable supply and demand
conditions. 2) The after-sales service admissions grew steadily, and the gross margin of
after-sales service climbed. 3) Value-added service saw a growth driven by the increase in
commissions for auto finance and second-hand car transaction business.
Revenue from new car sales and after-sales business increased by 46% and 34% to
RMB72,556 million and RMB11,302 million, respectively, from the same period last year.
Second-hand car sales made a contribution of RMB3,503 million. Their respective
proportions changed to 83.1%, 12.9% and 4% from 85.5%, 14.5% and 0, respectively, in the
same period last year. In H1, gross margin increased to 9.7%, up by 0.4 ppts yoy.

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