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Cango Inc.
(NYSE: CANG)
First Quarter 2020
Investor Presentation
This presentation has been prepared by Cango Inc. (the “Company”) solely for information purpose and has not been independently verified. By viewing or accessing the information contained in this
material, the recipient hereby acknowledges and agrees that no representations, warranties or undertakings, express or implied, are made by the Company or any of its directors, shareholders,
employees, agents, affiliates, advisors or representatives as to, and no reliance should be placed upon, the accuracy, fairness, completeness or correctness of the information or opinions presented or
contained in this presentation. None of the Company or any of its directors, shareholders, employees, agents, affiliates, advisors or representatives or accept any responsibility whatsoever (in negligence
or otherwise) for any loss howsoever arising from any information presented or contained in this presentation or otherwise arising in connection with the presentation. The information presented or
contained in this presentation is subject to change without notice and its accuracy is not guaranteed.
Certain statements in this presentation, and other statements that the Company may make, are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements reflect the Company’s intent, beliefs or current expectations about the future. These statements can be recognized by the use of words
such as “expects,” “plans,” “will,” “estimates,” “projects,” “intends,” “anticipates,” “believes,” “confident” or words of similar meaning. These forward-looking statements are not guarantees of future
performance and are based on a number of assumptions about the Company’s operations and other factors, many of which are beyond the Company’s control, and accordingly, actual results may differ
materially from these forward-looking statements. The Company or any of its affiliates, advisers or representatives has no obligation and does not undertake to revise forward-looking statements to
reflect future events or circumstances.
This presentation does not constitute an offer to sell or issue or an invitation or recommendation to purchase or subscribe for any securities of the Company for sale in the United States or anywhere
else. No securities of the Company may be sold in the United States without registration with the United States Securities and Exchange Commission (the “SEC”) or an exemption from such registration
pursuant to the Securities Act of 1933, as amended (the “Securities Act”) and the rules and regulations thereunder. No part of this presentation shall form the basis of or be relied upon in connection with
any contract or commitment whatsoever. Specifically, these materials do not constitute a “prospectus” within the meaning of the Securities Act. In evaluating our business, we use certain non-GAAP
measures as supplemental measures to review and assess our operating performance. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating
performances, investors should not consider them in isolation, or as a substitute for net income attributable to the Company or other consolidated statement of operations data prepared in accordance
with U.S. GAAP.
Disclaimer
2
Figures as of March 31, 2020 unless otherwise stated
China’s leading Technology-enabled Automotive Transaction Services Platform
Delivering Strong Value to Key Participants in the Transaction Chain
45,688 (1Q20)
Car Dealers
60Other Industry
Participants
1,441,721 (1Q20)
Car Buyers16 (1Q20)
Financial
Institutions
Strategic Partners
Asset Light
Model
Strong
Profitability
Transaction Value
Chain Coverage
3
Our Services and Solutions along the automotive value chain
Automotive Financing Facilitation
Automotive Transaction Facilitation After-market Services Facilitation
Other Participants
Insurance Companies/ Brokers
Car Buyers$
Dealers
Financial
Institutions
Online
PlatformsCar Buyers
$
Dealers
OEM/ Wholesalers
Online Platforms
Car Buyers $
A
B C
4
Application
Submission
Time to
Approve
Identity
Verification
Signing of
Agreement
GPS
Installment
Transaction
Closed/Car
Pick-up
10+ pages
Paperapplication form
1 Week approval time
Onsiteverification
at bank’s branch
Papersigning
Lengthy process
at Specified
Locations
Days to
Weeks waiting
time
Traditional
Approach
100%electronic
application
Facial
recognition utilization
Electronic signing
QuickInstallment
Onsite
Within
Half a Day
Approach
Value Creation for Platform Participants
Financial
InstitutionsDealers Car Buyers
Driving Operating Efficiency
30.8%Average
Operating
Margin
2017-2019
Transforming the Auto Finance Experience
Notes:
1. Operating profit over revenue
(1)
80% application
less than 30 minutes
approval time
5
Rigorous Dealer
Screening Procedure
1Credit Underwriting
2Six-stage Delinquent
Asset Management
3
Notes:1. FY 2019
Internal Blacklist of
Fraudulent Dealers
Significant Lawsuits
Check Leveraging
Third-party
Databases
On-site Visits
100% GPS
Installation
Credit Assessment Collateral Registration
Automobiles
Required to be
Registered with
Local Government
Authorities
Manual Evaluation
If Necessary
Proprietary Credit
Assessment Model
Machine Learning
Algorithms
Proprietary
Model
Loan Applicant
Data
Dealer Data
Proprietary
Data
Automated
Reminder1
Live Phone Calls2
In-person Visits3
Professional
Repossession 4
Disposal5
Legal Actions6
36.9% / 10.5%Automatic Approval/Rejection (1)
Robust Risk Management Practices
6
CarSourcing
Value-addedServices
After-market Products
Leads Generation
Sales and Transaction Facilitation
New and used car
sourcing for dealers
Diversified channels
Dealer Training
Supply Chain Financing
Repair & maintenance
Insurance products
Diverse online traffic to
offline dealer networks
Customized financial
products for car buyers
Dealers
6% YoY Growth of number of dealers from
2018 year-end to 2019 year-end
Majority of dealers experienced
>30% increase in auto sales volume
12 contracts per active dealer in 2019
RMB0.86 mmloan origination per active
dealer in 2019
46%
59%
89%
95%
2016YE
2017YE
2018YE
2019YE
Continuously Optimizing Dealer Productivity
% of Self-operated Dealers
Comprehensive Toolkit to Empower Dealers
7
Competitive Advantages
Largest and powerful dealer network
1
Asset light model with diversified funding sources and limited
risk exposure
2
Comprehensive services and solutions along the automotive value
chain
3
Strategic partners as powerful external growth driver
4
88
Investment Highlights
Market Position & OpportunityLeadership in Fast-Growing Auto Financing Market with High Growth Potential
Strength of the PlatformDifferentiated, Asset-Light and Highly Profitable Model
Visionary Management TeamExtensive Experience in China’s Auto Industry
Huge Monetization PotentialNew Products and Services to Monetize the Entire Auto Value Chain
9
Expanding Market Share against Industry Headwind with Promising Opportunities
Ahead
Source: CEIC , China Auto Dealer Association, Oliver Wyman Report
Notes:
1. Market share defined as number of financing transactions facilitated divided by total new and used car sales during the same period
2. Source: IHS database; CPCA; CADA; BCG Analysis.
0.99%
1.27%
FY2018 FY2019
- 7.4%
- 2.6%
Industry Car Sales Volume YoY Growth Cango Market Share
Expanding Market Share Despite of Industry Headwind (1)
1
10
20
2324
23
21 21 21
31
2015 2016 2017 2018 2019E 2020 2021 2030
China passenger vehicles sales volume (Million)
China Passenger Vehicles Market (2)
CAGR (‘21-
’30): 4-5%
30 provinces
347cities
Notes:
1. As of December 31, 2019
2. As of March 31, 2020
4S dealers18.7%
Non-4S dealers81.3%
Tier-one and tier-two cities
27.5% Lower-tier
cities72.5%
Features of Our Dealers(1) Strategic Value to Cango
Gain First-mover
Advantage in an
Underserved
Market
Build up Network
Effect
Access Auto
Transaction Value
Chain
~45,688dealers in total
Closed
Transaction Loop
Largest Dealer Network in China with Deep Engagement Levels
(2)
(2)
(2)
11
Differentiated Business Model
Banks and Auto Financial Leasing Companies
Auto e-Commerce Companies
Powerful Dealership Network Weak Dealer PresenceInefficient Online Leads
Conversion
Financing to Transaction Value Chain Financing Only Transaction to Financing for
Monetization
Scalable Platform with 28%+ Net Margin(1) Low ProfitabilityUnproven Profitability
Diversified Funding Facilitation
with Limited Credit RiskOn-balance Sheet ModelFull Guarantee Model
Notes:
1. FY201912
SHA: 601229
SHA: 601398
Asset-light Model with Diversified Funding Sources and Limited Risk Exposure
Overview of Major Funding PartnersDiversified Funding with Limited Risk Exposure
Loan Origination By Funding Partners
FY2019
Notes:
1. As of December 31, 2019
2. US$1 = RMB 6.9618; total asset as of Dec 31, 2019, unless otherwise stated
3. Based on “The Banker” in terms of tier–1 capital in 2019
Total Asset
(US$Bn)(2)
322
42
4,324
49%
Remarks
• 68th largest bank in the world(3)
• First private commercial bank in
China backed by
• Largest bank in the world(3)
Type
• Direct Partnership:
Risk-Taking
Jiangnan Rural
Commercial Bank
59 • 10thlargest rural commercial bank
in China
• Direct Partnership:
Risk-Free
• Co-partnership:
Risk-Free
• Direct Partnership:
Risk-Taking
Jincheng Bank
12 • Well recognized player in auto financing• Direct Partnership:
Risk-Free
74
%
Direct PartnershipCo-partnership:
7 Financial
institutions led by
More to come…
(1)
74.4%
7.4%
18.2%
2
SHA: 600016
960 • 28th largest bank in the world(3) • Direct Partnership:
Risk-Taking
13
Xiaojun ZHANG
Co-founder and Chairman
20+ years of experience in automotive
industry
Served as a financial supervisor of People’s
Bank of China, Shanghai Branch
Bachelor’s degree in finance from Shanghai
University of Finance and Economics and
master’s degree in business administration
from Peking University. Completed China
Senior Executive Program at Harvard
Business School
Visionary Management: Pioneers in China Auto Financing Industry3
14
Jiayuan LIN
Co-founder and CEO
20+ years of experience in automotive industry
Served as the Deputy Manager of the Audit
Division and Deputy Manager of the Credit
Division in the Finance Department at Pudong
Branch of Bank of China
Bachelor’s degree in finance and economics
from Shanghai University of Finance and
Economics. Completed the China Senior
Executive Program at Harvard Business
School
Yongyi ZHANG
CFO
25+ years of experience in finance and capital
market
Worked as an auditor at Arthur Anderson
(Shanghai Office)
Bachelor’s degree in international accounting
from Shanghai University of Finance and
Economics
New Strategic Initiatives: Working with OEMs
More national banks and prestigious funding
partners to join…
Vast dealer network in lower-tier cities
in addition to OEMs’ existing 4S
network
Direct funding from banks with low
funding costs
Extensive experience in offering such
products
Value Creation
Funding partners: diversified loan
portfolio & attractive asset class
OEMs: extend sales channels and
diversified funding support to boost sales
Car buyers: cost-effective and convenient
auto-financing solutions
Cango’s Core Competencies
More foreign and sino-foreign joint
venture OEMs to come…
Over 40 domestic OEMs partnering with us(1)
Low interest
OEM-subsidized
and non-
subsidized auto
financing
products for car
buyers
Note1: As of December 31, 2019
4
15
Auto
Insurance
Distribution
Anti-theft
Assurance
New Business Initiatives: Insurance Facilitation
Accident
Insurance
Number of Policy Sales
in 2019
355,880
207,377
As % of Total Transactions
Facilitated by Cango
91.2%
53.2%
Partner with more insurance companies to facilitate auto
insurance distribution
Potential high attachment
ratio to auto financing
solution
Minimal extra customer
acquisition cost
Highly scalable
High profit margin
16
Financial Highlights
Total Financing Transactions
(RMB bn)
Total Revenue
(RMB mm)
18
0.7x1.3x 1.3x
Cost of Revenue Operating Expenses(RMB mm)(RMB mm)
1.3x 0.7x
21.7
28.1
6.6 4.4
FY2018 FY2019 1Q2019 1Q2020
1,091
1,440
352 246
FY2018 FY2019 1Q2019 1Q2020
167 193
46 46
151237
65 57
47
57
13 13
FY2018 FY2019 1Q2019 1Q2020
Research and development
General and administrative
Sales and marketing
430
539
131 91
FY2018 FY2019 1Q2019 1Q2020
Robust Topline Business Growth with Improved Cost Structure
0.7x
18
661
901
221155
FY2018 FY2019 1Q2019 1Q2020
307
405
74
-35
FY2018 FY2019 1Q2019 1Q2020
Gross Profit Net Income (loss)
(RMB mm) (RMB mm) MarginMargin
62.6%60.6%
1.4x
63.2%62.8%
0.7x
28.1%28.1%
1.3x
-14.1%21.1%
-0.5x
Gross Profit and Net Income
Non-GAAP Adjusted Net Income
(loss)(1)
(RMB mm)
-0.1x1.4x
340
487
90
-11
FY2018 FY2019 1Q2019 1Q2020
Note 1: Non-GAAP adjusted net income is defined as net income excluding share-based compensation expenses
19
Select Balance Sheet ItemsIn RMB million Dec 31, 2019 March 31, 2020
Assets
Cash and cash equivalents 2,002.3 2,741.0
Restricted cash 971.0 690.0
Short-term investments 597.3 741.5
Short-term finance leasing receivable, net 1,661.1 1,669.5
Others 309.1 228.3
Total current assets 5,540.8 6,070.3
Restricted Cash 873.7 909.0
Long-term finance leasing receivable, net 1,449.0 1,252.3
Others 873.1 908.2
Total non-current assets 3,195.8 3,069.5
Total Assets 8,736.6 9,139.8
Liabilities
Short-term borrowings 1,439.7 1,192.9
Long-term debts-current 863.4 1,348.4
Accrued expenses and other current liabilities 278.7 174.3
Risk assurance liabilities 260.0 366.9
Income tax payable 67.3 59.2
Total current liabilities 2,909.1 3,141.7
Long-term borrowings 301.7 485.2
Deferred tax liability 12.3 14.4
Other non-current liabilities 21.8 13.7
Total non-current liabilities 335.8 513.3
Total Liabilities 3,244.9 3,655.0
Cango's equity 5,477.8 5,484.8
Non-controlling interests 13.8 0.2
Total shareholders’ equity 5,491.7 5,484.8
Total liabilities and shareholders’ equity 8,736.6 9,139.8
20
21
THANK YOU!
NYSE:CANG
Caesar Cao
Cango Inc.
Tel: +86 21 3183 5088 ext.5521
Email: [email protected]
Emilie Wu
The Piacente Group
Tel: +86 21 6039 8363
Email: [email protected]