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spk01: Good morning and good evening, everyone. Welcome to Kengo Incorporated's second quarter 2022 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. Jiayuan Lin, Chief Executive Officer, and Mr. Michael Zong, 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 am now turning the call over to Mr. Zhaiyuan Lin, CEO of Kango. Please go ahead, sir. 大家好,欢迎参加唱国2022年第二季度财报电话会。
spk06: Hello everyone and welcome to Cango's second quarter 2022 earnings call. During the second quarter, especially in May and April, lockdowns in Shanghai and other cities exacerbated supply chain challenges. Despite a series of favorable policies since June, demanding the automotive market has remained sluggish due to COVID's substantial impact on automotive manufacturing, logistics, and retail sales, as well as heightened risk aversion and weakened consumer confidence amidst the pandemic. Placing these headwinds, we achieved the total revenues of RMB 289 million in the second quarter, of which revenues from our car trading transactions business accounted for 219 million, or over 75.6% of our total revenues. Revenues from our traditional business lines, including automotive financing facilitation and aftermarket services facilitation, totaled 25.14 million RMB in terms of revenue mix Our business model of car trading transaction platform with multiple monetization avenues is becoming more and more robust.
spk02: 下面我将从车交易平台业务和传统业务两个维度与各位分享二季度主要的业务进展。 Next, I would like to share the progress of both our trading platform business and traditional business lines in the second quarter.
spk06: 首先是车交易平台业务,作为面向全国汽车经销商的B2B一站式平台。
spk02: The old car trading service is based on providing safe, reliable, and stable all-terrain road professional services for the car industry. The current state-funded purchase tax reduction plus the combination of car down payment and discount policy are more focused on the purchase stage, and a series of matching services around car trading are also expected to be perfect. In order to truly make the lower market car dealers and consumers no longer have difficulty in selling cars, but simply enjoy purchasing cars, Using the trading scene as a starting point, Canggu uses functions such as patrol car, driver, motorhome car, storage logistics, and car separation insurance to block and block small and medium-sized retailers in the process of car sales. This solves the business problems of small and medium-sized retailers in the business of drivers, customers, and funds, and helps them sell their cars faster, and opens up the sales situation for the lower levels of the upstream main airport to provide opportunities.
spk06: I'll begin with the car trading transactions platform business. As a one-stop platform serving car dealers nationwide, CanGo is committed to providing safe, secure, sustained, and consistent end-to-end professional car trading transaction services for participants in both the upstream and downstream of the industry for value chains. While current favorable government policies, including vehicle purchase tax relief and NEV promotion campaigns in rural areas, focus primarily on car purchases, supporting services also need to be improved so as to truly make car sales easier for dealers and car purchases simpler and more enjoyable for consumers, especially in the lower-tier markets. Based on transaction scenarios, CanGo addresses the unmet needs of medium- and small-sized dealers by offering an array of services, spending car sourcing, car supply, including self-owned cars, warehousing and logistics, and car financing and insurance. In this way, we have not only relieved the stresses of medium and small-sized dealers in the lower-tier markets in sourcing cars, customers, and funds, helping them sell cars faster, but also provide ongoing opportunities for upstream OEMs to expand their market coverage to lower-tier markets. By empowering both the upstream and downstream sides of the industry, Kangoo Hao Che enables more efficient and effective car transactions in the lower-tier markets.
spk02: As of June 30, 2022, Kangoo Hao Che has engaged 8,237 dealers in 31 provinces and 305 cities.
spk06: There are 22 self-owned vehicle models listed on our platform, including 9 car brands and 12 car series. During the second quarter, we sold a total of 2,291 cars, including 1,329 NEVs.
spk02: In particular, it is worth mentioning that since the WeChat program was launched at the end of May last year, we have launched the Canggu Good Car App in June this year to provide more powerful system and more integrated platform support for car companies. As of the end of June, only two weeks of good car apps have been launched, including the new registered car company Qianyu, which covers 30 provinces and cities in the country, except Tibet, Hong Kong and Taiwan.
spk06: It is worth noting that following the debut of Kangguo Haoxue, which had many programs, at the end of last May, we launched the Kangguo Haoxue app in mid-June to provide more powerful platform support to dealers with highly aggregated features and functions. By the end of June, only two weeks after its launch, over 1,000 dealers had migrated to or had newly registered on the app, covering all 30 provinces and municipalities nationwide, excluding China. Tibet, Hong Kong, Macau, and Taiwan. On top of high-quality car sources, we focus on building user stickiness by standardizing services as well as further strengthening our supply chain servicing and digital capabilities. As a result, car dealer activity and conversion rates on the platform both improved significantly in the second quarter. Users' daily activity rate rose by nearly 50% quarter over quarter in the second quarter, and dealer activity rate increased by nearly 70% from the previous quarter. In the first half of 2022, more than 10,000 car sources and car search entries were listed on our platform. In the second quarter, the average conversion rate from our matching service reached 2% and rose month by month in the quarter to 4.6% in June, compared with the industry average of around 2.5%. Our current conversion rate is significantly higher than the industry average.
spk02: In addition, in recent years, with the further development of the Chinese car market, The number of new cars is constantly increasing Consumers' demand for new cars is gradually manifesting The second-hand car market is constantly expanding Especially in the low-end market where the stock is deep-rooted The second-hand car market is in its early stages There is a greater gap between the mature market in Europe and the U.S. There is a huge market potential At the same time, second-hand car trading has an important role in driving new car sales Promote the transformation and upgrade of retailers and expand the range of business Plus the recent introduction of the second-hand car good policy 不仅二手车迎来发展新机遇,更有利于促进新车和二手车市场的全面健康发展。 其中,取消二手车限迁将丰富二手车市场的车员,加速二手车置换新车的过程, 对整体汽车流通体系的促进作用巨大。 二手车有望形成全国统一市场。 Since beginning of the year, while under great pressure, we also saw positive development in industry.
spk06: With the development of China's automotive market in recent years, new car ownership has increased significantly and consistently, gradually creating the need for car replacement, which has led to the continuous expansion of the used car market. However, China's used car market is still in the beginning stage, particularly in those lower-tier markets where Kangoo has a deep presence. Given its wide gap with the mature markets in Europe and America, China's used car market has tremendous growth potential. At the same time, used cars play an important role in boosting new car sales, encouraging dealers' digital transformation upgrade, and expanding their business scope. Furthermore, the recent release of favorable policies were opportunities for used cars and promote a comprehensive and healthy development of both the new and used car markets. Notably, the removal of used car cross-city transfer restrictions will increase used car supply, accelerate used car replacement, and advance the development of a car trading system. In time, we expect a unified national market for used cars. 今年4月底,在新车交易的基础上,我们加大了在二手车B2B撮合交易领域的探索,并取得了令人欣喜的进展。
spk02: The long-standing platform-based second-hand car business is positioned to make second-hand car transactions more intelligent and stable. Compared to the traditional micro-communications group, early car information is buried and the efficiency of self-communication is low. We have dedicated people to follow up online and connect offline, break down news barriers, carry out national and local price reports, accurately connect the supply and demand of both ends, and improve the efficiency of getting and delivering vehicles with clues. Since the end of the second quarter, the number of second-hand car dealers has exceeded 1,500. In view of the above-mentioned market developments, at the end of April this year, building on our successes in new car transaction facilitation, we expanded our used car matching services. Good progress has been made so far.
spk06: We position Kenco's used car business as a smart and reliable service provider. Current facilitation methods for used car transactions, such as communication via WeChat groups, are riddled with problems. Car searching messages can be easily buried in a swath of information, and spontaneous communication is not always efficient. In contrast, Kenco has a dedicated team to follow up on transactions, both online and offline, effectively breaking down the information barrier. We also provide price quotes across different regions to accurately match supply against demand, enhancing the efficiency of sales leads acquisition and vehicle delivery. As of June 30, 2022, over 1,500 used car dealers have registered on our platform with increasing engagement. We will continue to explore further upward and downward along the industrial supply chain to attract more dealers to our platform, create a national delivery network, and develop standardized services.
spk02: to provide customized services for retailers, and thus increase the annuality. The increase in the number of registered car dealers and the activity of car dealers on the platform of positive growth will be conducive to an increase in the transaction conversion rate. With the continuous improvement of our online service capability and supply chain service system, online and offline joint efficient operation, the overall logistics operation capability will also be further improved, and will eventually reach the self-operating self-circulation.
spk06: Going forward, we'll continue to focus on both new and used car trading as we improve our platform service capabilities and dealer stickiness. Specifically, we will center on standardization of our supply chain services, leveraging technology and big data analytics to provide innovative and customized services to dealers on the platform so as to improve their stickiness. Healthy growth in the number of registered dealers on the platform and increasing activity will drive up the conversion rate. With the continuous enhancement of our online services capabilities and supply chain service system, as well as increasing synergies from our efficient integrated online-offline operations, our on-floor logistics abilities will improve as well, eventually realizing a continuous and self-propelling transaction cycle. 另一方 面,基于我们对总体宏观经济走势的判断,传统业务也在继续稳步转型。
spk02: By optimizing the business model, actively exploring the coincidences of car transaction business, to transform into a complex form of financial insurance service transformation by trading as a catcher, to build platform supply chain service capability. In the field of car aftermarket, with the support of Canggu Good Car Platform, we focus on providing strategic configuration service around car transaction. Through efficient integration of products and operation service capability, we build insurance professionalized service within the platform, convenient insurance service, We will continue to explore deep cooperation with new energy brands to build a post-market ecological service network.
spk06: Moving on to our traditional business lines, based on a reading of the overall macroeconomic trends, we continue to transition our traditional business lines, optimizing the business model and exploring synergies with our car trading business to develop platform supply chain capabilities. Eventually, Kengo will transform to an integrated platform model with contractual and monetizing through multiple channels, including financing and insurance services. In the aftermarket services sector, rely on our Kengo hub We will focus on offering supporting services for car transactions. The insurance service interface is expected to be launched in the Kengo Houcher app in the third quarter. Offering an efficient way for dealers to obtain high-quality insurance services will further unlock the potential of our car trading platform. Apart from that, we will also develop customized products and services for corporate clients continue our in-depth collaborations with NEV brands to build an aftermarket service ecosystem.
spk02: 车金融业务领域第二季度 M1加和M3加预期率环比进一步有所上升 主要由于我们主动收缩住贷规模 导致新增贷款金融贷款规模不断下降 基于计算过程中分母的缩小 整个预期率指标出现上升 With respect to our automotive financing facilitation business, M1 plus and M3 plus overdue ratios increased quarter over quarter as we proactively scaled back
spk06: our financing facilitation business leading to a decline in our outstanding loan balance. As the denominators become smaller, the overdue ratios rise. Though we expect the overdue ratios to climb further for some time to come, it is important to know that the new delinquencies have already reached an inflection point. With further strengthening of loan servicing, such as collection, we are confident we can keep the overall overdue scale in a relatively safe range.
spk02: It is the starting point of our business. In this respect, we have many years of experience and advanced and perfect seal technology. We have advanced advantages. Under the guidance of the new strategic policy of multi-channel transformation, such as trading platform data storage, financial insurance services, etc., we have not given up the bag business, but have the option to do high-quality financial business and polish it into an important supply chain service capability and transformation channel of our trading platform.
spk06: We have strong expertise in financing, facilitation, and risk control, giving us a first-mover advantage as we pursue our new model. We have not given up financing facilitation business, but by our new strategy of creating a data-based transaction platform with multiple monetization avenues, including financing and insurance services, we choose to offer high-quality financial services selectively which will grow to be a key part of our platform's supply chain capabilities and monetization channels. We've noted that policy stimuli such as vehicle purchase tax relief aimed at boosting automotive consumption did not lead immediately to a major rebound in the automotive market. Furthermore, uncertainty stemming from supply chain challenges, chip shortages, COVID resurgences, and a complex external environment continue to weigh on the market and the automotive industry value chain. Therefore, We remain prudent and cautious and will continue to strengthen risk controls across the board.
spk02: New energy has always been our main direction of exploration. At present, the penetration rate of new energy vehicles on the good car platform in Canggu has exceeded 50%, far exceeding the national average level. The second-hand car series good policy is also in the process of gradual implementation. Since August 1, 2022, the whole country has officially cancelled the national five-line policy outside Beijing. The second-hand car has basically realized the circulation within the national scope. Despite these uncertainties, we remain positive about China's NEV and used car markets.
spk06: China has become the world's largest NEV market, with NEV penetration rate exceeding 20% in the first half of 2022. Having undergone significant growth in production and sales, NEVs are undoubtedly a new growth driver for the high-quality development of China's automotive industry. For Kengo, NEVs have always been a key component of our business development. We are well-precision to capitalize on the market's vast potentials. On Kangu Haozhi, the NEV penetration rate is already above 50%, far above the national average. As for used cars, favorable policies are already being implemented. Since August 1, 2022, with the removal of restrictions on used car cross-city transfer, other than Beijing, used cars can be traded nationwide. As NEVs and used cars enter a new development stage of fast and large-scale growth and benefit from policy initiatives designed to stimulate market activities, we will make ongoing investments in these two areas to elevate our platform's capabilities and realize our goal of building a tech-enabled car trading platform where we place equal emphasis on new and used car trading and monetizing our financing and insurance services through multiple channels.
spk02: 下面时间交给我们的CFO张永毅与各位分享我们阿基督的财务表现。
spk06: Next, I will turn the call over to our Chief Financial Officer, Michael Zhang, for a review of the company's financial performance.
spk03: Thanks, Zhang. Hello, everyone, and welcome to our second quarter 2022 earnings call. Before I started to review our financials, please note that unless otherwise stated, all numbers are in RMB terms and all percentage comparisons are on a year-over-year basis. During the quarter, Macro headwinds and a wave of COVID resurgence across China posed ongoing challenges to the domestic auto industry. Months of pandemic-related disruption significantly impeded our business, resulting in total revenue of $289.2 million in the second quarter. Our car trading transaction division, which delivered revenues of $218.6 million, still played an essential role in our transformation to a platform model. Now let's move on to our costs and expenses during the quarter. Total operating costs and expenses in the second quarter of 2022 were $643.3 million, compared with $933.5 million in the same period, 2021. Cost of revenue in the second quarter of 2022 decreased to $272.7 million, from $697.8 million in the same period, 2021. As a percentage of total revenues, cost of revenue in the second quarter of 2022 was 94.3%, compared with 73.7% in the same period, 2021. The change was primarily due to an increase in card trading transactions' share of total revenues. Card trading transactions normally present a higher cost-revenue ratio, thus pushing up the overall ratio. Sales and marketing expenses in the second quarter of 2022 were $41.8 million compared with $60.9 million in the same period of 2021. As I presented your total revenues, sales and marketing expenses in the second quarter of 2022 was 14.5% compared with 6.4% in the same period of 2021. General and administrative expenses in the second quarter of 2022 were $124.7 million compared with $64.7 million in the same period, 2021. As a percentage of total revenues, general and administrative expenses in the second quarter of 2022 was 43.1% compared with 6.8% in the same period, 2021. This change was mainly due to the advances arising from 12 million Cloud8 Ordinary Shares options granted to the company's chairman, Mr. Xiaojun Zhang, and CEO, Mr. Jia Yuanlin, in the second quarter. These share options are granted in consideration of Mr. Zhang and Mr. Lin's role in guiding Kangol's profitable investment in Li Auto, a provider of new energy passenger vehicles in China. Research and development expenses in the second quarter of 2022 were $12.9 million compared with $15.6 million in the same period, 2021. As a percentage of total revenue, research and development expenses in the second quarter of 2022 was 4.4% compared with 1.7% in the same period, 2021. Net loss on risk assurance liabilities in the second quarter of 2022 was $53.1 million compared with $35.9 million in the same period of 2021. Net loss on risk assurance liability was mainly due to a sequential increase in the default rate since 2021. We recorded loss from operations of $354.1 million in the second quarter of 2022 compared with an income of $13.1 in the same period, 2021. Net loss in the second quarter of 2022 was 285.8 million. Non-GAAP adjusted net loss in the second quarter of 2022 was 189.6 million. On a per share basis, diluting net loss per ADS in the second quarter of 2022 was 2.08, and diluting non-GAAP adjusted net loss per ADS in the same period was Moving on to our balance sheet, as of June 30, 2022, we had cash and cash equivalents of $1.3 billion, compared with $2.1 billion as of March 31, 2022. As of June 30, 2022, the company had a short-term investment of $2.1 billion, compared with $1.9 billion as of March 31, 2022. Looking ahead to the third quarter of 2022. We are now predicting our total revenues to be between $350 million and $400 million. Please note that this forecast reflects our current and preliminary view on market and operational conditions, which are subject to change. This concludes our prepared remarks. Operator, we are now ready to take questions.
spk01: Thank you, sir. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If using a speakerphone, please pick up the answer before pressing the keys. If any time your question has been addressed and you'd like to withdraw your question, please press star, then 2. Again, it is star, then 1 to ask a question. At this time, we'll just pause momentarily to assume our roster. And the first question we have will come from Shelly Wong of Morgan Stanley.
spk05: 各位管理层好,我是摩根士丹利的Shelly。 我这边有三个问题想请教一下管理层。 第一个是关于我们刚刚讲到的就是上线的这个独立APP。 Can you ask the management team to introduce the app in detail? For example, the positioning, our target customer service, and the content of the coverage. The second is about car transactions. We have also been in the business of car transactions for a while. During this time, we have seen whether the take rate has increased. The third is about car transactions. We expect that in the future, Good morning.
spk06: I'm Shelley from Morgan Stanley. I have three questions. The first question is, could you give us more information on the independent app that you mentioned earlier? For example, the position of the app and target customer base, as well as what kind of services do you offer on this app? And the second question is about card trading transaction business. Could you tell us more about the take rate? Has there been any improvement in the take rate? And the third question is also about car trading transaction business. So what size do you expect the car trading transaction business to reach?
spk02: Thank you, Shirley. Let me answer your three questions. The first question is about the Car Trading App. The Car Trading App is the mechanism for the company to build a car service platform. It is We also provide non-tourist supply chains such as financial insurance services, sales management and sales process optimization, as well as perfect management tools. We also provide non-tourist supply chains such as financial insurance services and sales process optimization, as well as perfect management tools. Thank you, Shelley. I will take your three questions. Well, the first question first. The CanGo HaoChi app is the foundation of the company's efforts to build a car
spk06: transaction service platform and represents a comprehensive upgrade of our original WeChat mini program. The app is a one-stop B2B transaction service platform for dealers across the country, providing a safe, secure, sustained, and consistent supply chain services with car sourcing, financial insurance services, and other non-car sourcing, supply chain, sales management, and sales process optimization tools. In addition, they offer a complete set of management tools for the upstream and downstream of the automotive industry chain, and comprehensively empowering dealers and enabling those who partner with CanGo to enhance their competitive advantages. Since the launch of the app just two weeks ago, more than 1,000 registered car dealers have migrated to or have been registered on the app. covering 30 provinces and cities nationwide, excluding Hong Kong, Macau, and Taiwan.
spk02: As a result of our consistent efforts, we have seen continuous improvement in car dealers
spk06: activity, and conversion rates on the platform. Conversion rates from our matching services have reached 4.5% in June, well above the industry average of 2.5%. 接下来在这个APP上,除了我们提供在优质测验的基础上, 我们将继续打造平台联系,聚焦把服务产品化, 进一步完善供应链服务和数字化能力。 Going forward, in addition to ensuring high-quality car supply, we will further increase user engagement and stickiness, focus on standardizing our services and strengthen our supply chain service and digital capabilities.
spk02: 第二个问题就是车交易的take rate 目前我们车交易业务毛利水平差不多维持在1% 因为我们的业务模式是以统一向主机厂积产 As for your second question on take rates, while so far our car trading transaction business has maintained a gross margin of about 1%, as our business model features centralized procurement of vehicles from OEMs before selling to small and medium-sized dealers,
spk06: Without any control over the production process, our gross margin is relatively low. Our industry peers have also a margin of around 1%, so we believe this level of gross margin will continue for some time. At the same time, to encourage more dealers to join our platform, we offer sufficient profitability for the dealers to ensure their activity and stickiness. With economies of scale, our bargaining power with both upstream OEMs and downstream dealers will improve. And when that happens, our gross margin will grow accordingly. So the car trading transaction business is our growth driver, but we will also increase our profits in the matching business as well as revenues from ancillary financial services such as insurance services for self-owned cars.
spk02: As for your third question, the expected size of our car trading transaction business,
spk06: Well, China is the world's largest autumn consumption market, with new car sales totaling 20 million units a year, plus a used car market of similar size. So take lower tier cities, Congo's traditional stronghold, as an example. In this market segment, new car sales exceed 8 million units a year, equivalent to the new car sales of Germany, Britain, France, and Russia combined. Our goal is to capture a considerable market share in a lower tier market.
spk02: Here's our development plan.
spk06: Well, in the initial stages, without expanding our team on a large scale, we will hone our business model in small incremental steps while gradually improving car supply and product services and establishing and validating a profitable and replicable business model and supporting technology-based platforms. And thereafter, we can roll out the model rapidly on a national scale. Therefore, looking forward over the next five years, business scale will be relatively steady in the first two years with fast expansion in later years. We will fine-tune and adjust our business plan based on the progress of our business development.
spk01: Thank you. Next, we have Sophia Zhu. Thank you for the introduction.
spk04: I have three questions for the management team. The first one is to see if the management team can talk specifically about the layout of our second-hand car business and the specific situation of the second-hand car business market competition. Thank you, Director Guan.
spk06: Thank you. Sophia from Goldman Sachs. I have three questions. So the first question is, could you give us more colors on the company's plan for the used car business? And also, could you describe to us the competition dynamics in these market segments? And the second question is, could you give us more details on your cost control measures? And the third question is, what about your collaboration with NEVOEMs? I mean, how are... Could you tell us more about, you know, what kind of collaborations do you have?
spk02: Let me answer this question. The first question is about second-hand cars. As the number of new cars continues to increase, the demand for second-hand cars is gradually expanding. The second-hand car market is constantly expanding. In addition to the recent policy to stop, the second-hand car consumer market will start to develop fast. We look forward to the development of the second-hand car market.
spk06: OK, I will take your first question on used car market. Well, with increasing new car ownership, we see more demand for car replacement, and this is becoming more and more evident. And this demand actually will lead to the continuous expansion of the used car market. Moreover, the recent release of favorable policies will accelerate the development of the used car market as well. So we are optimistic about the future of the used car market, especially in terms of NEVs. We see great potential, particularly in the lower-tier markets.
spk02: However,
spk06: A huge market potential and strong development prospects always attract a lot of players into the used car market. So the market has always seen a very fierce competition.
spk02: And during the lockdown, we started to try the used car matching service on our platform, and we have seen a good progress so far.
spk06: car services, we provide combined functions and features for our users. And actually, we borrow our expertise from our new car service platform, such as logistic service. But of course, all these services are provided in view of the special characteristics of used cars. So we are now trying to expand our business in the used car market, both along the upstream and the downstream of the market, and we are expanding our business in a targeted way. Right now, we are building a dedicated used car trading platform, and we will, with our efforts, successfully build a national delivery network offering uniform and standardized services. Well, based on the results so far, we believe the used car platform actually will be more active than the new car platform.
spk02: The second question is on cost control measures. Well, to achieve our goal of building a car trading transaction platform, we have taken downsides.
spk06: our staff and restructure our organization and reintegrate the company's human resources so as to maximize our to focus on the goal of building an automotive trading service platform. At the same time, we have increased our investment in IT systems so as to automate and standardize our operations and reduce human resource costs as well as operating costs.
spk02: At the same time, we have also taken steps to plan our funds
spk06: And we have also paid back some loans so as to reduce our level of borrowing.
spk02: The third question is on our collaboration with NEVOEMs.
spk06: Well, right now, our collaborations with NEVOEMs cover both new cars and used car markets. So in the new car segment, we cover new car purchases, corporate retail finance collaborations, as well as insurance services for new cars. And for used cars, we are exploring the possibility of mass procurement of used cars directly from auto OEM.
spk02: China has become the world's largest NEV market. In the first half of this year, NEV penetration rate exceeded 20%.
spk06: Given their significant growth in both production and sales volumes, NEVs undoubtedly represent a new growth driver for the high-quality development of China's auto industry. For Kengo, NEVs have always been an important focus for business development. So far, our NEV OEM brand partners include Buick, Skyworth, Dongfeng Aeolus, Dongfeng Furniture, and Maple, Polestar, Geometry, Rowy, and Xiaopeng, among others. On the Kangoo hotel platform, NEVs have a penetration rate of over 50%, far above the national average.
spk02: We are currently negotiating strategic partnerships with more NEV brands, which we will disclose in due course.
spk06: Thank you.
spk01: Again, as a reminder, if you'd like to participate in today's Q&A, please press star, then 1 on the touchtone phone. Again, at a star, then 1 to ask a question. Again, we will just pause momentarily to assume our roster. Well, it appears that we have a... Actually, I do apologize, everyone. It looks like we I do have an additional question, and it comes from Brian Lentier of Zacks.
spk00: Good evening, everyone. Thank you for taking my question. I feel like maybe Sophia got a copy of my notes because she asked pretty much everything I was going to ask. But the one thing I was wondering if maybe you could clear up for me would be the increase in non-current liabilities on balance sheet. Okay. And then everything else, I think, and then I guess if I'm correct in assuming that you have roughly $70 million open still on the stock repurchase agreement. Those are the two things I just wanted to clarify. Thank you.
spk06: Thank you very much. Good evening. Thank you very much for giving me such an opportunity to ask a question. Just now, Sophia peeked at my lecture and asked me all the questions I wanted to ask. But I have two questions here. I would like to ask the management to confirm and clarify them for us. The first small question is about the increase in non-flexible debt. Can you explain it for us? The second small question is about we see that there are about 70 million, that is, about 7,160 million stock repurchases. Is this correct? Can you help us verify it?
spk02: This financial question is for our CFO, Zhang Yongyi, to answer.
spk06: So for this technical question, I will turn it over to our CFO, Michael Zhang.
spk03: Thank you, Brian, for the question. With the growth of non-convenient liability, the main reason is that we have confirmed a long-term tax. This kind of process has led to non-convenient liability. It led to the rise of the balance of non-coronability. It is expected that such a trend will gradually realize in the next two to three years. This is the first question. The second question corresponds to the quota of our repurchase. As you just mentioned, as of June 30, the quota of our remaining repurchase is more than 7,100 million US dollars. ah ah ah ah
spk06: Thank you, Brian, for your questions. I will take your two questions. First of all, about the increase in non-current liabilities, it is because we recognize the long-term tax item on our balance sheet under the heading of non-current assets. and we said the tax item will be realized in two to three years' time. So that's my response to your first question. The second question, as for the balance of about $71 million worth of shared repurchase authorization as of June the 30th, well, based on last BOD meeting's authorization, this authorization actually will terminate by August 26th. And so, actually, last August, authorization terminates, will terminate, I mean, will have terminated by August this year. So, for authorization starting from this August, the size of the repurchase program for the first half of 2022 will be about $50 million.
spk00: Great. Thank you.
spk01: Well, we have no further questions at this time. We'll now hand the conference back over to management for any closing remarks.
spk06: Thank you for joining us, and this closes this earnings call.
spk01: And thank you for your time today. Again, the conference call is now concluded. At this time, you may disconnect your lines. Thank you. Take care, and have a great day, everyone.
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