CAR Inc First Nine Months Results. Nov 21 st, 2017

Transcription

1 CAR Inc First Nine Months Results Nov 21 st, 2017

2 Q3 17 Highlights (RMB in millions) Car rental 1,382 3 pps Margin 860 Continue to demonstrate strong growth momentum with less YOY price reduction impact Achieve significant margin expansion with strong fleet growth and techdriven cost structure improvement +57% +32% +7pp Rental days Revenue EBITDA margin YoY Rental revenue Adj. EBITDA Flat +4% Fleet rental UCAR fleet ~50% YOY reduction due to UCAR s change to balance btw self-op & 3rd parties to achieve better operating efficiency Fleet rental demand stabilized supported by UCAR s solid consumer demand & firmed operating model ~30,000 3Q 16 +2pp ~15,000 3Q 17 UCAR avg. rental fleet 1

3 9M 17 Executive summary Car rental: Continued to exceed expectations Demonstrated stronger than ever growth momentum 65% YoY rental days growth (guidance 40% YoY) Achieved record high utilization rate of 68% and quicker realization of significant upside 11pp YoY improvement (guidance 5-7pp YOY) Realized margin expansion despite significant price reduction EBITDA margin +5pp YoY and net margin +3pp YoY due to significant operating leverage/efficiency Fleet rental: Strong headwind due to significant UCAR fleet decline UCAR fleet decline driven by its operating efficiency improvement and refined operating model to best balance between self-operation and third party services More diversified fleet rental channels and products under development Used car: Expedited fleet replacement to drive growth and mitigate future residual risks headwinds on margins due to disposal loss of legacy models 2

4 9M 17 Highlights Growth 65% YoY Car rental (2) volume Profitability 60% Adj. EBITDA margin (1) 31% YoY Car rental revenue 14% Adj. net margin (1) Car rental 68% Fleet utilization Financial positions RMB 972 MM Free cash flow +11pp YoY 2.1x Net debt/adj. EBITDA (1) Notes: (1) Adjusted EBITDA, adjusted net profit, and margins exclude the costs relating to the used car B2C pilot program. Adjusted EBITDA is defined as profit or loss before income taxes, net finance income/costs, depreciation, amortization and impairment, excluding share-based compensation, foreign exchange gain/loss, fair value gain from investment in equity shares and redeemable preference shares, fair value gain on derivative instrument-transaction not qualifying as hedges, share of profit/(loss) of an associate; adjusted net profit is defined as profit or loss excluding share-based compensation, foreign exchange gain/loss, fair value gain from investment in equity shares and redeemable preference shares, fair value gain on derivative instrument-transaction not qualifying as hedges, share of profit/(loss) of an associate. Margins are calculated as percentage of rental revenue. (2) Rental revenue and operating fleet have been reclassified to align with its new development in business natures 3

5 Financial highlights (RMB in millions) Q3 17 Q3 16 YoY 9M 17 9M 16 YoY Total rental revenue 1,382 1,384 0% 3,838 3,837 0% - Car rental (1) 1, % 2,838 2,159 31% - Fleet rental (1) (49)% 983 1,643 (40)% Total revenue 2,146 1,892 13% 5,758 4,861 18% Net profit (13)% 662 1,388 (52)% Adj. EBITDA (2) % 2,309 2,380 (3)% Margin (4) 62.2% 59.5% 2.7pp 60.2% 62.0% (1.8)pp Adj. net profit (3) (3)% (23)% Margin (4) 16.3% 16.7% (0.4)pp 14.0% 18.3% (4.3)pp Free cash flow % 972 1,175 (17)% Basic EPS (RMB) (10)% (50)% Sep-17 Dec-16 change Total assets 20,812 21,189 (2)% Total debt 11,431 11,682 (2)% Cash 5,184 5,725 (9)% Total debt/ LTM Adj. EBITDA 3.8x 3.8x - Net debt/ LTM Adj. EBITDA 2.1x 1.9x 0.2x Note: (1) The Company has reclassified the rental revenue and operating fleet to better align with its new development in business natures. (2) Adjusted EBITDA is defined as profit before income taxes, net finance income/costs, depreciation, amortization and impairment, excluding share-based compensation, unrealized foreign exchange gain/loss related to USD denominated liabilities, costs related to B2C pilot program and fair value gain on investment in redeemable preference shares (3) Adjusted net profit is defined as profit excluding share-based compensation, unrealized foreign exchange gain/loss related to USD denominated liabilities, costs related to B2C pilot program and fair value gain on investment in redeemable preference shares (4) As a percentage of rental revenue 4

6 9M 17 Adj. net profit walk (RMB in millions) Car rental growth with margin expansion UCAR fleet rental decline 703 Residual pressure of legacy models Finance cost increase due to excess liquidity 539 Stabilized since August Non-recurring 9M'16 Car rental contribution Fleet rental contribution Vehicle residual impact Finance cost & others 9M'17 5

7 9M 17 Car rental business: High demand growth with margin expansion Car rental key metrics YoY 65% ADRR 31% Delivered far beyond operational targets (2017 focus on growth & utilization) Volume growth: 9M 65%, 3Q 57% Utilization improvement: 9M 11pp+, 3Q 6pp+ Effective pricing strategy, 21% ADRR decrease Rental days -21% Revenue 6% slight RevPAC decrease, offset by unit cost decrease due to higher operating leverage 57% 11pp+ YOY 68% Realized margin expansion due to significant operating leverage / efficiency +5pp 9M 16 9M 17 Car rental EBITDA margin Utilization Rate +3pp Car rental Net margin 6

8 Car rental: reboot and deliver beyond strong growth momentum well rewarded by growth initiatives 40%+ volume growth for 5 consecutive quarters Growth levers ADRR Price lever 313 More attractive pricing to stimulate demand & suppress competition Rental days Rental days YOY ADRR YOY 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 8% 18% 40% 45% 63% 79% 57% (1)% (6)% (9)% (12)% (22)% (26)% (16)% 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 Avg. fleet age 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Fleet optimizer 21 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Rental experience revolution Better fleet condition + more attractive models 15 Counter/staff bypass Rental on-demand Hybrid car sharing More diversified products 14 7

9 Car rental: margin expansion despite price reduction (RMB in millions) 9M 17 9M 16 YoY RevPAC (3) Car rental revenue (1) 2,838 2,159 = Days x Avg. daily fleet (2) x 65,669 47,140 RevPAC (2) = ADRR (3) x Utilization (4) 67.7% 57.0% 31% 39% -6% -21% +10.7pp Q 16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 ADRR (4) Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Utilization (5) 67.6% 69.4% 66.5% 60.3% 59.3% 55.4% 54.4% 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Adj. EBITDA margin increased 5pps despite significant ADRR reduction: RevPAC slightly decreased 6%, strong utilization gain offsetting ADRR reduction RevPAC break-even point decreased due to strong operating leverage from scale Notes: (1) The Company has reclassified the rental revenue and operating fleet to better align with its new development in business natures. (2) Average daily fleet is calculated by dividing the aggregate days of car rental vehicles in operation in a given period by the aggregate days of that period (3) RevPAC refers toaverage daily rental revenue per car rental vehicle, which is calculated by multiplying the average daily rental rate in a given period by the fleet utilization rate in that same period (4) Average daily rental rate is calculated by dividing car rental revenue in a given period by the fleet rental days in that period. Fleet rental days are the total rental days for all vehicles in car rental fleet in a given period (5) Fleet utilization rate is calculated by dividing the aggregate days that vehicles are rented out for car rentals by the aggregate days that car rental vehicles are in operation 8

10 Sustainable profitability profile Profit margins Cost structure Adj. EBITDA margin (1)(2)(5) 62% 61% 62% 61% 65% 61% 60% 57% 60% 58% 62% 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q 16 3Q 16 4Q 16 1Q 17 2Q'17 3Q'17 Gross margin (1) Major cost items as % of rental revenue (1)(4)(5) Interest SG&A 82% 74% 73% 74% 12% 73% 81% 77% 12% 11% 13% 12% 13% 11% 13% 10% 10% 10% 9% 12% 10% 88% 14% 11% 79% 12% 11% 85% 80% 14% 12% 10% 9% 50% 49% 50% 43% 49% 41% 42% 35% 43% 38% 42% Depreciation 20% 21% 21% 24% 23% 26% 24% 27% 26% 27% 26% 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Adj. net profit margin (1)(3)(5) DOE 31% 30% 30% 33% 29% 32% 32% 36% 30% 34% 33% 22% 21% 22% 16% 22% 17% 17% 10% 14% 11% 16% 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q 16 3Q 16 4Q 16 1Q 17 2Q'17 3Q'17 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Notes: (1) As percentage of rental revenue (2) Adjusted EBITDA is defined as profit before income taxes, net finance income/costs, depreciation, amortization and impairment, excluding share-based compensation, foreign exchange gain/loss, IPO-related expenses, fair value gain and costs relating to the used car B2C pilot program (3) Adjusted net profit is defined as profit excluding share-based compensation, foreign exchange loss related tocorporate reorganization, IPO-related expenses, and unrealized foreign exchange loss related tousd denominated liabilities (4) Expenses figures have been adjusted for share-based compensation, reorganization related expenses as well as costs related to suspended fleet. Interest expenses are net of interest income (5) The metrics exclude costs related to B2C pilot program in 4Q 16 and 1Q 17 9

11 Used car disposal Improved capabilities in used car disposal Proven residual risk management # of used vehicles disposed 23,092 27,973 Cost of sales of used vehicles As % of sales of used vehicles 15,483 16, % 103.0% 101.9% 101.9% 9, % 95.1% M'16 9M' M 16 9M 17 Avg. selling price (RMB 000) Depreciation % 23.4% 21.4% 25.1% 24.5% 26.0% (of rental revenue) Used car disposal channels 3% 9M 17 10% 48% 58% 9M 1642% 38% B2B - Franchisees B2B - Dealers Expedited vehicle replacement to drive growth and mitigate residual risks loss due to legacy GM model Updated estimations of residual values for certain vehicle models, resulting in depreciation% +1.5pp YoY Cost to sales ratio constant at 95%-105% Q % Continue the effort for deeper penetration into B2C retail channel through Maimaiche partnership 58% in 9M B2C - Maimaiche 10

12 Strong financial positions Strong cash generation (RMB in millions) Free Cash Flow (FCF) Optimizing funding capability and credit profiles (RMB in millions) Debt (Gross/Net) 1, M'17 (649) (1,129) 11,682 11,431 8,385 6,344 5,958 6,247 3,811 2,967 3,611 1,135 Cash (1) (3,303) Sep-17 Net debt Total debt 844 2,476 2,041 5,725 5,184 Net debt/ 3.2x 0.7x 2.3x 1.9x 2.1x adj. EBITDA Continue deliver strong Free Cash Flow after 3.0B vehicle capex spent Maintain strong cash position of 5.2B providing liquidity needs for both onshore and offshore Executed share buy-back of HKD1.2B in 2017 Net leverage remained low due to strong FCF generations Gross debt level remained constant maintain strong relationship and credit facilities with 30+ banks. FX risk mitigated: USD630mm hedged Note: (1) includes restricted cash, available-for-sale investments and cash and cash equivalents 11

13 Appendix Supplementary Financials

14 Net investment in fleet Fleet expansion (1) 38,353 37,401 22,171 21,857 9,986 15,483 (2) 9,284 29,982 23,092 27,973 Vehicles purchased Vehicles disposed M'17 Net investment in fleet (RMB in millions) 5,220 1,889 2, ,633 1,438 3,033 1,920 Vehicle purchase capex Used vehicle sales revenue M'17 Notes: (1) Fleet expansion does not reflect change in finance leasing fleet (2) Among 15,483used vehicles disposed in 2014, 10,185vehicles were sold while 5,298vehicles were disposed to franchisees through finance leasing 13

15 9M 17 Adj. EBITDA margin walk Car rental margin expansion UCAR fleet rental decline 62.0% Used car disposal loss of legacy models 60.2% UCAR fleet contribute higher EBITDA margin 9M'16 Car rental contribution Business mix change Used car disposal Others 9M'17 14