Ladies and gentlemen, thank you for standing by for Autohome's Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder this conference call is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to introduce your host Sterling Song, Autohome's IR Director. Mr. Song please go ahead.

Thank you, operator. Hello everyone. Good evening. Welcome to Autohome's fourth quarter and full year 2022 earnings conference call. Earlier today, Autohome distributed its earnings press release and you may find a copy on the company's website at www.autohome.com.cn. On today's call, we'll have Chairman and the Chief Executive Officer, Mr. Quan Long and the Chief Financial Officer, Mr. Craig Yan Zeng with us. After our prepared remarks, our management team will be available to answer your questions. Before we continue, please know that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the US Securities and Exchange Commission and The Stock Exchange of Hong Kong Limited. Autohome doesn't undertake any obligation to update any forward-looking statements except as required under applicable law. Please also know that Autohome's earnings press release and this conference call includes discussions of certain unaudited non-GAAP financial measures. Please refer to our press release which contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and is available on Autohome's IR website. Again, as a reminder, this conference call is being recorded. In addition a live and archived webcast of this earnings conference call will also be available on Autohome's IR website. I will now turn the call over to Autohome's Chairman and CEO, Mr. Long for opening remarks. Please go ahead Mr. Long.

[Foreign Language] Thank you, Song. Hello everyone. This is Quan Long, Chairman and CEO of Autohome. Thank you for joining us today in our earnings call. In the fourth quarter, Autohome's business witnessed accelerated pace of recovery with total revenues up by 12% year-over-year. Notably media services delivers robust revenue growth at 64% year-over-year, while boosting our topline growth. We also maintained good profit profitability and a high profit margin level. Our adjusted net income for the first quarter slashed by 43% year-over-year with adjusted net margin reaching 35.3%, closing out 2022 on a high note. Against the backdrop of the pandemic and other uncertainties throughout the year, Autohome successfully overcame adversity and the bounce back stopped, once again demonstrating the resilience and vitality of our business. Building our large and the engaged user base, solid business fundamentals, and industry-leading innovation capabilities, Autohome is well-positioned to navigate market cycles and achieve healthy long-term development as we continue to blaze trails and become the industry frontrunner. [Foreign Language] Looking back at 2022, we achieved significant progress in two key areas content ecosystem construction and exploration of new initiatives. On the content front, we successfully leveraged our big IP brands to promote our video-based strategy and formed partnerships, and organized cross-promotional activities with multiple Internet platforms to explore new automotive lifestyle experiences. In terms of new initiative exploration, we made huge strides exploring the industrial value chain and promoted in-depth development across our business supported by our continuous new achievements in NEVs, used cars, data products and other fields. Driven by our relentless efforts in Phase 2 areas, we continue to expand new business boundaries, establish new standards and foster new types of business. With our multiple dimensional business roadmap and extensive development concepts we've built a brand new ecosystem in the automotive industry propelling Autohome to new heights. [Foreign Language] Heading into 2003 with improvement in the macro environment restoration of industry order and the local government policies so stabilized growth and the boost consumption auto industry expected to maintain a steady upward trend. Benefiting from the industry's recovery, Autohome will continue to empower business partners and promote industry-wide digital transformation, while also increasing shareholder returns and achieving a win-win situation for all parties. [Foreign Language] With that, I will now turn the call over to our Chief Financial Officer, Craig Yan Zeng for a closer look at our fourth quarter and full year operating and financial results.

[Foreign Language] Thank you, Mr. Long. Hello, everyone. I'm Craig Zeng Yan, the Chief Financial Officer of Autohome. [Foreign Language] As Mr. Long just mentioned, we have made ongoing efforts to advance content creation and build core IT to establish Autohome IT matrix constructing a useful and fun video-based content ecosystem. [Foreign Language] For example, regulatory inspection, our flagship vehicle testing IT project has consistently produced useful content since its launch in 2019. With testing results that greatly assist users in choosing and buying cars. In 2022, vehicle inspection covered 58 newly launched popular electric vehicles and has accumulated nearly 300 million views across the entire network to-date. Autohome's four original IPs including Super Test and a travel journal have accumulated nearly 800 million views net worldwide, leading the market in terms of the overall size of our original IP matrix. In addition, we held more than 550 online auto shows throughout this year, providing users a seamless experience for searching and choosing cars anytime and anywhere. We also introduced interesting elements such as metaverse, metahuman and virtual assets to our content creation portfolio to encourage greater participation and a deeper engagement from younger users. In fact, it will be enhancing our user stickiness. [Foreign Language] Furthermore, we have reached strategic cooperation with multiple partners such as AMAP, Huawei Cloud and the Beijing Institute of Technology and Information, et cetera or BIT to explore greater business synergies. We've also jointly organized a broad array of activities with online platforms such as [indiscernible], JC Auto [ph] and NetEase Cloud Music to explore new automotive lifestyle experiences. These creative tactics have substantially increased the user traffic in our ecosystem and expanded our user base. According to QuestMobile, Autohome's mobile DAU in December 2022 increased by 16.1% year-over-year and reached a record high…

Thank you. We will now begin the question-and-answer session [Operator Instructions] Our first question comes from the line of Thomas Chong from Jefferies. Please ask your question.

Thanks, management for taking my questions and congratulations on a solid set of result. I have two questions. My first question is about the outlook for the auto industry for this year. And number two is about our cash usage and capital allocation. Thank you.

Well, thank you for the question. My name is Long Quan. I'm trying to answer your question by quoting, why you asked this question. As you know, in terms of January, you have noticed that some of the data of the production and the sales have already been released. If we compare the production and the sales with the same period of last year, the number has been dropping significantly. That's also true of comparing with the previous month. I think there were two reasons, tied to this. The first reason is, because the long holiday, the Chinese Spring Festival was on January. The second reason is, because the favorable policy and the subsidy for the combustion car and for the NEV the policy has been faded away, at the end of last year. Well, having said that, I still want to say, I'm optimistic about 2023. Why I say so, was due to the following reasons. Actually, if you look at the auto industry, it has been a pillar industry in China and also the government attached great importance to this industry. According to the 2023, January state council standing committee meeting, it said that we need to address the conflict about supply satisfying the demand of the consumers, and try to push forward the consumption and put all the consumption as one of the pillars to boost the economy. And we also need to implement, a lot of consumption policies to be implemented to boost the auto consumption. And we also need to boost the marketing and expenditure for the -- all kinds of consumption and retail business, and also try to boost the retail business to recover. So the noteworthy [ph], policies has been released due to the January standing committee of the state council. [Foreign Language]…

Well, thank you for the question. Talking about the cash. We have abundant reserve cash and our cash flow has been very healthy. And we also attach great importance to the shareholders' interest. We have the net inflow of RMB 2.1 billion of the cash last year. According to our BOD meeting last quarter, we will extend the share buyback initiative. And in this quarter, we already improved this -- actually the dividend payout ratio about 16% compared with the last year. So actually the dividend payout would be RMB 500 million and it will continue to grow in the future. So that is the way we are trying to actually give back to our shareholders. Now talking about the business side, we have a lot of new initiatives. We have new investments into the content, the video-based, the live streaming based, the metaverse-based and AR-based product. And according to our new business, the data product has been thriving. And we are also looking into some other opportunities to explore the M&A deals and make our business more global presence. So thank you for the question.

Thank you. Our next question comes from the line of Ritchie Sun from HSBC. Please ask your question, Ritchie.

[Foreign Language] I will translate myself. Thank you management for taking my questions. I have two questions. First of all, in 2023 for data products what would be our KPI? And what types of new launches can we expect? Second of all is going to this year for the used car business what will be our KPI and focus? And how should we think about the long-term adjusted net margin for this business? Thank you.

[Foreign Language] Now talking about the digitalized product our major purpose is trying to help our clients to lower the cost and enhance the efficiency. No matter it's OEMs or for the dealers. So we are trying to help them to improve the efficiency and we would continuously to launch a lot of new models. And also on the other hand, we are trying to enhance the coverage of more clients and we wanted to empower these customers with our new modules. [Foreign Language] Now talking about the future direction of the new business, we are working with the [indiscernible] autos and some of the used car business. We all have a lot of innovative initiatives. [Foreign Language] Now talking about the used car business, our major purpose is trying to establish a one-stop full chain transaction and service platform. Talking about the used car focus. Firstly, we are trying to create a closed loop for the transaction. Actually for -- it will cover all the full business chain of the used car transactions. We believe this would be the pain point in the used car market. And we are also going to launch the used car SaaS service and some other data products. [Foreign Language] In 2022, Autohome had finalized our operating. And in this way we enhanced the coordination of the resources and also have a better management not only on the 2C side, but also on the 2B side which achieved a good breakthrough. For example, we launched the innovative trading business and also used car SaaS products and the car history and the car condition data service. And we work with BIT on a lot of different data services. In the future, Autohome is trying to build a one-stop solution for auto purchasing and a one-stop solution for the sales plus SaaS product. That is our strategic target. [Foreign Language] Now talking about the used car business model as you know it is under exploration for the whole market. We achieved a profitable business for the Autohome used car business. For the TPP, it achieved a breakeven on the later half of last year. So in this way, we are trying to build our used car business. The margin would be similar to our dealership business.

Thank you. Our next question comes from the line of Brian Gong from Citi. Please ask your question, Brian.

I will translate myself. Good evening management. Thanks for taking my question. Congratulations on the solid results. I have two questions. First is regarding GDP. We just mentioned that we expect the used car industry to have an 8% year-on-year growth for 2023. With this number, how should we expect [indiscernible] growth this year? And secondly management just mentioned that you expect some favorable policy towards auto industry to be rolled out this year. So, can management give more specific what kind of policies we are expecting ahead? Thank you.

Well, thank you for the question. Talking about the COVID pandemic, it affected the used car business, because the transaction of the used car, need a lot of offline face-to-face communication. So that's why in 2022, the used car business in domestic markets dropped experienced actually 9%. So now, the good news is that, with more and more supportive policies released and with the reopening up of the society post pandemic, we believe the used car market will experience very good growth this year. According to some market report, which said the growth can be 8%. We hope that this 8% is achievable and it will even achieve beyond 8%. And Autohome's growth would be better than the market. Well, according to the auto market policy, as Mr. Long had already introduced to you, we believe that the auto market would benefit out of the policies. Auto is a large amount consumption for the individuals or for families. It is different from housing, because housing is non-movable, it's real estate. So that's why, we believe that in March, there will be new policies released to further support the market. The market can be quite good. There were three factors, I want to mention. The first one is, the policy was trying to stabilize the sales of the new cars. And secondly, NEV continues to be the strategic focus of the market. And thirdly, for the used car, we believe that it would have a lot of potential to grow. If you look at the breakdown of the used car comparing with the new car sales, it only accounts for 60% of the car sales. But in some of the mature markets, the used car's transaction volume was 2 times double or even triple, of the new car. So in this way, we believe the used car market has a lot of potential.

Thank you. Thank you all for your questions. I'll turn the conference back to the management team for closing comments.

Thank you, everyone. Thank you very much for joining us today. We appreciate your support and look forward to updating you, on our next quarter conference call in a few months' time. And in the meantime, please free to contact us, if you have any further questions or comments. Thank you very much. Thank you. Bye.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.