AUTOSTREETS (02443.HK) issued a profit warning on August 11, 2026, forecasting a net loss attributable to equity holders of no more than 15 million yuan for the first half of 2026, a sharp reversal from a net profit of approximately 12.8 million yuan in the same period of 2025. This marks a transition from profit to loss.

For the full year of 2025, AUTOSTREETS reported an adjusted net profit of 21.69 million yuan. This means the first-half loss in 2026 already accounts for nearly 70% of the total adjusted profit from the entire previous year. More concerning, the company's net profit attributable to shareholders in 2025 was only 8.27 million yuan, and its net profit excluding non-recurring items was actually negative 1.3 million yuan. This indicates that the core business was already effectively loss-making in 2025, with the reported profit propped up solely by non-recurring gains.

The day after the warning, shares of AUTOSTREETS closed at 1.525 Hong Kong dollars, bringing its year-to-date decline to over 40% and leaving its market capitalization at just 12 billion Hong Kong dollars. This former "leading stock in used car auctions" is rapidly descending into a crisis.

Understanding the 2025 Financial Landscape: Revenue Halved, Profit Artificially Sustained

To grasp the shift to a loss in the first half of 2026, it is crucial to examine the company's full financial picture for 2025. Even in a year of reported profit, the underlying health was severely compromised. In 2025, AUTOSTREETS generated 271 million yuan in revenue, a sharp decline of 33.7% year-over-year. This marks the third consecutive year of revenue decline, from 678 million yuan in 2021 to 492 million yuan in 2023, and finally to 271 million yuan in 2025. Over four years, total revenue has shrunk by more than 60%.

While revenue consistently contracted, the 2025 net profit attributable to shareholders of 8.27 million yuan is highly questionable. Non-recurring items totaled 9.56 million yuan for the year. After excluding these items, the net profit attributable to shareholders was negative 1.3 million yuan, confirming that the main business was already operating at a loss. In essence, the company's core operations were marginally unprofitable in 2025, with the reported profit only held up by one-off items. This precarious situation is starkly revealed in the first-half 2026 profit warning, where the absence of these non-recurring gains leaves the underlying operating loss exposed.

From a business structure perspective, the core metrics of a used car auction platform—transaction volume, average customer spending, and dealer activity—all faced significant pressure in 2025. The persistent revenue decline reflects the company's inability to effectively navigate a downturn in the industry cycle, with a deepening negative spiral of customer attrition and shrinking transaction scale. The most worrying aspect is the sustainability of the loss. The company stated in its announcement, "To respond to changes in the market environment, the group will continue to promote the construction of a used car export platform and develop new auction models. As these initiatives are in the promotion and development stage, their expected results are anticipated to gradually manifest from the second half of 2026." This statement indicates that the loss in the first half is a certainty, new business ventures are still in an investment phase with no short-term profit contribution, and the phrasing "gradually manifest" leaves room for uncertainty, without providing a clear timeline for a return to profitability.

Exclusion from Hong Kong Stock Connect: A Collapse from 200 Billion to 12 Billion Hong Kong Dollars

The impact on the company's share price and liquidity has been even more severe than its financial performance. On September 10, 2024, AUTOSTREETS was briefly included in the Hong Kong Stock Connect program, driving its share price above 30 Hong Kong dollars in the fourth quarter of 2024 and pushing its market capitalization beyond 260 billion Hong Kong dollars. However, this was short-lived. On February 13, 2026, Hang Seng Indexes Company announced that AUTOSTREETS would be removed from the Hang Seng Composite Index, effective March 9, 2026. This directly led to the loss of its Stock Connect eligibility.

Following its removal from Stock Connect, the company's liquidity has dried up rapidly. As of the close on August 12, 2026, shares of AUTOSTREETS traded at 1.525 Hong Kong dollars, giving it a total market capitalization of just 12.5 billion Hong Kong dollars. The stock has fallen over 40% year-to-date, with more than 260 billion Hong Kong dollars in market value evaporating in less than two years. Trading data is even more alarming. On August 12, 2026, the day after the profit warning, total trading volume was a mere 169,000 shares, with a turnover of just 250,000 Hong Kong dollars. A publicly listed company with a market cap of 12 billion Hong Kong dollars now sees average daily trading volume below 250,000 Hong Kong dollars.

A Microcosm of the Industry: New Car Price Wars Flooding the Used Car Market

The struggles of AUTOSTREETS are a microcosm of the entire used car industry. In the first half of 2026, the domestic new car market launched 630 new models, with profit margins compressed to 1.5%, yet new car sales still plunged by over 20%. The price war in the new car market has flooded into the used car segment, while the penetration rate of new energy vehicles has exceeded 60%. This has caused a precipitous depreciation of used gasoline-powered cars. In May 2026, the national used car market saw a transaction volume of 1.6016 million vehicles, a month-over-month decline of 4.17% and a year-over-year decline of 0.15%. The Used Car Manager Index in July was only 40.1%, down 3.4 percentage points month-over-month, and remained below the expansion-contraction threshold. The entire used car industry is enduring a prolonged period of stagnation.

As a B2B auction platform connecting dealers and vehicle inventory, AUTOSTREETS' business model makes it a direct barometer of the industry's winter. When dealers are losing money and hesitant to purchase inventory, the platform's transaction volume naturally suffers. This is not a problem unique to AUTOSTREETS. On June 25, 2026, Dache.com (DSC.O), another Chinese automotive circulation digital service provider, listed on Nasdaq at an initial public offering price of 17 US dollars. On its first trading day, its shares plummeted by 46.71%. The collapse of the used car sector in the capital markets is a shared experience between China and the United States.

Conclusion: A Vicious Cycle of Fundamentals, Valuation, and Liquidity

The trajectory of AUTOSTREETS' decline represents a complete negative spiral: deterioration of fundamentals, collapse of valuation, and death of liquidity. Revenue has shrunk by over 60% in four years, the core business was already effectively loss-making in 2025, and losses accelerated in the first half of 2026. After being removed from Stock Connect, liquidity has evaporated, making it nearly impossible for institutional investors to participate in trading. Meanwhile, the entire used car industry remains trapped in a double squeeze from new car price wars and the rising penetration of new energy vehicles, with no signs of a reversal in the near term. For AUTOSTREETS, the company is pinning its hopes on the used car export platform and new auction models to "gradually manifest results" in the second half of 2026. However, the distance from the "promotion and development stage" to "scalable profitability" is not just a matter of time, but also depends on the uncertainty of whether the entire used car industry chain can survive the current winter.