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Autohome

Founded in 2008 as a media content platform, Autohome is the leading online automobile platform in China, ranking first among automotive service platforms in terms of mobile daily active users, according to QuestMobile. Through its two websites, autohome.com.cn and che168.com, Autohome delivers comprehensive, independent and interactive content and tools to automobile consumers as well as a full suite of services to automakers and dealers. According to iResearch, the company was the largest online automotive advertising and lead generation service provider with 30% market share, in terms of media services and lead generation revenue, in China's online auto platform media advertising market in 2019.

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Shares of US-listed Chinese stocks are trading lower after Chinese planning officials reportedly fell short of investor stimulus expectations.

<h4>Key Takeaways:</h4>
<ul>
<li>Cango&rsquo;s used car exporting platform has listed more than 60,000 car models and signed up more than 20,000 registered users since its launch in March</li>
<li>The company is shifting gears from direct car trading to an asset-light model of providing related services to reduce its inventory risk as China&rsquo;s car market slows</li>
</ul>
By Doug Young
When its history is written, the story of&nbsp;Cango Inc.&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cang#NYSE">CANG</a>) will be a tale that in many ways parallels the many twists and turns in China&rsquo;s rapidly evolving car industry.
The company initially focused on car finance, as it profited from a booming auto market that passed the U.S. to become the world&rsquo;s largest, fueled by a new Chinese middle class racing to buy new vehicles. Later, the company shifted gears and began providing domestic auto trading services after China began reining in private financial companies over concerns about their lack of risk management experience.
About a year ago Cango also put the brakes on its fledgling business of directly trading in autos, worried about getting stuck with unsold inventory as China&rsquo;s car market began to slow. Now, its&nbsp;<a href="https://www.prnewswire.com/news-releases/cango-inc-reports-second-quarter-2024-unaudited-financial-results-302233913.html">latest results</a>&nbsp;released last week show it&rsquo;s tapping the accelerator on its latest initiative to export used Chinese cars to the rest of the world. At the same time, the company is continuing to develop its domestic car-trading business, but with a focus on providing related services that typically carry much higher margins than its previous focus on self-trading.
All those changes, most within just the last three years, have caused the company&rsquo;s revenue to rapidly shrink, in large part because it no longer buys and sells cars and instead only generates revenue from fees related to such trading. That shifting of gears led the company&rsquo;s revenue to tumble by 93% in the second quarter year-on-year to 45.1 million yuan ($6.4 million) from 675.4 million yuan a year earlier.
Investors seem to like the company&rsquo;s conservative approach as China&rsquo;s car market undergoes a painful correction after more than two decades of explosive growth. Cango&rsquo;s shares are up 74% so far this year, in sharp contrast with leading car trading services provider&nbsp;Autohome&rsquo;s&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/athm#NYSE">ATHM</a>) 10.8% decline over that period and an even larger 78% drop for smaller rival&nbsp;Uxin&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/uxin#NASDAQ">UXIN</a>), which directly buys and sells used cars. The stock gave back a little of those gains after the results came out, closing down 2.8% the next day.
One of Cango&rsquo;s biggest assets is its huge cash pile, which the company can use to weather the current downturn while it determines what direction it will ultimately take. The company had 3.65 billion yuan in cash and short-term deposits at the end of June, which was up slightly from three months earlier, thanks to its cautious posture that allowed it to earn a profit for the latest reporting period. It has maintained those high cash levels despite authorizing $250 million in share buybacks and doling out three large special dividends in the six years since its 2018 IPO.
Cango CEO Lin Jiayuan has watched China&rsquo;s car market sputter over the last year, frequently noting how a majority of dealers are losing money as the market remains gripped in near-constant price wars. He repeated that refrain with the latest results, saying a sluggish car market in the second quarter created &ldquo;significant challenges for the industry.&rdquo; He pointed out that sales of vehicles made in China fell 2.7% in June year-on-year to 2.55 million units.
The rate of decline accelerated to 5% in July, according to the China Association of Automobile Manufacturers. Sales of China-made passenger vehicles inside China tumbled by an even bigger 10% for the month, though that was partly offset by a 20% jump to 400,000 locally made Chinese vehicles that were exported during the month.
<h3>Focus On Exports</h3>
With Chinese car exports booming, even as the domestic market stalls, it&rsquo;s not difficult to see why Cango is shifting its focus to strong global demand for Chinese cars. Seeing that opportunity, the company launched its Autocango.com site in March, and reported the site had attracted more than 20,000 registered users in 207 countries and regions worldwide by the end of August. It added that Autocango.com now lists more than 60,000 car models covering 85,000 actual products and got an average of more than 10,000 views per day in June.
Lin said that Autocango.com has &ldquo;quickly gained traction among global audiences.&rdquo;
&ldquo;In the second quarter, we significantly expanded Autocango.com&rsquo;s market coverage as well as its range of products and services offerings,&rdquo; he said on the earnings call. &ldquo;Ultimately, we aim to position Autocango.com as the premier gateway for exporting Chinese used cars.&rdquo;&nbsp;
Cango is making its export drive as China tied or passed Japan to become the world&rsquo;s biggest car exporter last year, depending on which statistics you look at. China&rsquo;s vehicle exports continued to zoom in the first half of 2024, rising 30.5% to nearly 2.8 million units, meaning it&rsquo;s almost certain to take the undisputed global crown as the world&rsquo;s top exporter this year.
China&rsquo;s broader export drive has started to meet with some pushback in markets including the U.S., Europe and Canada, which have levied big tariffs to prevent a flood of Chinese imports. But so far, at least, those other markets haven&rsquo;t announced tariffs against used Chinese cars that are Cango&rsquo;s export focus. The company didn&rsquo;t give any data for revenue or transactions from Autocango.com so far, meaning the numbers are probably still relatively small.
On the domestic front, Cango continued to refine its Cango U-Car platform in the second quarter to focus on the more asset-light model of providing services to car traders rather than directly engaging in actual car trading. The platform, which was only launched early last year, facilitated 266 vehicle transactions during the second quarter and successfully auctioned 124 vehicles. It currently has over 260,000 vehicle listings.
&ldquo;Over the past quarter, we focused on enhancing the competitiveness of Cango U-Car by ensuring a consistent supply of high-quality vehicles, optimizing dealer experiences and supply chain management, and improving the convenience and security of cross-regional deliveries,&rdquo; said Lin.
Cango forecast its revenue would continue dropping to between just 20 million yuan and 25 million yuan in the third quarter, which would represent a 94% year-on-year decline at the midpoint. But the figure doesn&rsquo;t really tell too much about the company&rsquo;s latest direction, since most of it comes from other things besides Cango&rsquo;s core car-trading business.
Under its more asset-light model, Cango reduced its cost of sales to 58.8% of revenue in the second quarter from a much higher 91.2% a year earlier. The company is also being quite cautious with most of its expenses, with the exception of general and administrative expenses, which rose by a modest 6.5% in the second quarter. As a result, it was able to more than double its net profit for the quarter to 86 million yuan from 36.2 million yuan a year earlier.
This article is from an unpaid external contributor. It does not represent Benzinga&#39;s reporting and has not been edited for content or accuracy.

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Cango Jumps On China Car Export Bandwagon With Focus On Used Vehicles

Autohome shares are trading higher after the company announced it approved a new share repurchase program to buy up to $200 million worth of shares.

News

Buybacks

Autohome's Board Of Directors Approved A New Share Repurchase Program To Buy Up To $200M Worth Of Shares Over The Next 12 Months, Effective September 4, 2024

Autohome (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ATHM#NYSE">ATHM</a>) reported quarterly Adj Earnings Per ADSof $0.65 per share which beat the analyst consensus estimate of $0.56 by 16.07 percent.&nbsp;

Earnings

Autohome Q2 Adj Earnings Per ADS $0.65 Beats $0.56 Estimate

Earnings Beats

Autohome Q2 2024 Adj. Earnings Per ADS RMB4.71 Beats RMB4.09 Estimate, Sales RMB1.873B Inline

Benchmark analyst Fawne Jiang downgrades Autohome (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ATHM#NYSE">ATHM</a>) from Buy to Hold.

Downgrades

Analyst Ratings

Benchmark Downgrades Autohome to Hold

Citigroup analyst Brian Gong downgrades Autohome (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ATHM#NYSE">ATHM</a>) from Buy to Neutral and lowers the price target from $31 to $28.

Price Target

Citigroup Downgrades Autohome to Neutral, Lowers Price Target to $28

<h4>Key Takeaways:</h4>
<ul>
<li>Cango&rsquo;s revenue has fallen sharply in recent quarters, including an 88% drop in the first quarter, as it downplays its self-operated car-trading service to reduce inventory risk</li>
<li>The company launched its Autocango cross-border car trading platform in March, aiming to tap foreign demand for used Chinese cars</li>
</ul>
By Doug Young
As China&rsquo;s auto market slows after years of breakneck growth, car trader&nbsp;Cango Inc.&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cang#NYSE">CANG</a>) is following many of its peers by looking outward for new opportunities. But such a dramatic shift for the domestically focused company will take time &ndash; a reality that&rsquo;s reflected in its&nbsp;<a href="https://www.prnewswire.com/news-releases/cango-inc-reports-first-quarter-2024-unaudited-financial-results-302170561.html">latest quarterly report</a>&nbsp;that shows plunging revenue but steady profits as Cango becomes more cautious at home while starting to build a new cross-border car trading platform.
In looking abroad, Cango is following a recent trend that saw China nearly catch or even overtake Japan to become the world&rsquo;s biggest auto exporter last year, depending on which statistics you look at. That surge has been driven in part by China&rsquo;s huge production capacity for new energy vehicles (NEVs), as Beijing prioritizes development of that sector.
China&rsquo;s car exports rose 63.7% last year to 4.1 million vehicles, while domestic sales rose by a much slower 4.1%. China&rsquo;s domestic auto market has been steadily slowing since peaking at 24 million annual vehicle sales in 2017. Domestic sales last year totaled 21.9 million vehicles, down 9% from the peak, as consumers grow increasingly cautious on big-ticket purchases in a slowing national economy.
&ldquo;In the first quarter of 2024, the Chinese automotive industry continued to encounter significant challenges,&rdquo; said Cango CEO Lin Jiayuan. &ldquo;Traditional automakers are under pressure to transform and adapt to the new energy era and emerging new energy vehicle manufacturers are facing intense market competition and severe profitability struggles.&rdquo;
Cango started out as an auto financier but has nearly wound down that business and began shifting to car-trading services more than two years ago. It initially obtained a big part of its car-trading revenue by directly buying and selling cars. But lately it has withdrawn from that business over concerns about falling prices and getting stuck with unsold inventory.
As a result of that shift, the company&rsquo;s revenue plunged 88% in the first quarter to 64.4 million yuan ($8.9 million) from 542.6 million yuan a year earlier. Of the latest total revenue, only 3.4 million yuan came from car-trading services, down from 430 million yuan a year earlier.
&ldquo;We strategically adapted to a changing market by streamlining our self-operated new car business,&rdquo; said Lin. &ldquo;While this segment previously generated significant revenue, it offered lower profit margins. And this proactive shift has led to a decrease in total revenue but our core business has transitioned to facilitation services with much higher gross profit margins due to a leaner cost structure.&rdquo;
In fact, most of the company&rsquo;s revenue in the first quarter came from its non-car-trading businesses, including gains related to its older financing business, as well as from interest income and gains related to the sale of some of its investments.
The bottom line was that Cango earned a net profit of 90 million yuan in the first quarter, in a rare instance of a company reporting a higher profit than its revenue. As it reined in its spending and became more conservative, its cash and short-term investments more than doubled to 3.5 billion yuan at the end of March from 1.6 billion yuan three months earlier.
<h3>Eye On&nbsp;Exports</h3>
Cango is hardly abandoning its domestic car-trading business, which it has been fine tuning over the last year, including the merging of two previous platforms into Cango U-Car, a single platform for both used and new car trading. That platform had 8,459 registered dealers in 251 cities by the end of March, and facilitated 124 used car auctions, including 42 hosted on its own platform.
But for now, at least, the company is shifting its sights to the global used car market, hoping to tap demand from foreigners, most likely in developing nations, for a wide array of used Chinese cars. It passed an important milestone in March with its launch of Autocango, an information platform for such cross-border trading. It followed earlier this month with Autocango 2.0, and the site now features more than 75,000 items and 60,000 car models.
Cango hasn&rsquo;t commented on how it plans to earn money from the new service. Most likely it would collect transaction-related fees in the many steps of the relatively complex process of buying and paying for a used car from China and shipping it to its final destination.
Cango executives said their first goal is to build up traffic on the site and add select supporting services like car testing and delivery. The company is also exploring the potential for creating &ldquo;risk reduction packages&rdquo; that would boost buyer confidence by making sure the entire trading process is transparent and that all its various steps run smoothly.
&ldquo;This platform fills the gap in cross-border used car information services, providing valuable insights to global users, and our goal is to become the go-to gateway for Chinese used cars entering the international market,&rdquo; said Lin.
Investors seem to like Cango&rsquo;s conservative approach in the current environment of economic uncertainty. The company&rsquo;s stock is up around 80% since the start of the year. And while the shares fell 15.5% last week on the day after the latest earnings announcement, they regained most of that over the next three trading days.
The company&rsquo;s rapidly shrinking revenue has actually helped to boost Cango&rsquo;s price-to-sales (P/S) ratio, which passed above the important benchmark of 1 in the first quarter to its current reading of 1.11. That&rsquo;s still behind leading Chinese car trader&nbsp;AutoHome&rsquo;s&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/athm#NYSE">ATHM</a>) P/S of 3.27, and also trails U.S. used car giant&nbsp;Carvana&rsquo;s&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cvna#NYSE">CVNA</a>) 2.09. But it&rsquo;s well ahead of the 0.05 for the more comparable&nbsp;Uxin&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/uxin#NASDAQ">UXIN</a>), which, unlike Cango, continues to use a self-operated car-trading business model.
At the end of the day, Cango has quite a lot of cash that it could use for a variety of purposes. Those could involve more shareholder-focused uses like paying dividends or buying back its shares, both of which the company has previously done. Or it could focus on more strategic uses like accelerating development of its domestic and international car-trading services. Now it just needs to decide which road it will travel.
This article is from an unpaid external contributor. It does not represent Benzinga&#39;s reporting and has not been edited for content or accuracy.

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CVNA

Cango Reduces Risks At Home, Looks Overseas For New Opportunities

Autohome (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ATHM#NYSE">ATHM</a>) reported quarterly earnings of $0.56 per share which beat the analyst consensus estimate of $0.49 by 14.29 percent. This is a 1.75 percent decrease over earnings of $0.57 per share from the same period last year. The company reported quarterly sales of $222.85 million which beat the analyst consensus estimate of $220.60 million by 1.02 percent. This is a 0.21 percent decrease over sales of $223.31 million the same period last year.

CORRECTION: Autohome Q1 EPADS $0.56 Beats $0.49 Estimate, Sales $222.85M Beat $220.60M Estimate

Autohome&nbsp;Inc&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ATHM#NYSE">ATHM</a>) reported first-quarter FY24 revenues of RMB1,609.1 million&nbsp;($222.9 million),&nbsp;beating&nbsp;the&nbsp;<a target="_blank" href="https://www.benzinga.com/pressreleases/24/05/n38693257/autohome-inc-announces-unaudited-first-quarter-2024-financial-results" rel="noreferrer noopener">consensus of&nbsp;$220.60 million</a>.
Quarterly media services revenues were RMB327.4 million&nbsp;($45.3 million), compared to RMB361.5 million a year ago.
Leads&nbsp;generation services revenues were RMB726.4 million&nbsp;($100.6 million), compared to RMB680.6 million.
Online marketplace and&nbsp;others&nbsp;revenues were RMB555.2 million&nbsp;($76.9 million)&nbsp;in the&nbsp;first quarter&nbsp;of 2024, compared to RMB491.5 million a year ago.
Adjusted net income was RMB493.9 million&nbsp;($68.4 million), compared to RMB483.5 million in the year-ago period.
China&#8217;s&nbsp;online destination for automobile consumers posted an adjusted earnings per ADS of&nbsp;$0.56, beating the&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/earnings" rel="noreferrer noopener">consensus of&nbsp;$0.49</a>.
Tao&nbsp;Wu, Chief Executive Officer of Autohome, said,&nbsp;&#8220;For our users, according to QuestMobile, average mobile daily active users grew by 8.1% year-over-year to 69.39 million in March, highlighting&nbsp;the effectiveness of our content-focused strategy on attracting users.&nbsp;For our innovative businesses,&nbsp;Autohome Space&nbsp;is expanding further geographically, with&nbsp;a number of&nbsp;new franchise stores on track to open this year.&#8221;
As of March-end, the company had cash and equivalents of&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/guidance" rel="noreferrer noopener">RMB23.65 billion&nbsp;($3.27 billion)</a>.&nbsp;
Craig Yan Zeng, Chief Financial&nbsp;Officer,&nbsp;commented,&nbsp;&#8220;Revenues from our data products continued their strong upward growth trajectory, while revenues from new energy vehicle&nbsp;(&#8220;NEV&#8221;)&nbsp;brands remained robust, with a quarterly growth rate that consistently outpaces the broader industry.&nbsp;Our new retail business also bolstered our topline, enhancing our revenue sources.&#8221;
Investors can gain exposure to the stock&nbsp;Invesco China Technology ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CQQQ#NYSE">CQQQ</a>) and&nbsp;American Century ETF Trust Avantis Emerging Markets Small Cap Equity ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AVEE#NYSE">AVEE</a>).
Price Action:&nbsp;ATHM shares are up by&nbsp;3.99%&nbsp;at&nbsp;$28.09&nbsp;at the last check Wednesday.

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China's Autohome Floors It On Sales, User-Base: Details

<h4>Key Takeaways:</h4>
<ul>
<li>Autostreets is reportedly aiming to raise $100 million or more in a Hong Kong IPO, seeking a rich valuation as China&rsquo;s leading used-car trader</li>
<li>Growth of used car sales in China is expected to accelerate in the next five years as Beijing promotes the sector and consumers become more budget conscious</li>
</ul>
By Doug Young
Autostreets Development Ltd., China&rsquo;s leading provider of used car trading services, doesn&rsquo;t look too exciting as an investment, at least based on its last three years of operating data contained in its&nbsp;<a href="https://www1.hkexnews.hk/app/sehk/2024/106225/documents/sehk24041801935.pdf">Hong Kong listing application</a>&nbsp;filed in February. But a closer read of the application, which passed its listing hearing at the Hong Kong Stock Exchange last week, shows a company that may be the driver&rsquo;s seat for some strong growth in the next few years.
The 10-year-old company has quite a few things going for it and seems to think quite highly of itself in terms of valuation. It counts U.S. used car authority&nbsp;Cox Automotive, owner of the Kelley Blue Book and Autotrader.com brands, as its second largest shareholder with 11% of its stock. The company is China&rsquo;s leading used car trader, with 12.6% of the market for platforms handling such trading in 2022, according to its listing document.
At the same time, the company looks set to benefit from an expected boom in used car buying in China in the years ahead, driven by two factors. One of those is&nbsp;<a href="https://thebambooworks.com/perfect-storm-of-factors-fuels-rise-in-smartphone-recycling/">recent government support</a>&nbsp;for recycling. The other is China&rsquo;s slowing economy, which is likely to prompt increasingly cost-conscious consumers to purchase more used cars over new ones.
Such a boom would contrast sharply with weakness in China&rsquo;s used car market over the last three years due to the country&rsquo;s strict Covid restrictions in 2021 and 2022, followed by more weakness in the first half of 2023 as many people became infected when restrictions were finally lifted. Used car buying suffered more than new cars during the pandemic, since buyers were often prevented from attending offline auctions where many used cars are typically sold.
Third-party data in Autostreets&rsquo; listing document said China&rsquo;s used car market grew just 6.9% annually in the five years from 2019 to 2023, with 14.4 million used vehicles sold last year. But the growth rate is expected to accelerate sharply to 13.7% annually between 2023 to 2028, fueled by the factors we&rsquo;ve mentioned above.
On the policy front, China&rsquo;s State Council, the country&rsquo;s cabinet, in March announced an &ldquo;Action Plan to Promote in Large Scale Equipment Renewal and Trade-in of Consumer Goods,&rdquo; which included support for used-vehicle trading. That was followed a month later by a similar plan from the Commerce Ministry, which set a target of boosting used-car trading by 45% between last year and 2028.
When such specific messaging comes from the central government, local governments often follow on with their own specific action plans. And in this case, Autostreets pointed out that major cities like Shanghai and Jinan, as well as Hunan province, have already announced their own rules to promote used vehicle trading. With that kind of government support, companies like Autostreets look well-positioned for big growth as demand jumps for their services.
<h3>High Valuation</h3>
Autostreets realizes it&rsquo;s in a sweet spot and appears to be hoping for a valuation that looks well beyond those for its national and global peers. The best comparison for the company is China&rsquo;s own&nbsp;Autohome&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/athm#NYSE">ATHM</a>), which currently trades at price-to-earnings (P/E) and price-to-sales (P/S) ratios of 11 and 3, respectively.
Similar valuations for Autostreets would value the company at between $150 million and $200 million, based on its revenue and adjusted profit for 2023. Even a P/E ratio of 22, similar to that for leading U.S. used car trader&nbsp;Carmax&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kmx#NYSE">KMX</a>), would only value Autostreets at about $325 million. But a report from the authoritative IFR says the company is aiming to raise about $100 million in its IPO, which suggests it is seeking a valuation of $800 million or more.
Other information in the listing document suggests that Autostreets previously explored a potential listing in the U.S. at an unspecified date, and that at that time it was valued at about the $1 billion level.
All that said, we&rsquo;ll return to the company&rsquo;s financials, which, as we noted at the top, certainly don&rsquo;t look like reason for too much excitement. Those numbers all tell roughly the same story, namely that Autostreets experienced a sharp business slowdown in 2022 as Covid restrictions affected its business, and then began to rebound in 2023.
Its revenue fell 31% from 678 million yuan ($94 million) in 2021 to 468 million yuan in 2022, before rebounding by a much smaller 5% to 492 million yuan last year. Autostreets pointed out its growth started accelerating strongly in the second half of last year as life returned to normal after the pandemic, with its vehicle transaction volume up 21% year-on-year in the last six months of 2023.
The company derives all of its revenue from various car trading fees and services, allowing it to maintain relatively high margins while shouldering low risk. Its gross margin was relatively steady over the three-year period, falling from 62.8% in 2021 to 60.9% in 2022, before bouncing back to 63.5% in 2023.
The company is largely a B2B services provider, working mostly with professional car sellers and buyers rather than individual consumers. Growing confidence in its services among those large customers is reflected in the growing amount of revenue the company receives for each car sold, with the figure rising 27% from 1,280 yuan in 2021 to 1,636 yuan last year.
The company has been cash flow positive in each of the last three years, and posted an adjusted profit of 107 million yuan last year, up from 70 million yuan in 2022. One minor red flag is the company&rsquo;s falling &ldquo;transaction success rate,&rdquo; which is defined as the number of used cars that successfully trade as a percentage of all vehicles put up for sale. That success rate fell from 73% in 2021 to just 46% last year, with the company blaming growing numbers of people putting up used vehicles for sale, even as buyers remained conservative.
At the end of the day, Autostreets looks like it&rsquo;s quite well-positioned to profit from a coming boom in China&rsquo;s used car market, even if it may be seeking an optimistically high valuation.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

Autostreets In The Driver's Seat As China Gets Set For Used Car Trading Boom

<h4>Key Takeaways:</h4>
<ul>
<li>Cango has launched a new app, AutoCango, to facilitate the export of used Chinese cars to dealers in developing markets</li>
<li>The company&rsquo;s revenue plunged 73% in last year&rsquo;s fourth quarter, but it remains relatively well regarded by investors due to its conservative stance in China&rsquo;s difficult car market</li>
</ul>
By Doug Young
If you can&rsquo;t stand the heat in China&rsquo;s intensely competitive car market, then you get out of the kitchen.
Of course that&rsquo;s a slight exaggeration, but it&rsquo;s not too far from the latest approach by&nbsp;Cango Inc.(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cang#NYSE">CANG</a>), a former auto financier now trying to become a leading provider of auto trading services in the world&rsquo;s largest car market. Following a major pivot in its domestic strategy late last year in response to intense competition, Cango disclosed yet another major new turn in its roadmap in its&nbsp;<a href="https://www.prnewswire.com/news-releases/cango-inc-reports-fourth-quarter-and-full-year-2023-unaudited-financial-results-302085219.html">fourth quarter results</a>&nbsp;released on Monday.
That turn will see Cango try to position itself as a leading facilitator of used Chinese car sales to developing markets. Such a move may sound radical, but it dovetails with a recent boom in Chinese new car exports that has seen the country challenge Japan for the spot as the world&rsquo;s top auto exporter.
The Chinese companies are looking overseas after building up huge capacity that fed the country&rsquo;s huge demand for cars as its economy boomed over the last two decades. But with that economy now braking, intense competition at home has driven many companies to look overseas for new markets. Cango is facing similar problems as the many Chinese auto dealers that are its main revenue source are now losing money.
&ldquo;2023 was a challenging year &hellip; In the automobile sector, intense competition hastened the survival of the fittest, transforming the industry landscape,&rdquo; said Cango CEO Lin Jiayuan. &ldquo;We see significant potential in China&rsquo;s burgeoning used car export market, unlike the fierce competition within the domestic market. China, as the world&rsquo;s largest auto manufacturer and consumer, possesses a vast pool of used cars, a gold mine for exporters.&rdquo;
Lin&rsquo;s unveiling of the export initiative comes just months after Cango made another major shift by merging its two recently launched platforms for new and used car trading into a single platform called U-Car. It called the shift strategic, saying it reflected an increasingly blurring line between new and used car dealers.
Amid all those shifts, investors still seem surprisingly attracted to Cango. Its stock rose 2% after its latest quarterly results announcement. The shares are up around 50% so far this year, giving the company a price-to-sales (P/S) ratio of 0.72. Leading domestic rival&nbsp;Autohome&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/athm#NYSE">ATHM</a>) trades at a higher 3.24, but&nbsp;Uxin&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/uxin#NASDAQ">UXIN</a>) is far lower at just 0.04. And even U.S. used car giant&nbsp;CarMax&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kmx#NYSE">KMX</a>) is lower at 0.48.
The big attraction for investors appears to be Cango&rsquo;s deep financial reserves, which are actually growing as it remains cash flow positive thanks to its conservative stance. The company had 3.3 billion yuan ($459 million) in cash and short-term investments at the end of last year, up from 3.1 billion yuan just three months earlier. By comparison, Uxin had just 64 million yuan in cash at the end of last June.
<h3>Looking Overseas</h3>
Lin revealed that Cango took its first step to tap global markets with its launch earlier this month of AutoCango, which offers information and related services on used Chinese cars to dealers in emerging markets. He said the service already has information on more than 75,000 cars, and is adding another 500 to 1,000 each week.
&ldquo;China has a well-developed logistics network, ensuring efficient and secure delivery of used cars to international buyers,&rdquo; he said. The service&rsquo;s newness means it has yet to facilitate any exports of used Chinese cars. But investors will almost certainly be looking for updates in the company&rsquo;s next quarterly report in around three months&rsquo; time.
China exported more than 5 million cars last year, threatening Japan&rsquo;s longtime position as the world&rsquo;s largest exporter. Two of the country&rsquo;s biggest export destinations were Russia and Mexico, which look like the kinds of developing markets that could also hold potential for the new AutoCango service.
Cango launched the overseas drive as its current domestic business is going nowhere fast. Its revenue plunged 73% to 130.2 million yuan in last year&rsquo;s fourth quarter, which was in line with its forecast given three months earlier. Car trading accounted for the single largest revenue source, down 88% to 53.2 million yuan from 431.1 million yuan a year earlier.
Significantly, its cost of revenue fell to 85.1% of total revenue in the latest quarter from 98.9% a year earlier, CFO Zhang Yongyi said on Cango&rsquo;s earnings call, marking an important improvement as it tries to return to sustained profitability.
While its revenue was down sharply, so were most of its costs, including a 77% decline in sales and marketing expenses and a 31% drop in general and administrative expenses. As a result, its operating loss narrowed sharply to 28.9 million yuan from 211.6 million yuan a year earlier, while its net loss fell to 103.8 million yuan from 558.9 million yuan.
The company said its revenue would continue to drop sharply in the current quarter. It forecast revenue of just 50 million yuan to 100 million yuan for this year&rsquo;s first quarter, which would represent an 86% decline at the midpoint from 542.6 million yuan a year earlier.
As uncertainty loomed large in its home China market, Cango also made another recent adjustment by lowering its focus on directly selling cars, which carries high inventory risk, to the lower-risk business of providing intermediary and other services for car traders.
It said its U-Car app is slowly building up an ecosystem of such traders, and that 38 dealers had set up stores offering new and used cars in the fourth quarter. The app provided service to 3,499 small online car dealers and facilitated 530 used car transactions during the quarter.
At the end of the day, Cango looks a lot like a company preparing for a long and potentially cold winter, at least in its home market, which is undergoing a painful correction with too much capacity after years of explosive growth. In such circumstances, the company is taking care to lower its own risks and maintain a comfortable cash cushion to see it through the difficult times. It&rsquo;s also planting some seeds that could allow it to thrive when things improve, including its latest foray into car exporting.
This article is from an unpaid external contributor. It does not represent Benzinga&#39;s reporting and has not been edited for content or accuracy.

Facing Winter At Home, Cango Looks Overseas

<h4>Key Takeaways:</h4>
<ul>
<li>Autohome&rsquo;s profits rose about 4% last year to 1.88 billion yuan</li>
<li>The trading platform&rsquo;s sales of new energy vehicles are soaring, jumping nearly 82% last year</li>
</ul>
By Fai Pui
China&rsquo;s accelerating car market has put online trader&nbsp;Autohome Inc.&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/athm#NYSE">ATHM</a>) on the road to a post-Covid recovery, with some bumps along the way.
Government measures to boost auto consumption, backed by promotions from manufacturers, powered a 5.6% rise in Chinese passenger car sales last year to 21.7 million units, according to vehicle industry statistics. The jump was nearly triple the 1.9% rise in 2022, making China the world&rsquo;s biggest auto market.
Rising car ownership has added fuel to Autohome&rsquo;s business as an auto trading portal, with sales increasingly driven by new energy vehicles (NEVs). The company logged a fifth straight quarter of revenue growth at the end of 2023, although the rise was modest. Its latest&nbsp;<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0206/2024020601450.pdf">results</a>&nbsp;show revenue reached 1.91 billion yuan ($269 million) in the fourth quarter, a year-on-year increase of 1%, although net profit fell 25.6% to 432 million yuan.
But for the whole year, the picture looked brighter. Autohome&rsquo;s revenues rose 3.5% to 7.18 billion yuan last year and net profit also increased about 4% to 1.88 billion yuan. The car trading platform reported an adjusted net profit of 2.16 billion yuan for the full year, on a par with the 2.17 billion yuan in 2022, while the adjusted net profit margin remained high at 30.1%.
The figures came as a pleasant surprise for investors. Autohome&rsquo;s stock price on the Hong Kong market jumped 8.3% to HK$52 on the day after the earnings.
Autohome connects car buyers and sellers through its online platform and operates physical showrooms where customers can sample different brands in high-tech simulations. Its three main business segments are media services, lead generation and online marketing.
Revenues from media services fell about 18% to 500 million yuan in the fourth quarter and retreated 4.7% to 1.87 billion yuan for the full year. However, the other divisions put in a more robust performance. Revenues from lead generation advanced 6.9% to around 840 million yuan in the fourth quarter, while the full year saw a rise of 1.8% to 3.11 billion yuan. Online marketing and other services produced the strongest results, with revenues jumping 14.8% to 570 million yuan for the quarter and increasing 14.6% to 2.2 billion yuan for the full year.
Revenues may be rising, but so are costs. Autohome&rsquo;s sales and marketing expenses in the fourth quarter rose by 8.5% to 730 million yuan from the same period a year earlier, while general and administrative expenses soared 52.6% to 157 million yuan. Meanwhile, research and development expenses rose 13.7% to 356 million yuan. Overall, operating expenses for the quarter leapt 14.2% to a whopping 1.24 billion yuan and increased 2.4% to 4.9 billion yuan for the full year.
And the company&rsquo;s positive earnings performance owes a lot to its investment strategy. Last year, Autohome&rsquo;s returns from interest and investments rose a hefty 47.1% to 831 million yuan. Earnings from holdings in associate companies, described in the results as equity method investments, swung from a loss of nearly 50 million yuan to a profit of 29.13 million yuan. Interest and investment income together accounted for nearly 44% of the company&rsquo;s 1.88 billion yuan profit last year.
Despite its post-pandemic challenges, the car trader has been betting heavily on growth in electric cars and the market for second-hand vehicles. It has ramped up marketing efforts under growing competitive pressure from NEV manufacturers who are shifting towards a direct sales model, potentially squeezing out intermediaries such as Autohome. In response, the company has been investing in tools to help customers check car prices and conditions, as well as opening more offline showrooms to gain greater traction in the NEV market.
By the end of last year, Autohome had rolled out 20 of its so-called Energy Spaces in cities across China, with the latest in Beijing&rsquo;s automobile museum, using holographic technology to help buyers browse suitable cars in an immersive setting. By entering their preferred budget, brand and model, they can find a matching car from factories, dealerships or second-hand platforms without having to visit various stores.
<h3>Tech Tie-Up&nbsp;With Baidu</h3>
The launch of the Autohome Energy Spaces boosted the company&rsquo;s revenues from NEV car sales by 81.6% last year, drawing more brands into the system. The centers offer 3D holographs of more than 70 models from mainstream car brands. Autohome plans to extend the network to 50 Chinese cities this year, doubling to 100 cities the following year and broadening out to include overseas markets, helping Chinese car companies to build a global presence.
Market watchers expect the high-tech Autohome centers could fuel the company&rsquo;s advance into third- and fourth-tier Chinese cities, helping to introduce buyers there to a range of NEVs.
The experience centers could also rev up the used car business, giving customers data and information about second-hand vehicles as well as new cars. Autohome, which holds a 51% stake in the car trading platform Tiantian Paiche, has predicted that its experiential showrooms will help to develop the relatively untapped market for used cars in China&rsquo;s smaller cities.
Relying on technology for its space centers, the company has been splurging on R&amp;D while collaborating with leaders such as&nbsp;Baidu&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bidu#NASDAQ">BIDU</a>) in the fields of artificial intelligence and big data. In early February, Autohome announced a deal with Baidu to develop and apply innovation across a range of areas from content creation to marketing, customer service and business decision-making, using Baidu&rsquo;s Qianfan intelligent platform.
Autohome, as one of the few vehicle trading platforms to turn a profit, enjoys a price-to-sales (P/S) ratio of 3.16 times, way above the 0.56 times and 0.14 times for domestic peers&nbsp;Cango&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cang#NYSE">CANG</a>) and&nbsp;Kaixin Auto&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/kxin#NASDAQ">KXIN</a>), and the 0.54 times for U.S. online car dealer&nbsp;Carvana&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cvna#NYSE">CVNA</a>). Autohome&rsquo;s hefty premium implies that investors are confident the company is on a profitable track.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

KXIN

Autohome Shifts Into Higher Gear With NEVs And Immersive Tech

Autohome shares are trading higher after the company reported better-than-expected Q4 results.

Autohome&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ATHM#NYSE">ATHM</a>) shares are<a target="_blank" href="https://www.benzinga.com/movers" rel="noreferrer noopener">&nbsp;trading higher on Tuesday</a>.
The company reported fourth 2023 revenues of RMB1.911 billion ($269.2 million), up 1% year-on-year,&nbsp;<a target="_blank" href="https://www.benzinga.com/pressreleases/24/02/n36948973/autohome-inc-announces-unaudited-fourth-quarter-and-full-year-2023-financial-results" rel="noreferrer noopener">beating the consensus of $265.60 million.</a>
China&#8217;s online destination for automobile consumers&nbsp;posted an adjusted earnings per ADS of $0.58, beating the&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/earnings" rel="noreferrer noopener">consensus of $0.57</a>.
Adjusted net income was RMB502.8 million ($70.8 million), compared to RMB668.5 million in the year-ago period.
Quarterly media services revenues were RMB500.5 million ($70.5 million), compared to RMB610.2 million a year ago.
Fourth quarter leads generation services&nbsp;revenues were RMB841.5 million ($118.5 million), compared to RMB786.8 million.
Online marketplace and others revenues were RMB569.5 million ($80.2 million) in the fourth quarter of 2023, compared to RMB496.2 million a year ago.
As of December 31, 2023, the company repurchased 6.73 million American depositary shares for a total cost of approximately $200 million.
As of December 31, 2023, the company had cash and cash equivalents and short-term investments&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/guidance" rel="noreferrer noopener">of RMB23.55 billion ($3.32 billion).&nbsp;</a>
Price Action:&nbsp;ATHM shares are up by 11.6% at $26.84 on the last check Tuesday.

Guidance

Movers

Autohome Gains Over 11% After Q4 Earnings: Here's The Details

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Earnings Scheduled For February 6, 2024

Autohome (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ATHM#NYSE">ATHM</a>) reported its Q4 earnings results on Tuesday, February 6, 2024 at 05:30 AM.
Here's what investors need to know about the announcement.
<h3>Earnings</h3>
Autohome beat estimated earnings by 1.75%, reporting an EPS of $0.58 versus an estimate of $0.57.
Revenue was down $5.28 million from the same period last year.
<h3>Past Earnings Performance</h3>
Last quarter the company beat on EPS by $0.07 which was followed by a 0.52% increase in the share price the next day.
Here's a look at Autohome's past performance:

<table>
<thead>
<tr>
<th>Quarter</th>
<th>Q3 2023</th>
<th>Q2 2023</th>
<th>Q1 2023</th>
<th>Q4 2022</th>
</tr>
</thead>
<tbody>
<tr>
<td>EPS Estimate</td>
<td>0.60</td>
<td>0.57</td>
<td>0.50</td>
<td>0.71</td>
</tr>
<tr>
<td>EPS Actual</td>
<td>0.67</td>
<td>0.64</td>
<td>0.57</td>
<td>0.78</td>
</tr>
<tr>
<td>Revenue Estimate</td>
<td>261.70M</td>
<td>249.51M</td>
<td>216.27M</td>
<td>280.05M</td>
</tr>
<tr>
<td>Revenue Actual</td>
<td>261.24M</td>
<td>252.79M</td>
<td>223.31M</td>
<td>274.50M</td>
</tr>
</tbody>
</table>

To track all earnings releases for Autohome <a href="https://www.benzinga.com/quote/ATHM/earnings">visit their earnings calendar here.</a> 
This article was generated by Benzinga's automated content engine and reviewed by an editor.

Autohome: Q4 Earnings Insights

Autohome (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ATHM#NYSE">ATHM</a>) reported adjusted quarterly earnings of $0.58 per share which beat the analyst consensus estimate of $0.57 by 1.75 percent. This is a 25.64 percent decrease over earnings of $0.78 per share from the same period last year. The company reported quarterly sales of $269.20 million which beat the analyst consensus estimate of $265.60 million by 1.36 percent. This is a 1.93 percent decrease over sales of $274.50 million the same period last year.

Autohome Q4 Adj. EPS $0.58 Beats $0.57 Estimate, Sales $269.20M Beat $265.60M Estimate

Autohome (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ATHM#NYSE">ATHM</a>) is set to give its latest quarterly earnings report on Tuesday, 2024-02-06. Here's what investors need to know before the announcement.
Analysts estimate that Autohome will report an earnings per share (EPS) of $0.57. 
Autohome bulls will hope to hear the company announce they've not only beaten that estimate, but also to provide positive guidance, or forecasted growth, for the next quarter.
New investors should note that it is sometimes not an earnings beat or miss that most affects the price of a stock, but the guidance (or forecast).
<h3>Historical Earnings Performance</h3>
Last quarter the company beat EPS by $0.07, which was followed by a 0.52% increase in the share price the next day.
Here's a look at Autohome's past performance and the resulting price change:

<table>
<thead>
<tr>
<th>Quarter</th>
<th>Q3 2023</th>
<th>Q2 2023</th>
<th>Q1 2023</th>
<th>Q4 2022</th>
</tr>
</thead>
<tbody>
<tr>
<td>EPS Estimate</td>
<td>0.60</td>
<td>0.57</td>
<td>0.50</td>
<td>0.71</td>
</tr>
<tr>
<td>EPS Actual</td>
<td>0.67</td>
<td>0.64</td>
<td>0.57</td>
<td>0.78</td>
</tr>
<tr>
<td>Price Change %</td>
<td>0.52%</td>
<td>5.46%</td>
<td>3.17%</td>
<td>-3.85%</td>
</tr>
</tbody>
</table>

<img src="https://www.benzinga.com/files/images/story/2024/1707163272_0.png" alt="eps graph" />
<h3>Stock Performance</h3>
Shares of Autohome were trading at $24.04 as of February 02. Over the last 52-week period, shares are down 33.03%. Given that these returns are generally negative, long-term shareholders are likely a little upset going into this earnings release. 
<a href="https://www.benzinga.com/quote/ATHM/earnings">To track all earnings releases for Autohome visit their earnings calendar on our site.</a>
This article was generated by Benzinga's automated content engine and reviewed by an editor.

Preview: Autohome's Earnings

Autohome Q2 2024 Earnings Preview

Notable earnings before Wednesday's open

Autohome Non-GAAP EPADS of $0.65 beats by $0.09, revenue of $257.7M misses by $1.73M

<a href="https://investorplace.com">InvestorPlace - Stock Market News, Stock Advice &amp; Trading Tips</a>
Autohome (NYSE:<a href="https://investorplace.com/stock-quotes/athm-stock-quote/">ATHM</a>) just reported results for the second quarter of 2024.<ul><li>Autohome reported earnings per share of 65 cents. This was above the analyst estimate for EPS of 56 cents.</li><li>The company reported revenue of $257.67 million.</li><li>This was 1.45% worse than the analyst estimate for revenue of $261.45 million.</li></ul><div>InvestorPlace Earnings is a project that leverages data from <a href="https://www.tradesmith.com">TradeSmith</a> to automate coverage of quarterly earnings reports. InvestorPlace Earnings distills key takeaways including earnings per share and revenue, as well as how a company stacks up to analyst estimates. These articles are published without human intervention, allowing us to inform our readers of the latest figures as quickly as possible. To report any concerns or inaccuracies, please contact us at <a href="mailto:editor@investorplace.com">editor@investorplace.com</a>.</div><h3>More From InvestorPlace</h3>
		<ul><li>
						<a href="https://investorplace.com/2024/04/legendary-investor-predicts-forget-a-i-this-technology-is-the-future/?cid=MKT794457&amp;eid=MKT802109">Legendary Investor Predicts: &ldquo;Forget AI... THIS Technology Is the Future&rdquo;</a>
					</li>
									</ul>The post <a href="https://investorplace.com/earning-results/2024/07/athm-stock-earnings-autohome-for-q2-of-2024/">ATHM Stock Earnings: Autohome Beats EPS, Misses Revenue for Q2 2024</a> appeared first on <a href="https://investorplace.com">InvestorPlace</a>.

ATHM Stock Earnings: Autohome Beats EPS, Misses Revenue for Q2 2024

Autohome Inc. (ATHM) Q2 2024 Earnings Call Transcript

Autohome announces $200M buyback program

AutoHome (ATHM) has released an update. Autohome Inc., a premier online platform for automobile consumers in China, has unveiled a new program to r...

Autohome Launches $200M Share Buyback Plan

Autohome: Staying Bullish On Enticing Shareholder Yield And Regulatory Tailwinds

The top quant-rated China stocks by Seeking Alpha

Here is how many Chinese ADRs are performing from the past week

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Press Releases

Autohome Inc. Issues 2023 ESG Report

Autohome Inc. to Announce First Quarter 2024 Financial Results on May 8, 2024

Autohome Inc. Files Its Annual Report on Form 20-F

Autohome Inc. to Hold Annual General Meeting on June 21, 2024

Autohome Inc. Announces Unaudited First Quarter 2024 Financial Results

Autohome Inc. Announces Cash Dividend

Autohome Inc. Announces Results of 2023 Annual General Meeting

Autohome Inc. to Announce Second Quarter and Interim 2024 Financial Results on July 31, 2024

Autohome Inc. Announces Unaudited Second Quarter and Interim 2024 Financial Results

Autohome Inc. Announces US$200 Million New Share Repurchase Program

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