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Wednesday, 31 August 2016, 18:53 HKT/SGT
Greenland Rundong Achieved Steady Growth in 2016 1H
Gross Profit & After-sales Service Rose by 13.6% and 10.7% Respectively

HONG KONG, Aug 31, 2016 - (ACN Newswire) - One of the largest luxury automobile dealership groups in affluent coastal regions of Eastern China, China Greenland Rundong Auto Group Limited ("Greenland Rundong" or the "Company", together with its subsidiaries, the "Group", stock code: 1365), today announced its interim results for the six months ended 30 June 2016 ("the period under review" or "the reporting period").

In the first half of 2016, the Group endeavored to develop the recovering passenger vehicle market in China, transformed the former profitability model, set up the management philosophy with new automobile sales as the carrier and with after-sales and value-added business as the main business, thus the operating results recorded growth as compared to the corresponding period of last year. As at June 30, 2016, the revenue of the Group amounted to RMB7,871.5 million, representing an increase of 7.2% as compared with the corresponding period of 2015. The gross profit was RMB751.8 million, representing an increase of 13.6% as compared with the corresponding period of 2015. The gross profit margin was 9.6%, representing an increase of 0.6 percentage points as compared with the corresponding period of 2015. Profit for the period amounted to RMB116.6 million, representing an increase of 6.7% as compared with the corresponding period of 2015. The profit attributable to owners of the parent amounted to RMB110.2 million, representing an increase of 3.2% as compared with the corresponding period of 2015. The basic earnings per share amounted to RMB0.12.

Mr. YANG Peng, Executive Director, Chairman and President of China Greenland Rundong Auto Group Limited, remarked: "In the first half of 2016, with the complicated economic situation in China and abroad as well as the increasing downward pressure, the Chinese economy operated steadily as a whole, and the supply side reform has shown early results. The automobile market began to show a stable growth trend. During the period under review, the automobile sales maintained stable growth, and the luxury car market also recovered significantly, with the sales growth rate outperforming that of the industry, driving the growth of automotive after-sales services and related businesses. The Group still focuses on traditional dealership business: automobile sales and after-sales service, and also develops innovative business on the basis of traditional business, contributing to a good operating results during the period under review."

Growth Recovery in Sales of New Automobiles
During the period under review, by optimizing wholesale and retail structure, formulating the classified management method for vehicle models and continuing to promote sharing of regional resources, the Group continued to intensify the value-added businesses and services such as financial services, assembling, automobile accessories package, etc., and enhanced customer invitation and test drive experience, which have controlled the inventory efficiently and guaranteed the stable growth in sales and gross profit margin of new automobiles. During the reporting period, the Group's revenue from sales of new automobiles amounted to RMB6,842.3 million, representing a year-on-year increase of 6.7%, among which, revenue from sales of luxury and ultra-luxury automobiles reached RMB4,872.8 million, representing a 3.0% year-on-year increase and accounting for 71.2% of the revenue from sales of new automobiles. Gross profit margin from sales of new automobiles was 4.5%, which was 0.5 percentage points higher than the same period of the previous year.

Rapid Growth in Revenue from After-sales Services, with increasing proportion in total revenues
Based on the current market and industry development status and the future forecast, the Group has set up the management philosophy with new automobile sales as the carrier and with after-sales and value-added business as the main business. During the reporting period, after-sales service revenue increased by 10.7% year-on-year to RMB1,029.2 million, accounting for 13.1% of the total revenue of the Group, which was 0.4 percentage points higher than the same period of the previous year. The gross profit of after-sales service increased by 10.4% year-on-year to RMB446.6 million. The gross profit margin of the after-sales service was 43.4%, remained almost flat with that in the same period of the previous year.

Active Expansion of Value-added Business to Transform the Profitability Model
During the period under review, the Group made active efforts to expand value-added business and enhance the proportion of value-added business in the profit. In terms of automobile financing service, the Group evaluated the financing cooperation channels in various areas to ensure the implementation of multi-channel financial products in various areas, and continued to concern the financing penetration rate. In the first half of 2016, in terms of agency business, the Group's penetration rate of automobile financing agency business increased from 22% in the same period of 2015 to 32% during the period under review. In terms of revenue, the Group achieved RMB51.8 million from the financing agency service representing an increase of 42.7% as compared to the revenue of RMB36.3 million in the same period of 2015. In addition, the Group also attached great importance to the insurance agency services, formulated different strategies for new insurance and insurance renewal business, endeavored to enhance the insurance penetration rate, and explored the profit growth point. During the period under review, revenue from insurance agency service of the Group amounted to RMB31.0 million, representing an increase of 11.5% from RMB27.8 million in the same period of 2015.

Active Layout of Second-hand Car Business
The second-hand car market developed rapidly in China, with the compound annual growth rate at 16%. The Group seized the opportunity to set up the second-hand car business team, established the ERP second-hand car business system, introduced the second-hand car auction platform, and actively developed the dealership certification business of second-hand car. Through technological cooperation and introduction of advanced experience, the Group's second-hand car agency business had developed rapidly.

Steady Advancement of Parallel Import Business
The Group also steadily promoted its parallel import business, with an aim to strengthen its research on the customers and market trend forecast to ensure the imported vehicles meet the market's and customers' requirements, thus guaranteed the gross profit margin of new automobiles. During the period under review, the Group cooperated with Chongqing Xiyong Integrated Free Trade Zone to open the first "Chongqing-Xinjiang-Europe" Parallel Vehicle Import Railway, achieving the great move of transporting vehicle from Europe to Mainland China by land. The opening of the railway symbolized a successful breakthrough of the Group in strategic deployment at the domestic imported vehicle market, and also laid a solid foundation for the Group to enter the Southwest market in the future.

Continuous Optimization of the Network Layout
As a luxury car dealership group in Eastern China, the Group's business focuses on prosperous coastal areas in Eastern China, including Jiangsu province, Shandong province, Shanghai and Zhejiang province, covering the largest luxury and ultra-luxury automobile markets in China. Besides, the Group tried to enhance the operating efficiency and service capability by establishing the high density dealership network. Considering that the new automobile sales entered into the slight growth stage, the Group slowed down the opening of new stores accordingly. Meanwhile, the Group conducted internal integration and upgrade, optimized and upgraded the existing stores to make its layout more reasonable and improve the customer's consumption experience. During the period under review, the Group newly opened a Maserati 3s store, consolidated Jinan Maserati Exhibition Hall and Repair Center, and upgraded it into a 3S store. Meanwhile, the Group also upgraded and transformed some BMW stores, and increased the electric vehicle and second-hand car business. As at June 30, 2016, the Group's brand portfolio includes eight luxury brands, two ultra-luxury brands, and 15 mid- to high-end brands, and operated 70 stores in total. The well-balanced portfolio of brands together with the well-established network show great development potential of the Group.

Looking into the second half of the year, the Group plans to steadily develop the automobile sales business, carry out mergers and acquisitions and cooperation related to automobiles consumption, consolidate traditional automobile sales and after-sales businesses, optimize brand structure and speed up network layout to realize rapid expansion. Meanwhile, the Group will enlarge the value space along the automobile industry chain, expedite developing the financing lease business, automobile financing business and second-hand car business, enhance the financing penetration rate, and increase the insurance commission income. In addition, the Group will also take advantage of the existing offline entity service network and the cumulative high-grade customers, endeavor to integrate with automobile shared economy, explore various cooperation models, and seek development opportunities.

Mr. YANG Peng concluded: "Despite the domestic automobile sales has entered the slight growth stage, there is still room for improvement in car ownership industry in China compared with other developed countries in the world. Meanwhile, the increase in new automobile ownership of over 20 million units and the rise of vehicle age will drive the explosive growth of automotive after-market. The development of industry business structure is getting matured, the contribution of vehicle sales to the profit shows a downtrend, the profitability extends gradually to after-sales service market, and the business markets of automobile financing and of second-hand car both contain tremendous potentials. Based on the aforesaid considerations, we will continue to focus on automobile sales and service industry, develop the automobile macro-consumption business in a steady manner, accelerate the development of automobile financing and second-hand car business, and make active efforts to explore new development models, as to create maximum profit for our shareholders."

Aug 31, 2016 18:53 HKT/SGT
Topic: Press release summary
Sectors: Financial, Business
From the Asia Corporate News Network

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