AutoBeta(AutoBeta.net)07/17 Report--

On July 17, Guanghui Motor once again closed at 0.78 yuan per share, with a total market value of 6.466 billion yuan. Compared with the peak of 16.15 yuan per share, Guanghui Motor's share price has fallen by 95%, and its market capitalization has shrunk by more than 120 billion.

As the share price has been less than 1 yuan for 20 consecutive trading days, Guanghui Automobile will trigger the face value delisting clause in the future. According to the Stock listing rules of the Shanghai Stock Exchange, if the daily closing price of the company's shares is less than 1 yuan for 20 consecutive trading days, the company's shares may be terminated by the Shanghai Stock Exchange.

While the stock price fell by the limit, Guanghui convertible bonds also fell by 20%, which will also cause Guanghui Motor to trigger the face value delisting clause. In accordance with Article 9.1.17 of the Stock listing rules, if the listing of the shares of a listed company is terminated, the listing of convertible bonds and other derivative products issued shall be terminated. According to the second paragraph of Article 9.6.1 of the Stock listing rules, the shares of delisted companies are forced not to enter the delisting period for trading. According to the rules, the termination of the listing of convertible bonds and other derivative products shall be carried out with reference to the relevant provisions on the termination of the listing of stocks. This means that Guanghui convertible bonds will be the first high-rated convertible bonds to be delisted because their face value is too low. Data show that Guanghui Automobile issued Guanghui convertible bonds rated as AA+, belong to investment grade bonds.

Guanghui Automobile, as the leading enterprise of car dealers, is also difficult to be immune from the spring tide of the industry.

Guanghui Automobile is the leading passenger car distribution and service group in China, and has become the leading car dealer in China by 2012. In June 2015, Guanghui Automobile successfully entered the A-share market through backdoor Mero Pharmaceutical Co., Ltd. In June 2016, Guanghui Automobile successfully offered to acquire Hong Kong listed company Baoxin (now renamed Guanghui Baoxin) Automobile Group Co., Ltd.

However, only three years after listing, Guanghui Motor performance began to decline. According to the statistics of Automotive Industry concern, from 2018 to 2020, Guanghui Automobile achieved net profits of 3.257 billion yuan, 2.601 billion yuan and 1.516 billion yuan respectively, with net profit growth rates of-16.27%,-20.16% and-41.72%, respectively. Although net profit increased slightly in 2021 compared with the same period last year, it suffered another huge loss in 2022, with a loss of 2.669 billion yuan, down 265.92% from the same period last year.

In 2023, Guanghui Automobile turned from loss to profit, with annual revenue of 137.998 billion yuan, but net profit of only 392 million yuan. After entering 2024, the operating situation of Guanghui Automobile continued to deteriorate, with total revenue of 27.79 billion yuan in the first quarter, down 11.49% from the same period last year, and net profit of 70.9405 million yuan, down 86.61% from the same period last year. However, Guanghui Automobile issued a forecast a few days ago. The net profit for the first half of 2024 is expected to be-699 million yuan to-583 million yuan.

For the decline in performance, Guanghui Automobile Analysis said that due to the intensification of competition in the industry, the major car companies fought a price war to seize market share, and the company's new car sales scale and gross profit margin declined compared with the same period last year. At the same time, the company took decisive "shutdown and amortization" measures against weak brands, continuous losses and inefficient stores, resulting in impairment and accelerated amortization of related assets such as creditor's rights and franchises receivable during the reporting period, resulting in one-time losses and expenses. In addition, there are related impairment losses.

In order to avoid delisting, Guanghui Automobile planned the change of control to actively save itself and began to make final efforts for "shell preservation". On the evening of July 11, Guanghui Automobile announced that the controlling shareholder of the company, Xinjiang Guanghui Industrial Investment (Group) Co., Ltd. (referred to as "Guanghui Group") and Xinjiang Jinzheng New Materials Technology Co., Ltd. (referred to as "Jinzheng Technology") signed the Equity Cooperation Framework Agreement. According to the content, after December 19, 2024, Guanghui Group will transfer 24.5% of the company's shares, that is, 2.03 billion shares to Jinzheng Technology, and the total consideration of the underlying shares will be determined by both parties through consultation. If a formal agreement is finally signed and the delivery is completed in accordance with this framework agreement, the control of the company will be changed.

However, the change of equity plan still failed to save the market. On the 11th and 12th, the stock price rose to 0.96 yuan, and on the 13th, it once reached 1.01 yuan in intraday trading, but finally closed at 1.01%, closed at 0.97 yuan, and once again lost the red line. Since then, it has fallen to the limit on the 16th and 17th, and has been below 1 yuan for 20 consecutive trading days, losing the opportunity to stand on the face value of 1 yuan.

Nowadays, new energy vehicles have risen, and the direct operation mode, which is accompanied by new energy vehicles, is also impacting the traditional car dealer model. The direct marketing model widely adopted by new energy brands has had an impact on the traditional dealer model to a certain extent. Under the price war, although the sales volume has increased, the profit space of dealers has been compressed, and the operating pressure is not small.

Of course, the strength of Guanghui Motor is also worthy of recognition. On May 29th, the China Automobile Dealers Conference released the 2024 Top 100 Dealer Group list of China Automobile Circulation Industry. Guanghui Automobile ranked second in the list with revenue of 137.998 billion and ranked first among the top 100 dealer groups with sales of 713467 vehicles. By the end of 2023, Guanghui Automobile has established a national automobile distribution network covering 28 provinces (autonomous regions and municipalities), operating 735 outlets, including 695 4S stores, including BMW, Audi, Volvo, Jaguar Land Rover, Maserati and many other luxury brands.

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