#11 HARMONY AUTO 和諧汽車 2020 Interim Results Presentation China Harmony Auto Holding Ltd. Stock Code: 03836.HK#22 Disclaimer HARMONY AUTO 和諧汽車 This presentation material is prepared by China Harmony New Energy Auto Holdings Ltd.(the "Company") solely for your information only. All or any part of this presentation material may not be taken away, reproduced, redistributed, or retransmitted in any manner. You agree to be bound by the above condition by participating into this presentation. Any non-compliance may be against the related laws and requirements. This presentation material does not constitute an offer to purchase or sell the related securities or forms the basis of, or be relied upon in connection with any contract, commitment or investment decision whatsoever. This presentation material may contain forward-looking statements. These forward-looking statements are based on several assumptions about the future, some of which are beyond the Company's control. The Company does not undertake any obligation to update any forward-looking statements to reflect events that occur or circumstances that arises after the date of this presentation. Potential investors should bear in mind that actual financial results may differ materially from the following forward-looking statements. The information contained in this presentation material is not verified by any independent third party. No warranty is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information contained herein. The information contained in this presentation material should be interpreted under the prevailing circumstances. There is no update and nothing to be updated upon the presentation to reflect any significant change in the development. At no time does the Company or the related directors, management, employees, agents or advisers accept any liability for the information contained in this presentation material and accordingly accept any liability whatsoever for any loss howsoever arising from any use of this presentation material. 2#33 Business Overview CONTENTS ılı. Financial Analysis HARMONY AUTO 和諧汽車 Future Outlook and Strategy#44 ● Business Overview | Financial Highlights Strong Recovery of New Car Sales Revenue of new car sales RMB 50.2 billion 1H decrease 20.2% 2H growth 13.8% ↑ HARMONY AUTO 和諧汽車 Improved Operational Efficiency Recovery Growth of Value-added Service Cash flow from operating activities RMB 730 million Gross profit from commission RMB 140 million 1H2020 growth 26.9% ↑ 1H2020 growth 6.7% ↑#55 Business Overview | Brand Portfolio B W MASERATI ROLLS M W VOLVO R 3 ROYCE Ferrari MINI LEXUS JAGUAR FA ALF ROMEO +3 HARMONY AUTO 和諧汽車 Operating 4 ultra-luxury brands: Bentley / Maserati / Rolls-Royce / Ferrari LAND- - ROVER Operating 10 luxury brands: BMW /MINI / Lexus / Jaguar / Land Rover Volvo /Zinoro / Alfa Romeo / Lincoln / Audi#66 HARMONY AUTO Business Overview | Network Expansion 和諧汽車 cass 四 Total number of stores in operation 4 new stores added in 1H2020 75 As of 30 June 2020* 1 2 1 B M W Ferrari#77 HARMONY AUTO Business Overview | Network Expansion 和諧汽車 Target of M&A- 4 new added stores acquired in 1H2020 Ferrari Kunming B Ferrari Ferrari ④ 海底捞火锅 Bentley Shijiazhuang 食鍋快 2Fat 今生必吃的成都火锅 BENTLEY EXTRAORDINARY YEARS BMW Jiujiang M W BMW Nanchang BMW Currently in negotiation with other auto dealers for M&A opportunities, more targets are expected to be acquired in the future.#88 Business Overview | Network Expansion HARMONY AUTO 和諧汽車 Regional distribution of new stores authorized to open Henan 2 Inner Mongolia 1 8 new authorizations M under construction LEXUS -Hebei 1 Shandong 1 B Hubei 1 Jiangsu 1 Jiangxi 1 | || | 3 1 22 南海诸岛 Ferrari#96 Business Overview | Network Distribution Shanxi(3) -BMW -Bentley Beijing(5) -BMW -Maserati -Alfa Romeo Hebei(2) -Lexus Inner Mongolia(5) -BMW Shanxi(2) -Rolls-Royce Hubei(3) -BMW -Landover -Jaguar Jiangxi(2) -BMW Yunan(1) -Ferrari HARMONY AUTO 和諧汽車 -Bentley Henan (40) -BMW -MINI Jiangsu(6) -Lexus -Maserati -Volvo -Ferrati -Rolls-Royce -Alfa Romeo Shanghai(2) -BMW -ZINORO -Maserati - Audi -Alfa Romeo -Bentley -Lincoln Fujian(1) Cover 36 cities in 13 provinces Guangdong(2) -BMW -Maserati -Alfa Romeo -Lexus#1010 Business Overview | Rapid Growth of New Car Sales after Covid-19 Epidemic New Car Sales HARMONY AUTO 和諧汽車 New Car Sales Revenue Unit: vehicles -0.5% unit: millions -5.5% 15461 505 502 +10.6% 14613 -26.7% 9716 8784 6677 4897 1Q 2Q 2019 2020 Gross Profit Margin from New Car Sales 3.9% -0.2% 3.7% +13.8% -20.2% 332 292 213 1Q 1H 2Q 2019 2020 Inventory Turnover +3 days 40 37 20191H 20201H 20191H 20201H 1H Unit: days#1111 Dealership Business | Volume Analysis by Brands HARMONY AUTO 和諧汽車 M W BMW sales in China (include MINI) 329,000 vehicles Lexus sales in China 95,000 vehicles BMW Sales from YoY decrease M 5.8% Harmony(Include MINI) 11,318 vehicles YoY decrease \5.6% YoY growth $4.8% Bentley sales from Harmony B $150.0% YoY growth ROLLS Lexus sales from Harmony 1,850 vehicles YoY growth ↑7.4% Rolls-Royce sales Rfrom Harmony ROYCE ↑ 21.0% YoY growth#1212 Business Overview | Aftersales services, Financial leasing and Commission Income After-sales Revenue +2.0% -32.2% 452 379 257 1Q 461 Unit: millions -13.6% 831 718 2Q 2019 1H 2020 Commission Income 128 Unit: millions 137 +6.7% 20191H 20201H Gross Profit from After-sales Service 44.1% 44.4% +0.3% 20191H 20201H Financial Leasing +31.9% HARMONY AUTO 和諧汽車 Unit: millions Unit: millions 15.3 Bad debt rate < 0.5% 11.6 20191H 20201H#1313 | Financial Analysis Ⓒ Financial Performance Ⓒ Income and Gross Profit Margin Ⓒ Cost management and Debt Analysis Comprehensive Financial Overview HARMONY AUTO 和諧汽車 保#1414 Financial Analysis | Financial Performance Comprehensive Income +12.9% -22.2% 3,890 2,446 2,574 2,002 -2.1% Unit: millions 6,020 5,891 HARMONY AUTO Comprehensive Gross Profit 和諧汽車 +10.1% -28.5% 394 434 311 223 Unit: millions -7.0% 706 657 1Q 2Q 2019 2020 1H Comprehensive Gross Profit Margin -0.6% 1Q 2Q 2019 2020 1H Net Profit Attributed to Owner of Parent Company (Dealership Business) 11.7% 11.1% 281 -15.7% 237 20191H 20201H 20191H 20201H Unit: millions#1515 Financial Analysis | Revenue and Gross Margin Analysis HARMONY AUTO 和諧汽車 As % of total Revenue in 1H2020 After-sales 12% Other Incomes 3% 1H2019 1H2020 YOY Growth/Decrease New car sales revenue 5,048,817 5,021,405 -0.5% After-sales services income 831,087 717,944 -13.6% Financial leasing income 11,617 15,326 +31.9% New Car Sales 85% Commission income 128,117 136,757 +6.7% As % of total Gross Profit in 1H2020 Others Income 23% Unit: 1,000 RMB 1H2019 1H2020 YOY New Car Sales 28% Growth/ Decrease Core Business GPM 9.8% 9.0% -0.8% New Car Sales GPM 3.9% 3.7% -0.2% After-sales GPM 44.1% 44.4% +0.3% After-sales 49%#1616 Financial Analysis | Cost Management and Debt Analysis Selling Expense Ratio 5.2% -0.3% 20191H 4.9% 20201H HARMONY AUTO 和諧汽車 Management Expense Ratio 1.3% Flat 1.3% Asset-Liability Ratio 39.9% -3.4% 36.5% 20191H 20201H As of June 30, 2020, the group's asset-liability ratio (total liabilities/total assets) was 36.5%, decrease 3.4% year on year Asset-liability ratio is far lower than that of peers. In the future, the company will use syndicated loans, bonds and other means to increase leverage ratio for expanding business scale and mergers and acquisitions, thus improving ROE level. 20191H 20201H#1717 Financial Analysis | Comprehensive Financial Overview HARMONY AUTO 天和諧汽車 1H2020 1H2019 Growth/(Decrease) Comprehensive 5,891 6,020 (2.1%) Commission income 137 128 6.7% Comprehensive gross margin 11.1% 11.7% (-0.6%) Sales management and Financial 417 439 (-5.0%) expenses Net profit attributed to parent 237 281 company (dealer business) (-15.7%) Inventory 1,025 992 3.4% Total assets 11,688 11,674 0.1% Bank loans and other loans 2,408 1,961 22.8% Net assets 7,427 7,015 5.9% - Asset – liability ratio 36.5% 39.9% (3.4%) Note: The comprehensive gross profit includes commission income#1818 Future Outlook & Strategy HARMONY AUTO 和諧汽車 Ⓒ Focus on Core Business, Focus on Dominant Brands, Focus on Efficiency B M W Luxury Brands @ LEXUS PORSCHE ROLLS R ROYCE Ultra - Luxury Brands B Ferrari#1919 O Future Outlook & Strategy HARMONY AUTO 和諧汽車 The annual development goals remain unchanged, 15% growth on distribution network Yerrars FBSPIDER Improve data management efficiency and optimize operational efficiency Improve new car sales turnover rate and faster inventory turns To fully utilize products that can improve customers retention, maintain and enhance existing customer base Maintain healthy operating cash flow, pay attention to potentialal M&A opportunities#2020 392 Q & A#2121 Thank You! Hong Kong Investor Relation Office Email: [email protected] HARMONY AUTO 和諧汽車