Cango Inc – ADR (NYSE: CANG) stock plummet 12.04% on May 29th, 2019 (Source: Google finance) after the company missed the earnings estimate for the first quarter of FY 19.
However, the stock recovered over 4% on May 30th, 2019 (as of 12:04 pm GMT-4; Source: Google finance). During the first quarter, the company continue to focus on strengthening the core competencies in auto loan facilitation services accelerating the development of the aftermarket services, expanding the collaborations with strategic partners, and establishing new partnerships with financial institutions and OEMs.
The total revenues increased by 41.3% year-on-year to RMB351.7 million in the first quarter and the aftermarket services facilitation business remained a major source of growth in the first quarter contributing RMB39.8 million or 11.3% to the total revenues. First, as the primary driver of the company’s growth, our auto loan facilitation business continued to deliver solid results. In the first quarter, the total amount of financing transactions facilitated reached RMB6.55 billion and a total outstanding balance of financing transactions facilitated was RMB35.75 billion.
On the funding side, CANG signed a collaboration agreement with First Automobile Finance, or in short FAF, a subsidiary of FAW Group. Under this agreement, the company had utilized the extensive build network, especially in lower tier cities to promote and distribute FAF auto financing products. Recently, the company has signed a collaboration agreement with China Jincheng Bank and we are currently in negotiations with potential funding partners such as China Construction Bank, China Citibank, Bank of China, and Shanghai Pudong Development Bank.
Moreover, at the end of the first quarter, CANG had more than 47,000 registered dealers in 353 cities, representing a 27% year-on-year increase in dealers. This expansion of the network further consolidated the market-leading position as the largest auto transaction service platform in China in terms of new car dealership coverage.
CANG in the first quarter of FY 19 has reported the adjusted earnings per share of 9 cents, beating the analysts’ estimates for the adjusted earnings per share of 15 cents.
Additionally, in Q1 2019, the company had integrated the systems with both Dongfeng Honda Automobile and Changan Mazda Automobile. These collaborations enabled the company to offer OEM subsidized auto financing and promotion services nationwide by leveraging the dealership network. Meanwhile, CANG is close to finalizing the negotiations with Changan Suzuki Automobile as well as Guangqi Honda Automobile. The company expects to start working with these OEMs in the second quarter of 2019. During the first quarter, the company has completed over 190 car purchase transactions for license to Didi drivers across eight cities in China.