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Revenue and After-sales Service Revenue Achieved Significant Growth of 33.5% and 46.8%, Respectively
Quality Brand Portfolio and Close-knit Dealership Network
Luxury and Ultra-luxury brands Automobiles Continued to Record Rapid Growth
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HONG KONG, Mar 30, 2015 - (ACN Newswire) - One of the largest luxury automobile dealership groups in affluent coastal regions of Eastern China, China Rundong Auto Group Limited ("Rundong Auto" or the "Company", together with its subsidiaries, the "Group", stock code: 1365.HK), announced its annual results for the year ended 31 December 2014 ("year under review").
Benefiting from the domestic automobile consumption driven by demand for vehicle upgrades, more new entry-level luxury vehicle models tailored for the PRC consumer market having been launched to the market, and the implementation of government policies setting limits on purchases and driver license issuance causing vehicle buyers to opt for the more expensive luxury vehicles, the Group's revenue achieved strong growth in 2014. For the year ended December 31, 2014, the Group recorded a turnover of RMB15,469.3 million, representing an year-on-year increase of 33.5%. Gross profit increased by 43.6% to RMB1,439.1 million. Profit attributable to equity holders increased by 27.8% to RMB305.4 million. Earnings per share were RMB0.34.
During the year under review, riding on stable growth posted by the Group's luxury and ultra-luxury brands dealership stores, as well as the successful integration of the three Audi stores acquired in 2013, the Group's after-sales service revenue and automobile sales business continued to record significant growth. Revenue from new automobile sales was RMB13,829.0 million, up 32.08% from the same period in 2013, and the revenue from sales of luxury and ultra-luxury automobiles reached approximately RMB10,104.9 million, up 38.0% from the same period in 2013, which accounted for about 73.1% (2013:70.0%). The strong increase in sales of luxury and ultra-luxury automobiles drove the growth in the Group's revenue from new automobile sales, and also contributed to the growth of Group's after-sales and value-added service. After-sales service revenue increased by 46.8% year-on-year to RMB1,640.4 million, and accounted for 10.6% of the total revenue of the Group (2013: 9.6%). The gross profit of after-sales service increased by 60.3% year-on-year to RMB733.9 million. The gross profit margin of the after-sales service was 44.7% (2013: 41.0%).
Mr. YANG Peng, Chairman, Executive Director and President of China Rundong Auto Group Limited, remarked: "In 2014, domestic economy in China achieved relatively stable development under the "new normal conditions", the economic development was on course to shift from a high growth pattern to one of moderate-to-high growth. In line with this, the automobile industry in the PRC also showed a slowdown in expansion. However, the passenger vehicle segment continued to be the growth engine to the overall expansion of the automobile industry. With respect to the market for luxury and ultra-luxury automobiles on which the Group focuses its operations, we are of the view that while entry- and mid-level luxury automobile tap into the mid-end market to facilitate consumption and upgrade, the market for luxury and ultra-luxury automobiles still has tremendous room for growth. Therefore, the Group has focus its strategy on the luxury and ultra-luxury automobile brands with great popularity in China, while balancing the development of mid- to high-end automobile brands. Also, the Group has established an all-round service chain for the whole consumption cycle of automobile. It comprises of a comprehensive and all-encompassing industry chain of after-sales service and value-added service. By doing these, the Group maintains significant business growth and enhanced the profitability rapidly."
In terms of sales volume during the year under review, the Group sold 56,628 units of automobiles, representing an increase of 13,247 units or 30.5% from 43,381 units for the same period in 2013. 24,115 units of luxury and ultra- luxury automobiles were sold by the Group, representing an increase of 7,852 units or 48.3% from 16,263 units for the same period in 2013. The Group's sales results of mid- to high-end automobiles also grew rapidly and recorded a revenue from sales of new automobile of RMB3,724.1 million, representing an increase of 18.4% from the same period in 2013. The Group sold 32,513 units of mid- to high-end branded automobiles, representing an increase of 5,395 units or 19.9% from 27,118 units for the same period in 2013. The steady growth of sales of these mid- to high-end automobiles further strengthens the Group's well-balanced brand portfolio.
During the year under review, the Group has extensive brand portfolio, and strategically focusing on the luxury and ultra-luxury automobile brands, including BMW, MINI, Jaguar, Land Rover, Audi, Lexus and Cadillac; two ultra-luxury brands, namely Maserati and Ferrari. Also, a well-balanced mid- to high-end brands portfolio with 14 automobile brands, including Buick, Hyundai, Ford, Chevrolet, Shanghai-Volkswagen, Kia, Dongfeng Honda, GAC-Honda, FAW-Toyota, GAC-Toyota, Toyota, Dongfeng Nissan, Zhengzhou Nissan and BJNE Automobile.
In terms of network layout, the Group achieved network expansion to date through organic growth and selected acquisitions and its strategic focus on the affluent coastal regions of Eastern China, including Jiangsu and Shandong provinces, Shanghai, Zhejiang province and Anhui province. High density dealership networks set up in such key regions helped the Group achieve success in brand recognition as well as customer loyalty. As at December 31, 2014, the Group operated in total 65 stores, of which 44 were located in Jiangsu province, ten in Shandong province, seven in Shanghai, three in Zhejiang province and one in Anhui province. 41 or 63% of the stores specialized in luxury or ultra-luxury automobile brands, while 24 or 37% specialized in mid- to high-end automobile brands. Besides, the Group has obtained authorization or non-binding letters of intent from automobile manufacturers to establish three 4S dealership stores for BMW, a quick repair center for BMW, a repair store for BMW, a 3S dealership store for Maserati, a 4S store of FAW-Volkswageni and a pre-owned automobile trading center for BMW. This should further enhance the Group's dealership network of luxury and ultra-luxury vehicles in key regions.
In 2014, the Group aimed to attain leading position in the market and place the development of new energy automobiles and after-sales service talents on first priority. The Group's cooperation with manufacturers of new energy automobiles had strengthened, with the opening of first 4S dealership store of Beiqi new energy automobiles in Shanghai. The Group expects the store to provide solid market and talent base to the Group during the anticipated emergence of new energy automobiles.
In view of the current boom in the PRC automobile market having been extended for some years, coupled with aging automobiles, the Group had pressed on the building and formation of after-sales service store network on the foundation of its fast-lane repair centers and repair centers. As at December 31, 2014, the Group had a total of six fast-lane repair centers and repair centers under brand's authorization, five of them being set up during the year under review. In terms of brand profile, all six repair centers were of luxury and ultra-luxury brands, five of them being repair centers and fast-lane repair centers under BMW's authorization, with another one being under Maserati and Ferrari's authorization. The Group believes may enjoy a more stable profit and achieve better profit margin with respect to after-sales service.
With a customer-oriented operating philosophy, the Group strives to provide tailor-made services to customers throughout the entire customer spending cycle. The Group has strengthened input on the development of CRM system. The Group's existing customers increased by 73.7% from 186,000 for the year ended December 31, 2013 to 323,000 for the year ended December 31, 2014. The Group's database contained information of 515,000 customer leads (i.e. potential customers accessed by the Group's marketing platform) as of December 31, 2014, representing an increase of 1.86 times over the number of 180,000 as of December 31, 2013. The Group makes extensive use of innovative marketing channels, and offer iOS and Android Apps called "Rundong Xing" to attract younger customers, as well as assimilate seamlessly into the Group's CRM system and ERP system, allowing for effective resource allocation and business optimization in key strategic regions. Besides, the Company upgraded its ERP system to ERP management system and incorporated CRM system into the ERP system.
During the year under review, Mr. Yang Peng, the Chairman of the Group, was awarded "2014 Award for Outstanding Contribution to China's Automobile Dealership Industry" by China Automobile Dealers Association. The Group also awarded "2014 Automobile Industry Leader in China" and"Top 500 Private Enterprise in China", in recognition of its excellent leadership and automobile services.
Looking into 2015, the Group plans to expand its business scale of automobile dealerships in the key geographical areas and for the key automobile brands through a prudent strategy on acquisition together with a measured approach on the opening of new stores. On selection of acquisition targets, the Group will principally consider whether the brand portfolio under dealerships and geographical locations are in line with the Group's development strategy. Such acquisition may be made by, inter alia, merger and acquisition financing or share swap arrangement, in order to reduce the cash outlay required; thereby assuring that the Group's operating cash flow to remain at a normal level. The Group will carry on its plan to establish and develop those automobile dealerships that have already obtained authorization from the automobile manufacturers. For authorization application for newly opened automobile dealership stores, the Group will focus on filling the hollow parts of brand portfolio and building its presence in geographical regions with good potential. At the same time, the Group is working to strength the existing CRM system and optimize its online and offline service processes and standards. The Group aims to provide customers with refined service experience through seamless integration of online and offline processes. The Group will also further optimize the integration of CRM system and ERP system. Through in-depth analysis of the information about customer spending behavior in customer database, the Group operating decision makers can keep abreast with accurate and updated knowledge about customer spending behavior, which allows for better tracking, monitoring and analysis of key operating data, and more efficient management and resources allocation.
Mr. YANG Peng concluded: "We believe that amid further progress to maturity in the automobile market, the consumption needs can still maintain stable growth. With respect to the market for luxury and ultra-luxury automobiles on which the Group focuses its operations, we are of the view that while entry- and mid-level luxury automobile tap into the mid-end market to facilitate consumption and upgrade, the market for luxury and ultra-luxury automobiles still has tremendous room for growth. In particular, leveraging the rising ownership of luxury automobiles in the Eastern China where the Group's business is located, the market for after-sales services and value-added services of luxury automobiles will continue to progress steadily. In addition, amid rising car ownership and maturity of our outlets, in 2015, we will leverage our strong customer management capabilities, our leading position in the regional market and our established marketing channels and concentrate on the development of after-sales service and value-added service. In contrast to other market competitors, our after-sales service and value-added service will pivot on the luxury and ultra-luxury automobile market which is characterized by high profit margin and customer loyalty, with a view of fortifying our leading position in such market. By doing these, we strive to create greater value for our shareholders."
Topic: Press release summary
Source: China Greenland Rundong Auto Group Limited
Sectors: Daily Finance
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From the Asia Corporate News Network
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