Qingling Motors Announces Discloseable Transaction: Strategic Repurchase Agreement to Support New Energy Vehicle Sales

Key Highlights

• Qingling Motors Co. Ltd. (HKEX: 1122) has entered into a Repurchase Agreement with Chongqing Transportation Equipment Financial Leasing Co., Ltd. (the Financial Leasing Company) and Wuhan Xinxiang Anpeng Logistic Co., Ltd. (the Dealer) on 16 February 2026.
• The agreement is designed to facilitate the sale and financing of the Group’s new energy vehicles (NEVs) through a finance lease model, representing a significant shift from the traditional sales approach.
• The transaction is classified as a discloseable transaction under Chapter 14 of the HKEX Listing Rules, as the relevant percentage ratios exceed 5% but are less than 25%.
• The maximum aggregate repurchase price under this agreement is set at RMB1,028,800, covering a batch of five new energy vehicles.
• This repurchase agreement is part of a series of similar agreements entered into over the past 12 months, all supporting the Group’s broader NEV business strategy.

Transaction Details

• Business Model Transition: Qingling Motors is transitioning its NEV business model from direct sales to a finance lease scheme. Under this model:
  • Dealers or end customers lease vehicles from financial leasing companies and pay rent.
  • Qingling Motors provides a repurchase guarantee to the financial leasing company, enhancing credit support.
• Repurchase Mechanism:
  • If the dealer defaults (two consecutive missed payments or more than three cumulative missed payments), or fails to complete required procedural steps, the financial leasing company can require Qingling Motors to repurchase the leased vehicles and associated debt rights.
  • The repurchase price includes overdue rent, principal of all undue rent, and a nominal retention purchase price (RMB1 per vehicle).
  • Upon repurchase, Qingling Motors gains full ownership and all debt rights related to the vehicles.
• Deposits:
  • The dealer must pay a performance deposit (equal to two months’ rent) and a repurchase deposit (equal to 40% of the repurchase price) to Qingling Motors, which can be used to offset any shortfall.
• Monitoring and Control:
  • Qingling Motors is authorized to install IoV (Internet of Vehicles) facilities for real-time tracking and monitoring of the leased vehicles, reducing risk of loss or misuse.
• Disposal Rights:
  • After repurchase, Qingling Motors may require the dealer to buy back the vehicles “as-is” or may dispose of the vehicles via sale, lease, or other means; the dealer is required to cover any shortfalls if the disposal proceeds are insufficient.
• Termination Rights:
  • Qingling Motors reserves the right to suspend cooperation at any time. If the financial leasing company continues to work with the dealer after a suspension notice, it does so at its own risk without recourse to Qingling Motors.
• Repurchase Price Justification:
  • The price is based on the initial purchase price of the vehicles, the number of vehicles, and the outstanding rent, not on the market value at repurchase time.
  • Qingling Motors will use internal resources to fund any repurchase obligations.

Strategic Rationale and Potential Impact

• Boosting NEV Sales: The shift to a finance lease model aims to address the high upfront cost of NEVs, which has slowed direct sales growth. Leasing is becoming a preferred mode of use for commercial NEV customers.
• Market Expansion: By providing guarantees and working closely with financial institutions, Qingling Motors expects to increase NEV sales volume, broaden its market share, and accelerate industry adoption.
• Risk Mitigation: Use of IoV technology and deposits reduces credit and asset risk. The company can also develop secondary markets for used vehicles, further supporting revenue streams.
• Liquidity Enhancement: The structure allows Qingling Motors to receive full proceeds in advance, improving cash flow and operational flexibility.

Shareholder Considerations & Price Sensitivity

• Revenue Growth Potential: If successful, the finance lease model could drive substantial sales growth in Qingling’s NEV segment, potentially enhancing overall earnings and shareholder value.
• Risk of Repurchase Obligations: The company is exposed to the risk that it may need to repurchase vehicles if dealers default. However, risk is mitigated by the deposits, monitoring systems, and the company’s ability to resell or sublease the vehicles.
• Regulatory Disclosure: As the transaction size is significant (but below 25% of relevant ratios), it is classified as a discloseable transaction under the HKEX Listing Rules, ensuring shareholders are appropriately notified.
• Strategic Alignment: The move aligns with national policies to promote NEV adoption and supports Qingling’s transformation into a more innovative and finance-driven automotive group.

Counterparty Information

• Financial Leasing Company: Chongqing Transportation Equipment Financial Leasing Co., Ltd., majority-owned by state-owned entities under the Chongqing Municipal Government.
• Dealer: Wuhan Xinxiang Anpeng Logistic Co., Ltd., privately owned, focused on logistics and NEV sales.
• Both counterparties are independent third parties and not connected persons under HKEX rules.

Conclusion

This transaction marks a significant step in Qingling Motors’ strategy to expand its new energy vehicle business through innovative financing solutions. The repurchase agreement model is expected to boost sales, improve risk management, and enhance liquidity, potentially having a positive impact on the company’s financial performance and share value. Investors should monitor the effectiveness of this business model transformation and its contribution to future earnings growth.

Disclaimer: This article is for information purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. The information is based on company announcements and may be subject to change without notice.

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