On January 7, 2026, ZHENGTONGAUTO (01728) announced that the seller, Qifu Group Limited (an indirect wholly-owned subsidiary of the Company), and Shenzhen Hui'anqi (an indirect wholly-owned subsidiary of the Company) entered into an equity transfer agreement with the buyer, Xiamen Information Xinda Co., Ltd. The seller conditionally agreed to sell, and the buyer conditionally agreed to acquire, the entire equity interest in Shenzhen Hui'anqi and to accept and assume the related debts, with a provisional sale price of approximately RMB 803 million, payable via bank transfer. As of the date of this announcement, the Group holds a 100% equity interest in Shenzhen Hui'anqi. The primary asset of the disposal group is the Shenzhen property, specifically a land parcel located in Shenzhen, China.
As previously disclosed on August 4, 2023, and October 1, 2024, the 2023 disposal plan could not proceed, and the Company had considered re-initiating a public listing for the transfer of the disposal group. The current disposal represents a renewed attempt to sell the disposal group. Considering the unprecedented adversity and challenges faced by China's traditional automobile dealership industry in recent years, the Group remains firmly committed to focusing on its automobile sales and automobile-related derivative businesses, having made significant efforts in areas such as new energy vehicle transformation and automotive internationalization, while property development is no longer a priority in the Company's development strategy.
Furthermore, given that the construction of the Shenzhen property is still in its preliminary stages, substantial additional development costs are anticipated. After considering current market conditions and the Group's cash flow requirements, the disposal is expected to improve the Group's capital and debt structure and alleviate the financial burden associated with further capital expenditures for developing the Shenzhen property, thereby allowing the Group to concentrate its resources on the transformation, upgrading, and sustainable development of its automobile-related businesses. Additionally, the disposal will enable management to devote more time and energy to managing the Group's principal operations.
As of the date of this announcement, both Shenzhen Hui'anqi and Shenzhen Zhuoruixiang (a wholly-owned subsidiary of Shenzhen Hui'anqi) are indirect wholly-owned subsidiaries of the Company, established as limited liability companies in China. Shenzhen Hui'anqi is legally registered to engage in consulting services. The principal business of Shenzhen Zhuoruixiang is consulting services, and it holds the Shenzhen property, which constitutes the main asset of the disposal group. Upon completion of the disposal, the Company will no longer hold any interest in the disposal group, and the companies within the disposal group will cease to be subsidiaries of the Company.
The Group expects to recognize a gain of approximately RMB 34.26 million from the disposal. This expected gain is calculated by deducting from the provisional sale price of approximately RMB 803 million: the related debts of approximately RMB 353 million as of March 31, 2025; the book value of Shenzhen Hui'anqi's net assets in the Group's consolidated accounts of approximately RMB 370 million as of March 31, 2025; and the expected income tax and stamp duty expenses related to the disposal of approximately RMB 45.17 million.
The Company intends to use 60% of the net proceeds from the disposal to repay the Group's bank loans, with the remaining 40% to be used to supplement the Group's operating cash flow, particularly focusing on automotive international business expansion and/or new energy vehicle transformation.