EQS-News: MeiDong Auto 2021 Annual Results: Steady Growth and Significant Enhancement in Operational Efficiency

China MeiDong Auto Holdings Limited

(Incorporated in the Cayman Islands with limited liabilities)

(Stock code: 1268.HK)

2021 Annual Results: Steady Growth and Significant Enhancement in Operational Efficiency
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Revenue Increased by 16.7% to RMB 23,576.7 million

Gross Profit Increased by 36.1% to RMB2,770.5 million

Profit for the Year Surged by 57.4% to RMB 1,213.3 million

Final Dividend of RMB0.6991 per Share as Dividend Payout Hit 90.0%

Inventory Turnover Days Reached Record Low of 5.8 days

Financial Highlights

(30 March 2022 - Hong Kong) The fast-growing auto distributor focusing on high-potential 2nd-to-4th-tier cities in the PRC, China MeiDong Auto Holdings Limited ("MeiDong Auto", together with its subsidiaries, the "Group", stock code: 1268.HK) is pleased to announce its annual results for the year ended 31 December 2021 (the "Year").

Results Highlight

In 2021, the lingering impact from the pandemic and the shortage of chips, have together put enormous pressure on many automobile companies. The premium brands that have been growing rapidly in recent years were also affected, and their sales have subsequently slowed down. According to the data from the China Passenger Car Association, sales volume of premium brand vehicles in China increased only by 4.9% yoy to 2.652 million units in 2021.

Despite the volatile economic environment, the Group continued to maintain its growth momentum, as revenue reached approximately RMB23,576.7 million (2020: approximately RMB20,207.4 million), representing an increase of approximately 16.7% yoy. Driven by the steady growth in revenue, gross profit increased by approximately 36.1% yoy from approximately RMB2,035.5 million in 2020, to approximately RMB2,770.5 million in 2021. Overall gross profit margin also increased by approximately 1.7 percentage points to approximately 11.8% (2020: approximately 10.1%). Leveraging its efficient inventory management, extensive management experience, and effective cost control initiatives, profit for the Year increased by approximately 57.4% to approximately RMB1,213.3 million (2020: approximately RMB770.6 million). Net profit margin for the Year increased substantially by 1.3 percentage points, from approximately 3.8% to approximately 5.1%.

The Group also became more efficient as it grew. During the Year, cash flow from operations exceeded RMB2,189.8 million. ROE and ROA remained at high levels of 29.47% and 12.38%, respectively. Inventory decreased to 5.8 days, a drop of 3.1 days from 8.9 days during the same period last year. The Group believes efficiency enhancement is of the utmost importance of its sustainable development.

In view of the remarkable financial performance, the Board of Directors (the "Board") of the Company recommended a final dividend of RMB0.6991 per ordinary share (2020: RMB0.2410 per ordinary share). Together with the interim dividend paid of RMB0.1293 per share, total dividend for the Year increased significantly to RMB0.8284 (2020: RMB0.3861), which is 2.15 times of the previous year, with payout ratio reaching approximately 90.0% (2020: 64.0%).

New Passenger Vehicle Sales - Accounted for 88.3% of Total Revenue

During the Year, benefiting from the improved sales efficiency and remarkable sales performance of premium brand vehicles, revenue of new passenger vehicles sales increased approximately 16.0% to approximately RMB20,829.4 million (2020: approximately RMB17,956.2 million). Sales of premium brands remained as the major revenue source, accounting for approximately 86.6% of total new passenger vehicles sales. BMW, Porsche and Lexus recorded sales of new passenger vehicles of approximately RMB8,792.2 million, RMB4,852.7 million and RMB4,270.3 million, accounting for approximately 42.2%, 23.3% and 20.5% of total new passenger vehicles sales, respectively. In terms of sales volume, despite of the supply shortage, the Group sold 61,595 new passenger vehicles in total, representing an increase of 7.7% yoy. BMW, Porsche and Lexus recorded a sales volume of 24,964 units, 5,708 units and 11,699 units, respectively.

After Sales Services - Accounted for 11.7% of Total Revenue

During the Year, driven by new stores and same store sales growth, the Group has further expanded its customer base for after-sales services. Revenue of after-sales services increased approximately 22.0% to approximately RMB2,747.3 million (2020: approximately RMB2,251.3 million). Total number of vehicles served was 651,375 units, representing an increase of approximately 26.9% yoy. Gross profit margin from after-sales services also reported a significant enhancement by approximately 2.8 percentage points yoy to approximately 49.1%.

Current Network

The Group continued to implement its highly-effective premium brand focus, and expanded its distribution network in line with its "Single City Single Store" strategy. In 2021, the Group opened 4 new stores and acquired 3 new stores, with the number of self-operated stores reaching 70 as of 31 December 2021, situated in provinces and cities such as Beijing, Hebei, Hubei, Hunan, Jiangxi, Fujian, Guangdong, Gansu and Anhui, including a joint venture operated by the Group.

Mr. Tao Ye, Chief Executive Officer and Executive Director said, "We put our efficiency to use in 2021 by acquiring StarChase, which is about a quarter of our size. This acquisition is expected to significantly grow our Porsche revenue in 2022. In the long run, we believe our ability to acquire and grow depends heavily on our efficiency. By lowering debt and increasing cash, we were gaining efficiency and strength - akin to storing energy by compressing a spring. Our future acquisitions would rely on this cycle of storing and releasing. In the end, the key determining factor of the StarChase integration is still efficiency - how quickly and effectively we can improve the efficiency of the combined company. If we can successfully manage the cycle of storing (improving efficiency) and releasing (acquiring and growing), we will make our company into a truly efficient company, and will be able to turn market challenges into opportunities, yielding a higher and more predictable return to our shareholders."

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About China MeiDong Auto Holdings Limited

China MeiDong Auto Holdings Limited is a fast-expanding auto distributor focusing on 2nd to 4th tier cities along with the provision of after-sales services. The Group mainly focuses on mid brands and mainstream luxury brands, including Porsche, BMW, Lexus, Audi, BMW Mini, Toyota and Hyundai. As of 31 December 2021, the Group operates 70 stores in Beijing, Hebei, Hubei, Hunan, Jiangxi, Fujian, Guangdong, Gansu and Anhui provinces in China.

This press release is issued by DLK Advisory Limited for and on behalf of China MeiDong Auto Holdings limited.

For further information, please contact:

DLK Advisory 金通策略

[email protected]

Tel: +852 2857 7101

Fax: +852 2857 7103