As for the performance loss, Zhang Xuan, CEO of e-Car, said that Chinas new car sales have been declining for more than 15 months, which makes automakers and dealers more cautious about advertising and marketing budget.
It is understood that e-Car is a car Internet shopping guide platform established in 2000. In 2010, e-Car was successfully listed on the NYSE, becoming the first stock of Chinas automobile industry to be listed in the United States. At present, the e-Car business is divided into three parts: advertising business, digital marketing solutions and transaction services. Jingdong, autotrader (Cox automotive) and Li Bin are the top three shareholders of e-Car, holding 25.4%, 12.8% and 11% shares respectively.
According to public data, e-Car had lost money for four consecutive years, totaling 2.858 billion yuan. In 2017, the largest amount of loss reached 1.426 billion yuan. This also hit the stock price and market value of e-Car. On September 30, 2014, the stock price of e-Car reached US $98.28/share, with a market value of US $5.8 billion. As of the publication, the stock price of e-Car was $14.72/share, with a market value of only $1086 million.
Ding Daoshi, an Internet industry analyst, told time finance that the business of e-Car and auto home is mainly to provide services for car companies and dealers. The decline of the automobile industry will inevitably affect them. Compared with auto home, which relies on content to obtain traffic, e-Car mainly comes from third-party purchase, and high marketing costs (6.371 billion yuan in 2018) will inevitably affect its profits. After the privatization of e-Car in the future, it doesnt mean that it cant be re listed. With reference to some enterprises that have been privatized, it is very possible for e-Car to choose to re list a shares after delisting.
From the second half of 2018, Chinas car market has entered a downward cycle. According to the public data, from January to October 2019, the sales volume of narrow sense passenger vehicles was 16.62 million, down 8.3% year-on-year, which caused great pressure on the entire industry chain.
Compared with the continuous loss of e-Car, old rival car house is in a better position. According to the financial report, Q3s revenue in 2019 was 2.17 billion yuan, an increase of 14.92% over the same period of last year; its net profit was 644 million yuan, a decrease of 5.52% over the same period of last year. As of the publication, the market value of auto house is 8.056 billion US dollars.
In addition to the general environment of the automobile industry, the loss of e-Car is related to the substantial increase of marketing expenditure. According to the financial report, the sales administrative expenditure of e-Car increased by 7.4% to 1.63 billion yuan in the third quarter. Xu Ming, EVRs chief financial officer, said they had launched a new marketing and brand promotion plan. Although these investments will increase the operating cost in the short term, in the long term, they will help e-Car further reduce the customer acquisition cost and strengthen the product competitive advantage.
In the middle of October, Zhang Xuan, CEO of the company, announced that it would launch the three-year brand plan to strengthen brand building with unprecedented strength and patience. At the same time, e-Car signed a contract with Shen Teng to act as the brand spokesperson, launched the new advertising language of the price knows that buying a car is not a loss, and on October 14, it contracted the elevator advertising resources of focus media in 54 cities across the country to dominate the screen to broadcast new advertisements.
In addition, the launch of e-Car will continue until the end of this year, covering nearly 100 cities. E-Car ads will successively land on CCTV, Hunan TV, Zhejiang TV, Jiangsu TV, as well as mainstream video platforms, radio stations, bus bodies and other channels.
It does bring high exposure and traffic to the easy car. According to the data of quest mobile, the number of daily active users of e-Car app in October 2019 increased by about 255% year on year, and the total dau of e-Car app and auto quotation Daquan app increased by more than 55% year on year. The total sales leads of e-Car increased by more than 6% year on year, and the proportion of high-quality native sales leads continued to exceed 60%.
However, the high investment in marketing did not bring revenue and profit growth for the change of cars. According to the third quarter report, the service revenue of e-Car advertising and subscription business was 923.6 million yuan, down nearly 13% year-on-year; the revenue of digital marketing solution business was about 200 million yuan, down 34% year-on-year.
In terms of car change, time finance was informed, because the business model of car change is 2B, and it still needs a process to reflect the revenue. Marketing does bring about the improvement of data, which is conducive to the negotiation and cooperation with host manufacturers and dealers.
Tencent sees Yi Xin?
Another topic of great concern about e-Car is privatization. Earlier in September, e-Car announced that it had received privatization offers from Tencent holdings and Blackhorse capital, and the buyer planned to purchase the outstanding e-Car shares it had not yet held with each share or $16 per ADSS. According to the announcement, founders Li Bin, Jingdong and autotrader have now agreed to vote for the deal, with the three parties currently holding 48.5% of the shares.
Some people in the industry said that the main goal of Tencent and other privatization of e-Car is e-Xin. Yixin group, formerly an auto finance business unit under the company, operated independently in 2014 and was listed on the Hong Kong Stock Exchange in November 2017. Its core businesses include loan assistance and proprietary business. At present, e-Car directly or indirectly owns about 43.74% of the shares of e-Xin. As of the publication, the market value of e-Xin group was HK $11.026 billion, far exceeding that of e-Car by US $1.086 billion (about HK $8.5 billion).
It is understood that Tencent holds 1.312 billion shares of e-Xin, accounting for 20.9%; e-Car holds about 2.786 billion shares of e-Xin, accounting for 43.74%, with about 53.59% of the voting rights. This also means that if you take the equity of e-Car, it is equivalent to taking the fat meat of e-Xin.
Data shows that the total revenue of Yixin group in the third quarter was 1.42 billion yuan, up 3.1% year on year. Among them, the loan assistance business has grown rapidly in the past two years. Data shows that from 2018, the loan assistance business of Yixin group has continued to expand. By the first half of 2019, the loan facilitation service revenue of Yixin group was 839 million yuan, an increase of 655% year on year; in the third quarter, Yixin group facilitated financing transactions for 12 banks and financial institutions, with 94000 transactions, an increase of 213% year on year, accounting for 73% of the total financial transactions of Yixin in 2019.
At present, the privatization of e-cars has not been finalized. However, e-Car and Tencent entered into a new voting entrustment agreement on November 15. Tencent granted e-Car the right to restrict e-Xin group, a listed company of e-Car, in accordance with the provisions of the voting agency agreement. According to this agreement, the financial performance of Yixin can continue to be consolidated with the financial statements of Yiche.
After the release of the third quarterly report of e-Car, Citi published a research report that the third quarter performance of e-Car failed to meet expectations, and the fourth quarter guidance (2.45 billion yuan to 2.55 billion yuan) was disappointing, giving it a neutral rating. (Ouyang Xizi, Beijing Time Finance)