AutoBeta(AutoBeta.net)08/04 Report--

After being exposed to multiple defaults and non-delivery of vehicles, due loans could not be repaid on schedule, luxury car dealer group "Zhengtong Automobile" did encounter a financial crisis. Recently, Zhengtong Automobile controlling shareholder intends to sell equity news announced.

On July 31, Zhengtong Automobile issued an announcement saying that the controlling shareholder intends to sell 29.9% of the company's shares at a premium. Xiamen International Trade Holding Group Co., Ltd. is a state-owned enterprise controlled by Xiamen City government.

Zhengtong Automobile, which encountered business problems and capital crisis, had to rely on equity sales to partially solve the capital problem.

According to the 2019 annual report of Zhengtong Automobile, by the end of 2019, the current assets of Zhengtong Automobile were about HK $24.14 billion, down 3% year-on-year; due to the growth of loans and borrowings, the current liabilities increased by 8.5% year-on-year to HK $25.82 billion. Among the current liabilities, short-term loans amounted to HK $17.028 billion, bills payable HK $2.447 billion and short-term debts reached HK $19.475 billion.

In 2020, Zhengtong Automobile issued bonds of US $173 million at an annual interest rate of 12%, and placed shares at a discount of 15.5% on July 16, raising HK $267 million, totaling US $440 million in two financing rounds. But on July 21, Zhengtong still defaulted on an installment loan of about $100 million. On July 22, Zhengtong Automobile announced that it would repay 30% of the loan principal and interest in two installments, and the installment loan would be extended to January 2021.

Funding problems have further led to defaults by its dealers. Zhengtong Automobile is a dealer group focusing on luxury brand sales and operation in China. Recently, dealers in Haikou, Shenzhen, Fujian, Foshan and other places have been exposed to be unable to deliver vehicles to consumers on schedule. The reason is that the capital turnover of the head office is difficult, resulting in a longer time for the release of customers 'vehicles.

Zhengtong Automobile, together with its subsidiaries, is the leading 4S dealership group in China, mainly dealing in luxury and ultra-luxury brand cars. Listed on the Hong Kong Stock Exchange in 2010, the company is the first luxury car dealer group listed in China Hong Kong. Zhengtong Automobile once staged "snake swallowing elephant" in 2011, acquiring Shenzhen Zhongqi South Investment Group Co., Ltd., twice its scale, for 5.5 billion yuan.

By the end of 2019, Zhengtong Automobile has 135 dealerships nationwide, representing luxury and ultra-luxury automobile brands, including Porsche, Mercedes-Benz, BMW, Audi, Jaguar Land Rover, Volvo, Cadillac, Infiniti, etc., as well as dealerships for mid-range market brands such as FAW Volkswagen, Buick, Nissan, Toyota, Honda and Hyundai.

Zhengtong Automobile, which focuses on luxury brand management, has encountered a capital crisis while luxury car sales continue to grow. Perhaps the core reason lies in its own business problems. Entering 2020, the operating income of Zhengtong Automobile in the first quarter decreased by 64.2% year-on-year to 3.131 billion yuan, and the net profit turned to a loss of 54 million yuan, compared with a profit of 200 million yuan in the same period last year. Under the influence of the epidemic situation, Zhengtong Automobile's capital difficulties were further caused.

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat