AutoBeta(AutoBeta.net)09/07 Report--

A continuing downturn in the auto market and poor management have driven China's largest car dealership, Giant Group, to its knees over a $17 million debt.

On the evening of September 5, the huge group issued two announcements in succession, the announcement shows that the court has ruled to accept the huge group reorganization application, will implement delisting risk warning. Pang Da Group shares will be delisted risk warning on September 9, the stock abbreviation will be changed to "*ST Pang Da", and the daily rise and fall of stock price will be limited to 5%; Pang Da Group shares will be suspended for one day on September 6 and resumed trading on September 9.

Pang Da Group also warned investors in its announcement that if the company fails to restructure, the company will be declared bankrupt by the court. If the company is declared bankrupt by the court, the company's shares will be delisted.

Why are large groups restructured? According to the announcement on May 13, Pang Group borrowed RMB 17 million yuan from Beijing Jidongfeng on May 4,2017 to supplement working capital for purchase. However, when the loan expired, due to fund shortage, Pang Group was unable to repay its debts, so Beijing Jidongfeng applied to the court for reorganization of Pang Group.

As the largest dealer in China in the past, it was sued for not paying 17 million yuan in arrears, which made many investors sigh. According to the financial report of Huge Group, in 2018, Huge Group realized operating income of 42.034 billion yuan, down 40.37% year-on-year, and net profit attributable to shareholders of listed companies was about-6.155 billion yuan, down 3003.23% year-on-year. In the first half of this year, the operating income was 10.256 billion yuan, down 62.17% year-on-year, and the net profit attributable to shareholders of listed companies was 1.198 billion yuan, down 563.66% year-on-year. In the first half of this year, the cumulative sales volume of new vehicles of the huge group was 50,100, down 71.22% compared with the same period last year.

In the semi-annual report of 2019, the huge group said that in the first half of this year, the negative impact brought by operation continued to ferment, superimposed on factors such as tight overall capital environment in 2018, the financing difficulties and capital shortage of listed companies have not been alleviated, so it seriously affected and restricted the normal operation of the huge group, and the operating income and benefits of the company decreased year-on-year.

In the face of difficulties, on the one hand, the huge group truthfully explained the situation to financial institutions and obtained understanding and support; at the same time, the huge group also reduced expenses and recovered funds by reducing staff and increasing efficiency, disposing assets, etc., and tried its best to maintain the normal operation of the company.

Pang Da Group said it would also push ahead with its slimming plan while awaiting a court ruling. It retains the joint venture brand 4S stores with relatively strong business ability, but the 4S stores that are in the incubation period are rented or sold to relieve the pressure brought by funds.

The huge group is ST, in fact, it is also the epitome of the whole automobile industry. In 2018, the automobile industry ushered in an inflection point, with the first annual sales decline in 28 years. From this year's data, the whole industry does not seem to show much sign of improvement. According to the latest data of China Automobile Association, from January to July this year, passenger car sales volume was 11.654 million, down 12.8% year-on-year.

Zhong Shi, an analyst in the automobile industry, said that the problems encountered by several major automobile dealer groups are universal. In order to seize market share, brands fight a big price war, and the profits of single vehicles are getting thinner and thinner, which erodes the operating profits of dealers severely.

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