Cango Inc.

Good morning and good evening, everyone. Welcome to Cango, Inc.' 's third quarter 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. Jiayin Lin, Chief Executive Officer, and Mr. Michael Zong, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct a Q&A session. Before we begin, I refer to 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, I am now turning the call over to Mr. Xiaoyin Lin, CEO of Kengo. Please go ahead, sir.

Hello, everyone, and welcome to Kengo's third quarter 2020 earnings course. Since the second half of this year, with China's overall test, especially the gradual recovery of the lower market, as well as the steady promotion of the company's various businesses, we are very happy to see that the overall business of the third quarter has significantly rebounded. The total income of the third quarter reached 4.35 billion yuan, which is nearly 32% higher than the leading upper limit that we previously gave. Among them, the car aftermarket storage business, which is mainly based on insurance, has an income of 68.9 million yuan, which accounts for 15.8% of the total revenue. The car trading business has also made considerable revenue contributions in this quarter, reaching RMB7036 million. Under the effective cost control of the company, the operating profit continued to maintain a good growth posture in the last quarter, reaching RMB13.5 billion. Finally, in terms of net profit, due to the investment revenue of the supply value change brought by the company's investment in ideal vehicles,

In the second half of this year, China's auto market has regained momentum with gradual recovery in the lower tier cities. With steady progress across our business, we are pleased to see a significant rebound in both our financial and operational performance. Total revenue in the third quarter was approximately 435 million RMB, outperforming the high end of our guidance range by approximately 32%. In particular, our aftermarket services Facilitation revenue grew to 68.9 million RMB, accounting for nearly 15.8% of total. Our car trading transaction business also contributed considerable revenue in this quarter, reaching 70.4 million RMB. Operating income sustained its growth momentum from the previous quarter and came in at approximately 135 million RMB, mainly attributable to our effective cost control initiatives. Finally, our net income of this quarter was close to 1.8 billion RMB, mainly attributable to the significant investment gained from the auto.

我们致力于为购车客户提供安全、专业、高效的汽车交易相关产品及服务 通过对公司核心发展战略的充分执行 以及我们对机盘业务和新业务的成功拓展 加大了市场对我们产品和服务的需求 提升了公司整体运营效率及市场份额 Our deep and wide coverage of dealership network, continuous upgrades and innovations of products and services are the main drivers for our sustained growth

We are committed to building an integrated platform that serves all parties in the automotive value chain while offering safe, professional, and efficient auto transaction-related products and services to our customers. By implementing our key growth strategy and successfully expanding our core and new businesses, we are witnessing increasing demand for our products and services, which is leading to improved operating efficiency and gains in market share. 首先来看一下我们的汽车贷款促成基盘业务。

Let's start with our core auto loan facilitation business. In the third quarter, we facilitated 7.5 billion RMB financing transactions, up 30% from the same period of last year,

marking the first period of year-on-year growth since the pandemic outbreak. As of September 30, 2020, the total outstanding balance of financing transactions the company facilitated reached 38.9 billion RMB.

In terms of channel coverage, following the positive expansion and launch of our new products in the CS channel, the number of our sales channels has returned to the growth track. In terms of a dealership network, with our proactive expansion in forest stores and introduction of new products, the number of new dealers is growing again.

By the end of this quarter, we have had a total of 46,248 registered dealers nationwide, maintaining our leading position in auto financing with the most extensive coverage of dealers for new cars in China. 在此基础上,我们通过提供更多元产品和服务,提高合作经销商的活跃度,叠加测试回暖,经销商产单量稳步提升。 More importantly, after optimizing efficiency of our lower-tier dealership network over the past quarters by terminating relationships with dealers that were not up to our standards for operating risks and traffic generation capabilities, We have seen a significant improvement in the overall operating efficiency in the lower-tier markets. Additionally, by providing more diversified products and services, our dealers are becoming more active, and along with the auto market recovery, transaction volumes steadily increase.

此外,年初我们提到,预计未来需求两极分化明显,客群将向上迁移。 我们今年将向高端豪华车品牌以及主流CS渠道拓展。 Based on this goal and strategic layout, we established a high-end brand CS channel expansion team. Since the establishment of the team in July, we have quickly expanded our collaboration with high-end brands such as Benz, BMW, Audi, and other high-end brands. This quarter, the number of businesses originating from the CS channel has exceeded last month. Our layout in the CS business makes us see the potential in the market. and further help the company gain more market space and scope. Next, we will actively invest resources to further increase the coverage of CS channels.

Earlier this year, we mentioned that future consumer demand is expected to diverge significantly with more consumers and customers pursuing higher-end brands. For CanGo, we plan on expanding into high-end and luxury segments of the market while furthering our Forex stores network. With this goal and strategic plan in mind, we have set up a dedicated team to target high-end brands. Since the inception of this plan in July, we have established a partnership with Mercedes-Benz, BMW, and Audi, to name just a few. And the number of forest dealers partnering with us is rapidly increasing. In a third quarter, business volume contributed by forest stores has been doubled month by month. And our efforts to develop the business of forest stores enables us To capture potential in this market and help Kengo gain further market share. Going forward, we plan to deploy more resources to improve its coverage. 在资产质量方面,第三季度预期率表现持续好转,整体资产质量接近疫情前水平。 截至2020年9月30日,公司所有已完成并在存续期的汽车贷款的M1加预期率由上季度末的1.59%。

Turn into asset quality.

During the third quarter, the overdue ratio was continuously improved, and the overall asset quality was close to the pre-pandemic level. As of September 30, 2020, the M1 Plus overdue ratio decreased to 1.11% from 1.59% as of June 30, 2020, and the M3 Plus overdue ratio decreased to 0.53% from 0.84% during the same period. 在夯实机盘汽车贷款促成业务的同时,三季度我们继续在汽车后市场发力。

Especially in terms of insurance promotion business, we have made further progress. Especially worth mentioning is that in the third quarter, we have gradually completed the construction of the insurance sales team, which has greatly improved our overall insurance business conversion rate. The main customers of the insurance sales team come from our car finance business sales channels, including car repair stores and other car aftermarket service manufacturers, etc.

In addition to strengthening our core auto loan facilitation business during the third quarter, we also continued our pursuit of expanding our aftermarket services facilitation business. In particular, our insurance facilitation services achieved an outstanding performance during the quarter. It is worth noting that we successfully built our key account sales team and call center for our insurance business in the third quarter, which greatly improved the conversion rate of our overall insurance facilitation business. The team acquires new customers mainly from outside of our registered dealership networks, including repair shops and other aftermarket service providers. Now, KA sales of our insurance products have become an important driver for our future growth.

The insurance industry presents a huge potential for development. In the future, we will continue to develop other high-quality insurance trading channels and categories to meet the more diverse needs of consumers and extend to higher-end insurance products. As our products become more diverse and more closely integrated with consumers, we will provide customers with a more comprehensive and rich service experience. In the next step, we plan to surround the service scene of the car aftermarket and further enhance the technology On insurance facilitation services have shown great growth potential.

Looking ahead, we will continue to explore other premium insurance transaction channels and categories to meet the increasingly diverse needs of consumers. as well as to expand our insurance product offerings to include those insurance categories of higher transaction values. As our products become more diversified and tailored to the needs of customers and consumers, the entire service experience will become more enriched for them. Our next step is to focus on up-to-market services in which we will further enhance our technology service capabilities to improve the customer experience, stickiness, and engagement. At the same time, the KA sales business model mentioned above will help us further expand our customer base and bring new growth opportunities. 在于战略伙伴合作方面,我们与工行共同开发的贴息产品已于7月份上线,首批产品包括东风日产,一气大众以及广本的贴息产品。 In terms of our cooperation with strategic partners, the OEM subsidized products we make via our cooperation with ICBC was launched to the market in July 2020, with Dongfeng Nissan, FAW Volkswagen, and GAC Honda included in our first batch.

As China's leading technology-based car trading platform, we have always closely monitored the development of the car industry and considered its development strategy. New energy is a must-have trend for the transformation and upgrade of the automotive industry. We have a firm view of this track and have begun to plan for the new energy automotive sector in accordance with the strategic development direction designed by the company. In 2018, we invested in Ideal Motors, which later successfully listed in NASDAQ in the United States, and brought a sharp capital return and strategic cooperation opportunity for Canggu. The company's investment in Ideal Motors is not only financial, but also strategic. On the one hand, our business model is highly in line with the new energy car industry, using our rich experience of deep-rooted car service in the market for more than 10 years, the largest offline new car sales network in the country, and our industry expertise and capabilities, we will assist new energy car manufacturers to achieve the last mile of the leading model. At the same time, our extensive network and ground service capabilities can provide value to manufacturers, helping them to achieve the full onlineization of the entire business process,

As China's leading technology-based automotive transaction services platform, we are always closely monitoring the latest market trends and taking them into consideration when developing our growth strategies. New energy vehicles, or NEV, is an inevitable trend in the evolution of the automotive industry. We have firm confidence in this market and have begun to invest in this field. Our investment in Li Auto back in 2018 is expected to bring significant investment returns and strategic cooperation opportunities following its listing on NASDAQ. Our investment in Li Auto was not only made for financial returns, but also from a strategic perspective. On one hand, our business model is highly aligned with the NEV operation of model and leveraging our extensive industry experience, China's largest offline new car dealership network and our industry know-how and capabilities, we are able to empower the NEV manufacturers and help them realize the last mile of their direct sale model. At the same time, our wide lower-tier network and on-the-ground service capabilities enable us to provide additional value by helping those NEV move the whole process online and truly provide their customers with efficient, affordable, transparent, and simple one-stop services.

我们对新能源汽车领域的发展潜力抱有信心,将持续加深在这领域的拓展,为整个行业的健康发展助力。 We are current daily autos service partner nationwide and cover all Tesla stores in Shanghai.

Leveraging our successful experience and increasing popularity of NEVs, we are looking forward to establishing close partnerships with more NEV OEMs in the future. We have high confidence in the growth potential of NEVs and will continue to deepen our exploration in this field and accelerate the healthy development of the whole industry.

We will expand the model across the country.

Next, I would like to discuss our new independent sales rep initiative. This new sales rep network is completely independent of our leadership network. Through social coefficients by utilizing each agent's social relations to amplify our marketing efforts and maximize consumer growth in a cost-effective way, it creates direct access to our target customers and builds up our private traffic, forming a closed transaction loop. Through our technology platform and by utilizing social tools, we are offering products, services, and technological power. Through this registered agent network on our platform, we can reach consumers in lower-tier markets more effectively and directly, and in return, provide them with better products and services. Since we started our pilot project in Yunnan Guizhou area in this July, we have seen very satisfying results. As of now, we have more than 4,000 registered agents and we expect to expand this new business model in China's other regions in the future. turning out to our car trading transactions business. We have made a lot more effort in this area since the beginning of this year, and we have built up our designated team and business process in the third quarter. The head of this business segment is an industry veteran with over 15 years of experience in this area, and we expect to see stronger developments and more meaningful revenue contributions in the coming quarters.

Since the beginning of the year, the wave of the epidemic and the market has created time and space for us to explore and set up new business and new models. We are very pleased with the performance and performance of the current stage and the effect it has shown. Our continuous exploration and innovation in the business model has highlighted the visibility and strong management and execution capabilities of the company management team towards the trend of the industry. In the future, we will continue to strive to provide users as the center,

Since the beginning of 2020, COVID-19 and resulting market volatilities have created a lot of opportunities for us to explore new business and models. We are very pleased with our performance at this stage. Our consistent exploration and innovation demonstrate our management team's business acumen, and our ability to follow the industry trends as well as strong management and execution capabilities. Looking ahead, we remain committed to providing a more user-centered product mix around automotive financing and transaction, while at the same time further deepening our dealership network and extending our service footprint. 接下来有请我们的首席财务官张永毅。

to review the company's financial performance this quarter.

With that, I will now turn the call over to our CFO, Michael Zhang, to review our financial performance in this quarter.

Thanks, Jiayuan. Hello, everyone, and welcome to our third quarter 2020 earnings call. Before I started to review our financials for the quarter, please note that unless otherwise stated, all numbers are in IMB terms and all percentage comparisons are on a year-over-year basis. Total revenues came in at... $434.9 million in the third quarter of 2020, once again outperforming our previous guidance range. In addition, our off-market services facilitation business continues to serve as an important growth driver, generating $68.9 million in revenues for the third quarter and accounting for approximately 16 percent of total revenue. Card trading transactions business also become a meaningful growth driver this quarter, contributing $70.4 million in revenues. Now let's move to our cost and expenses during the quarter. Total operating cost and expenses in the third quarter of 2020 were $300.4 million compared to $261.6 million in the same period, 2019. This was in line with the increase in the company's sales volume and related costs incurred by car trading transactions. Cost of revenue in the third quarter of 2020 increased by 44.2% to $180.9 million from $125.4 million in the same period 2019. As a percentage of total revenues, cost of revenue in the third quarter of 2020 was 41.6% compared to 35.7% in the same period 2019. Excluding the financial impact from the car trading transactions, Cost of revenue as a percentage of total revenue was 30.3% in the third quarter of 2019. Sales and marketing expenses in the third quarter of 2020 were 41.9 million compared to 47.6 million in the same period of 2019. As a percentage of total revenue, sales and marketing expenses in the third quarter of 2020 decreased to 9.6% from 13.5% in the same period of last year. The decrease was a result of the company's effort to improve the efficiency of cost and marketing spending while growing its revenue concurrently. General and administrative expenses in the third quarter of 2020 were $52.2 million compared to $52.3 million in the same period, 2019. As a percentage of total revenues, Journal and administrative expenses in the third quarter of 2020 decreased to 12% from 14.9% in the same period last year. Research and development expenses in the third quarter of 2020 were $14.2 million compared to $13.2 million in the same period of 2019. As a percentage of total revenue, research and development expenses in the third quarter of 2020 decreased to 3.3% from 3.8% in the same period of last year. Net gain on risk assurance liability in the third quarter of 2020 was 12.9 million compared to a net loss of 7.5 million in the same period of last year. Net gain on risk assurance liability was mainly due to a decrease in the delinquent loan balance and default rate. We recorded income from operations of $134.5 million in the third quarter of 2020 compared with $89.7 million in the same period of last year. Net income in the third quarter of 2020 was $1,769.4 million. Non-GAAP adjusted net income in the third quarter of 2020 was $1,783.2 million. On a per share basis, Our diluted net income per ADS in the third quarter of 2020 was 11.78, and our diluted non-GAAP adjusted net income per ADS in the same period was 11.87. Moving on to our balance sheet as of September 30, 2020, we had cash and cash equivalents of $1.4 billion compared to $2 billion as of June 30, 2020. mainly due to the fact that the company invested a certain amount of cash in term deposits and repaid debts. As of September 30, 2020, the company had a long-term investment of $2.3 billion compared to $551.5 million as of June 30, 2020. The increase was mainly due to the change in fair value of the company's investment in Li Auto. Looking ahead to the fourth quarter of 2020, we expect our total revenue to be between $700 million and $750 million. Please note that this forecast reflects our current and preliminary view on market and operational conditions, which are made in consideration of uncertainties in market caused by the COVID-19 outbreak and are therefore subject to change. This concludes our prepared remarks, and operator, we are now ready to take questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. For the benefit of all participants in today's call, if you wish to ask your question to the company's management in Chinese, Please immediately repeat your question in English. We will pause momentarily to assemble our roster. The first question today comes from Shelly Wang with Morgan Stanley. Please go ahead.

Hello, everyone. I'm Shelly from Morgan Stanley. First of all, congratulations on the very good performance of the third quarter. I have three questions here that I would like to ask. The first one is about the four quarters and the next year's outlook. Because we see that the car's monthly sales actually see the car has been warming up, especially our main brands like Chang'an, Changcheng, these independent brands, in fact, these few months have recovered very well. And then we also see that the income of the fourth quarter is 7 to 7.5 billion. I would like to ask about the growth of the revenue, mainly from our main revenue, the car finance loan. What about this business? Or is it the increase from our new business? And then the second one is to look at it in more detail. If we look at it here, what is the outlook of the four seasons and the year? I need to translate the English myself.

I think I will translate your question. First of all, congratulations to the management for your outstanding performance in the third quarter. And I actually have three questions. Well, the first question is about your outlook for your fourth quarter performance and your performance for next year. Well, if you look at the monthly sales of the car brands in China, we are witnessing a strong rebound in China's auto market, in particular the Chinese domestic OEMs such as Chang'an and Great Wall. And based on your presentation, your guidance for next quarter for your revenue is about $700 million to $750 million. So could you share with us your outlook on your performance in fourth quarter and for next year in more details, and also which business lines do you expect to contribute more to this growth in the fourth quarter? Is it your core car loan business or new business?

Hi, Sherry. The recovery of the car market is still very significant, especially when we look at the lower-end market. As we mentioned in the past quarter report, the recovery of the lower-end market is relatively slow in the first half of this year. However, as we look into the third quarter, the recovery of the lower-end market is obviously accelerating, especially the two brands you just mentioned. We also have the same perception from our end. Therefore, we expect that the business of car finance services in the fourth quarter should be able to maintain a stable and continuous growth. Of course, what you heard is about our performance guidance, such a data perspective. Because in the third quarter, we have some new business lines, and we have generated a volume of business income. Thank you very much, Chris, Shirley, for your questions.

Indeed, from third quarter to fourth quarter, we expect the car market to continue its strong rebound, especially in the lower tier cities. Well, in our previous quarter presentation, we mentioned that actually in the first half of this year, the lower tier market segments have been relatively slow in terms of their recovery. However, in the third quarter, these lower tier markets definitely picked up. its recovery speed, especially the two brands that you mentioned, Chang'e and the Great Wall. So your observations are the same as ours. Well, in terms of our guidance for the fourth quarter, so definitely we expect to see stable growth and steady growth in the fourth quarter in terms of our performance metrics. And on our guidance for the fourth quarter, Well, actually, in the third quarter, we already see, you know, equivalent revenue contribution from our new business line. So in the fourth quarter, we've got, you know, significant contribution top line from our car trading transaction business. So actually, in terms of the guidance for the fourth quarter, we've got, you know, the car trading transaction business contributing 40% to our business growth.

uh, uh, uh, uh, uh, uh, My second question is about the forest dealership network. In your presentation, you mentioned that Tango plans on exploring and developing your footprint in the higher-end market segments.

However, in the forest market, we already see car financing services offered by the premium companies such as BMW. So how are you going to differentiate yourself in this competition? And my third question is about the impact of the insurance reform, auto insurance reform policies. So how are those policies going to impact on your business?

薛力,我回答你的問題。 第一個問題是CS店我們如何占有一定的市場份額。 因為CS店的市場在中國實在太大。 當然我承認在銀行和AFC都在CS店占有絕大多數份額。 But our current goal is only 10% to 15% of our sales. These 10% to 15% of our sales are brought by our diversified services. Because we use our own people to get closer to the service. And we also have the characteristics of our ants and online merchants. In the recent period, the customer experience of ant and online products is very good. So these services are mainly the difference between services, which allows us to have the opportunity to enter the market. And our target audience is not high. I don't want to compete directly with AFC and Bank of China.

Shirley, I will take your questions. The first question about how are we going to gain market share in the forest dealership market. Well, indeed, in China, the forest dealership market is huge. We are also seeing, you know, strong efforts by banks and the AFC photo financing companies to, you know, develop their footprint in this market. However, while for our target market share, we are not very ambitious. We only aim for 10% to 15% of the market share. And how are we going to gain this market share? Well, it's going to be on our differentiated services. Well, first of all, we offer in-person services for our customers. And on the other hand, we also are different from offline service providers by offering strong service capabilities online, for example, like our partnership with Ant. And actually, we have received very good feedback from our customers for our online services. So this is how we are going to be different from the AFCs. So again, we are not going to compete directly against the AFCs because we are not so ambitious in terms of our market share.

Just one thing about our product offerings in the forest market.

Well, we are also selling the bank's products to our customers in this market. So actually compared with the local banks where forest stores are located, our partner banks, they have a stronger financial position and they are offering lower cost of capital. 第二个问题就是保险。

At the beginning of September, the tax reform of car insurance brought some pressure to our insurance promotion business. However, we adopted some response plans, including a more enhanced cooperation with large insurance companies to obtain better products, and further acquire market share in the transformation of the industry. Well, about your third question, the impact of the insurance reform policies,

launched in September. Well, indeed, these new policies have put some pressure on our insurance facilitation business. However, we have already taken some countermeasures to mitigate the pressure on us. First of all, we are working with larger insurers to offer better products and services to our customers, thereby gaining market share in these industry transformations. Secondly, we are combining our insurance products and services with our car financing business. In other words, we are utilizing cross-selling strategies to offer a more diversified mix of products and services to our customers, improving their experience. In addition, we are stepping up efforts to build up our KA model, key account sales model, and so we are able to integrate our resources in this regard and to prepare ourselves for market developments in the next year.

That's all from me. Very clear. Thank you.

The next question comes from David Pong with Goldman Sachs. Please go ahead.

David Pong. Thank you.

First of all, congratulations to the management on your outstanding performance in the third quarter. And we are also very excited by your outlook for the fourth quarter. My questions are mostly on industry competition. Could you give us more colors on the trends, the market trends, in both the forest markets and in the lower-tier markets since the third quarter, or in other words, the post-pandemic markets? And my question is mostly on auto financing. And the second question is, could you share with us your observations on the market, on your market share and development and, you know, how it's going to be in the future?

David, let me try to answer your question. This year's epidemic and the whole market downfall It gave us time to think about and explore and reform the model. In this reform, we strengthened the accumulation of good quality and operation process with the shares for decades. We got a lot of recognition from the banks. So we have more banks providing low capital costs and adding the operation process of the shares to bring customers a better experience. Thank you very much. Vivian, I will try to answer your questions. Well, actually, the pandemic and the market downturn have given us more time to rethink our business models and to initiate

new measures to improve our business models. And thanks to over 10 years of development, we are now well-recognized by our partner banks for our high-quality service and very well-designed business process, which deliver very good experience to our customers and consumers. And that's why banks working with us are happy to provide with us low-cost silk of capital products And thanks to these efforts, we are able to further improve and enhance our core business. And that's for the core business. And then for our new business lines, over the past few months, we have developed and implemented a series of initiatives to develop new business lines. And the initial results have given us more confidence in our future and our strategic directions. And these new business lines or initiatives include our efforts to expanding to the higher-end forest stores and EV market, as well as setting up the sales rep initiative for our insurance products. And also, in addition, we have successfully launched our car trading transaction business.

David, I would like to add a few more points. One is from the point of view of demand. In fact, especially during the epidemic period and after the epidemic, we found that in the lower market, especially in the form of small retailers, such a market structure is actually facing a major change. In this case, we can see that in the course of the epidemic, the survival of small and medium-sized businesses is actually further degraded. Even though there is a rebound on the demand side of the car consumer, the survival status has improved. But in general, they do need more uh uh uh So I think this is the first point I would like to share. Secondly, it also comes from the demand side. As Mr. Lin mentioned, for the upper-line cities, that is, the CSDN business expansion in the first and second-line central cities, in fact, we found that there are also some pain points in this field. These pain points are more reflected in the efficiency of services and processes. In this process, we also found that there are many our potential breakthrough opportunities. In July, after we formed a team, in such a short period of 3-4 months, we have already seen an effective business breakthrough in CS stores, luxury and high-end brands. In the future, we expect uh uh uh uh uh From the point of view of demand, there are two observation points. From the point of view of supply and demand, as I just mentioned, the whole of China's domestic car finance is a leading platform. From our observation point of view, with the whole of the epidemic, the whole market The competition pattern has also changed dramatically. Since last year, we have seen a gradual increase in the concentration of such a market. This year, the increase in the concentration of such a market is actually accelerating its speed further. So, from the point of view of the entire supply chain, we want to have a more reasonable Thank you. I would like to add a few observations from my side. First of all, on the demand side,

Well, in fact, during the pandemic and after the pandemic, in the lower-tier markets, we are seeing the market conditions for the small dealers changing significantly. Well, what I mean is that the smaller dealers in the lower-tier markets, they are in a very disadvantaged position now. Although we are seeing a rebound in market demand in the recent months, the conditions for the dealers have improved slightly. Still, the smaller dealers, they need strong partners to help them get access to more resources and to help improve their service capabilities. And this is where Kengo can offer value to our partners in the lower-tier markets. And this is also where we see the value of the lower-tier markets is. And this trend is very obvious in the pandemic. And so for us, the key is to help establish ecology based on our platform and offer a diverse range of services and products. And this definitely will give us more room to grow and also will help dealers in lower-tier markets to grow together with us. And on the demand side, the second point I would like to make is about the higher tier or the first tier and the seventh tier cities and also the higher end market segments, that is the forest markets touched upon by Mr. Lin. Well, again, in these market segments, we are seeing some unmet needs here by our partners, for example, in terms of service efficiency and process efficiency. So we do see a lot of opportunities for us to drive our growth. And actually, since July, when we established our teams, in the past three to four months, we have already achieved new business growth for our partnership with forest stores and luxury and premium brands. In the future, we believe that with our strong service capabilities and also our high-quality financing resources, we will be able to further drive the growth of our forest market segment. And on the supply side, well, CanGo is China's leading auto financing platform. And during the pandemic, we are seeing profound changes in competition, in industry competition. Actually, since last year, we already saw the trend of market consolidation. And this year, the consolidation has picked up pace, in fact. So in the future, we believe only platforms that have a unique have their unique core competencies and that are able to deploy, you know, well-designed business strategies and that can offer strong products and services to customers will be able to survive and grow.

Thank you for your answer, Mr. Zhang. And finally, congratulations to Mr. Zhang for his excellent work.

Thank you very much for your answers, and congratulations again on your strong performance.

Thank you, David.

Again, if you have a question, please press star, then 1. We have no further questions at this time. I would now like to hand the call back to management for any closing remarks.

Thank you. This conference is now concluded. Thank you for attending today's presentation.

You may now