CANG - Earnings call transcript Q4 2020

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Operator

Good morning, and good evening, everyone. Welcome to the Cango, Inc.'s Fourth Quarter and Full Year 2020 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.

Joining us today are Mr. Officer; Executive Chief Lin, and Mr. Jiayuan Chief Zhang, Financial Officer company. the of Michael

management's conduct will remarks, Q&A Following we the prepared session.

go applies earnings Before to we forward-looking CEO the which statements. company's now said, will Jiayuan Lin, call the you conference Please, also release, turning Safe Harbor With of as begin, statement ahead, in make I management to the refer over sir. I'm Mr. today, this the Cango. to

Jiayuan Lin

pressure welcome and XXXX, stand pleased report Difficulty] Thank fourth of pent-up year to the the with the second progress at across you. and Good up the lines, on evening, of during and year significantly it XXXX Cango's mean, our markets In industry morning auto still. and continuous year, half call. auto good overall the unleashed pace economy its of picked [Foreign the of also XXXX. year, the the speed year -- and full towards to the China's [Technical this brought the business quarter everyone, steadily. that are the Language] recovered in half market Cango's accelerated But business pandemic beginning earnings transformation of rebounded demand I lower-tier unexpected from industry, second we

services for effective one-stop and the to previous a auto along RMB business auto range create our network initiatives, million. After came years industry are XX,XXX deepened experience transactions guidance customers prompted control milestone lower-tier As the billion industry platform this in a record the a quarter the a pressing we offering better gain Auto value Building reach in enjoyable Thanks in forward by founded extending as purchasing our as the we in toward and quarter movements its us income the of primary our cost of result, services sustained RMB about we and the also marked total expanding to foundation, year fourth all our financing, parties to saw in a in leading growth facilitation we company. chapter today, empower our the we a grew solid Cango markets. billion, XXX to in the and value actively an chain, of significant car a customers. surpassing quarter chain, the X.X to transaction new to Cango's was of segment, end XX lower-tier routes to revenues markets, nearly have operating easy specifically serving chain, car Net in demand the The RMB our X,XXX originating growth whole. high a dealers XX%. in registered at have goal XXth the for downstream of transaction income platform and Cango this to the and technology-based of about unmet automotive RMB aftermarket auto nationwide, trading while And on connect ago, China. XXXX auto value investment upstream X.X anniversary, making and opening attributable the million,

service and further enjoyable and We industry. for and dedicated an consumers. easy overall platform is looking the And the purchases choice ways mission, are car we our of advance of make for development to always remain to vision become to auto which

that and the trend of emerged markets. the an same trading efficient platform future I demand have in about ecosystem, of a convenience their loan and RMBXXX and main is and industry. that exploring XX% lower-tier driver. buyers transactions in a car trading transactions as network, recognize transformation an important line become the time, business, capabilities total when decade, and NEVs business gross million, generated It service an auto dealers, are we aftermarket energy our In we inevitable building technology past Cango has made complete for benefiting positive the dealership improved worth auto markets local puts were now, of position lower-tier and difficulties platform service operation us industry our leads OEMs. the industries, supply other actively revenue of growth the empower which our to advancing traffic the markets needs participants. and sales Through markets, trading On effectively to car fourth service About mentioning a nationwide and we lower-tier trading transactions quarter, network adopt transactions needs. by on service car both in our in in accounting past platform At markets has actively ideal top revenue. NEV the business seeking our in platform, as the car has transaction OEMs core operational the [Foreign has our quarters. the footprint in margin. rapid have their trading support. and meet we lines: the of facilitation, mean business of Language] Cango's It the expand short connections, in few connects car developed the lower-tier new our the transaction, channels. trading development and vehicles, efficiency network this As the OEMs, car connect transactions, model, strong professional progress dealers consumers with traffic extensive transaction service Today, facilitation. auto usually and Cango's have of direct dealership three dealers looking solid in an capabilities in services manufacturers, all and of including cloud we lower-tier sales

traditional network, traffic in traffic independent and First, lower-tier our will by markets. the transactions in target good of trading we sales initiatives traditional facilitation end had quarter, services the car did across reps the sales by broaden our groups our dealership X,XXX By than independent country. more sales dealership to plus of expansion fourth addition the private a reps XXX deepen independent to sub-dealers quarter. The job our the have our help segmented fourth businesses generated the customer private reps aftermarket in continuous more network and us and flow

-- weakly chain have improved logistics also supply also are We we capabilities. our and

to partners' had several us our self-developed complement the to the Our warehouses, efficiency XX solve fourth the approximately the local local of allowing By have end warehouses problems together markets. warehouses quarter, in we lower-tier with XX,XXX infrastructure developed parking of transactions across covering an the service This XX providers business. part development more our a car important has total than with trading strategic country. spaces, of grow our cities become capacity

suitable pioneer and dealership technology-based our has Cango work capabilities, been services and our data while our service guidance product will to base. the itself China's service we the launched facilitated improved are auto branding business our a in efficient enhancing dealers and multilevel and Lastly, to empowering technological car while effective and Tech technological and transaction up target for for the markets. to customer innovation core strongly our continue facilitation in quarter, covering quarter. system field, provide model advanced their during building the their and customers, customer the auto products committed leveraging fourth car service institutions, promoting dealers as auto capabilities will the our have management technology-based our an resulting integrated force, improved leader a efficiency. we driving experience big for With XXXX, In further fourth billion XX% process, financing lower-tier in-depth In cooperation to we loan more cover upgraded and offerings. quarter, transaction with entire rebounded service transactions, Simultaneously, by capabilities year-on-year. developed XX.XX also large In we financial we we transaction strengthen car know-how, expanding as models

XX.X% the to RMB pre-pandemic track. same period facilitation XXX.X and million, Our revenues this back levels recovering from to automotive the up financing were returning growth year,

facilitated the As of outstanding billion. the reached asset of total XX.X RMB transactions XX, About December quality. company by balance XXXX, financing

As XX, MX+ XX, as – XXXX. from as the the December overdue to mean, of XX% decreased to of December I from And ratio of X.XX% MX+ overdue XXXX. September XX, X.XX% X. ratio decreased XXXX, X.XX%

margins performance, grow. remain and stable our business financial of as terms In profitability our volumes

strongly Finally, our in facilitation quarter XX.XX the services total aftermarket million, supporting RMB was growth. revenue fourth revenue

the premium insurance response, products. industry we business and and in exploring are Cango's potentially the a as traditional fourth upgrading actively new the XXXX auto impact pressure in overall some may put insurance insurance on offerings quarter While reform our

Looking will meet and to cooperation insurance we companies the needs large segments. ahead, our customer product extend diversified with introduce offerings different of more

our of expanding the team growth account to insurance sustainable our While business. also key sales drive

services, insurance and businesses the of addition, value business, into maintenance and upstream chain dig deep auto by help downstream such our backed we the as match continuously and In auto repair services. aftermarket will

total of registered dealership of our of [Technical we nationwide. Difficulty], have a end by In the terms had dealers network, XX,XXX

to bridge auto in services, In important finance end networks in and During X customers a for services provider proposition, dealers. won always more Cango and a and our auto enjoyable first in quarter, numerous dealers row, a market we customers. of ourselves will segment differentiated our for was And them we row, committed Enterprises the and China awarded experience some service award and car quarter, and further expanded Golden scenarios continue fourth the Cango work need wide rely Finance Award. on this China the year Dedication was recognized year devote rewarded. extensive Automobile demand additional pursuing efforts to groups range auto share. and by making always remain nearly of products purchases with Engine in the started around Services work we Going customer-centric offers Dealers and develop products innovative high-quality [Foreign put Association. auto customer a the transactions Cango and financing gain dealer high and the will our market and Automobile are powerful and industry dealer brands, best ForEx resources, further Cango to we third help XXXX, into With centered -- hard customers network among Language] XX,XXX services for industry we the easy value auto to financing awards awarded by provide

has call journey would saying, Michael conclude new will is to just to is there over With and that, I Chinese more to turn CFO, will, I there like a our now details. our with in Our the where performance review the Zhang, financial begun, way.

Michael Zhang

fourth our call. full Hello, quarter everyone, to Thanks, welcome year and earnings XXXX and Jiayuan.

to otherwise percentage and started I basis. comparisons please a note RMB in financials, on stated, year-over-year review are Before are unless all that numbers terms all our

business facilitation financing, fourth revenue increased were fueled streams and and off-market in across outperforming during we trading saw is of continuous revenues X.X important again revenues. approximately to XX.X once car total shift coming our quarter. a RMB Notably, respectively, contributor. transaction from our RMB our an expansion billion, XX% total progress business range. in and as becoming the previous million quarter, Our guidance from million, automotive facilitation revenue top steady XXX.X service line in with the at fourth contribution RMB Revenues This the quarter,

of period let's RMB expenses from each RMB quarter by million of XXXX million the compared car XXXX. to quarter operating revenues Total the of Now, trading car revenue compared cost total as XXXX. XXX.X same trading move in The decreased to and transaction expenses were XXX.X increased in RMB Cost and business. in administrative to the fourth increase same of due on mainly Primarily and marketing result of XXXX general quarter fourth $XXX the from XXXX million expenses and percentage a during as development the of XXXX. and to the of same in of research was period expenses sales the the the period our the fourth and million related in quarter. cost incurred to a revenue transaction, of in increase expenses, XXX.X costs

compared of revenue an in the of transactions. amount cost change in in and XXXX, increase XX% fourth the a the total quarter was As primarily same of revenue, period the percentage XX.X% was to of due trading to car

marketing and of fourth service compared in of percentage relevant period $XX.X quarter RMB was in as XXXX. quarter fourth million facilitation, XXXX. automotive cost revenue facilitation million For around a same XX.X and financing XX% expenses of revenues were the of in XXXX the to the Sales aftermarket

XXXX. the expenses and XXXX. As XXXX compared the a fourth revenue, were in to percentage of marketing same administrative RMBXX.X in of in XXXX the the quarter to was X% period total RMBXX.X period compared sales of fourth in million General expenses quarter million XX.X% same and

to of quarter a million RMBXX. in the and X expenses As XXXX revenue, XXXX administrative fourth quarter to percentage of same RMBXX compared general were expenses development in the XX.X% of was same the XXXX. total X.X% period fourth Research compared million period and the XXXX. in in in

same and million of the fourth of expenses in to a X.X% loss recorded in million in percentage third same adjusted non-GAAP RMBXX.X rate ADS of the was RMBXXX.X the the research net income a fourth same On operations on due the quarter Net the million. fourth Net share XXXX XXXX. RMBXXX. risk was period fourth was RMBX,XXX.X fourth compared adjusted from As was RMBX,XXX in compared million. X to XXXX. in XXXX in quarter ADS quarter income development in was to the XXXX fourth RMBX.X of per per gain the in gain mainly XXXX. in RMBXX.X quarter default income of was of net in XXXX period assurance the the period diluted X.X% assurance quarter quarter quarter diluted in compared since revenue, per net risk a of million of million was RMBXX.XX. liabilities Non-GAAP total on XXXX the period of sequential income Net to a XXXX. net same income We liability and decrease basis,

the increased was and XX.X% net ADS non-GAAP net revenues Total by was RMBX.X RMBX.X net For billion, net XXXX, income per expenses respectively, operating were and RMBXX.XX our RMBX.X Diluted was diluted in billion. billion. and total RMBX.X and adjusted income ADS cost RMBXX.XX, non-GAAP of XXXX. year billion, net income for adjusted income full to

to Moving on balance our sheet.

equivalents September had XXXX. compared RMBX,XXX.X cash December cash of XX, of to of XXst, As XXXX, as million million RMBX,XXX.X we and

investments. the December investment in XXXX, investments the as in change The the company's such to RMBX.X was of company long-term and billion to of had reclassification investments short-term from RMBX.X of auto increase due short-term September billion of XX, company's As XXst, of XXXX. compared the to mainly fair investment the value

view prepared we million. remarks. between ready our This our take and Looking change. ahead market and current total million to to that XXXX, RMBX,XXX be are the quarter expect which note preliminary to our first reflects to subject we the revenues and conditions, operational forecast questions. now Operator, Please RMBX,XXX are this concludes on

Operator

from comes Your [Operator Thank question you. Shelly from go Stanley. ahead. Instructions] Morgan Please first Wang

Shelley Wang

of to all, strong Shelley First Language] I'm Stanley. the Morgan yet congratulations [Foreign on performance. of Wang management year another from

And three so I have questions.

in some complete your do you is dealer’s they first from car on for example, OEMs. the question XXXX? many also, The And line. For is the outlook trading maybe XXXX? how business in transactions cars able may business -- to to facilitation What directly expect be get cars

your for the to my sure the note do are how loans make you on ability to you what, you question repay So manage with trading My this the transaction how by dealers? model, do customers? how kind about of, model, sales to rep verify example, the indeed the service do the risk more generate independent cars? the you that value second And for question car is is used And macro buy do economy. third

So the on observation, auto I for Year? Do impact credit in how your demand do And -- you for will less tightening loans? mean, supply? see the see demand already based the because New loans that credit will that how you supply of auto tightening

Jiayuan Lin

[Foreign your Shelley, three I Language] Okay. answer will questions.

of about the all car in for First transaction outlook XXXX. trading our

of part XX,XXX So do transactions XXXX value trading to in the whole we and about that is to the year, of question, that your for we facilitate kind will XX,XXX offer dealers. second what car expect the we first

authorized target cities. we dealers While in the mainly the lower-tier non

cars because their for traders get the solid mostly of they have used they from types large car supply these very OEMs from forest cars really the stores. and dealers, of So don't to

chain ensuring of their challenges of competitive example, in market, supply for they of have source supply the the is of reliable quite them, for the authenticate supply and inefficient. the cars, them is steady and a cars not to whole very are for prices very difficult cars in not and and it's lot the So sometimes the

to difficulties, services values complementary the these targeting to cars lower-tier our dealers OEMs, non-authorized So provide help we the and because the to dealers. chain streamline we sourcing and from of services centralized able the also this to these dealers And the offer supply dealers, city are chain. also supplementary we and in of valuable improves It whole And well is dealers profitability. process very actually the also complete their as cost the the supply to sourcing. car parties only for but helps different to of not their ability reduces as deals operation various

to and services, the the generate aftermarket continue will for capabilities the risk business control rep sales line empower service logistics in business model. better so improve traffic. the transaction our independent are partners. to to they dealer company future, car sales mostly line. Well, the reps, for So Well, as On second we independent and your our operate trading question, helping

lines. to business not strictly is auto each looking as how the managing much there visits. on company as well these the line, sales to the review qualification And two levels, in-person every are and about rep. we're the authorization we transaction risk eligibility they exposure of conduct well So as then business their loan and And and as recommendation, monitoring we also

So have set up strict very these for sales authorization we all independent a reps. level

supply the auto addition, terms independent cars business. loan cars sales of facilitation to supply of the control reps In for we in -- the of

to we sales control are risk more reps fine overall have because So our And city we also source independent of authenticity for loan lower-tier transactions. able than strict ensure on auto stringent of facilitation a we adopting the measures control cars, the are these business. thirdly,

the company. at in you the service management close loan quality management, is service loan the average of the -- look And the so fact, of the far, to level if

XXXX be impact you increase well the business. measures to supply parts – consumption been for countries has clearly to rural of in policies, government your look as the for government smaller a increase it credit of in as drive that and of third the cities areas and Council China As steadily. central will work proposed Well, macro demand question, taken for if report, example, the at cars to State our policies on China as of as well -- the

policies more So directly our far, supply And Cango. not of of the performance definitely, market on the factor fundamental the so Instead, whole of our impacting based is tightening a like observation, a business. in are has business. really favor impacted on as credit direct also, companies car the macro on

Shelley Wang

for that's Thank So me. you. all

Operator

Thank you.

from question Sachs. comes from Su Derek Your Goldman next

Derek Su

I'm from for question is fourth Sachs. Su the founding Derek your performance you. Congratulations Thank with strong quarter. Goldman My the your partnership in partners. about

what et your funding, for outlook is rate, what So rate? for outlook cetera? is interest take And of cost your

Jiayuan Lin

[Foreign invite our these I Language] Michael Zhang, to answer So will CFO, questions.

Michael Zhang

for you, have. partners and been We Well, funding the strategy expanding range quality [Foreign work of questions. partners. want our Language] Thank to more Derek, to your and we with has larger funding higher always

been cost even more have working to keep very been to with hard funds to offer our customers, competitive have keep acquisition cost customer very we products able of we this, will of decrease. working then And funding So the our be steady to and hard we helping -- our our the strategy. thereby

is by understand So bank able to been have paid -- stable. we us. the you mean, rate fee the probably take and our rate also the steady I to we take have keep

rate So as and also for well. cost to will steady take we funding our believe the steady be future, keep our of we able

Derek Su

Thank you.

Operator

you. Thank

back questions management to no closing at further hand the for time. We remarks. I now this call have will

Jiayuan Lin

your [Foreign all you joining call. for support. on this us for Thank Language] earnings and Thank your participation you

Thank concludes earnings today's call. that So you.

Cango (CANG) 12 Mar 212020 Q4 Earnings call transcript