2017 Interim Results Aug 15 th , 2017 1H17 Executive summary Car - - PowerPoint PPT Presentation

2017 Interim Results

Aug 15th, 2017

1H’17 Executive summary

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Achieved record high utilization rate and quicker realization of significant upside … 69% in 1H, 14pp YoY improvement (guidance 5-7pp YOY) Realized margin expansion despite significant price reduction … EBITDA margin +4pp YoY and net margin +3pp YoY due to significant operating leverage from scale

 Car rental: Deliver far beyond 2017 expectations

Demonstrated stronger than ever growth momentum … 71% YoY rental days growth in 1H and 79% YoY in 2Q, a record high since 2013 (guidance 40% YoY)

 Used car: Expedited fleet replacement to drive growth and mitigate future

residual risks … headwinds on 1H margins due to disposal loss of legacy models

 Fleet rental: UCAR fleet 30%+ YOY decline, regulation & business driven

Expedited fleet replacement to accommodate regulatory requirement for vehicles providing ride-hailing services … 36% YoY revenue decrease Started to diversify customer base of fleet management … decided to re-enter into new long-term rental businesses for corporations

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1H’17 Highlights

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

Growth Car rental 69%

Fleet utilization

Profitability Financial positions

RMB 407 MM Free cash flow

13%

• Adj. net margin

(1) (1) (1)

59%

• Adj. EBITDA margin

2.1x

Net debt/adj. EBITDA

71% YoY

Car rental(2) volume

31% YoY

Car rental revenue

+14pp YoY

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1H’17 Financial highlights

June-17 Dec-16 change

Total assets 20,739 21,189 (2)% Total debt 11,242 11,682 (4)% Cash 4,982 5,725 (13)% 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

(RMB in millions)

1H’17 1H’16 YoY

Total rental revenue 2,456 2,452 0%

• Car rental(1)

1,739 1,326 31%

• Fleet rental(1)

705 1,100 (36)% Total revenue 3,612 2,969 22% Net profit 379 1,062 (64)%

• Adj. EBITDA(2)

1,449 1,556 (7)% Margin(4) 59.0% 63.5% (4.5)pp

• Adj. net profit(3)

314 472 (33)% Margin(4) 12.8% 19.2% (6.4)pp Free cash flow 407 784 (48)% Basic EPS(RMB) 0.16 0.44 (63)%

472 314

1H'16 Car rental contribution UCAR fleet contribution Vehicle residule impact Finance cost &

• thers

1H'17

4 (RMB in millions)

1H’17 Adj. net profit walk

Car rental growth with slight margin expansion UCAR fleet rental decline Residual pressure of legacy models GM Excelle impact, UCAR fleet residual adjustment in 4Q’16 Finance cost increase due to higher gross debt

63.5%

1H'16 Car rental contribution Business mix change Used car disposal Others 1H'17

59.0%

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1H’17 Adj. EBITDA margin walk

Car rental margin expansion UCAR fleet rental decline Used car disposal loss of legacy models UCAR fleet contribute higher EBITDA margin

1H’17 Car rental business: High demand growth with margin expansion

71% (24)% 31%

ADRR Revenue Rental days 55% 69%

14pp+

YOY 1H’17 1H’16 Car rental EBITDA margin

 Rental days growth: 1H 71%, 2Q 79% record high  Utilization improvement: 1H 14pp+, 2Q 15pp+  Effective pricing strategy, 24% ADRR decrease  5% slight RevPAC decrease, offset by unit cost

decrease due to higher operating leverage Utilization Rate

Realized margin expansion due to significant operating leverage from scale

Car rental Net margin Car rental key metrics YoY

+4pp +3pp Delivered far beyond 2017FY operational targets (2017 focus on growth & utilization)

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Car rental: consistent strong growth momentum

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Growth levers

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17

More competitive pricing Younger fleet

8% 18% 40% 45% 63% 79%

Smarter Dynamic Pricing Attractive new models

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17

ADRR

Price lever Fleet optimizer Rental experience revolution

Counter/staff bypass Rental on-demand

<1yr Fleet %

9,803 10,988 12,346 13,624 15,200 17,255 2Q’17 1Q’16 2Q’16 3Q’16 4Q’16 1Q’17

Sequential increase

• f YoY growth% for

6 consecutive qtrs

Rental days YoY (%) Registered members (in thousands)

1Q’16 2Q’16 3Q’16 4Q’16 1Q’17 2Q’17

~2x in 18

months

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 to average 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

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Car rental: margin expansion despite price deflation

38%

1H’17 1H’16

• Avg. daily

fleet(2)

31%

Car rental revenue(1) 1,739 1,326 60,307 43,830 RevPAC(2) 160 169 x = x = x

Days

ADRR(3) 234 307

+13.6pp

Utilization(4) 68.5% 54.9%

(RMB in millions)

• 5%
• 24%

RevPAC(3)

313 300 282 251 245 223

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17

ADRR(4)

55.4% 54.4% 60.3% 59.3% 67.6% 69.4%

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17

Utilization(5)

174 163 170 149 165 155

1Q‘16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17

YoY

Delivered margin expansion despite significant ADRR reduction:

• RevPAC slightly decreased 5%, strong utilization gain offsetting ADRR reduction
• RevPAC break-even point decreased due to strong operating leverage from scale

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Improved capabilities in used car disposal Proven residual risk management

100% Cost of sales of used vehicles As % of sales of used vehicles 2014 95.1% 2015 101.1% 65

• Avg. selling

price (RMB‘000) 2016 103.0% 15,483 9,284 23,092 8,077 17,808 2014 2015 2016 1H'16 1H'17 # of used vehicles disposed Used car disposal channels

Used car disposal

62 23.4% 21.4% Depreciation %

(of rental revenue)

25.1%

 Expedited vehicle replacement to drive growth and

mitigate future residual risks … 1H loss due to legacy GM model

 Solid residual adjustments of legacy models and UCAR

fleet in 2H’16, resulting in 1H’17 depreciation % 1.7pp increase YoY

 Cost to sales ratio constant at 95%-105%  2H’17: strengthen the effort of penetrating B2C retail

channel through Maimaiche partnership

64 65 64 1H’16 1H’17 99.0% 103.0% 26.3% 24.6% 9% 29% 63% 5% 37% 58%

B2B - Franchisees B2B - Dealers B2C - Maimaiche

1H’17 1H’16

Strong financial positions

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Optimizing funding capability and credit profiles

Cash(1) 2013 2014 2015 2016 1H'17 Free Cash Flow (FCF)

Strong cash generation

(RMB in millions)

Net debt/

• adj. EBITDA

2,967 1,135 6,344 5,958 6,260 3,811 3,611 8,385 11,682 11,242 2013 2014 2015 2016 1H'17

Net debt Total debt

Debt (Gross/Net) 5,725 2,041 2,476 844 3.2x 0.7x 1.9x

 Net leverage remained low due to strong FCF

generations

 Gross debt level remained constant  FX exposure further reduced: USD630mm hedged  Continue deliver strong Free Cash Flow after 2.0B

vehicle capex spent

 Maintain strong cash position of 4.9B … providing

liquidity needs for both onshore and offshore

 Executed share buy-back of HKD662MM

Note: (1) includes restricted cash, available-for-sale investments and cash and cash equivalents

4,982 2.3x 2.1x (649) (1,129) (3,303) 1,795 407

(RMB in millions)

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Net investment in fleet

22,171 21,857 38,353 29,831 23,601 9,986 15,483 9,284 23,092 17,808 2013 2014 2015 2016 1H'17 Vehicles purchased Vehicles disposed

Fleet expansion (1) Net investment in fleet

(RMB in millions)

1,889 2,729 5,220 2,633 1,973 495 654 603 1,438 1,156 2013 2014 2015 2016 1H'17 Vehicle purchase capex Used vehicle sales revenue

Notes: (1) Fleet expansion does not reflect change in finance leasing fleet (2) Among 15,483 used vehicles disposed in 2014, 10,185 vehicles were sold while 5,298 vehicles were disposed to franchisees through finance leasing (2)