Cango Inc. (CANG) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

June 8, 2023 9:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and good evening, everyone. Welcome to Cango, Inc.'s First Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. The call is also being broadcast live on the company's IR website.

Joining us today are Mr. Jiayuan Lin, Chief Executive Officer; and Mr. Yongyi Zhang, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct the Q&A session.

Before we 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.

With that said, I'm now turning the call over to Mr. Jiayuan Lin, CEO of Cango. Please go ahead, sir.

Jiayuan Lin

Hi everyone. Welcome to Cango's first quarter 2023 earnings call. Due to a variety of issues, notably COVID-19, the automotive industry remained slow throughout 2022. The macro economy began to show indications of steady recovery in 2023, the first year of the post-pandemic era, made a hopeful basis for a revival in China's auto sector. Despite this encouraging trend, the market remained weak in the first quarter due to constrained consumer spending caused by factors such as the Spring Festival Holiday, the loss of national subsidies and a price war that began in March.

According to China Passenger Car Association, retail sales volume of passenger vehicles declined 13.4% year-on-year in the first quarter. We predict the overall passenger vehicle market to remain volatile into 2023 owing to persistent pressure from weaker market demand.

Cango reacted promptly to changing macro economic and industry conditions by using our resources and constantly expanding our capacity to capture long term growth opportunities. Our Cango Haoche and Cango U-Car apps are now fully operational showcasing our capacity to successfully develop a full service automotive transaction ecosystem centered on both new and used cars by refining our service capabilities and enhancing our operating skills.

In the first quarter of 2023, our overall revenues of RMB540 million, down 31% year-on-year but up 11% quarter-on-quarter. Revenues from car trading transactions were RMB430 million, accounting for 79% of total revenues, reinforcing our position as a strong growth engine.

Our company's net income for the first quarter was RMB78.8 million, primarily due to an increase in gain on risk assurance liabilities, and the newly implemented accounting standards and the reversal of credit impairment loss due to asset quality improvement. The entire outstanding balance of financing transactions we facilitated have reduced from RMB25.6 billion as of December 31, 2022 to RMB20.7 billion as of March 31, 2023, with our M1 + and M3 + percentages falling to 2.33% and 1.29% respectively.