AutoBeta(AutoBeta.net)06/19 Report--

On the evening of June 18, Zhongtai Motor issued a revised announcement of its 2019 results, showing a loss of 10.8 billion yuan to 11.5 billion yuan in 2019, compared with an estimated loss of 6 billion yuan to 9 billion yuan, compared with a profit of 800 million yuan in the same period last year. This revision (calculated on the basis of a maximum loss of 11.5 billion yuan) makes Zhongtai Automobile, which ranked second in loss among Chinese car companies in 2019, likely to become the Chinese car company with the largest loss in 2019.

As for the reasons for the performance correction, there are mainly the following two points: ① was further affected by factors such as COVID-19 's epidemic situation, and the company's cash flow was further affected. Due to the limitation of funds, the management of the company adjusted the original resumption plan according to the actual situation, adjusted part of the reproduction models and reduced the resumption output, thus calculating that the recoverable amount of the production line was lower than its book value, resulting in signs of impairment of some assets. According to the accounting standards, the asset impairment loss is about 1.33 billion yuan for the difference. Due to the market environment, some customers' credit deteriorated during the reporting period, such as being included in the untrustworthy list, failing to fulfill their legal obligations on time, being enforced by the court, and so on. According to the principle of prudence, the company re-estimated the future repayment ability of this part of customers with poor credit, and made provision for bad debts accordingly, resulting in an increase of about 327 million in credit impairment.

It is worth mentioning that this is the second performance change of Zhongtai Automobile. In January this year, Zhongtai issued a performance forecast with a net profit loss of about 6 billion yuan to 9 billion yuan in 2019. In April this year, Zhongtai Motor issued another announcement, showing that the company's net loss in 2019 was about 9.3 billion yuan, which has exceeded the lower limit of the previous performance forecast. This performance revision directly increased the loss by 2 billion yuan.

While the impact of the epidemic has further increased Zhongtai's losses, the domestic car company has also been exposed to encourage employees to leave voluntarily. According to media reports, Zhongtai Hunan Base issued a notice on the company's employees' extended holiday on May 29, saying that due to the downward pressure of the automobile industry and the serious impact of the epidemic, the holiday time of all in-service employees of the base was postponed to June 30, 2021.

Hunan base is one of the many production bases built by Zhongtai Automobile Group in China. It is the key production base based on Zhongtai's acquisition of Jiangnan Otto in Hunan in 2007. According to the document, Zhongtai Hunan Base Research decided to postpone the holiday again on the basis of the original holiday notice, involving all serving staff who signed valid contracts with the company until June 30, 2021. Zhongtai said that the move is due to the downward pressure of the automobile industry and the serious impact of the epidemic, and combined with the company's current situation to make a decision.

In addition, the notice shows that Zhongtai Automobile encourages employees to leave voluntarily and gives certain incentive funds. The subsidy standard is: 3000 yuan per month × length of service accounting subsidy if the basic salary is higher than 3000 yuan, and according to the basic salary × length of service accounting subsidy if the basic salary is less than 3000 yuan.

Zhongtai Automobile is an independent car company based on imitation in the eyes of Chinese consumers, and its products are sought after by consumers in a short period of time by virtue of "high-end reference". From the perspective of market performance, with the help of the hot sales of high-imitation models, Zhongtai Motor sales have also achieved great-leap-forward growth. Among them, 166000 vehicles were sold in 2014 and about 220000 in 2015. Zhongtai Motor sold more than 330000 vehicles in 2016, which was the best performance in the history of Zhongtai Automobile and entered the top 10 of domestic independent brand sales. at this time, Zhongtai's "ruler" has become a "sharp blade" of sales growth.

However, relying on the obvious results of "high-end reference" did not accumulate its own advantages, but immersed itself in the achievements of the "ruler department", leading to the continuous decline of the automobile market. Zhongtai Motors fell into a business crisis due to financial problems, car quality and other problems. Sales fell to 317000 in 2017, 234000 in 2018 and 40.1 per cent to 153000 in 2019, according to the data. Zhongtai has not disclosed specific sales since 2020, but sales of Zhongtai from January to May 2020 were only 3573, a decline of 96 per cent, according to the China Association of China Futures Association.

Jin Zheyong, chairman of Zhongtai Automobile, was restricted to high consumption in April, according to Tianyan data. In addition, two senior executives have left this year, and vice presidents Chen Jing and Deng Xiaoming tendered their resignations. Since the beginning of this year, Zhongtai Motor has 19 court announcements, mainly for sales contract disputes and advertising contract disputes.

Due to the shortage of funds and insufficient supply of spare parts, some fuel models and new energy vehicles have been suspended. Under the influence of factors such as the delay in the launch of new cars, the continuous decline in sales and the decline of subsidies for new energy vehicles, Zhongtai Wuguo 6 models have been put on the market, and there are no models to sell in Guangdong, Chongqing, Henan and other provinces.

The technical strength of Zhongtai Automobile is weak, the old models have been unable to upgrade the national six standards for a long time, and the development of new models has been slow. Now the production base has been exposed that the holiday has been postponed. In the current environment of intensified reshuffle in the automobile industry, Zhongtai Automobile is teetering in the market, and it is almost impossible to rely on new cars to achieve blood recovery. In 2020, Zhongtai's share price continued to fall. By the close of trading on June 18, Zhongtai's total market capitalization was only 3.8 billion yuan, while last year's loss was equivalent to three times the total market capitalization of Zhongtai.

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