Proportion of Premium and Ultra Premium Branded Automobiles
IncreaseSignificantly

[26March 2012, Hong Kong] ChinaZhengTong Auto Services Holdings Limited(“ZhengTong Auto” or the “Company”, together with its subsidiaries, the “Group”, stock code: 1728.HK), a major premium branded 4S dealership group in China,today announced its annual results for the year ended 31 December 2011(the “year under review”).
The Groupachieved a remarkable resultin itsfocuson premium and ultra premium branded automobilesin 2011andcontinueda strong growth during the year under review.Benefitted from the growingdemand for premium automobile,the rapid expansionof dealership networkand the continuously improvingoperating efficiency of theGroup’s dealershipbusiness, for the year ended 31 December 2011, the Group generated turnover of approximately RMB14,443.9million, representing an increase of approximately 79.8% overthe same period of 2010. Gross profitincreased 90.9%toapproximately RMB1,385.6million. Profit attributableto equity holders of the Company was RMB524.0 million, representing a significant increase of 89.9% over the same period of last year. Gross profit margin and net profit margin were 9.6% and 3.9%, respectively, representing a year on year increase of 0.6 percentage points and 0.2 percentage points respectively. Basic earnings per share were RMB25.2 cents (2010: RMB18.0 cents), showing a 40% increment compared to the previous year. The Company did not recommend payment of a final dividend for the year ended 31 December 2011.
Mr. Wang Kunpeng, Chief Executive Officer of Zhengtong Auto,said,“In the face offierce competition in theautomobile industry in 2011, westrengthened ourinternal operational management, adhered to our customer-oriented philosophy, continued to enhance the standardof service and quality, and actively sought external cooperation. In addition,we enhanced our capital operation andrapidly expandedour businesswhilst obtaining new brand mandates.This shows that weachieved remarkable results in every aspect.”
During the year under review, revenue from the sales of new automobiles amounted to RMB12.95billion, representingan increase of 84.8% compared to2010, and it accounted for 89.7% of the totalturnover of the Group. Revenue from the after-sales business amounted to RMB1,047million,representing an increase of 73.9% compared to 2010, and it accounted for 5.6% of the total turnover of the Group, and recorded gross profit of approximately RMB457million, representing an increase of approximately 72.5%compared to 2010.
The Group’s focus on the dealership of premium and ultra premium branded automobiles stimulated the strong growthof the Group. During the year under review, revenue from the sales of new premium and ultrapremium branded automobileswas RMB10,583 million, representing an increase of 120.4% ascompared to2010, and it accounted for81.7% of the totalsales ofnew automobilesof the Group.Profit from the sales of new premium and ultra premiumbranded automobiles accounted for 85.8% of the profit from the sales of new automobiles of the Group, an increase of0.3 percentage points compared to85.5% in 2010.
During the year under review, the Group continuedtoexpandits4S dealership network by means of new establishment and acquisition in order to create a strategicnational dealership networkcovering first-tier cities and fast-growing regions with a focus on premium andultra premium branded automobile sales and services.As at 31 December 2011, the Group had 594S stores inoperation across the country, an increase of 35stores or 145.8% over the 24 4S stores in operation as at 31 December 2010.AJaguar/Land Rover brand 4S dealership store wasopened in Shantou,Guangdongand oneBMW M centre in Beijing were put in trial operationduring 2011and already commencedoperation at the release of this announcement.The Group’sdealershipnetwork covers 27cities inaffluent andrapidly developing regionswithlarge, established automobile markets.
The Group adhered to and activelyimplemented the brand placement strategy with a focus on the most popular premium and ultra premium automobile brandsin China,optimizing brand portfolioandenhanced the position of premium and ultra premium brand automobilesales and services in the Group’s business structure.As at 31 December 2011, the Group operated4S dealershipbusinesses for a total of 20 automobile brands, of which11 brands were premium and ultra premium brands, namely BMW, MINI, Audi, Jaguar, Land Rover, Volvo,Import Volkswagen, Mercedes, Infiniti, Acuraand Porsche. The Group hada total of 594S automobile dealership stores in operation.43of themwere premium and ultra premium brand 4S automobile dealership stores, accounting for 72.9% ofthe Group’s total number of 4S automobile dealership stores in operation. The Group becameacore distributor of fivepremium automobile brands, namely BMW, Audi, Jaguar, Land Rover and Volvo.
During the yearunder review, the Group startedits used automobile business. The Groupestablished used automobile centres inInner Mongolia, Beijing and Hubeiandcarried outunified operation and managementof itsautomobile businessin corresponding areas. Moreover,the Group achievedeconomies of scales in theautomobile accessories salesand extended businesses, coveringautomobile financingand automobile insuranceand soughtpreferentialpurchasing prices, more favourable financial policy and insurance conditions.
Mr. Wang Kunpeng concluded, “Leveragingon thestrongmacro-economic growth momentum and the ongoingdemand,the premium and ultra premium branded automobile dealership sectorwill continue its fast growth in the future. ZhengTong Auto willalso striveto maintain the rapidgrowth inthe sales of newautomobiles by adoptingthe growth strategy of operating efficiency enhancement and reasonable network expansion.Through fostering the customer-oriented principle, optimising the after-sales services system and procedures, enhancingthe quality of after-sales services and customer satisfaction, the Group is able to effectively increase the profitability oftheafter-sales services segment and gradually develop it as apillarsegmentof the Group. The Group willalso actively promotethe development of extended businesses including used automobiles, automobile accessories andautomobile finance to turn them into new profit driversof the Group. In addition, the Group will effectively develop other businesses such aslogistics and lubricant oil tradingin order to support the development of automobiledealershipas thecore business, as itgeneratesprofits to the Group.The management believes that ZhengTong Auto will continue to maintain its leading position in the fast-growingpremium and ultra premium branded automobile marketin China,thus maximizingreturns forour shareholders.”