Hong Kong Stock Connect "delisted," Beijing Automotive financing channel locked?

Recently, the Shenzhen Stock Exchange made an adjustment, removing Beijing Automobile (01958.HK) from the Hong Kong Stock Connect list. Mainland investors can only sell their holdings; they can no longer buy through the Hong Kong Stock Connect.

Just half a month ago, the company issued a profit warning. The net profit attributable to the parent company in 2025 is expected to be only 110 million to 130 million yuan. Compared to 956 million yuan in 2024, this is a plunge of 86.4% to 88.5%. Compared to the peak profit of Beijing Benz in 2022, it has shrunk by over 97%.

The market’s exit channel was cut off, and the company’s performance suddenly stalled. This veteran automaker was thrust into the spotlight, looking somewhat embarrassed.

All of this was not without warning. The removal from the Hong Kong Stock Connect was directly triggered by market capitalization and liquidity hitting regulatory red lines. The sharp profit decline was mainly caused by Beijing Benz’s losses and the high costs of transformation. More specifically, over-reliance on Mercedes-Benz for blood transfusions, with the company’s own core business long underperforming. The so-called new energy transformation has yet to show any real results.

Beijing Automobile has become a typical example of traditional joint venture models under the impact of the electric and intelligent wave.

Funding Channels Cut Off

Beijing Automobile’s removal from the Hong Kong Stock Connect has led the market to discuss liquidity contraction and falling stock prices. But this is only the surface. The real fatal blow was the direct cut-off of its last low-cost financing channel for its new energy transformation.

Looking at cash flow reveals the severity. In the first three quarters of 2025, Beijing Automobile’s operating cash flow net amount plummeted from over 18 billion yuan in the same period last year to 2.4 billion yuan. Its ability to generate cash has almost dried up.

Transformation requires spending money. Developing new platforms, building new factories, laying out new channels—each year involves billions of yuan in investment. For a H-share company like Beijing Automobile, the Hong Kong Stock Connect was almost the most important equity financing window for mainland funds. Public funds, insurance companies, and institutional investors from the mainland used this channel to allocate shares, forming the foundation of its stock liquidity and refinancing pricing.

Now, this window has been closed.

After the removal list took effect, mainland funds can only sell, not buy. Liquidity exhaustion is the first step. Industry insiders expect trading volume to drop by another 30% to 50%. For institutions, a stock that cannot be traded normally will be immediately removed from their stock pools. The withdrawal of large funds will trigger the first wave of selling pressure.

More seriously, the loss of financing function means that subsequent share issuances and rights offerings are almost impossible. Even if they proceed, the issuance price will be pushed to very low levels, and financing costs will skyrocket. This means that Beijing Automobile’s ability to raise capital from the market has become extremely difficult. Rumors of “low-price privatization” have even begun to circulate, and such expectations will drive more investors to exit early, accelerating the chain reaction.

This is not just a regulatory adjustment; it’s more like a “notice of critical condition” issued by the capital market, declaring that the possibility of relying on traditional paths for transformation has essentially vanished.

Beijing Automobile’s predicament serves as a harsh lesson for all traditional automakers still relying on a single profit source and slow to transform: in industry upheaval, losing trust from capital is more deadly than losing the market temporarily.

Behind the Removal from the Hong Kong Stock Connect

The performance forecast for Beijing Automobile in 2025 has torn open a bottomless gap. The estimated net profit attributable to the parent of 110 million to 130 million yuan, compared to 956 million yuan last year, represents a decline of over 86%. The evaporation of nearly 850 million yuan in profit is shocking.

Behind Beijing Automobile’s troubles is an already distorted profit structure. There are two main issues: first, the loss of Beijing Benz’s main profit driver; second, the unprofitability or even losses in other business segments, such as the independent brand and Beijing Hyundai, which lack basic risk hedging capabilities.

In 2025, Mercedes-Benz’s cumulative passenger car deliveries in China totaled 575,000 units, down 19% year-on-year, reaching a decade-low. Sales of Beijing Benz’s domestically produced models also declined by 19%. Operating data is equally bleak. Beijing Benz’s revenue in 2025 was 16.72 billion euros, down 23.12% year-on-year; pre-tax operating profit was 1.5 billion euros, down 38.6%; total comprehensive income was 1.519 billion euros, down 36.81%. It should be noted that this is the third consecutive year of decline in both revenue and net profit for Beijing Benz.

To maintain market share, Mercedes-Benz’s fuel vehicles have fallen into a cycle of “price cuts—limited sales boost—further price cuts” over the past year. The more they cut prices, the more brand premium and profitability are eroded, creating a double blow to revenue and profit. As the profit pool of fuel vehicles rapidly shrinks, Beijing Benz becomes more cautious about the huge investments and short-term uncertain returns in pure electric transformation. This creates a vicious cycle. The dilemma of new energy is a consequence, not the cause.

When Beijing Benz is preoccupied, its former group’s hopeful independent segment not only failed to become a new pillar but also turned into a bottomless cash drain. In 2025, Beijing’s independent brand sales increased by 5.6% to 1.07 million units, a figure that seems like an anesthetic. More strikingly, the company’s net profit attributable to the parent plummeted by 98%, and operating cash flow shrank by nearly 90%. The growth in sales and the decline in profit and cash flow are completely contradictory.

This bizarre divergence stems from its distorted sales model. Over 60% of Beijing’s independent sales go to B-end markets: ride-hailing, government procurement, large customer bulk purchases. These orders rely on extremely low prices to achieve scale, with per-vehicle gross profit often negative. The more they sell, the greater the losses. Meanwhile, the funds allocated for “increased R&D and marketing of new models” in 2025 have not been effectively used to develop high-value products that appeal to individual consumers but have instead been used to subsidize these low-quality, ineffective B-end orders.

Therefore, this performance collapse was not an accident.

The only feasible move for Beijing Automobile now is to shut down continuously loss-making non-core business lines, cut back on low-price B-end volume investments, and concentrate limited funds on niche segments with brand heritage and profit potential. The goal is to first achieve break-even in the independent segment before considering further new energy transformation.

This might still preserve a chance for a turnaround.

Public Car Review

The closure of the Hong Kong Stock Connect was never the starting point of this crisis; it was merely the loudest warning shot in the overdue industry cleanup. The capital market is often about embellishments, rarely about providing real help.

Today, Beijing Automobile’s situation serves as a stark warning to all traditional automakers still relying on joint venture profits for “survival”: mountains will collapse, and people will run away. When the tide fully recedes, who is left swimming naked is obvious. For Beijing Automobile, this is not the end but the starting point for self-rescue.