The latest financial results of eHi Car Services, announced on June 5, showed the company has gained 33.7% in first quarter incomes, from RMB 460.5 million in Q1 2016 to RMB 615.6 million in Q1 this year, driven by increased incomes in car rental and car services. Marginal profit at RMB 192.1 million was 48% higher than the same period last year. Gross margin went up from 28.2% in Q1 2016 to 31.2% in Q1 this year, due mainly to the lower cost percentage in car depreciation. The size of usable fleet grew 31% year on year, from 34,334 in Q1 2016 to 44,962 in Q1 this year.
eHi introduced shared car service in seven major Chinese cities in Q1 this year. “Shared car service was introduced in April to meet the ever-changing needs of China’s travelers. The service offers flexible short-term car lease service. The whole rental and payment process is automated. The service is still in the startup stage. It is offered in seven tier-one cities. We hope to further explore and develop this shared car business to complement our car rental service,” said the company’s chairman/CEO Ray Zhang.
"China's per capita disposable income and population in the driving age continue to increase, and we see exponential growth in the demand for car rental and car services in China, as Chinese travelers spend to satisfy leisure and business travel needs while being less sensitive to pricing. Our fleet utilization rate of 73.7% and total RevPAC of RMB152 in the first quarter were further testaments to our strategy," Mr. Zhang said.
The company’s CFO Colin Sung added: “Our nation-wide service network and the existing fleet enable us to provide a diverse range of car models for the shared service. This also helps us enhance operational efficiency and fleet usage, without escalating costs.”
In a consultation paper released on June 1, China’s regulatory authorities had for the first time officially endorsed the development of shared car service that make use of mobile internet and GPS information technology. eHi’s service shows that the company is taking a forward-looking step towards developing shared car and self-help short-term rental service.
Meanwhile, UCAR plans to issue 14,287 news shares at 16.8 yuan per share to generate RMB 2.4 billion. The share placement plan is underwritten by China Renbao Assets Management Company.
UCAR is said to intend to devote the funds into developing its e-car dealing platform Maimaiche. The funds will be used for buying cars, setting up store fronts and beefing up marketing and human resources. UCAR already raised RMB 4.6 billion in a non-public offering completed on May 9 this year, far short of the targeted investment of RMB 12 billion the company expects to inject into the Maimaiche in the two-year period between 2016 to 2018.
UCAR, listed on the New Third Board on July 22, 2016, is the main operator of Car Inc, which also operates in car rental, chauffeured services, car dealing and finance. UCAR’s B2B model uses the fleet of Car Inc, and all drivers are recruited and trained by the company. UCAR’s annual report for 2016 shows that it raked in income of RMB 5.845 billion with a net loss of RMB 3.58 billion.
The Maimaiche platform has leveraged the mass of online users and the traffic of the car leasing business as well as the nation-wide network of suppliers online and offline to develop a large pool of car supplies, either from manufacturers, 4S stores and importers. The platform then sells the cars to end-users from the online channels, via sole agents or representatives in offline stores or the online network. It offers a complete chain of service, from car sales to supply and after-sale service.
The company reported that Maimaiche is covering 122 cities in China by April this year, and expects to have 300 to 500 stores in the country in the next three years.
UCAR also announced that its vice chairman Hui Li has resigned from all roles with UCAR from June 5, 2017. The company intends to invite Ms Liangyun Chen as director and Ms Lin Yu as shareholder’s representative on the board, effective when the appointments are endorsed in the shareholders meeting till the end of the current term for the board of directors.
