Zhongsheng Group Issues Profit Warning: Expects Significant Loss for 2025

Zhongsheng Group Holdings Limited (Stock code: 881), a leading automobile dealer in China, has issued a profit warning for the financial year ending 31 December 2025. This announcement comes under the regulatory requirements of the Hong Kong Stock Exchange, specifically Rule 13.09(2) and Part XIVA of the Securities and Futures Ordinance.

Key Highlights from the Profit Warning

• Significant Expected Loss for 2025: The Group anticipates recording a loss attributable to owners of the parent of no more than RMB2.0 billion for FY2025. This marks a dramatic reversal from the previous year, where the Group reported a profit of RMB3.2 billion for FY2024.
• Major Factors Behind the Projected Loss:
  • Automobile Business Gross Loss: The Group’s core automobile operations, including both new and pre-owned vehicles, continued to suffer gross losses. This was primarily due to persistently weak domestic consumer spending, an ongoing imbalance in supply and demand within the passenger vehicle market, and intensifying competition in the automotive sector. Notably, the gross loss from automobile operations is expected to increase by no more than 70% year-on-year.
  • Decline in Automobile Financing Commissions: Industry policy changes have led to a substantial reduction in commissions from automobile financing. This income stream is expected to decrease by up to 50% compared to FY2024.
  • Non-Cash Impairment: Due to the above macroeconomic and industry headwinds, as well as store adjustment strategies, the Group has conducted an impairment assessment. It expects to recognize a non-cash impairment of goodwill and intangible assets of up to RMB2.5 billion in 2025, specifically from underperforming cash-generating units.

Additional Operational Insights

• New Car Sales Volume: Despite the overall negative outlook, the Group reported a slight increase in new automobile sales volume, mainly driven by new energy vehicle brands.
• After-Sales Services: Gross profit from after-sales operations maintained steady growth, indicating resilience in this segment.
• Inventory and Cash Flow: Inventory levels remained healthy and operational cash flows improved, demonstrating ongoing operational stability.
• Overall Group Position: The Board asserts that the Group’s operational and financial position remains stable and sound, despite the expected substantial loss.

What Shareholders Need to Know

• Price Sensitive Information: The anticipated swing from a RMB3.2 billion profit in 2024 to a loss of up to RMB2.0 billion in 2025, combined with the significant non-cash impairment, are highly price sensitive and could materially impact the share price.
• Pending Final Financials: All financial figures mentioned are preliminary and based on unaudited management accounts. The final results are subject to adjustments and will be disclosed in the annual results announcement, expected before the end of March 2026.
• Shareholder Advisory: Given the uncertainty and the magnitude of the expected loss, shareholders and potential investors are strongly advised to exercise caution when dealing in the Company’s securities.

Board Statement

The announcement was authorized by the Board of Zhongsheng Group Holdings Limited, led by Chairman Huang Yi, and released on 13 March 2026. The Board includes a mix of executive, non-executive, and independent non-executive directors.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. All financial figures are based on preliminary, unaudited data and may be subject to change. Investors are urged to consult the official company filings and seek professional advice before making any investment decisions. The author and publisher accept no responsibility for investment actions taken based on this article.

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