ZhengTong Auto Recorded Strong Growth Results for 1H 2011

Turnover and Profit Attributable to Equity Holders Increased by 92.3% and 91.5% respectively

Reinforce Premium and Ultra Premium Branded Automobile Dealership

Infiltration to Markets with High Growth Potential

HONG KONG, Aug. 29, 2011 /PRNewswire-Asia/ --

China ZhengTong Auto Services Holdings Limited ("ZhengTong Auto" or the "Company", together with its subsidiaries, the "Group", stock code: 1728), a major premium branded 4S dealership group in China, today announced its interim results for the year ended 30 June 2011 (the "period under review").

Benefited from the increasing demand for premium branded automobile, consistently improving operational efficiency of automobile dealership and steady expansion of dealership network, ZhengTong Auto recorded excellent results during the period under review. During the six months ended 30 June 2011, the Group generated turnover of approximately RMB6,016 million, representing a significant increase of approximately 92.3% over the same period of 2010. Gross profit increased 118.0% to approximately RMB630 million. Profit from operations surged 141.4% to approximately RMB449 million. Profit attributable to equity holders of the company was RMB293 million, representing an increase of 91.5%. Gross profit margin and net profit margin were 10.5% and 5.2% respectively. Basic earnings per share amounted to RMB14.7 cents (Corresponding Period in 2010: RMB10.2 cents). The Board of Directors does not recommend an interim dividend payout for the period under review.

Mr. Wang Kunpeng, Executive Director and Chief Executive Officer of ZhengTong Auto said, "In the first half of 2011, although the overall automobile market was steady, the market for premium and ultra premium branded automobiles still maintained a rapid growth trend. As a major premium and ultra premium branded automobile dealership group, ZhengTong Auto fully capitalized on its tremendous potential in the premium and ultra premium branded automobile market in China. During the period under review, apart from adopting its strategies consistently to raise operation and management efficiency, the Group also adhered to its strategy of premium and ultra premium branded automobiles as always via active exploration of dealership network by means of mergers and acquisitions as well as new establishment. Upholding the concept for after-sales services of being customer-oriented as well as adhering to the basic profitability model under the coordinated development of diversified segments of automobile dealership as well as lubricant oil and logistics business, the Group has achieved outstanding results in respect of these aspects."

During the period under review, the revenue generated from the sales of new automobile amounted to approximately RMB5,393 million, representing an increase of 100.9% compared to the corresponding period of 2010 and accounted for approximately 89.6% of the total revenue in the first half of 2011. After-sales service business contributed a turnover of approximately RMB424 million, representing a period-on-period increase of approximately 74.5% and accounted for 7.0% of the overall turnover of the Group. The increase in total turnover was mainly due to the strong growth in the income from sales business for premium and ultra premium branded automobile of the Group. Moreover, the Group adopted a number of strategies to expand dealership network, enhance operating efficiency and take advantage of market opportunities in a timely manner and as a result, turnover grew rapidly.

During the period under review, the gross profit margin and net profit margin of the Group raised from 9.2% and 5.1% to 10.5% and 5.2%, respectively. Benefited from the increasing proportion of premium branded automobiles, innovativeness in after-sales services and management, profitability of the Group has increased. All 4S dealership stores commenced various promotion campaigns, actively optimized the flow of after-sales services, reasonably introduced the informationization and management tools by segments, thereby enhanced customer satisfaction and nurtured loyalty among customer base. In addition, the surge in the number of new car sales of the Group as well as the continuous increase in the number of automobile insured in China also represents great potential for the after-sales services of the Group. The Group also started to fostering after-sales services-related business, such as used automobile, accessories and automobile financing and insurance business.

The Group has always been focused on the dealership of premium and ultra premium branded automobiles. During the period under review, turnover from premium and ultra premium branded automobiles was approximately RMB4,350 million, representing a growth of approximately 162.7% over the same period in 2010, and accounted for approximately 80.7% of the revenue from the sales of new automobiles.

ZhengTong Auto's strategy for dealership network distribution is to achieve balanced development in the established markets as well as the markets with high growth potential. During the period under review, the Group has established dealership stores in 8 provinces, 15 cities, covering all the largest and well-established automobile markets of the affluent regions of China, such as Beijing, Shanghai, Guangzhou and Qingdao as well as the rapidly developing regions such as Baotou, Nanchang, Chenzhou, Yichang, Hohhot and Shiyan.

In the first half of 2011, the Group has established 1 import Volkswagen 4S dealership store in Baotou, and 1 Land Rover/ Jaguar exhibition hall in Baotou. The Group has also acquired 2 Audi 4S dealership stores, respectively in Nanchang and Qingdao. As at 30 June 2011, the Group has 27 4S dealership stores and 1 urban exhibition hall in operation. Meanwhile, the Group has another 10 4S dealership stores under construction, with the brands of import Volkswagen, BMW, Land Rover and Audi, and three of which (respectively in Xiangtan, Shangrao and Ganzhou of BMW brand) have been open in July and August 2011. Majority of the other stores under construction are anticipated to be open in 2011.

The Group has been focusing on the expansion of its premium and ultra premium brands 4S dealership stores. As at 30 June 2011, 18 out of total 28 4S dealership stores of the Group are dealership stores for premium and ultra premium brands, and downtown showroom, accounting for approximately 64.3% of all 4S dealerships of the Group. During the period under review, both the self-established and acquired 4S dealership stores and urban exhibition hall are premium brands, including Audi, import Volkswagen and Land Rover/Jaguar.

Mr. Wang Kunpeng concluded, "Looking ahead, ZhengTong Auto will continuously consolidate and enhance the Group's leading position in the premium and ultra premium branded automobile dealership in China, and reinforce our core automobile dealership business, while actively accelerating the expansion of the existing dealership network on the basis of the optimization and expansion of the current premium brand offerings. Customer-oriented after-sales business will also be deepened to enable a greater contribution to the Group's profit, and strive for a rapid development in respect of used automobiles, automobile financing and insurance business, while adding new profit growth points for the Group to ensure a stable and sustainable development. The Group will also better utilize its after-sales service channels and its good relationship with automobile manufacturers to accelerate the development of logistics and lubricant oil business, hence achieving excellent results. The management believes that the Group will continue to maintain its leading position during the rapid growth of automobile market in China, and it is determined in maximizing return for the shareholders."

About China ZhengTong Auto Services Holdings Limited

ZhengTong Auto is a major premium branded 4S dealership group in China focused on premium brands such as BMW, MINI and Audi. In addition to the premium brand dealership, the Company also operates dealership stores for ultra premium brand such as Porsche, and middle market brands such as Nissan and Honda. The Company operates nearly 30 dealership stores and 1 urban exhibition hall covers 15 cities in China provides them with a strong presence in both the large, established automobile markets of the affluent regions of China as well as the rapidly developing regions. Each of the dealership stores is a 4S dealership store that integrates four principal automobile-related businesses: sales, spare parts, service and survey, and offers a broad range of sales and services.

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