Shanghai Dongzheng Automotive Finance Co., Ltd. provided preliminary unaudited earnings guidance for the year ended 31 December 2022. For the year, the company expects to record an unaudited net profit ranging from RMB 108 million to RMB 162 million as compared to the audited net loss of approximately RMB 840 million for the year ended 31 December 2021. Based on the preliminary assessment of the Company on the expected credit loss of its loans and advances to customers, bills receivable and other financial assets, including the repayments of certain overdue receivables from customers of over RMB 1.7 billion in 2022, the Company is expected to record a reversal of impairment losses under expected credit loss model ranging from RMB 505 million to RMB 559 million for the year ended 31 December 2022 as compared to recognition of impairment losses under expected credit loss model of approximately RMB 1,316 million for the year ended 31 December 2021.

However, such improvement is partly offset mainly by the expected decrease in net interest income. Based on the assessment of the economic situation and credit risks, as well as the impact of the pandemic, the Company has adopted a more cautious approach and has been gradually reducing the loan portfolio since 2021, leading to an expected decrease in net interest income of approximately RMB 130 million.