At first glance, the car rental in China is currently at a low price, but how the quality is not good to judge
Editor’s note: This article from the public micro-channel number ” travel a passenger “(ID: carcaijing) , author: Shi Zhiliang team.
Shenzhou car rental will soon become “others’ children”.
On June 1, Shenzhou Car Rental (00699.HK) announced that Shenzhou UCAR (838006.OC) had signed a non-legally binding contract with Beijing Automobile Group Co., Ltd. (BAIC Group) on May 31 Strategic cooperation agreement. According to the agreement, BAIC Group will acquire no more than 21.26% of the car rental in Shenzhou. The details and terms of this cooperation are still under negotiation.
It is understood that UCAR holds 21.26% of the stock of China Car Rental through subsidiaries at all levels. If the transaction is successful, it means that BAIC Group may become the largest shareholder of China Car Rental, while Lu Zhengyao and China Automobile will be fully drop out. In this regard, the capital market gave positive feedback. As of the close, Shenzhou Car Rental reported HK$2.22 per share, an increase of 23.33%, with a total market value of HK$4.707 billion.
But then, on June 1, the new third board company Shenzhou Youche was suspended by the National Small and Medium Enterprise Share Transfer System Co., Ltd. because it did not disclose the inside information simultaneously.
The signing of a strategic cooperation agreement by BAIC Shenzhou has triggered many speculations in the industry. BAIC Group has made timely action, and the development of car rental in China may usher in a “little bloom” moment. BAIC Group can also expand its travel business. With regard to the transaction price, negotiation details, and the future business development of the China Auto Rental CorporationFor the direction of the exhibition, a traveler asked the relevant person in charge of UCAR and BAIC Group, and there is no more information for both parties to disclose.
Although the cooperation between the two parties has not been finalized yet, it is revealed at this time that the cooperation can affect the impact of the Ruixing incident for car rental in China, which is good news to boost market confidence. “As a large state-owned enterprise, BAIC Group, in addition to providing product support, compared with other pure capital investment companies, the industry chain resources are also richer, which will benefit the future development of car rental in China.” Yan Jinghui, an automotive industry analyst, said Especially after the Ruixing Coffee incident, if Shenzhou Car Rental can establish a cooperation with BAIC Group, it can transfer more confidence to the capital market.”
Beijing Automobile started the car rental in China for consideration of transformation
In fact, this cooperation between China UCAR and BAIC Group has already shown signs. On April 13, BAIC Group and China Automobile jointly announced that the two parties will reach a comprehensive cooperation through vehicle procurement, new car retail, technical cooperation, big data and financial services.
At that time, in accordance with the cooperation agreement between the two parties, BAIC and Shenzhou UCAR will focus on automobile travel and other businesses, forming a complementarity between the two parties in terms of technology, industrial chain and other resource advantages Integration, realize the deep integration of “traditional automobile + travel industry”, and build a travel ecological chain.
The main travel platform of BAIC Group is China Travel. Public information shows that Huaxia Travel was established in 2017 and is a second-tier platform unit of BAIC Group, including shared car time-sharing, online car rental, urban logistics, vehicle rental (long-term rental) and other business forms.
At present, China Travel has launched two time-sharing rental brands, “Mofan Travel”, which provides car sharing services for ordinary users, and “Beijing Travel,” which provides business travel services. As of the beginning of 2019, Huaxia Travel has been deployed in 22 cities across the country, operating approximately 22,000 vehicles.
In the view of Yan Jinghui, a well-known auto industry analyst, Shenzhou Car Rental is in the leading position in my country’s car rental industry, and has certain resource advantages. For example, if Beiqi Group starts car rental in China, it can expand its travel map. According to the China Car Rental’s first quarter 2020 performance announcement, as of March 31, 2020, the average daily car rental fleet in China increased by 9.6% year-on-year to approximately 113,300 vehicles, with a total fleet size of approximately 141,700 vehicles.
“From the perspective of volume, the scope of China’s car rental business is far beyond that of China Travel. BAIC Group may integrate the resources of China Car Rental and China Travel in the future to better transform into a travel service provider.” Yan Jinghui said.
Recently, Party Secretary of China Travel, General Manager Yue Dianwei also mentioned in a media interview that OEMs abandon the transformation of the mobility industry and give up the future. Mobility services are the only way for OEMs to transform. Only the transformation of the mobility field can make OEMs and consumers have a close relationship It’s more than just buying one and selling one.
“From the customization, operation, and use of vehicles to the disposal of the last used car, all vehicle usage data, operation data, consumer preferences, and consumer portraits can be used throughout the entire vehicle life cycle. Master and return the data to the OEM, so as to improve the ability to monetize the data, which will be a great promotion for the future OEM’s vehicle manufacturing.” Yue Dianwei further emphasized, “Whoever transforms first lives first.” >
There is a view that, in addition to the considerations based on travel business, the acquisition of car rental in China will also help BAIC Group and UCAR to jointly revitalize Baowo Automobile, and at the same time explore the increase in business of BAIC Group in new energy and other automotive products.
Before long ago, the car-making industry of the China Department inherited the mantle of the BAIC Group. In March 2019, China UCAR took a 67% stake in Baowo Automobile from BAIC Foton through Changsheng Industrial (Xiamen) Enterprise Management Consulting Co., Ltd. (Changsheng Industrial) and became the controlling party. Since its development, Baowo Automobile’s future is still unclear, and the purchase debt of China Automobile has not been settled.
In order to optimize the debt structure of Baowo Automobile and protect its daily operation and development, on April 1, China Automobile announced that it will use about 4 billion yuan in fixed assets (including construction in progress) to offset its payment to Beiqi Foton About 4 billion yuan in debt. In April this year, the cooperation contents reached by BAIC Shenzhou also showed that UCAR will expand the market for BAIC and Baowo Automobile, a subsidiary of China UCAR, with a more flexible sales method, and create a new retail model for the automotive industry.
Inject more market confidence for the car rental in China with insufficient color
Before signing this cooperation agreement with BAIC Group, China UCAR reduced its shareholding in China Car Rental several times. On April 3, UCAR, a wholly-owned subsidiary of UCAR, sold 44.666 million shares of China Auto Rental, which accounted for 2.11% of the issued share capital of the latter. After the above equity sale, China UCAR holds 27.65% of the total issued share capital of China Car Rental through its subsidiaries.
Next, on April 22, UCAR completed the sale of approximately 98.61 million shares to Amber Gem, and the car rental shares owned by UCAR decreased from 25.92% to 21.26%. At that time, Amber Gem planned to divide into two batches and successively acquire the shares of Shenzhou Car Rental. According to public information, Amber Gem is a subsidiary of American private equity firm Huaping Investment.
However, car rental in China now seems to be looking at BAIC GroupThis “Ruyi Langjun”. In its announcement on June 1, China Auto Rental announced that it has terminated the second batch of acquisition agreements previously signed between Huaping Investment and China UCAR, and lifted the exclusive obligation of China UCAR to seek other potential buyers.
At present, China Auto Rental holds 21.26% of China Auto Rental and is still the majority shareholder of China Auto Rental. Amber Gem’s shareholding rose to 14.76%.
Due to the impact of Ruixing Coffee’s performance fraud, Hong Kong stocks listed in China’s car rental market plunged 72.9% on April 3, and then announced a short suspension. The stock price was HK$1.96/share when the trading was suspended, a drop of more than 50%. As of the close of June 1, it was only 2.22 HKD/share, which was at a low price.
“Beijing Automobile Group may want to buy the stock price of car rental in China at a low price, but time can wait.” An analyst from the securities industry told travellers that, at first glance, car rental in China is currently at a low price, but How bad it is to judge. Before the signing of the cooperation agreement between UCAR and BAIC Group, Geely Automobile and Ctrip had reported that they had the intention to acquire the shares of car rental in China, but in the end it was gone.
From a fundamental perspective, the car rental business in China is under pressure.
Shenzhou Car Rental’s financial report shows that total revenue in the first quarter of 2020 was RMB 1.325 billion, compared with RMB 1.850 billion in the same period last year, a year-on-year decrease of 28.3%. The net loss was 188 million yuan, and the net profit for the same period last year was 390 million yuan, which turned from profit to loss year-on-year.
Among them, the total rental income of car rental in the first quarter of China decreased by 35.0% year-on-year to RMB 947 million. Car rental revenue decreased by 30.6% year-on-year to RMB 879 million. Shenzhou Car Rental attributed the problem to the new coronary pneumonia epidemic, which resulted in reduced bicycle revenue and increased operating costs.
At present, the liquidity of car rental funds in China is under pressure. As of the end of the first quarter of this year, car rental companies in China still held 5.611 billion yuan in current assets, including 3.303 billion yuan in cash and cash equivalents; however, current liabilities were 5.814 billion yuan over the same period. Therefore, current assets were negative 206 million yuan.
Furthermore, according to the China Semi-annual Report of UCAR in 2019, the shares of China Car Rental held by it at that time had been fully pledged as guarantees to banks for loans.
According to wind client news, the representative of the car rental company of China revealed in the first quarter of this year’s financial report that the bank debt that has been repaid from January to May this year is 2 billion. In the future, the monthly debt repayment is about 200 million, and it is still solvency. On the one hand, we still have cash on hand, and on the other hand, we accelerate the processing of used cars.
On April 27, S&P Global Ratings downgraded the long-term subject credit rating of China Car Rental and its long-term debt rating of priority unsecured U.S. dollar bonds from “B-” to “CCC”. Since then, credit ratings have been downgraded for the second time. At the same time, S&P adjusted the outlook for car rental in China to negative.
It is worth noting that this transaction between BAIC and China may still have variables. According to Shenzhou Car Rental, the strategic cooperation agreement is not legally binding in nature, and there is no guarantee that a formal agreement will be concluded. The details and terms of the cooperation between UCAR and BAIC Group are still under negotiation, and the final terms have not been reached as of the date of this announcement. Prior to the signing and closing of the formal agreement between China Automobile and BAIC Group, the shares held by China Automobile may be further involuntarily sold by certain lenders of China Auto under the discretion of the relevant financing agreement.
In addition, a senior industry observer confessed to reporters that in the future, the integration of BAIC Group and Shenzhou Car Rental can disperse the weight of assets and reduce management complexity, which will become a complex project. This shows that the future of the cooperation between the two parties still needs further observation. (Editor/Yang Peiqian)