Q4 2021 Cango Inc Earnings Call
Good morning, and good evening, everyone and welcome to Kengo Inc's fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode.
This call is also being broadcast live on the company's Investor Relations website.
Joining us today are Mr Giant Lynn Chief Executive Officer, and Mr. Michael Zhang Chief Financial Officer of the company. Following management's prepared remarks, we will conduct a Q&A session.
Before we begin I refer you to the Safe Harbor statement in the company's earnings release, which also implies to the conference today.
Management will make forward looking statements.
But that being said I am now I'll turn the call over to Mr. Zhao you and Lynn CEO of Kengo. Please go ahead Sir.
Hi, Joe how are you in terms of our town auditing, our union diesel GTO GTO and the anti bot the hallway.
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You are in 2021 the lingering COVID-19, pandemic and volatile global political and economic environment post the many challenges for ETP Jos businesses in a society that much the automotive industrial what puts you multiple chats with power shortages and I'll go Yang supply chain disruptions.
19 has become part of a new normal.
All of the pressure, we proactively coupled with the changes and implemented changes within our organization. We took the initiative to transform our business by deepening the platform strategy and we're delighted to see encouraging progress over the past year.
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We achieved great growth effective progress.
Progress in I'll call it trading transactions business during the past year Vod will now deeply penetrated dealership network covering nearly 50000 car dealers, which predominantly serve the lower tier cities and extensive industry knowhow accumulated.
Over the last decade, we leveraged high quality vehicles, all things that the interim flights supplemented with integrated automotive supply chain services to further empower our dealers.
No says we promoted a comprehensive transformation of <unk>.
Our business into a one stop automotive transaction services platform at the same time in the context of economic changes and tightening regulation, we have proactively adjusted our traditional.
Automotive financing facilitation business since the end of Q2, 2021 by strictly managing our business scale and focusing on productivity improvement or is that that allow us to improve the profitability of this traditional business at the same time, we're looking to provide better quality services for dealers to increase there.
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A range of proactive business. These initiatives have helped us to hedge effectively against the challenging economic and market conditions. Despite these difficulties. We achieved total revenues of RMB. One point you know about that.
I think the fourth quarter, beating our guidance Ravi news form all car trading transactions business was 704 million RMB accounting for nearly 67% of total revenues revenues from all automotive financing facilitation and aftermarket services sanitation business. It was what 200000 to.
Two 2 million and $36 seven 3 million, respectively, Q4, net income was 124 million looking at the full year, Oh actually our total revenues were not sleep 192 billion RMB over 91% yellow yet.
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During this period of transition car trading transactions business is a crucial part in the formation of the ecosystem pivoting around Cankles car trading platform and this has also been important business focused in 2021 during the past year, we continue to invest in developing cell phones and third party source itself vehicles, while also.
<unk> all transaction matching services we.
We aim to build a diverse vehicles sources to meet the data demand, particularly Lowe's.
T a market well attracting more dealers to join our platform and increase their loyalty in a queue.
For all of 2021 revenues from car trading transactions grew 28, 7% year on year and total revenues for full year 2021 unique cultural coach compared with the prior year and just like you all I'll call trading transactions business has grown into an important driver for revenue growth and our business transformation.
Accounting for 67% of total revenue.
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Last night, we launched our <unk> Wechat mini program called Tango, how Chuck has the bank traffic attracting entrance to our platform. It combines organically digital intelligence platform, while service network to build a closed loop of online matching and all fund transactions for Ddos, providing them with cool process.
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Q4, kenkel, how to how to engage with 6394 theaters.
So do you want provinces and 305 cities since its launch a cumulative number of views will can go home to her husband.
2 million and the proportion of cheetos actively using the service reached a 31% in Q4. They are all 53 cell phone vehicle models on can go how trial, including flooding comprehends uncertainty full range yourself car models are models 13, Brian nine Oklahoma.
Net new energy vehicles not awards, we are also studying homestyle supporting warehousing and logistics capabilities and.
That's off the end of Q4, a total of 93 warehouses have been established Capri, Nike one cities across the country.
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The default rates available in many instances morrow coastal low cost vehicle displays of it with free shipping helps dealers in which the Friday, all children models and improve their ability to attract and retain customers more than 400 dealers have applied 46 place of is a currency nearly 100 students are existing.
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In addition to all existing dealership network. We also acquire customers through our independent sales Rep initiative building all around private traffic acquisition and operating capabilities.
End of Q4, our sales reps network, that's been operating in child provinces across the country with more than 21000 sales reps on 900 I'm five subunits. During Q4, we organized Nike Inc. President <unk>, featuring <unk> brands in six provinces and cities, including me now Guizhou <unk>.
Events showcased and you'd be Brian recruiting alcohol sell pumps, and opaque pogo and hiking and matched the dozens of autos.
Integrating like private traffic with offline community experience all online to offline or O to O model has been working very well and we also well we have also formed a close traffic Luke.
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In terms of traditional automotive financing facilitation business and anticipation of the market and regulatory conditions, we proactively make strategic adjustments since the end of second quarter 2021 we switched our focus from scale to call. It they are looking to improve our rising.
<unk> and operational efficiency through technological tools and process restructuring in Q4, we facilitated some financing transactions total they are totaling 5.733 billion RMB, 7.7% quarter over quarter. The total outstanding balance of Kimco facility.
These financing transactions was $46 702 billion RMB.
As of December 31st Huntington's, you want in terms of dealer network by the end of last year. We have worked with what's nice 45930 car dealers throughout China of which 9844 work flora theatres, including 846 luxury brand peanuts.
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In terms of asset quality as of December 31st since you took the one hour and what's not.
Plus overdue ratios that increased slightly quarter over quarter to $1 six 2% points eight 6% respectively.
Was mainly affected by the product mix adjustment, that's why that's a weak macroeconomic conditions, but we expect the overdue ratios will remain flat in the coming quarters.
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Turning to our aftermarket services segment through our insurance facilitation services, we continue to explore additional cooperation opportunities with and UV manufacturers fourth quarter, we've embedded with Henkel insurance service portal in the autos that.
We'll complete integration with high five system much talks with other EV manufacturers are also underway at the same time as one of the main supply chain services. Our hotel transactions. If it is platform provides we'd be looking to fully explore our ddos service capabilities in the after market.
Insurance portal has been integrated into our data platform Kengo holger as well as SEDAR tool can go go plus during this past quarter, we bundled auto insurance products with vehicle group says and successfully launched the first batch of customized insurance products for as seamless as the NASDAQ We will continue.
To expand the auto service networks, increasing stickiness and activity.
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In 2021 market volatility caused by COVID-19, and chip supply disruptions doubt a theory is slow to low carb market, particularly in the lower tier cities.
In terms of you for 'twenty. One we also saw the first year of our phone on avid to transforming to a car trading platform confronted with unprecedented market changes.
We've responded by looking in Wetzel internal in Packer as defined uncertainties, who said I'll go out of your China automotive industry Summit 'twenty 'twenty. One we received the 20th century, while outstanding car transaction. You know Fortis is provided award demonstrating the industry's recognition of our transformation into a platform.
And the achievements we have made in this direction.
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And our next stage of developing our platform. We will continue to focus on building the platform core competency. So that's maybe for gene Cankles deep rooted channel networks and service capabilities and I know what your market adults.
The fees, we will cultivate O N E T cells the capabilities in the lower tier markets to do so we will profile Adidas with differentiated vehicles will assist imagine local demand.
Well help AEP manufacturers with modest mouse offices, you don't know what your market. Secondly, we are going to establish an even polymer empowerment mechanism to boost data.
I would say by providing systems tools on our responses and offline implementation services that directly address the challenges we have.
Well extend our current three major business segments to provide competitive supply chain. So this is truly a palo Alto Cisco platform resources and services may be told they have to call them.
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Looking ahead, we will continue to optimize the ecosystem of all car transaction. So this is not for them without advantage in the supply chain on causal thing complemented by our consistently improving systems tools and surveys operating capabilities. We will further empower our dealer partners and continued.
To provide high quality branded auto related services to consumers.
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Next I will turn the corner over to our Chief Financial Officer, Michael John for a review of the company's financial performance.
Thanks, Julia Hello, everyone welcome to our fourth quarter and full year 2021 earnings call.
Before I started to review our financials.
Please note that unless otherwise stated all numbers.
And all percentage comparisons.
Or a year basis.
During the quarter.
Macroeconomic headwinds continued and global chip shortage directly impact China's automotive industry.
Facing external pressure, we continue to make steady progress in the fourth quarter was top line, beating our previous guidance.
Fourth quarter total revenue were $1050 5 million.
Looking at the quarterly performance of our three core business.
Revenues from car trading transaction was $703 9 million continue to serve as an important growth driver and playing a key part of our business transformation.
Platform model.
Revenues from automotive financing facilitation market subjects, facilitation, what $252 million and $36 7 million respectively.
Now, let's move on to our cost and expenses during the quarter.
Total operating costs and expenses in the fourth quarter 2021, $1207 6 million compared to 899 million same period 2020. This was mainly due to the related costs incurred by car trading transactions business.
Cost of revenue in the fourth quarter of 2021 increased to 880.7 million from 723.
8 million in the same period of 2020.
And as a percentage of total revenue.
Wholesale revenue in the fourth quarter of 2021 was 83, 8% compared to 66% in the same period of 2020.
The change was primarily due to an increase the amount of car trading transactions, while automotive financing facilitation and all market services facilitation cost of revenue as a percentage of relevance revenues was around 54, 1% in the fourth quarter of 2021 sales and marketing expenses in the fourth quarter.
2021 were $73 8 million compared to $65 8 million in the same period 2020.
As a percentage of total revenue sales and marketing expenses in the fourth quarter of 2021, 7% compared to 6% same period 2020.
General and administrative expenses in the fourth quarter 2020 was $86 1 million compared to $19 1 million in the same periods of 2020 as a percentage of total revenue.
General and administrative expenses in the fourth quarter of 2021 remained flat.
One 2% compared with the same period of 2020.
Research and development expenses in the fourth quarter 2020, it was 20.
$23 6 million compared to $23 million in the same period 2020.
As a percentage of total revenue research and development expenses in the fourth quarter of 2021 was two 2% compared to two 1% in the same period of 2020.
Net loss on risk assurance liabilities in the fourth quarter of 2021 was $84 6 million compared to a net gain of $18 8 million in the same period of 2020.
The loss was mainly due to a sequential increase in default rates over the last quarters.
Recorded loss from operation So.
157 million in the fourth quarter of 2021 compared to an income of $198 4 billion in the same period of 2020.
This decrease was mainly due to loss of our risk assurance liabilities and provision for credit loss as well as the decrease in cost profit margin.
Our automotive financing facilitation and I'll pass the service facilitation business.
Due to the fair value change of the company's investment in the auto.
Net income in the fourth quarter 2021 was $124 1 million daus.
Adjusted net income for the fourth quarter of 2021 was $147 3 million.
On a per share basis diluted net income for the fourth quarter of two southern tons here once was 087 and diluted non-GAAP adjusted net income for the same period was 1.0 Paul.
For the full year of 2021, our total net revenue increased by 91, 1% year over year to three 9 billion.
Operating costs and expenses were $3 9 billion.
Net loss was $8 5 million and non-GAAP adjusted net income was $79 1 million.
Net loss per ads was 0.06 and diluted non-GAAP adjusted net income.
One 0.5 for <unk>.
Moving onto our balance sheet.
The December 31st 2021, we had cash and cash equivalents of $1 4 billion compared to $906 4 million as of September 32021.
As of December 31st 2021.
The company had a short term investment of $2 6 billion compared with $3 6 billion as of September 32021.
Looking ahead to the first quarter 2022, we expect our total revenue to be between 700 million to 750 million. Please note that this forecast reflects our current and preliminary view on the market and operational conditions, which are subject to change.
This concludes our prepared remarks, operator, we're now ready to take questions. Thank you.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two.
At this time, we'll pause momentarily to assemble our roster.
Yeah.
And the first question will come from Shelley wing with Morgan Stanley . Please go ahead.
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I'm sure they for them, while I have three questions. So the first question is what is your outlook for contribution transactions with these uncertainties in situ mainly the your outlook for wholesale at block module and my second question is about the ancient thank you well I noticed that the company makes a quite high provisions and all.
So in Q1 of this year when I noticed that the guidance for the company on revenue is quite conservative so on what basis do you produce.
Such a cautious forecast or guidance is it because all you want a more negative outlook over the macroeconomic conditions do you think lots of macro economic conditions, well have a negative impact on the demand or is it more because of what are your concerns or you know the close.
Sequencers from the business transition of the company, so which factor plays a more important growth in oil production of these numbers and my third question is about your cooperation with <unk> could you give us some uptick on your cooperation with <unk> manufacturers that any new business partnerships.
Thank you so music makes that Tokyo will take the first and third question and Michael will take the second question.
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Okay. So for the first question inked in T 21 way too so the total rose about 23000 vehicles.
And including 5742 E meats, so actually for the full year. The sales volume was 23100 <unk>.
66, right now the gross margin level was about 1% how do the loss margin of car transferred trading transaction. You. So now there is sufficient potential for kimco in adult what's your market, which is was a tapping into because we have a lot of our strengths.
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Looking forward to 'twenty to 'twenty two weeks by the auto market to remain under pressure because of global chip shortage. However, the impact on any of these will be a small that we will focus on strengthening our and you'd be sales capabilities. So that you know where to your market.
We won't try to create an empowerment.
Conducive to increasing dealer stickiness. Meanwhile, we will also carry out our.
Training programs for Dennis so that we won't be able to build up our brand our brand image and enhance data and loyalty.
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Our car trading transaction fees are we over the years, we have been taking advantage of our deep due to its network.
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Nope with our platform phase two cosmos in financial services and insurance isn't is services that help empower all our car dealers and this is the underlying logic of our business.
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Oh, Okay I'll I'll take the second question I will answer your question.
Divided into two parts the first parties actually about all our provision for bad debt in Q4, yes.
You are right we have increased our.
Provision for bad debts in Q4, mainly because of the two reasons. The first reason is that we noticed speech that seem to know what's your market. The party cycle is it's.
It's showing some negative sign for example, like the Coquimbite bases are moving downwards and also if.
If you look at quarter by quarter number the overdue ratio is deteriorating and a second reason it has something to do with connection and because also the outbreak so for pandemic in China or different parts of China, and our collection efforts have been negatively impacted different paths in different regions and SaaS.
This has been a reason why the overdue ratio has been rising as well so based on the principles are built based on the principle of Purdue geology, we have decided to increase our position for Q4 to reflect the changes in our asset quality, that's about as changes in the external environment.
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So it wasn't until the issue to you.
That's all we're trying to shoot holes or thoughts about jumping too.
Turning to the south of Italy, Homecare Masimo in Washington, So when she comes home what we should do that don't you. There you go.
Shouldnt seem that challenging.
Cool.
Got you got you.
Okay.
Okay. So the second part is about Oh, well consider it conservative guidance for Q1 revenue well there are two main reasons for this the first one is has something to do with the external demand weeks, but not.
Demand for Illinois to your market.
Well actually it will be quite soft.
Especially the demand for oil trading services as far as demand for all of US is supposed to mutation a business like mostly because of the different types of pressure available in the market. So overall speaking we are indeed, not so optimistic about our market demand into 222 and is that the reason has something to do with all.
Strategic transformation well in the second half of last year. The company decided to transform visa strategy from you know the facilitation business focus the model to model.
That emphasizes more on mileage car trading capabilities surface capabilities.
Aftermarket.
Type of capabilities as well in other words I think the second half of last year, we have started to reduce.
Reduce the size of our facilitation business, which actually holds higher credit risks.
And so as I said earlier, we have also noticed the changes in the credit cycle in a market. So.
That's why.
It seems to be a second half of last year, we started to change our business model. So in the future, yes, there will be that focus.
Those are businesses that have higher credit risks and financial risks instead, we will focus more around normal trading.
The surface businesses. So in the process of course in the near term.
Reduction for the contraction of the facilitation business well have some negative impact on our.
Expansion revenue.
So.
This is indeed something that has been that'd.
That'd be south call follow strict strategic transformation. So combining the two reasons I always citation with no market demand and also because of all the strategic transformation. We have given this a new guide we have given news our revenue guidance for Q1.
Yeah.
Yes.
Okay.
Okay.
Again, if you have a question. Please press Star then one.
And we will pause momentarily to assemble our roster again.
Okay.
Yes.
The next question will come from David Pan with Goldman Sachs. Please go ahead.
Hey don't illegal.
What are the kinds of things.
He will show you some data.
Switching gears.
Carter I'll hold you cut out on me.
Could you do there to go in CPR to shop our portfolio.
You can take on your hobbies, Michigan's Shawn I'd like.
So should we potentially off on any changes that's for sure.
No one can argue that the cause of weird lumbar nutrition for losing some difference in some time I think I'm sure the limits of your car jumped onto the PV.
Got it into the commercial or was that the whole team.
Sometimes it doesn't.
Beyond the journey with Tricia.
These are truly realize the 200 itself.
That's all my mother.
Sure sure.
Shrink though.
The whole category too sure what kind of a negotiation.
I'll touch on hydro production being shifted.
P clarity regarding familiarize itself out.
Our whole so who you.
Columbia, Doug I have no control back to Mr. James Let me go to the levels, including Botox I'm wondering if you could I appreciate it.
It's a good question.
She said.
Thank you I have three questions. Thank you I have three questions. The first question is about your outlook for the loan facilitation business well in Q4, Indeed, we know what his thoughts on now with some changes in terms of this business both into those cute.
Yeah, that's what I said quarter by quarter and also you'll have talked about the change that you're seeing out there called let's say an impression that you are facing so what he is talking to a planned kona loan facilitation business well right now the company is going pretty well with your strategic transformation and I noticed that indeed, a contribution from the loan.
So the fish precipitation this thing's going to your total revenue has reduced.
And of course the growth trend.
<unk> has changed as well so what is your plan for loan facilitation business open up over the next few years.
You will continue with this Christmas or where you exit from this business and the second question is about the cash and cash equivalents I noticed that by the end of 'twenty 'twenty. One the company still holds about a 1.43 billion I wouldn't be all of our cash and cash equivalents. So what is your plan for the use of the cash and the third question.
About holding flooring company accountable act so yeah, well there are some rules in terms of.
This thing all these oh dang foreign companies. So could you talk about the impact of these new act on your business.
Yeah.
Yeah.
Sure.
Do you go into your what I'll call. It the <unk> the CFO Lastly, Bob.
Thank you David for your question. So I will take the first question and I'll leave the second datasets to Michael.
Oh Boy, you got a year with the local <unk>.
Jude.
The.
Hunting the call women's that's also true.
There's a one book with Keytruda.
I want to wish.
It was a woman nook.
Joseph Tung.
Goodbye.
Do you want to add to the tunnel that to deal with just one more quick one evolution or shortly to attributing towards the acquire yield.
But because of such injuries no macroeconomic conditions, we've decided to reduce the size of our loan facilitation business. However, we will not give up a bit so business all together because our numbers are found at the precipitation businesses were part of the fundamentals of the book.
So is that in the future with a focus on more wrong.
No risk.
For loan facilitation and that's why was that so it's a business that can help that will be more efficient.
So Michele Joy, if you can touch on a single quarter.
Julien This is Joe Truitt, our putting <expletive> Joey you can be sure.
For NATO ours Hitachi is G. Joe you thought you got the only other truly cheap.
So you won't quit doing no go no go no go Joe you said under two times.
You talk to them with a father.
Also while we are transforming into a trading platform. We shall we still have to rely on loan facilitation business.
Two our profile in patches for olive groves and actually when you watch providing trading purposes, you have to provide the loan facilitation business as well is that we are going to rely still rely on the loan facilitation as a catalyst for all of your truck routes.
Okay.
With that what <unk> done with Julia with them.
Okay, now I'll hand over to Michael.
Alright.
Well, if you go Ontario.
So that would be generally talk about where some of the control E mail boxes.
You work on that she thought just as happy to do that anywhere.
With our improved performance.
Firth Hudson with Hudson.
Yeah.
It sounded material with Amazon, but I think what we're proposing.
You bet.
As usual on the way down.
Zero.
So wonder what people don't even know how to sell.
Who am I correct.
Through dietary almost yelling you go from what you just saw exchange all your points that you see on that you've got your people are.
Uh huh.
Thank you Moshe.
Now turning to the only thing we got lucky on that help it could go the same way you saw water joyful food even yesterday.
The quarter saw sounding okay sure languish at all.
Tim I don't know who you are.
At this time.
So I think what you can find a partner to the woman.
Oh got you got you.
It sounded like you were showing scan data telling me the Green chart published Chicago down this year.
You sure Shelby.
<unk> been telling you you've got to go to somebody and that's why we're suggesting a warmer.
Wheeler real artist.
You don't want to tie it to your answer that you have to tell me, but you guys anyway.
Thank you for your questions I will add a few words to the effect of question well, yes S. Jaguar and saw a lot. So don't facilitation business, we will not keep it up however, we are changing the positioning of this business line in our total fixed infrastructure well I think at least I know earlier.
Now turning more to what trading as well that certainly is a platform. So in other words.
Now our new business model now.
So close to its trading first and then Oh awesome.
As part of trading we profile, our loan facilitation business to our customers. So in other words you can understand.
I understand it this way the loan facilitation business will become an extension of our trading and yourself as a platform basically both of them could provide an opportunity for us for Kashi.
In time, we will try I'll pass it to improve the productivity and increase the efficiency of the operation of Pizza, our loan facilitation business, including or in particular of course control. So this is the our positioning all please don't forget to petition business for the future.
Uh huh.
Thiago <unk>.
Tom mentioned Gina.
Tall women's entity, but it sounds good that you've got a chart with Baba number do you think.
<unk>.
Gotcha.
Sure.
Okay.
These women to the Central challenge, but you know most of that you've got home machine that you thought so Watson is only about somebody some country useful.
John This year Coronado down this year.
So that you could.
Calling on John .
<unk> do not see a whole shebang.
Yeah.
About your second question.
Use of our cash balances well of course with me, we will have to use the cash to meet our strategic.
Development to meet what we wanted to attack.
Where we need the cash to support our business growth.
And also we are transforming.
Transforming our business model. So we may need the cash to meet our capital expenditure needs. In addition, we'll also use the cash to better realize.
Realize our potential.
External cooperation opportunities.
Maybe I'll take that if I'm going to do quite a music or whatever.
Zohar one.
It was an issue uhm.
One $2 <unk>.
So I wanted to just see where ball Gaba don't all thumb, which I always they always.
So with all that senior which also of course, Joe can implement they'll go for it.
It seems so that's the only way Sheila So I know what you call me or Joe once we shared sequencing machine ratio, Joe Guangzhou, Tianjin Qingdao almost it off on the one they chose to.
Her called loop.
<unk> put almost as Helena challenging issue.
Or should I say tier one does it appear like you saw.
Tell me don't corner down this year.
Hi, Bob.
It's hard to tell us where you are selling things.
Tom, which I was at a holiday where it could go to the highest frequency.
Gentlemen, there are no jamba has called home since you touched on this is being done from home.
So is it.
About your third question S. H F C. A a well or we didnt notice not so there have been some news coverage on days to act. However, so far for the company. We have not yet received any formal inquiry from either M Y S E new.
New York stock exchange or any regulator so for US we will keep her formerly up the the regulatory departments at a same time, we will also make a plan in line with the regulatory changes in different markets and you know future possible.
Our regulatory arrangements, however for us so far I'll focus well be actively communicating with the regulators and work with the regulators.
[noise].
Yeah.
The next question comes from Tim Moore with Zach. Please go ahead.
Thank you.
I have four questions, which I'll ask individually.
My first question similar to what Shelly was asking about.
Your revenue growth guidance for the first quarter seems a little bit light.
We are aware of the macro slowdown and.
The Olympics and Chinese new year impacts.
So when I was really kind of wondering is.
Are you skipping or turning away.
Possibly half the business opportunities in the loan facilitation business and it was part of your transformation.
And in order to avoid maybe some write downs from credit cycle tightening in some cities.
I just wanted to get a better sense of it.
How active and intentional you're really skipping business on the loan side rather than macro pressure.
Yeah.
Well, if you're going to still go once you know what you guys are going on right now.
Michigan, a dartboard I shouldn't wonder once you've got it sounds the way it should go $8 I hate you to why do you think will you show that you can call me at once it should be felt volatile now gagan Oh go ahead, yeah sure unless you use it you been copied on local funding to use with it being quite nice kind of Ohio Cynthia.
That's useful to you so it seems like the one you Duncan.
I'm told that people see that you'll see that being Florida hook once it does a good job they do.
So what I think what you would see.
Gosh, it's actually saw especially which as I said I'm sure.
So against that jewelry out so do you see that your childhood I think you'd find a giant gosh I hate to do quite well so the old tier two treaties that nowadays too sure chimney with Eagle Hawaii is gonna be on fire. How do you see you're going to be live in situ drilling do you all just to say it seemed quite yet.
These two should that try and.
What I tried to do the two goes towards the unquote initial tool that can do that because social.
Okay.
So go into oil.
Sure Sheila with Aloha and welcome to the sale of hotel Thats helpful. Josef.
Okay sure.
Yes.
Oh, so CEO Jaguar and well take our question first and then Michael well.
At what at what that is.
Hum.
Okay.
Total yield with the social context, what she thought that your topline Jeanne Jew Ginger Association, which is the Belmond hotel.
Some of them with Super quick follow ups, you took the two times just hold off.
Well as we explained earlier, we decided to contract the or reduce the size of these loan facilitation business, partly because of the macroeconomic condition changes I saw that the changes in the credit cycle. However, we will not give thought police business.
You'll have a warm winter.
The Hershey and the only thing we will function, so you'll mishanter warm winter teahouses done.
So the diesel cheating melanoma. So it just also so it does let Douglas is Honda for sure with diligence puts antigens. That's all for me.
Women.
Because we still have a lot of our core competency in the loan facilitation business, we will not simply giving them up. So our plan is that when a market is down in a downturn. We will you know contract all of business correspond debate. However, when the market recovers we will.
Expand our business again.
Yeah.
Still majority of flesh and of course when Townsville.
So with that you could certainly ought to be.
So one missile shield.
In addition, as I just explained earlier, while we are transforming our business model and in transforming ourselves into a trading platform. The financial services well known visitor business is actually a separable parts of these trading surfaces.
Okay great.
CFO .
So that's what we saw from me.
I will now hand over to Michael.
Uh huh.
Some control.
The EBITDA part of mattresses.
Really you saw yet.
<unk>, which is <unk>.
Does that bother you.
It sounds like a telephone.
Number two a suggestion about you want to take.
And Sheila CEVA supports yet another pivotal to the assortment busiest season production.
Got.
You could tell us the.
Number two pieces because you thought.
Yeah.
But you've got a lingering jonah.
So the only way you could capitalize on.
So on this.
Well I thought it's L D Bacardi Cushing Dr. George <unk>.
They got pushed.
<unk> is obviously up I am not telling me.
Sure Jorge with Hong Kong, and a coffee jumped quite a sort of a challenge.
You want you can call me a bunch of doctors to Michelle.
You either take out somebody else, which Ohio.
Tell us about them.
So by Wuxi, they're telling me.
The outstanding balance number two it's also wonder woman.
Fruition.
Uh huh.
Dunbar.
This year it seems like Oh.
Fortunately our thought about you would say on that front at all.
Top teaching hospitals.
Nobody will treat or somebody soil.
Nonetheless, I tell them they go to more shocking about women thoughts of Tucson, well Michelle.
Oh God <unk> got some dogs aren't Jason can doubt, we'll do that sounds they've got tells it.
Those whole woman Oncotype Cookie jar.
So on this agenda.
So the Wilmington to the Jamba, Inc.
Hong Kong and <unk> put a shortfall.
She says where somebody can conduct so you took a woman.
Guidance, you've got the job done.
Welcome to the town that you've got.
Our intelligent vitality.
Yeah.
Okay.
Thank you the team so I will add a few points on that.
First of all yes, as you've noticed that so we have a major major adjustments to our loan facilitation business saw actually we took the initiative to reduce the size of these known facilitation business well look solid reasons, while our CEO has already explained quite clearly and another reason is that the.
We believe we are still at the beginning of a new credit cycle. So we well we wanted to do is to quickly reduce our credit risk exposure in a relatively short period of time. If you look at our outstanding balance well known facilitation business do you feel about the 45 billion RMB.
About and among which 25 to a way we are.
My wage 25 to 30 billion are what we need to undertake risk assurance liabilities not of what we have to take the take home. The party risks for about 225 to 30 billion. All of these are outstanding balance.
We want so that's why we need to take a very quick.
Mashes to make major adjustments to the meal.
Facilitation business in a relatively short period of time, so as to reduce our risk exposure. So that's why you'll have you'll so these are major changes in our Q1 guidance.
So you will notice.
Sorry.
Oh, well what shows up.
Just.
She is a woman, yes sure that aren't they.
And then go up all over the years.
Hotels in adult.
Jim.
Sure Felicia.
Thank.
Yeah Moshe.
Sorry, just one last word on this point.
Our goal is to minimize our credit risk in the shortest period of time possible in our business model.
Yeah.
Okay. Thank you that was very helpful for that point.
Next question.
It relates to your closed loop, one stop shop, which is very differentiated including your logistics warehousing them last mile service for dealers.
I'm, hoping that you could share.
Some examples of actions that you're taking or you plan to take.
To accelerate the penetration of auto trading into your dealer network. I believe you have OTO trading at about 6000, or so of your dealerships and it seems like it could go to 15 or 20000 over time.
At least half the dealership base, maybe a couple of years out. So I'm just wondering maybe what youre doing to really move move that needle faster maybe on the auto trading penetration.
Yes.
For Shanghai and soon that will also move without sufficient to do what they need to efficiently onshore how not wasn't that I wouldnt Thiago. Once you do have the one she knows she plays Eagle tranquil that'd be one who doesn't shouldn't the ankle moisture.
Danny go to dollar anyway once.
Once a week I Don T cell phones, you want to tell you why that would be why you've done should the geography.
Don't panic when it would be a lot of times why don't see who you need us.
What you can really does not my wish I think one it's on them for sure. She said she didn't eat well Joshua young actually treating the chalk well sure. You'll show me that you could see why mango doctoral courses I think they'll have a lot more detroit they'll eat tied to acquired shouldn't hold it to a slowdown to what kind of a judicial templeton side because he felt a lot what do you mean like do you just your thoughts.
Got it.
Oh My goodness, what have you done your why shouldn't be that there'll be usually you won't change that all got wiped out of John Gugel anymore. So what's your thought now let's see what he thought he was the amount that would be what you saw.
But its too far like jostled cheez it shouldn't hold either Chico does Google and they'll go to ease let me just say hold on.
Yeah.
Okay, they'll go well a quick answer.
Jim to what Joe said.
So Joe you sue them in yield.
So you can tell with the chosen us as do move forging new propulsion for that's assuming in the tumor impulsion food plenty of full quarter and Don will mature towards human impulsion food, joining an elite lounge.
<unk> is on the two ones that gene just on one law, how warm winter does your intelligence at the Columbia, Shantou, food and elite I'd say shouldn't they shouldn't own enough. So to Joe you don't book.
Chris you want.
Just wanted to hit by the sinter usage to towards Hey, Julien how are you.
Sounder.
So you don't need one does it to the change in Louisiana.
So just do a warm welcome to the Chita yourself.
Joey agenda tie as usual.
Thank you Tim for your question I will take the first part of your question. So in terms of our car trading business well actually it was a natural extension of our cost with it.
Loan facilitation business.
Now that we have built.
Oh for the past 10 years, well, thanks to our more than a decade of athletes we have a buildup of strong capabilities in the Oh auto loan facilitation.
Sacramento walnuts the insurance so isn't it.
Surface sector. So I.
I mean segment.
We have also over the years build up relationships with more than 50000 dealers in lower tier markets as well that our in person Inc. Surface capabilities Oh these capabilities are in.
Essential to our core trading business. So this is also where we are different from a lot of the peers in our markets.
Yeah.
So those are the two tissue machines.
Michelle.
Sure and Tom shows all the time to do the kinds of Deutsche Bank.
<unk> chose onshore yield.
And in terms of the specific actions, we have taken well actually we have seen a free trip organizing training programs for all of selfish person now.
In line with our car trading business development needs and for example, we are trained on how to better work with the car dealers.
So it shows you is a woman.
The only two and a total cost agenda.
Now changing to.
So sure.
When will you allow tanto Yo.
Joe.
Putting royal Quake from question gentlemen.
So over time with our investment in capacity building and in.
In our investments in the resources well actually we will fully we worked quickly fully leverage our capabilities in the non traditional known facilitation.
Business to support the growth of all car trading Wilcox the transaction business.
Okay.
Now if only the nook wouldn't you.
One more quick chicken.
That's helpful.
This is Jamie.
Okay.
So the phone as a true when we've done that to Jean Charles Honda Jet.
So I don't know will mature.
That's helpful.
And to give you. Another example, which is also part of your question that is the last mile service, we deliver to car dealers well. An example is the this place of it. So we organize for a car dealers and this is a service that we have noticed that based on our deep knowledge of the needs of all car dealer.
Partners.
Duke when youre going to be a woman the changes when was it says you don't see the ship hold.
July combing the Hood is upwards of one the changes huh.
And about our warehousing services, we have for food he developed the system and those are.
Our strong database that well and that helps us smartly.
Sure.
Yeah, Tycho one more quick thing Joseph Tung Couture twofold.
And for some.
Uh huh.
Dealers, who don't haven't you know a long term business with us.
And also for some touches saying Oh does that you know.
Not so big in 40 or more emphatic we profile.
Self service Oh, the possibility for Adidas, Scott is that data can come to our warehouse and pick out one.
Pick up the cars by themselves.
Okay.
So is it worth with outcomes on Windows CFO .
Total.
So that's me and <unk>.
I will hand over to Michael.
So it's just our ability.
No more from Michael.
Great. Thank you for elaborating on that important topic.
My other two questions were already answered so I don't have any further questions. Thanks.
Hey, John .
Well gone he's going to join go watch either you go.
Challenging times sure Alan.
So what does that go in the longer run.
<unk> will also have gone through what you think without Dallas and what's your feeling that way.
Uh huh.
Oh.
Yeah.
The next question will come from Brent Lee with Bamboo works. Please go ahead.
Yeah.
Yeah.
What is how are you.
The chemical institution, Tim Shirley Sean Sean wanted to settlement since after you do something with US just from a camera.
Okay. My other question.
My question I have just one question. My question is about our company. So I noticed that a company has to reduce your holding in <unk>. So what is your view on the future.
Future development.
[noise] okay.
Sure sure.
Jin Guan with sealed Lisa you also John .
So on the tundra hurdle once you possibly.
Tom do.
Do you want to kind of how Jean Louis two doses on pulpwood Vishal just how does how is your father.
Okay. On this question what should I have we've reduced our holding in <unk> as part of our investment.
Investment decisions and though we have reduced all holding we will maintain our close strategic partnership with the hotel and as usual we are still very positive about the developments of AEP and each market, including the auto.
Well this is Jim.
Thank you.
[noise], Oh, no well machine center.
What do you do about suggestion.
Yes.
That closes today's.
Our conference call. Thank you all for your attention.
[noise] okay.
Oh sure sure.
[noise] The conference call has concluded. Thank you for your participation you may now disconnect.
[music].