Xixiangfeng Group (02473) plans to acquire a novel and exotic control business for approximately HK$150 million and expand into the automotive after-sales service sector

Zhitong Finance App News, Xishengfeng Group (02473) announced that on August 4, 2026, the company plans to acquire the entire issued share capital of PAGAC NTS Limited from Jia Rui Development (Hong Kong) Limited at a cost of about HK$150 million, which will be paid by the company by allocating and issuing 380 million consideration shares to the seller at the time of completion, at HK$0.3947 per share, at a discounted rate of HK$0.505 per share reported on the Stock Exchange on the date of the transaction agreement. Price shares account for approximately 16.99% of the expanded share capital.

According to reports, the target company directly holds all of NTS's issued share capital, and NTS directly holds about 85.45% of Novelty's shares (currently, this is actually equivalent to 94.94% of the economic and voting rights). After the seller's sales agreement is completed (in particular, Shanghai Yiru's capital reduction), the actual shareholding ratio of NTS in Novelty will increase to about 94.94%. Novelty is mainly engaged in comprehensive automotive aftermarket services in China. Its business operations cover all aspects of vehicle-related requirements, including repair and maintenance, beauty and personalized modification, tires and wheels, and car insurance. The novel headquarters is located in Shanghai. As of May 31, 2026, Novelty has operated 24 stores nationwide, all directly managed stores, including 7 in Shanghai, 9 in Fujian, 6 in Nanjing (including 1 store that has not yet opened), and 2 in Suzhou.

The company believes that the proposed acquisition provides the Group with a strategic opportunity to expand its business scope and enhance long-term competitiveness by expanding from the automotive finance sector to the automotive after-sales service sector. The Group is mainly engaged in: (i) automobile retail and financing business. According to this, the Group mainly sells non-luxury cars through direct financial leasing arrangements; (ii) automobile-related business, according to which the Group mainly provides automobile management and leasing services and other automobile-related services; and (iii) direct automobile retail business, according to which the Group sells automobiles on a one-time basis. Through the proposed acquisition, the Group will gain novel control over the target company and its main operating subsidiaries. Novelty is an auto service chain headquartered in China, mainly engaged in car repair and maintenance and other related car services. The proposed acquisition will enable the Group to establish a platform combining auto finance with downstream vehicle services, thereby extending its business footprint to a wider range of automotive value chains.

The company believes that integrating auto finance and auto services can facilitate the establishment of a more comprehensive automotive ecosystem, covering vehicle purchase, financing, use, maintenance, and eventual resale or replacement. Automobile after-sales service generally has the characteristics of repeated customer needs and relatively high service frequency, especially maintenance and tire replacement services. By entering the independent automotive aftermarket through novel and unique service outlets, the Group will be able to diversify its revenue sources. The Board believes that diversification can enhance the resilience of the Group's overall business model and provide an additional recurring revenue stream from end-user customers.

Additionally, the proposed acquisition would create cross-selling opportunities. Novelty provides services to passenger car owners in many cities in China. Customers visit regularly for maintenance and service needs. The company believes that relevant customer channels can provide the Group with more customer touchpoints to promote automobile financing products, installment payment arrangements and other automobile-related financial services. Integrated services and financing solutions can improve customer acquisition efficiency, enhance customer retention, and enhance overall customer lifetime value. Furthermore, vehicle service data may help the Group improve its credit evaluation, asset monitoring and residual value management procedures for financing vehicles, thereby possibly strengthening the Group's risk management capabilities.