Zhongsheng Group Holdings (Zhongsheng Hldg) reported its first annual loss since listing, posting a RMB1.90 billion net loss for 2025 versus a RMB3.07 billion profit a year earlier. The reversal stemmed from steep price competition in China’s passenger-car market, which drove new-car gross profit to a negative RMB3.71 billion, expanding 15.6% year-on-year.

Revenue slipped 2.2% to RMB164.40 billion. Sales of motor vehicles were broadly flat at RMB125.88 billion, but commission income from finance and insurance—traditionally a key earnings buffer—fell 38.7% to RMB2.57 billion after high-rebate loan products disappeared mid-year.

Margins deteriorated sharply: • Gross profit dropped 17.2% to RMB8.84 billion, cutting the consolidated gross margin to 5.4% from 6.3%. • Operating swung to a RMB0.52 billion loss from a RMB5.67 billion profit, hurt by RMB2.29 billion of goodwill and intangible-asset impairments. • Basic EPS fell to a loss of RMB0.71 from a profit of RMB1.35.

Segment performance • New-car volume edged up 2.5% to 497,316 units, with luxury brands contributing 62.6% of sales, yet price inversion with OEMs led to negative margins. • Pre-owned volume slipped 2.2% to 221,213 units; gross profit halved amid a 17.6% drop in average selling price. • After-sales services proved resilient: revenue rose 4.1% to RMB22.91 billion and gross profit climbed 8.2% to RMB11.05 billion, boosted by nearly 10% growth in higher-margin collision-repair visits.

Balance-sheet and cash flow Cash and equivalents stood at RMB20.44 billion (down RMB2.57 billion). Free cash flow reached RMB5.93 billion on improved working-capital release. Bank loans and other borrowings fell to RMB29.54 billion, lowering interest costs slightly; gearing increased to 44.3% from 42.5% as equity shrank after the annual loss. All outstanding 2025 convertible bonds and 2026 U.S. dollar bonds were redeemed during the year, while a US$600 million 5.98% bond due 2028 and a RMB1 billion Panda bond were issued.

Operations and network The dealer group closed or restructured 50 under-performing outlets and added 104 facilities, ending 2025 with 453 dealerships and 46 collision centres. Management targets a multi-fold increase in new-energy-vehicle (NEV) stores by end-2026, leveraging partnerships with Huawei- and Geely-linked brands.

Dividend No final dividend was proposed, compared with a HK$0.678 payout last year.

Outlook Management will continue to shutter loss-making stores, curb inventory financing and prioritise high-margin after-sales and NEV opportunities, aiming to restore profitability amid ongoing industry price wars and channel reshuffling.