CAR Inc. Company Presentation August 15 th 2017 Disclaimer By - - PowerPoint PPT Presentation

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CAR Inc. Company Presentation August 15 th 2017 Disclaimer By - - PowerPoint PPT Presentation

CAR Inc. Company Presentation August 15 th 2017 Disclaimer By attending the meeting where this presentation is made, or by reading the presentation materials, you agree to be bound by the following limitations: The information that follows is a


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CAR Inc.

Company Presentation

August 15th 2017

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By attending the meeting where this presentation is made, or by reading the presentation materials, you agree to be bound by the following limitations: The information that follows is a presentation of certain information of CAR Inc. (the “Company”) prepared by the Company as of August 2017. The information contained herein (including, among others, the market data, industry data and other industry statistics included in this presentation derived from public or third party sources) has not been independently verified and thus no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information, or opinions contained herein. Neither the Company nor any of its respective directors, officers, employees, advisors, affiliates or agents shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. In addition, no person is authorized to give any information or to make any representation not contained in and not consistent with this material and, if given or made, such information or representation must not be relied upon as having been authorized by or on behalf of the Company. In this presentation, we refer to EBITDA, Adjusted EBITDA and other measures which are not standard financial measures under IFRS. Such measures may not be comparable to similarly titled measures presented by other companies. See the relevant footnotes contained in this presentation for the definition and calculation of such financial measures. This presentation is based on the economic, regulatory, market and other conditions as in effect on the date hereof. It should be understood that subsequent developments may affect the information contained in this presentation, which neither the Company nor its advisors or representatives are under an obligation to update, revise or affirm, and past performance is not indicative of future results. The information communicated in this presentation contains certain statements that are or may be forward looking. These statements typically contain words such as "will", "expects" and "anticipates" and words of similar import. By their nature forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the

  • future. Any investment in securities issued by the Company will also involve certain risks. There may be additional material risks that are currently not considered to be material or of which the

Company and its advisors or representatives are unaware. Against the background of these uncertainties, readers should not rely on these forward-looking statements. The Company assumes no responsibility to update forward-looking statements or to adapt them to future events or developments. This presentation and the information contained herein do not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities of the Company. The securities of the Company have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered, sold or delivered within the United States or to U.S. persons absent from registration under or an applicable exemption from the registration requirements of the United States securities laws. No securities may be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Any public offering of securities to be made in the United States will be made by means of a prospectus. Such prospectus will contain detailed information about the company making the offer and its management and financial statements. No public offering of securities is to be made by the Company in the United States. This presentation and the information contained herein is being furnished to you solely for your information on a confidential basis and may not be reproduced or redistributed to any other person, in whole or in part. In particular, neither the information contained in this presentation nor any copy hereof may be, directly or indirectly, taken or transmitted into or distributed in the United States, Canada, Australia, Japan, Hong Kong or any other jurisdiction which prohibits the same except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of U.S. or other national securities laws. No money, securities or other consideration is being solicited, and, if sent in response to this presentation or the information contained herein, will not be accepted. BY REVIEWING THIS PRESENTATION, YOU ARE DEEMED TO HAVE REPRESENTED AND AGREED THAT YOU AND ANY CLIENTS YOU REPRESENT ARE EITHER (A) A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF REGULATION 144A UNDER THE SECURITIES ACT), OR (B) NOT A U.S. PERSON AND ARE OUTSIDE OF THE UNITED STATES AND NOT ACTING FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT). YOU ARE ALSO DEEMED TO HAVE REPRESENTED AND AGREED THAT YOU AND ANY CUSTOMER YOU REPRESENT ARE PROFESSIONAL INVESTORS AS DEFINED IN THE SECURITIES AND FUTURES ORDINANCE (CAP 571 LAWS OF HONG KONG) AND ANY RULES MADE UNDER THAT ORDINANCE.

Disclaimer

1

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2

Our vision: China’s leading auto mobility provider

 Infant stage with huge growth potential  Life-style driven, not only travel demand  Dominant leader = High margin  Significant entry barriers Market Demand Competition Landscape  O2O and mobile  Asset-light network strategy  Strategic collaboration with UCAR Innovations

We are more than a car rental company

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I. Industry Overview

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World’s fastest growing region for car rental

Source: Roland Berger Notes: (1) Defined as the number of rental vehicles as a percentage of the total number of registered passenger vehicles in 2012 (2) Represents growth in the car rental market size, based on rental revenues CAGR’s on local currency basis

2.5% 1.6% 1.4% 1.3% 0.4% 2% 2% 6% 13% 27% 2013-2018E CAGR (2)

Car rental sales growth Penetration rate of car rental(1)

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Key growth drivers

PRC regulatory reforms Typical rental market evolution Licensed drivers without cars

217M 310M 84M 150M

2013 2016 Gap: 133M Car rental(1) market size (2013) ~$0.9 bn ~$24.0 bn

>4,000,000

government-owned cars

  • No. of driver’s license holders
  • No. of passenger vehicles

Gap: 160M

1 2 3

 Business travel  Leisure travel  Replacement car  Limit number and models of

cars that may be purchased by government agencies and encourage car rental

 Official guidance (July 2014)

stipulates that no further government-owned cars will be provided for use in regular government affairs or to officials below a certain rank

Source: Roland Berger (1) The Company has reclassified the rental revenue and operating fleet to better align with its new development in business natures

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6

Significant entry barriers

Challenging for new entrants to acquire new

licenses

Vehicle purchasing restrictions Scale, network and brand Difficult, costly and time-consuming to

replicate

Difficult access to debt financing

Requires “deep pockets”

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II. Investment Highlights

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Investment highlights

Clear and sustainable market leadership Most trusted brand supported by superior customer experience Industry-leading proprietary technology platform Diversified and stable business Experienced management team and strong partners Strong and sustainable profitability profile

1 2 3 4 6 5

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Source: Public filings

9

940

~3x

Larger

~2x

Larger

96,449 #1 #1 Vehicles (2016) RMB in millions (2016) #2 #2 56,916 3,057

~3x

Larger

Fleet size Rental revenue

  • Adj. EBITDA

RMB in millions (2016)

#1

#2 1,664 5,016

Clear market leader

1

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Consistently extending leading position

1

31.2% 8.2% 1.9% 1.9% 1.2% 19.8% 7.7% 2.7%

<1.5%

1.5% eHi Topone Reocar Avis 2013 2011 % Change +11.4% +0.5%

  • 0.8%

+0.4%

  • 0.3%

Market share (by revenue) of top 5 car rental(1) companies in China

Source: Roland Berger (1) The Company has reclassified the rental revenue and operating fleet to better align with its new development in business natures

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Note: (1) As of Jun. 30, 2014

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Our clear market leadership provides unique competitive advantages

1 Cost advantages 1 License advantages 2 Funding advantages 3

Secured licenses to accommodate future growth

 ~13,000 in Beijing(1)  ~8,000 in Guangzhou(1)

Access to diversified debt funding channels including credit facilities

 Bank, OEM financing, capital leasing

Access to global capital markets Procurement

 One of the largest passenger vehicle

purchasers in China Operational leverage

 Economy of scale

Reinforces our …

market leadership

provides…

cost advantages

and creates…

barriers to entry

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12

Most recognized and trusted brand with superior customer experience

2

3.5 15.6 2011 1H'17 (‘000)

Growth in institutional customers

~4.5x

increase

447 4,657 2011 1H'17 (‘000)

Growth in individual customers

~10.4x

increase

57% 65% 2011 1H'17 % repeat customers transactions (1)

Increasing customer engagement

+8pp

increase

Best-in-class customer service

Extensive nationwide network Broadest vehicle selection Excellent vehicle conditions Hassle-free rental process

Note: (1) The transactions by our repeat customers as a percentage of the total number of our car rental transactions. Repeat customers include any customer that has completed more than

  • ne transaction with us within any period of time.
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Extensive nationwide coverage with deep urban penetration

2

Beijing Guangzhou Shanghai Shenzhen

Deep urban penetration

Service locations cover major transportation hubs, business districts, residential communities and tourist destinations

Nationwide coverage

Directly operated 104 major cities 823 service locations (333 stores and 490 pick-up points) Franchise operated 189 small cities 239 service locations

1 2 3 6 7 9 10 4 8

Note: Network statistics as of June. 30, 2017

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Industry-leading proprietary technology platform

3

Customer interface Comprehensive management systems

Fleet Management

 Repair and insurance  Used car sales

Yield Management

 Supply / demand  Dynamic pricing  Fleet deployment

Financial Management

 Budgeting  Business analytics

Customer Management

 CRM  Promotional activities

Transaction Management

 Reservation, vehicle pick-up /

return, payment

 Risk control

Effective Reliable Scalable

Call center PC Mobile Store Big data Business intelligence

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Dynamic pricing to maximize yield and competitiveness

Note: (1) Recent same day examples

3

 Market demand  Inventory level  Rental term  Location  Timing of booking  Competitor rates  Target margin

Dynamic Pricing

Data analysis

Pricing flexibility of the same car model in different stores (1)

¥415/ 日

¥280/ 日

Beijing Guomao Shanghai Jinjiang Action Park Xining Caojiabao Airport

¥69/ 日均

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Diversified and stable business

Note: (1) Business transactions refer to reservations under commercial agreement, car pick up outside of holidays, car pick up outside of tourist locations, weekend rentals and rentals with formal receipt issued for reimbursement purposes. Leisure transactions refer to the remaining transactions. (2) The Company has reclassified the rental revenue and operating fleet to better align with its new development in business natures

4

25% 45% 7% 3% 10% 10% 76% 9% 9%6% 71% 29% Car rental Fleet rental, leasing & others ~35% ~65% Beijing, Shanghai, Guangzhou, Shenzhen Other cities ~55% ~45% Top 10 cities Others 32% 68% Business Leisure Buick Toyota % 1H’17 rental revenue

Products Customers

% 1H’17 car rental transactions

Network Suppliers

% 1H’17 car rental revenue(2) % 1H’17 total fleet VW Kia Others ~23% ~77% On-airport business Off-airport business ~84% ~16% Top 10 models Others % 1H’17 car rental transactions

(1) (1)

% 1H’17 car rental revenue(2) % 1H’17 total fleet % 1H’17 car rental revenue(2) Chevrolet Store Mobile PC Call Center

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Strong and sustainable profitability profile

Source: Roland Berger (market share by revenues in 2013), Euromonitor, public filings of peers (Brazil market share by revenues in 2014), Auto Rental News Note: (1) EBITDA margins based on percentage of rental revenues for all, except for the #2 player. CAR: Adjusted EBITDA as disclosed. #2 player: adjusted EBITDA as disclosed. Hertz: EBITDA as disclosed (unadjusted due to limited public information available). Avis: corporate EBITDA for car rental business adjusted for vehicle depreciation and interest. Localiza: car and fleet rental EBITDA as disclosed

5

Market position comparison EBITDA margin among peers(1)

Dominated by Localiza Dominated by CAR

CAR 31% eHi 8% Topone 2% Other 59%

Market shared by 3 large players

Enterprise 48% Hertz 26% Avis 18% Others 8% 59% 45% 42% 36% 1H'17 FY2016 FY2016 FY2016 FY2016

Localiza Hertz Avis #2

Localiza 47% Unidas 8% Hertz 7% Other 38% 34%

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Source: Public filings of Hertz, Avis, Localiza and the #2 player. Peers data based on the year ended December 31, 2016 except the #2 player based on the year ended December 31,2015. Notes: Where applicable, CAR’s expense figures have been adjusted for share-based compensation, reorganization related expenses as well as costs related to suspended fleet (1) Representing expenses as a percentage of rental revenue, excluding sales of used vehicles; but in the case of the #2 player, including car services revenue. CAR Inc. rental revenue and operating fleet have been reclassified to align with its new development in business natures. (2) Due to limited disclosures available, depreciation and amortization expenses have been used as a proxy to estimate vehicle-related depreciation (3) Due to limited disclosures available, direct operating expenses are estimated by taking vehicle operating expenses less depreciation and amortization expenses (as a proxy for vehicle-related depreciation) (4) No breakdown for rental business available for expense. Figure estimated based on total expense multiplied by rental business revenues % of total revenues (5) CAR: net interest expenses for the corporate level; #2 player: net interest expenses for the corporate level; Hertz: net interest expenses for the corporate level; Avis: net interest expenses of corporate debt and net vehicle interest expenses excluding net impact of early extinguishment of debt); Localiza: net interest expenses for the corporate level

18

Economies of scale + operational leverage

5

15% 11% 12% 12% 13% 9% 7% 6% 6% 2013 2014 2015 2016 1H'17

% of rental revenue (1)

18% 12% 12% 11% 11% 17% 10% 13% 14% 2013 2014 2015 2016 1H'17

Depreciation of rental vehicles expenses SG&A costs Finance costs (5)

(4) (4)

34% 34% 31% 33% 32% 46% 60% 51% 43% 2013 2014 2015 2016 1H'17

Direct operating expenses

(4)

Localiza Hertz Avis #2 China Global

(4)

(3)

27% 27% 21% 25% 26% 33% 26% 24% 10% 2013 2014 2015 2016 1H'17

(2)

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Experienced management team and strong partners

years

  • f relevant industry experience

6

 Investment of Fund XI, established

in 2012

 International resources  Capital markets know-how  Current shareholding 11.5% (1)

Charles Lu Chairman

 23+ years of entrepreneurial experience: 15+

years in technology, 10+ years in automobile and consumer services related sectors

Senior leadership

Ming Lin VP of rental operations

 Former VP at Legend Capital

20+ years Yandong Zeng VP of fleet management 18+ years Wilson Li COO, CFO

 Former CFO of GE Healthcare GSC Asia

16+ years

Partners

 Parent company of, among others,

Lenovo, Digital China, Legend Capital, and Raycom Real Estate

 Strong continuous support on bank

guarantees and government relationships

 Current shareholding 24.8% (1)  Founded in late 2014, a leader in

mid-to-high-end on-demand chauffeured service in China

 Listed on NEEQ in July 2016, market

cap over RMB40 B

 Current shareholding 28.4% (1)

Notes: (1) as of June. 30, 2017

23+ years Yifan Song CEO 17+ years

 Founding member, executive vice-president

since 2013, in charge of general management

  • f processes and standardization

 Former sales head at Tetrapak China,

manufacturing engineer at Ford Motor (China)

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III. 2017 Interim Results

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1H’17 Executive summary

21 21

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

22

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

23

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)%

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472 314

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

  • thers

1H'17

24 (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

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63.5%

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

59.0%

1H’17 Adj. EBITDA margin walk

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

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

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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

27

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

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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

Car rental: margin expansion despite price deflation

28

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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Used car disposal

29  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

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 62 23.4% 21.4% Depreciation %

(of rental revenue)

25.1% 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

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Strong financial positions

30

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

31

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)

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  • V. Business Strategies
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Revolutionary changes in auto related industry

33

互联网技术革命 Internet Technology

智能汽车 Smart Vehicle 云计算 Cloud Computing 电动车 EV 大数据 Big Data 机器学习 Machine Learning

车联网 Connected Vehicle

汽车技术革命 Auto Technology

自动驾驶 Autonomous Driving

消费习惯变化 Consumer behaviors change 汽车生态圈重塑 Auto ecosystem revolution

On-demand economy Car ownership  Car sharing Mobility sharing …… Manufacturing Distribution Repair & maintenance Financing & insurance ……

SHARE

33

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34

UCAR becomes the largest shareholder of CAR

CAR Inc.

Premium Auto Rental (China) Limited (HK) Haike Leasing (China) Limited (HK) CAR Hong Kong (HK) Shenzhou Used Car (China) Limited (HK)

Offshore Onshore

 Hertz transferred

subsidiaries

 Beijing China Auto Rental

Co., Ltd.

 China Auto Rental (Tianjin)

Co., Ltd.

 Haike Leasing (Beijing) Ltd.  Haike Leasing (Fujian) Ltd.  Haoke Leasing (Shanghai) Ltd.  Haike Leasing (Tianjin) Ltd.

100% 100% 100% 100% 100% 100% 100%

Grand Union Amber Gem

28.4% 24.8% 11.5%

Public

35.3%

神州优车

UCAR

Such shareholder consolidation makes shareholding structure clearer and more concentrated

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Reshape the auto and consumer ecosystem

35

Customer Oriented Technology- driven Business Model Innovation Synergies

Financing Platform Mobility Platform E-Commerce Platform

Value Chain

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36

Suppliers

OEMs Insurance companies

Customers

Car rental Chauffeured Purchase

Fleet

Fleet sharing Used car disposal

Network

Stores & operations Repair & maintenance

Big data

Customers Fleet

Branding

Brand recognition

Extensive synergies between CAR and UCAR

Improve cost structure

Upgrade customer experience

Create new growth engines

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Build a smart mobility platform for the future

Smart Vehicles 智慧车辆 Connected Vehicles 车联网 Smart Fleet 智能车队 Smart Drivers 智慧司机 Full-time Drivers 专职司机 Drive Robot 驾驶机器人

Smart Dispatch

智慧派单

Controllable Driving

可控驾驶

Easy Trip

舒适 行程 Smart Demand 智慧需求 Mobile Internet 移动互联网 Smart Scenario 智慧场景