We are an automobile dealership service provider in China focusing on luxury and ultra-luxury brands. We ranked sixth among all ultra-luxury brand automobile dealership service providers in China as measured by revenue generated for the year ended December 31, 2020 with a market share of approximately 4.0%, according to the Frost & Sullivan Report. Passenger vehicle brands are categorized into four segments, namely ultra-luxury, luxury, medium-level and entry-level. See “Industry Overview — Overview of Passenger Vehicle Market in China — Market Segmentation” in this document for details. The market share of ultra-luxury brand automobiles was approximately 2.9% within the automobile dealership industry in China in terms of revenue generated in 2020. As of the Latest Practicable Date, we operated 12 4S dealership stores for the brands of Porsche, Audi, Mercedes-Benz, Bentley, Volvo and Jaguar-Land Rover across six provinces and municipalities in China, namely Beijing, Tianjin, Shandong, Sichuan, Zhejiang and Guangdong. According to the Frost & Sullivan Report, these six provinces and municipalities were all among the top ten provincial-level regions in China in terms of the number of high-net-worth individuals in 2020, and had shown strong purchase power and demands for luxury and ultra-luxury automobiles.
We offer a comprehensive range of automobile-related products and services, including (i) sale of automobiles consisting of imported and domestically manufactured petroleum models. For the years ended December 31, 2018, 2019 and 2020, we sold a total of 14,113, 13,233 and 13,480 automobiles, respectively, among which approximately 60.0%, 58.4% and 55.7% were imported models, and approximately 40.0%, 41.6% and 44.3% were domestically manufactured models. During the Track Record Period, we also sold certain new energy vehicle models for Audi, Porsche, imported Volkswagen, JAC Volkswagen-Sihao and Volvo. For the years ended December 31, 2018, 2019 and 2020, the total number of new energy vehicles (including plug-in hybrid electric models and pure electric models) sold by our Group was 152, 664 and 635, respectively, which we consider insignificant to our dealership business as a whole; and (ii) after-sales services, which consist of repair and maintenance services, sale of accessories and other automobile-related products, insurance agency services and automobile license plate registration services. According to the Frost & Sullivan Report, both plug-in hybrid electric model and pure electric model are categorized as new energy vehicles under industry practice. We also provide other automobile-related value-added services to customers, such as automobile financing and pre-owned automobile brokerage services. We believe that our broad range of services allow us to build and maintain long-term relationships with our customers and establish a variety of revenue streams. Unlike direct sales outlets of automobile manufacturers, repair shops and spare parts retail centers, which only provide limited services to customers, our 4S dealership stores provide a full spectrum of automobile- related services from sales to after-sales services which cover the whole value chain in the automobile industry. By continuing to enhance customer satisfaction, we aim to become a one-stop provider of automobile products and services for our customers.
In 2000, we opened our first dealership store for Audi in Beijing and became one of the first dealers of Audi in China. In 2003, we opened our first dealership store for Porsche in Beijing, which was also the first Porsche 3S dealership store in China. Our success in the luxury and ultra-luxury brand automobile dealership segment is grounded in our in-depth understanding of the needs of luxury and ultra-luxury brand automobile purchasers, our effective marketing towards this group of customers and the high quality services we provide. We have established advanced information technology systems in our headquarters and across our 4S dealership stores as a uniform digital platform which integrates data and information relating to our customers and automobile brands. In 2016, we completed the roll-out of our ERP system, which maintains in one database the information needed for a variety of business functions, such as inventory, financial and human resources management. In addition to helping customers choose their preferred automobile models, we follow up with each customer and provide them with other after-sales and value-added services throughout the life cycle of their automobiles, including repair and maintenance, insurance and trading of used cars, in order to maintain customer relationships and cultivate further business opportunities.
Our revenue decreased from RMB8,409.2 million for the year ended December 31, 2018 to RMB8,178.8 million for the year ended December 31, 2019 primarily because revenue generated from our sales of automobiles decreased from RMB7,346.8 million for the year ended December 31, 2018 to RMB7,069.3 million for the year ended December 31, 2019, mainly due to the decrease in the sales volume of automobiles as a result of the transition of automobile models to fulfill the new requirements of the China Six Standard which have been implemented in Zhejiang, Sichuan, Guangdong and Shandong provinces and Tianjin since July 1, 2019, and in Beijing since January 1, 2020. As advised by our PRC Legal Advisor, after the implementation of the China Six Standard, the production and import of light-duty vehicles that only satisfy the China Five Standard are prohibited in China. A transition period, which is six months for Sichuan and three months for Beijing, Tianjin, Guangdong, Shandong and Zhejiang after the implementation of the China Six Standard, has been granted by the local governments. During the transition period, application for registration of vehicles that satisfy the China Five Standard was still accepted by the local government authorities. However, the implementation of the China Six Standard, which has set more stringent emission requirements for light-duty vehicles, has resulted in a transition between automobile models. This transition between models had a significant negative impact on the automobile sales performance of our dealership stores in 2019 as consumers were inclined to hold off purchase decisions until the transition was completed. We adopted a conservative approach when purchasing our inventory for 2019 because automobiles manufactured under the old emission requirements had to be all sold off before the end of 2019 before the new requirements took effect. These old model automobiles were often sold at reduced prices due to the scheduled transition. As our manufacturers just transitioned to models of automobiles that meet the new emission requirements as well, for a while the supplies of these new model automobiles available to us were limited in 2019. In addition, according to the Frost & Sullivan Report, as the China Six Standard was different from the emission standard set by the European Union, some of the imported automobile models that did not comply with China’s emission standard were not allowed to enter China’s market, which had led to a decrease in the volume of imported automobiles in China during the year of 2019. Meanwhile, automobile manufacturers are relatively more willing to supply the new automobiles, which comply with the emission requirements in China, to the dealers in areas where such new emission standard has been implemented. All of these factors contributed to the decrease in our sales for 2019 compared with 2018. Our revenue increased from RMB8,178.8 million for the year ended December 31, 2019 to RMB8,533.1 million for the year ended December 31, 2020 primarily because revenue generated from our sales of automobiles increased from RMB7,069.3 million for the year ended December 31, 2019 to RMB7,462.5 million for the year ended December 31, 2020 as a result of the ramp-up in the operation scale of our 4S dealership stores for Volvo and Jaguar-Land Rover and the launch of new models of Bentley in 2019, which stimulated the sales performance in 2020. Our net profit decreased from RMB270.2 million for the year ended December 31, 2018 to RMB224.9 million for the year ended December 31, 2019. Our net profit increased from RMB224.9 million for the year ended December 31, 2019 to RMB306.5 million for the year ended December 31, 2020. Our Adjusted Net Profit, which was prepared based on non-IFRS measures, increased by 3.3% from RMB218.3 million for the year ended December 31, 2018 to RMB225.5 million for the year ended December 31, 2019. Our Adjusted Net Profit, which was prepared based on non-IFRS measures, increased by 45.9% from RMB225.5 million for the year ended December 31, 2019 to RMB329.0 million for the year ended December 31, 2020.
Source: BetterLife Holding (06909) Prospectus (IPO Date : 2021/06/30) |