Stock Price Plunges 15%! Auto Dealer Leader Zhong Sheng Holdings Turned from Profit to Loss Last Year, Expected Loss Not Exceeding 2 Billion Yuan

On the first trading day after the pre-loss announcement, China Shenghua Holdings’ stock plummeted.

On the evening of March 13, China Shenghua Holdings Limited (00881.HK) announced that for the fiscal year ending December 31, 2025, the company expects a net loss attributable to the parent of no more than 2 billion yuan. In 2024, the company recorded a net profit attributable to the parent of 3.2 billion yuan.

At the opening on the 16th, China Shenghua Holdings opened sharply lower, dropping more than 18% during the trading session. By the close on the 16th, the stock had fallen 15.42%.

The announcement pointed out that the company’s losses are mainly due to the continued weak domestic consumer demand, imbalance in the supply and demand of passenger vehicles, and intensified industry competition, leading to sustained gross losses in the group’s auto sales business. It is expected that the group’s auto sales gross loss in 2025 will increase by no more than 70% compared to 2024.

In 2025, the “high interest, high return” model in auto finance came under regulatory scrutiny, which also affected many auto dealerships’ operations. The announcement states that due to industry policy impacts, the commission rebate ratio for auto finance loans will decline, and in 2025, the commission income from China Shenghua Holdings’ auto finance business will decrease by no more than 50% compared to 2024.

Additionally, the announcement revealed that China Shenghua Holdings has adjusted its store network and conducted impairment assessments, confirming that goodwill and intangible asset impairments will not exceed 2.5 billion yuan.

It is noteworthy that this is the first annual loss in over ten years since China Shenghua Holdings went public, which industry insiders see as an important signal of the survival challenges faced by auto dealers.

According to the “Top 100 Auto Dealers in China” ranking released by the China Association of Automobile Circulation, China Shenghua Holdings has ranked first in dealer group revenue for many years. In 2025, the company achieved a total revenue of 168.1 million yuan and a total sales volume of 711,500 vehicles, both ranking first among the top 100.

The China Association of Automobile Circulation believes that the Chinese auto market in 2025 is complex and volatile, with multiple policies introduced by the government to support and stabilize auto consumption. Especially with the “Two New” policies, which effectively promote demand release. However, on the distribution side, persistent price inversion has further challenged dealer survival, with an expected net reduction of nearly 1,500 4S stores throughout the year.

The traditional fuel vehicle business continues to decline, and embracing new energy vehicles has become a definite direction for dealer transformation.

Public data shows that China Shenghua Holdings is currently one of the auto dealer groups with the most authorized HarmonyOS Smart Mobility vehicles.

“The group’s new car sales slightly increased compared to 2024, with good contributions from new energy brands. Additionally, the group’s after-sales service gross profit has steadily grown, inventory levels are healthy, and cash flow from operating activities has increased. The board believes that the overall operation and financial condition of the group are sound,” China Shenghua Holdings stated in the announcement.

Reporter Wu Yuli, The Paper