Monday, November 30, 2020
 
Columnist
Martin Hennecke
 
YONGDA AUTO
HKEx Stock Code : 03669 
 
Corporate Profile
The Group is a leading passenger vehicle retailer and comprehensive service provider in China focused on luxury and ultra-luxury brands. The Group haS dealership agreements to operate its 4S dealerships for a diversified portfolio of automobile brands, consisting of luxury and ultra-luxury automobile brands including BMW, MINI, Audi, Porsche, Jaguar, Land Rover, Infiniti, Cadillac, Volvo and Bentley, and mid-to-high end automobile brands including Buick, Chevrolet, Volkswagen, Toyota, Honda, Nissan and others.

Business Review - For the year ended December 31, 2012

As a leading passenger vehicle retailer and comprehensive service provider in China, the Group has achieved steady growth in 2012. The revenue and gross profi t of the Group were RMB21,712.0 million and RMB1,770.6 million, respectively, representing an increase of 6.9% and 10.6%, respectively, from 2011. The EBITDA, i.e. the earnings of the Group before interest, taxes, depreciation and amortization, was RMB1,108.0 million, a 5.9% increase from 2011. Set forth below is a summary of the major developments of the business of the Group in 2012.

Stable Growth of New Passenger Vehicle Sales and Fast-growing After-sales Business

E New Passenger Vehicle Sales. Despite a challenging market environment, the sales volume of passenger vehicles of the Group reached 69,883 units in 2012, a 14.1% increase from 2011, and sales volume of luxury and ultra-luxury brands reached 34,039 units in 2012, a 16.9% increase from 2011. The weak consumer sentiment resulting from the growing economic instability has adversely affected market demand in 2012; however, a general recovery of economy is underway, particularly during the fourth quarter. The management has prudently monitored changing market conditions and developed adaptive plans in new passenger vehicle sales and new outlets development, which encouraged a sustainable and balanced growth of sales revenue and sales volume. The Group has strived to prioritize the profitability of its business and the management of inventory to a reasonable level by optimizing its sales structure and closely monitoring its inventory turnover.

E Repair and Maintenance Services. The repair and maintenance services of the Group have achieved fast growth in 2012. This is resulted from its fast-growing customer base, in particular, its customers for luxury and ultra-luxury passenger vehicles, which in turn increased the demand for its after-sales services; its one-stop shop comprehensive automobile-related quality services and the recognition of its well-known Yongda brand to achieve a high degree of customer satisfaction which has increased customer retention rates and continuous consumption and attracted new customers through referrals; and its efforts to enhance its cooperation with insurance companies.

E Automobile Extended Products and Services. In addition to the repair and maintenance services of the Group, the Group is also committed to provide comprehensive automobile extended products and services through its one-stop shop services, which mainly include automobile decoration products, automobile care services, agency services of vehicle title registration and vehicle inspection services. The automobile extended products and services of the Group have achieved fast growth in 2012, mainly driven by its integrated sales with new passenger vehicle sales, provision of more incentives to its sales force and the introduction of products and suppliers catering for the needs of its customers. Revenues from sales of automobile decoration products and automobile care services were RMB202.1 million and RMB145.5 million, respectively, a 53.0% and 133.9% increase from 2011, respectively.

The after-sales service business of the Group, which mainly includes the above-mentioned repair and maintenance services and automobile extended products and services, has achieved a revenue of RMB2,048.6 million, a 35.1% increase from 2011.

E Agency Services for Automobile Insurance and Financial Products. Through strengthened cooperation with insurance companies and other financial institutions, the Group has achieved a service income of RMB155.8 million in 2012 from its agency services for automobile insurance and financial products, a 77.1% increase from 2011.

E Pre-owned Vehicle Business. The Group has actively promoted its pre-owned vehicle business in 2012 by increasing the proportion of brand certified pre-owned vehicles, upgrading information management system for pre-owned vehicles, as well as using a third-party auction system for pre-owned vehicles, which has greatly improved sales volumes and revenue of preowned vehicle business.

E Automobile Rental Services. In 2012, the Group proactively promoted its automobile rental services by excavating new and long-term customers and expanding its fl eet size. As a result, its automobile rental services has achieved a revenue of RMB223.1 million, a 23.5% increase from 2011.

Continuous Expansion of the Network of the Group The Group has continued to build its strong and long-term relationships with leading manufacturers of luxury and ultra-luxury passenger vehicles. In 2012, the Group continued to focus on luxury and ultra-luxury brands, including BMW, MINI, Audi, Porsche, Jaguar, Land Rover, Infiniti, Cadillac, Volvo, and Bentley, a UK premium luxury brand that was newly added. In 2012, the Group has obtained authorization to open 21 new outlets from a number of luxury and ultra-luxury brands, including Porsche, BMW, Audi, Jaguar, Land Rover and Bentley, which has further enhanced its luxury and ultra-luxury brands portfolio. Moreover, the Group has operated 4S dealerships for a select portfolio of mid- to high-end brands, including Buick, Chevrolet, Volkswagen, Toyota, Honda, Nissan and others.

Business Outlook - For the year ended December 31, 2012

China is expected to become the largest luxury and ultra-luxury passenger vehicles market in the world in 2016, according to McKinsey, a global management consulting fi rm. During the last decade, luxury and ultra-luxury passenger vehicles market in China has achieved a CAGR of approximately 36%. In 2012, the sales volume of luxury and ultra-luxury new passenger vehicles in China reached approximately 1.25 million units, making China the second largest market of luxury and ultra-luxury vehicles in the world, second only to America. According to McKinsey, it is expected that China's luxury and ultra-luxury passenger vehicles market may maintain a CAGR of 12% up to 2020, while the CAGR for the passenger vehicles market is expected to be approximately 8% only during the same period, and the annual sales volume of luxury and ultra-luxury passenger vehicles in China is expected to reach 3.0 million units, generally in line with the Western Europe market, while the annual sales volume of luxury and ultra-luxury passenger vehicles in America market is expected to be approximately 2.3 million units. According to McKinsey, the annual sale volume of automobiles in China is expected to reach 2,250,000 units by no later than 2016, taking over the place of America and ranking first in the global luxury and ultra-luxury passenger vehicles markets. Meanwhile, maintenance and repair services, automobile extended products and services, pre-owned vehicles, insurance, automobiles rental and automobile financing and leasing businesses are also expected to increase rapidly, continuously increasing the profitability of the automobile industry.

To proactively capture market opportunities, the Group aims to continue strengthening its market position as a leading luxury and ultra-luxury passenger vehicles dealership group in China and seize the opportunities in the world's largest and fast-growing passenger vehicle's market by pursuing the following strategies in 2013 and the future.

Network Expansion

E The Group plans to further strengthen its focus on the luxury and ultra-luxury passenger vehicles segments. The Group plans to continue to strengthen and enhance its established strong and long-term strategic and cooperative relationships with leading automobile manufacturers of luxury and ultra-luxury brands, focus on network expansion and introduce new brands into its brand portfolio in luxury and ultra-luxury passenger vehicles segments;

E The Group plans to continue to strengthen its leading position in the Eastern China regional market (including Shanghai);

E The Group plans to consider particular market conditions in different regions and tiers when it selectively develops its centralized automobile parks, stand-alone automobile 4S dealership, automobile city showrooms, pre-owned vehicle centers, maintenance and repair service centers and city and town quick repair stores, so as to enrich the types of its outlets and tailor to the needs of different markets and customers; and

E The Group plans to focus on its network expansion mainly through its organic growth and supplemented by acquisition opportunities in appropriate size that the Group will proactively and selectively identify in order to expand its network to its strategic regions or new regions. The Group plans to focus on the luxury and ultra-luxury brands in any potential acquisitions and mergers.

Business Expansion

E New Passenger Vehicles Sales. The Group plans to further improve gross profit margin in new passenger vehicle sales by implementing an information system that provides dynamic management of sales price and turnovers of inventories. The Group plans to integrate its advantage of economies of scale and take advantage of synergies from industrial, regional, brands, business, customers and channel linkages. It also plans to implement customers loyalty programs to encourage their continuous consumption and consumption upgrade;

E Maintenance and Repair Services. The Group plans to implement a differentiated and delicate management to its subsidiaries at different development stages. It plans to further tap growth potential of its mature stores and rapidly improve the business capability of new stores, to expand accidental car business, to promote production efficiency by the establishment of a refinishing center; to increase gross profit margin through strategic cooperation with insurance companies, to continue service innovation in order to develop maintenance related business, such as warranty extension, assembly repair and quick repair, as well as to strengthen training of key technical personnel;

E Extended Products and Services. The Group plans to take advantage of its economies of scale to further control procurement costs of extended products, to improve product upgrades such as vehicle care products, engine oil and sales and marketing, to develop vehicle refitting OEM business, automobile coating and detailing services when market demands arise, and to enhance revenue streams from services for license registration, inspection, and trading by integrating its industrial chain;

E Pre-owned Vehicles. The Group plans to accelerate the development of manufacturerauthorized pre-owned 4S dealerships to achieve a leading industrial position by scale; to upgrade the replacement business through the development of its existing customers base; to further increase revenues from pre-owned vehicle business by strengthening business from manufacturer certified brands and also promoting business from brands certified by the Group; and enhance value-added pre-owned vehicle business by enhancing cross-selling efforts among pre-owned vehicles, warranty extension, decoration, insurance and financial products;

E Insurance Business. The Group plans to enhance its strategic cooperation with major insurance companies to promote the growth of accidental car business and gross profit margin; to take advantage of such cooperation to develop extended insurance business that is not covered by manufacturers; to maintain maintenance service resources in an effective manner in order to improve revenues from insurance business; and to take advantage of its economies of scale by integrating insurance business in Eastern China and other areas that its outlets are concentrated in;

E Automobile Rental. The Group plans to expand its automobile rental outlets at a relatively lower cost by taking advantage of its passenger vehicle sales and service outlets; the Group plans to study the possibility of establishing a temporary rental unit to develop a dual business model with both long-term and short-term rental business, and increase the turnover rate and rental rate of temporary rental business; to actively promote service innovation and also launch an online booking new business; and the Group plans to provide featured automobile rental services such as VIP arrivals in order to provide personalized services for high-end customers; and

E Financing and Leasing Services. The Group plans to enhance its profitability of passenger vehicle sales by exploring a new business model of financing and leasing services, first among high-end brand companies in Shanghai in 2013, then gradually promoting such business nationwide in 2014. The Group has engaged experts from America to help with product design and planning in order to cater for the needs of customers. The Group plans to promote such business by positioning finance managers and introducing the relevant monitoring system at its 4S dealership stores. The Group believes the financing and leasing business will provide it with business growth in relation to maintenance and repair, automobile extended products and services, and insurance, as well as resources for pre-owned vehicles.

Source: China Yongda Auto (03669) Annual Results Announcement
Chairman CHEUNG Tak On Issued Capital (shares) 1,480M
Par Value HKD 0.01 Market Capitalisation (HKD) 10,952M
 
Login
Password
Register  Forget Password
Advanced Search
© 2020 The Standard, The Standard Newspapers Publishing Ltd.
Home | Business | Metro | Focus | Opinion | Markets | World | Sports | Entertainment | Monday Money | Property | Macau | Weekend