Q3 2024 Cango Inc Earnings Call
Good morning and good evening everyone. Welcome to Ken Go in 3rd quarter 2024 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 IR website.
Chise Executive Officer and Ms. Riyan Sun, Financial Director of Kang Go.
Following management for Parader Marks, we will conduct a Q&A session. Before I begin, I refer you to the Safe Harbor Statement in the company's earnings release, which also applies to the conference call today, as management will make forward looking statements.
Speaker Change: with that said, I am now turning the call to Mr. Jiayuan Lin, CEO of Kango. Please go ahead.
Jiayuan Lin: Hello everyone and welcome to Kango's third quarter of the 2022 course.
Jiayuan Lin: [inaudible]
Jiayuan Lin: [inaudible]
Jiayuan Lin: In a third quarter of 2024, Kenke was overall business performance, remains stable, highlighted by total revenue of 26.95 million RMB.
Jiayuan Lin: and operating profit of 35.24 million RMB and a net profit of 67.8 million RMB. These solid results will primarily driven by our implementation of strict across control and risk management strategies, which significantly improve operational efficiency.
Jiayuan Lin: 直至9月30日全量代代余额约人民币48亿元
Jiayuan Lin: M1 plus 5 is 3.17%, M3 plus 5 is 1.76% We have reduced the value of RMB1.7 billion from the credit risk margin that we have not taken full preparation or full guarantee responsibility
Jiayuan Lin: The company's cash and cash prices, including short-term investment, amounted to RMB3.8 billion, which is RMB8,927,000 more than the last few weeks.
Jiayuan Lin: effectively maintaining a low non-performing loan ratio and ensuring asset quality and stability.
Jiayuan Lin: As of September 30th, our total outstanding loan balance was approximately 4.8 billion RMB with M1 Plus at 3.17% and M3 Plus at 1.76%.
Jiayuan Lin: We also reduced our credit risk exposure not fully covered by bad debt allowance for risk assurance liabilities to 1.7 billion RMB.
Jiayuan Lin: The company's total cash equivalents and short-term investments amounted to approximately 3.8 billion RMB, an increase of 89.27 million RMB compared to the end of the previous quarter.
Jiayuan Lin: In terms of business development, we will focus on the development of the Canggu Youche APP and the second-hand sea business.
Jiayuan Lin: On the last day of the 3rd quarter of this year, the number of PVs for the Changgu Youche APP reached 280,000, a 21% increase compared to the previous year.
Jiayuan Lin: to implement the real-time update of vehicle information to ensure that the diversity and richness of vehicles on the CanGu YouChe app further strengthens CanGu's vehicle advantage.
Speaker Change: In terms of business development, we prioritize driving growth across the CanGo YouCar app and our overseas used car operations.
Speaker Change: We strengthen CanGo's competitive advantages in vehicle inventory during the quarter by establishing strategic partnerships with numerous used car marketplaces, enabling real-time updates of vehicle listings, and ensuring a diverse and abundant supply of vehicles through CanGo's YouCar app.
Speaker Change: At the same time, we have launched rapid vehicle testing and on-demand services. Through close cooperation with professional third-party testing teams, we carry out in-depth background research on each vehicle and assess the overall vehicle frame. We provide detailed vehicle history reports and inspection data for each buyer, and enhance transparency in transactions.
Speaker Change: We cooperate with various national logistics service networks and can also provide diversified delivery and transportation methods for buyers to meet the needs of different customers.
Speaker Change: Meanwhile, we introduce the Rapid Vehicle Inspection and Listing Service.
Jiayuan Lin: In close collaboration with professional third-party inspection teams, we conduct thorough background checks and comprehensive vehicle condition assessments for each vehicle and provide buyers with detailed vehicle history reports and inspection data, enhancing transparency in transactions.
Jiayuan Lin: Additionally, our nationwide logistics network offers buyers a variety of delivery and transport options to better meet diverse customer needs.
Jiayuan Lin: Our community-operated team, through various online and offline activities, such as online auctions, site inspections, and member exclusive discounts, increases user interaction. We also continue to collect and analyze user feedback, constantly optimize service processes, and improve customer satisfaction.
Jiayuan Lin: Our community operations team fosters user engagement through a range of online and offline activities, including exclusive online auctions, on-site visits, and members-only discounts.
Jiayuan Lin: We also continuously collect and analyze user feedback to refine our service processes, ensuring we consistently improve customer satisfaction.
Jiayuan Lin: In terms of second-hand cars going overseas, we continue to see positive progress in this quarter. Our second-hand car export website, AutoCango.com, has achieved a total PV breakthrough of 370,000 times since its launch in March 2024.
Jiayuan Lin: There are nearly 60,000 users on the website. There are more than 100,000 SKUs on the platform. There are more than 65,000 models in total.
Jiayuan Lin: On our youth car airport service, where we continue to make significant progress this quarter
Jiayuan Lin: Our international used car platform Autocango.com has accumulated over 370,000 page views and nearly 60,000 registered users since its launch in March 2024. The platform now offers more than 100,000 used car SKUs covering over 65,000 different models.
Jiayuan Lin: 为了更好地服务客户和提升品牌形象,我们持续优化网站内容和用户体验。
Jiayuan Lin: 通过持续的内容更新和技术改进,目前AutoKango.com页面数量突破50万。 这一增长反映了我们在内容建设上的努力,同时也表明了用户对我们所提供信息的关注度有所增加。
Jiayuan Lin: To better serve our customers and enhance our brand image, we are continuously optimizing AutoCanGo.com's content and improving the overall user experience.
Jiayuan Lin: Autocango.com's sitemap now boasts over 500,000 pages thanks to consistent content updates and technological improvements. This growth reflects our commitment to content development and drives increased user engagement with information we provide.
Jiayuan Lin: In terms of search engine optimization, we have also seen positive changes. AutoCango has broken through 2.41 million times in vertical search results.
Speaker Change: It is expected to break through 4 million times by the end of this year. This means that more and more people will be able to find and visit our website through search engines, thereby increasing our brand exposure rate. As the overseas market continues to expand, we have currently received purchase clues from more than 130 countries and regions.
Speaker Change: Our content development efforts have also driven positive changes in search engine optimization.
Speaker Change: AutoCango.com's visibility in search and journal results pages.
Speaker Change: or SERP in short, has exceeded 2.41 million impressions and it is expected to surpass 4 million by the end of this year.
Speaker Change: This means that an increasing number of people can find and access our website through search engines, boosting our brand exposure. As we continue to expand into overseas markets, we have already received inquiries from over 130 countries and regions regarding vehicle purchases.
Speaker Change: In the future, we will continue to focus on improving the quality and functionality of Auto Candle to ensure that it can meet the diversified needs of users in different regions. At the same time, we will also strengthen the application of data analysis to better understand the characteristics of the target market and user groups.
Jiayuan Lin: 以期在全球范围内实现更加均衡的发展
Jiayuan Lin: Looking ahead, we will continue to focus on enhancing AutoCanGo.com's quality and functionality to meet the diverse needs of users in different regions. At the same time, we will strengthen our data analysis capabilities to gain a more accurate understanding of the characteristics of our target market and user demographics.
Jiayuan Lin: Building on this foundation, we will develop data-based scientific marketing strategies aimed at achieving more balanced global growth.
Jiayuan Lin: On the basis of Hengshi's current business, we will continue to look for strategic investment opportunities around the world for the future. We will focus on high-quality projects that can compete with our core competitiveness and bring technological innovation.
Jiayuan Lin: Through the establishment of an international network of cooperation, strengthening communication and exchanges with leading companies around the world, and actively participating in cooperation and development of overseas projects, we look forward to the strength of a broader platform to show the strength of the company.
Jiayuan Lin: While steadily advancing our existing business, we are also actively pursuing forward-looking strategic investment opportunities on a global scale. We will focus on high-quality projects that complement our core competencies of brand technological innovation.
Jiayuan Lin: By establishing an international cooperation network, strengthening communication with leading global companies and actively participating in the collaborative development of overseas markets or overseas projects, we aim to showcase our company's strengths and vision on a broader stage.
Speaker Change: Now I would like to hand the call over to our Financial Director, Ruiyan Chen, who will share our financial performance for this quarter.
Jiayuan Lin: Thank you for watching!
Jiayuan Lin: Hello, everyone. I am Ruiyan Sun, Financial Director of CanGo. Welcome to our third quarter 2024 earnings call.
Jiayuan Lin: Before I review our financials, please note that unless otherwise stated, all numbers are in RMB terms and all percentage comparisons are on a year-over-year basis.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Guaranteed income, which represented the fee income earned on the non-contingent aspect of a guarantee, was $14.4 million in the third quarter of 2024.
Jiayuan Lin: This was represented separately from the contingent effect of a guarantee pursuant to the adoption of ASC 326 since January 1, 2023.
Jiayuan Lin: Now let's move on to our costs and expenses during the quarter.
Jiayuan Lin: Cost of revenue in the third quarter decreased to $23.3 million from $304.6 million in the same period of 2023.
Jiayuan Lin: As a percentage of total revenues, cost of revenue in the third quarter of 2024 was 86.3% compared with 86.1% in the same period of 2023.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Jiayuan Lin, Yongyi Zhang
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Net gain on contingent risk assurance liabilities in the third quarter was $7.1 million compared with a net loss of $3.5 million in the same period of 2023.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Net recovery on provision for credit losses in third quarter of 2024 was 74.4 minutes compared with 66.9 minutes in same period of 2023.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: We recorded $35.2 million in income from operations in the third quarter of 2024, compared with a loss of $87.8 million in the same period of 2023.
Jiayuan Lin: Net income in the third quarter of 2024 was $67.9 million. Non-GAAP-adjusted net income in the third quarter of 2024 was $71.3 million.
Speaker Change: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: On a per share basis, basic and diluted net income per ADS in the third quarter of 2024 were 0.66 and 0.60, respectively, and the non-GAAP-adjusted basic and diluted net income per ADS in the same period were 0.69 and 0.63, respectively.
Jiayuan Lin: Moving on to our balance sheet, as of September 30, 2024, the company had a cash and a cash equivalent of $691.8 million, compared with $949.5 million as of June 30, 2024.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: As of September 30, 2024, the company had a short-term investment of $3.1 billion compared with $2.7 billion as of June 30, 2024.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Looking ahead to the fourth quarter of 2024, we are now predicting our total revenues to be between $15 million and $17.5 million. Please note that this forecast reflects our current and preliminary views on market and operational conditions, which are subject to change.
Jiayuan Lin: This concludes our prepared remarks. Operator, we are now ready to take questions.
Speaker Change: Thank you.
Speaker Change: Thank you very much. We will now begin the question and answer session. To ask a question, you may press star and 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Today's first question comes from Emerson Zhou with Goldman Sachs. Please go ahead.
Emerson Zhou: Hi, I'm Emerson from Kaohsiung. I have two questions.
Emerson Zhou: The first question is, considering that China's economy is in a state of mild recovery,
Jiayuan Lin: How does the company view the potential impact of the future of the PR economy on business? The second question is, in order to ensure the safety and reliability of the second-hand vehicle trade, what specific measures have the company taken to ensure the quality of the vehicle? Thank you.
Jiayuan Lin: And the second question is, what specific vehicle quality assurance measures has the company taken to ensure the safety and reliability of used cars?
Speaker Change: Thank you, Mr. Emerson. Regarding the first question, in the face of China's mild economic recovery, we believe this will have a positive impact on our business.
Speaker Change: The improvement of the macroeconomic environment helps to increase consumers' confidence and purchasing power, and stimulates the growth of demand in the car market. Especially for the second-hand car market, as the economy improves, more people are likely to upgrade their vehicles or buy cars for the first time, and thus promote an increase in second-hand car trading.
Speaker Change: Thank you, Emerson, for your questions. On your first question, China's moderate economic recovery will, we believe, positively impact our business.
Speaker Change: Specifically, for the used car market, as economic conditions improve, more people may be inclined to upgrade their vehicles or purchase a car for the first time. This will drive an increase in used car transactions.
Speaker Change: We will continue to monitor the macroeconomic indicators and market dynamics in order to quickly respond to possible economic changes. We believe that by continuously improving operating efficiency, strengthening customer experience, and utilizing digital advantages, the company can reduce the potential impact of macroeconomic fluctuations on business.
Speaker Change: 此外,我們也在積極探索新的轉機會和增值服務,以適應和滿足市場的需求變化。
Speaker Change: And we will continue to monitor macroeconomic indicators and market dynamics.
Speaker Change: to respond quickly to potential economic changes. We believe that by consistently enhancing operational efficiency and strengthening customer experience and leveraging our digital capabilities, the company can mitigate the potential impact of macroeconomic fluctuations on our business.
Speaker Change: In addition, we are actively exploring new growth opportunities and value-adding services to adapt to the market's evolving needs.
Jiayuan Lin: We cooperate with well-trusted dealers and conduct regular audits of our partners to ensure that they can provide high-quality vehicles that meet the standards. Before each vehicle is put on the market, it requires more than 100 professional technical tests covering the appearance, interior design, mechanical performance, and many other aspects.
Speaker Change: On your second question, how we are ensuring the safety and reliability of used cars, well we collaborate with reputable dealers and regularly assess our partners to ensure they provide high quality vehicles that meet our standards.
Jiayuan Lin: Each vehicle undergoes over 100 professional technical inspections before being listed covering areas such as the exterior, interior and mechanical performance.
Jiayuan Lin: 而且我们为每辆车出具详细的检验报告,包括但不限于行驶里程、车况描述等重要信息,供买家参考,设立专门团队收集反馈意见,针对投诉问题及时响应处理,并不断优化流程以提高整体服务水平。
Jiayuan Lin: A detailed inspection report is also provided for each vehicle, including but not limited to key information such as mileage and condition descriptions for buyer's reference.
Jiayuan Lin: We have also established a dedicated team to gather feedback, respond promptly to any complaints, and continuously improve processes to enhance overall service quality.
Jiayuan Lin: 好,谢谢,我的回答完毕 Thank you, that's all from my side.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Speaker Change: Thank you.
Speaker Change: The next question comes from Pingyu Wu with CIPIC Securities. Please go ahead.
Speaker Change: Jiayuan Lin, Jiayuan Lin
Speaker Change: Jiayuan Lin, Jiayuan Lin
Pingyu Wu: Hello, Jiayuan Lin. I have two questions. First, what is the company's plan for deepening overseas market integration? What are the plans for optimizing Outlook Mango's functions and services? My second question is about product control. In terms of product control and risk management strategies, what is the company's plan for deepening overseas market integration?
Speaker Change: What measures have you taken to improve operating efficiency and increase the financial structure? How will these financial structures affect the company's performance in the future?
Speaker Change: with your overseas markets and what are the plans for optimizing AutoCango's features and services? My second question is on risk control and management.
Speaker Change: Well, what measures have CanGo taken in terms of cost control and risk management strategies to improve operational efficiency and improve your financial structure? And how will these measures continue to impact the company's future performance?
Speaker Change: Thank you. My first question is about how to diversify and integrate into the overseas market.
Speaker Change: At present, we are in-depth studying the overseas market and actively establishing contacts with local partners in order to obtain more local support and resources.
Speaker Change: In this process, we have carried out detailed research on the clean-up policies of each country in Africa and have established an import-clean-up agency cooperation relationship between the four African countries. The next step is to gradually build a business agency mechanism in Africa.
Speaker Change: 只在为潜在客户提供服务
Speaker Change: Thank you for your questions. On your first question, we are currently conducting comprehensive research on overseas markets and actively engaging with local partners to secure more localized support and resources.
Speaker Change: For example, we have thoroughly examined
Speaker Change: the customs clearance policies of various African countries and established import customs clearance agency partnerships in four nations to date.
Jiayuan Lin: Our next step is to gradually develop a business agency framework in Africa, in that providing services to potential clients in key areas such as customs clearance and logistics, among others.
Jiayuan Lin: 此外,我們計劃通過社交媒體等平台積極展示品牌形象。
Jiayuan Lin: In order to raise international awareness and ensure that global users can use our services without hindrance, we will provide multi-language versions of support. The language version of the AutoCango website will increase to 15 versions in early 2025.
Jiayuan Lin: to further enhance the scope of user experience and market coverage.
Jiayuan Lin: Additionally, we plan to actively showcase our brand image through social media and other platforms to enhance our international visibility. We will also offer multilingual support to ensure that users worldwide can seamlessly access our services.
Jiayuan Lin: By early 2025, AutoCanGo.com will be available in 15 languages, further improving user experience and expanding our market reach.
Jiayuan Lin: In terms of functional optimization, Autocango will open a website that directly sends resources to the Chinese second-hand car market and provide overseas users with a fast online query of second-hand car models and price services to further enhance the user experience.
Jiayuan Lin: In terms of functionality improvement, we are introducing a direct sourcing feature for the Chinese used car market on Autocango.com
Jiayuan Lin: Finally, we are working hard to cultivate a culture of international cooperation and cross-cultural communication.
Jiayuan Lin: 以強化公司在海外市場的運營能力
Jiayuan Lin: We plan to recruit international students in Shanghai to participate in internship projects. This not only provides them with a valuable opportunity to practice, but also injects fresh international blood into our team. Through such a talent strategy, we expect to build a diverse but globally competitive team.
Jiayuan Lin: 以更好的服務不同文化背景的客戶 並推動公司的國際化進程
Jiayuan Lin: We plan to recruit international students in Shanghai for internship programs, providing them with valuable practical experience while infusing our team with fresh blood and including global insights.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: In terms of cost control, we have optimized the business process and adopted automated tools to simplify the approval process.
Jiayuan Lin: At the same time, we use cloud computing services to replace traditional IP infrastructure construction, reduce hardware investment and maintain costs.
Jiayuan Lin: In addition, we will establish a long-term partnership with high-quality suppliers to fight for better price conditions and regularly evaluate the performance of suppliers.
Jiayuan Lin: The elimination of those with poor performance will reduce the cost of purchasing. It is reasonable to plan for employee programming and strengthen the training and development plan to improve the professional skills and service level of the team.
Speaker Change: on your second question of cost control and risk management strategies.
Jiayuan Lin: Firstly, on cost control, we have streamlined our business processes, automated approval workflows and enforced strict budget management systems to ensure disciplined spending. We also leveraged cloud computing services to replace legacy IT infrastructures, significantly reducing hardware investments and maintenance costs.
Jiayuan Lin: Moreover, we have strategically optimized workforce allocation and upgraded our training and development programs to elevate the team's expertise and service quality.
Jiayuan Lin: and try to adjust the company's strategic direction.
Jiayuan Lin: In terms of risk management, we have established a robust internal control system that clearly defines risk management ownerships at various levels and strengthens internal audits to promptly identify and rectify potential issues.
Jiayuan Lin: The ongoing impact of the above measures will be reflected in the company's financial statements, such as the improvement of the asset-asset balance sheet and the increase in cash flow, which will set a solid foundation for the company's next strategic development.
Jiayuan Lin: That is all from my side.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Speaker Change: Thank you.
Speaker Change: That concludes the question and answer session. Thank you once again for joining Kengo's third quarter 2024 earnings conference call today. Have a great day.
Speaker Change: That closes today's learning call. Thank you all for joining us.
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Jiayuan Lin
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
Jiayuan Lin: Jiayuan Lin, Jiayuan Lin
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Speaker Change: Jiayuan Lin, Jiayuan Lin
Speaker Change: Jiayuan Lin, Jiayuan Lin Jiayuan Lin, Jiayuan Lin