Good morning and good evening, everyone. Welcome to Cango Inc.'s Fourth Quarter 2019 Earnings Conference Call. At this time all participants are in a listen-only mode. This call is also being broadcast live on the company's IR website. Joining us today are Mr. Jiayuan Lin, Chief Executive Officer; and Mr. Yongyi Zhang, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct a Q&A session. Before we begin, I refer you to the Safe Harbor statement in the company's earnings release, which also applies to the conference call today, as management will make forward-looking statements. With that said, I'm now turning the call over to Mr. Jiayuan Lin, CEO of Cango. Please go ahead, sir.

Hello, everyone. Thank you for joining us today on Cango's fourth quarter 2019 earnings call. Despite macroeconomic uncertainty and a downturn in China's automotive market we ended the year on a high net, even for [ph] exceptional financial and operational results in the fourth quarter on a back of steady growth and business expansion. Notably total revenues in the fourth quarter increased to RMB438.5 million representing a year-on-year increase of 36.6%. Our robust performance in the quarter demonstrates our continuous progress in the following areas. Firstly, upgrading our auto loan facilitation services to bolster our market leadership; secondly, refining our core selling strategy to drive growth in our aftermarket business, facilitation business; and thirdly, strengthening our existing relationships with core strategic partners and seeking out new opportunities to diversify funding sources and revenue streams. Firstly, for our auto loan facilitation business, we implemented a series of initiatives to bolster our market leadership. During the quarter for example, we focused on growing the reach of our dealership network by adding approximately 1,800 new dealers to our network. At the same time, we begin to actively refine our network efficiency. As such, we have terminated relationships with approximately 2,000 dealers that did not meet our standards for operating risks and traffic generation capabilities. As on December 31, 2019, the company has covered a total number of 49,238 dealers across 363 cities nationwide. We also continue to make progress in the implementation of our direct coverage model during the quarter. As we further the penetration of our model, our sales team is growing the number of directly covered dealers in our network. Currently we maintain direct coverage of 94.6% of our dealers in our network. The high penetration of our direct coverage combined with our removal of underperforming dealers, has enabled us to…

Thanks Jiayuan. Hello everyone, and welcome to our fourth quarter to 2019 earnings call. Before I start to review our financials for the quarter please note that unless otherwise stated all numbers are in RMB terms and all percentage comparisons are on a year-over-year basis. In the face of macroeconomic headwinds and ongoing contractions of domestic automotive industry, we maintained our gross momentum in the fourth quarter of 2019 to deliver strong financial and operating performances. Our total revenues increased by 36.6% to RMB438.5 million from RMB321.1 million in the same period of 2018, outperforming the high end of the company's guidance by 9.6%. Our off market services facilitation business also continue to ramp up in the fourth quarter as its revenue grew to RMB89.6 million or 20.4% of our total revenue. Cost of revenue in the fourth quarter of 2019 increased by 1.8% to RMB157.2 million or 35.9% of total revenue to RMB154.5 million or 48.1% of total revenue in the same period 2018. As a result, gross margin in the fourth quarter of 2019 expanded to 64.1% from 41.9% in the same period of 2018. Such expansion was mainly attributable to the successful implementation of a series of cost control initiatives and our increased average as a result of our growing economies of scale. Sales and marketing expenses in fourth quarter of 2019 increased by 17.5% to RMB55.2 million from RMB47 million in the same period 2018. As a percentage of total revenue, sales and marketing expenses in the fourth quarter of 2019 decreased to 12.6% from 14.6% in the same period of 2018. This decrease further illustrates our commitment to improve our sales and marketing efficiency while continuing to drive revenue growth. General and administrative expenses in the fourth quarter 2019 increased by 26.3% to RMB66.1 million…

[Operator Instructions] And the first question comes from John Cai [ph] with Morgan Stanley.

Hi. So my first question is, the virus impact on the delinquency and asset quality. So just wonder how much increase of the delinquency have we observed? And what's the potential trends [ph] and outlook we see the risk of further pick up at this level and then when will be the peak? So the second question related to the operating is on the volume recovery, so first two months this year, we facilitate below 40,000 financing transactions versus in the same period last year, we facilitated roughly 72,000. So just wonder what's the number in March? And what would be the recovery trend that we expect and maybe in the second quarter, is it likely for us to recover to a normal volume? Thank you.

Thank you, John for your question. Well, let me take your two questions. Firstly, asset quality, well affected by the outbreak, we have seen an increase in overdue ratios and have taken a series of measures to control the impact on the asset quality, including enhancing recruitment efforts of collection staff, strengthening customer service support, and assisting customers who apply for delay free payments in accordance with one of the bank's [ph] requirements. So far, the overall asset quality is under control, and we have full confidence in maintaining this trend. And regarding your second question, recovery of our business in Q1, well, for the first quarter of 2020, we expect total revenues to be between RMB180 million and RMB210 million approximately 40% to 50% lower than the same period of last year. Well, the situation in the second quarter depends on the containment of the epidemic and the resumption of our partner dealers. So our view is that the market will recover gradually from the second quarter of 2020. But we believe the turning point of the market won't be seen until at least the third quarter.

John likes to make some addition to your first questions. And we do see that our overdue ratio is going up a little bit. We expected the M1 plus may reach to a little bit over 1% at the end of maybe first quarter. And also for the M3 plus, we expect that maybe the ratio will reach very close to 0.5%. That's our expectation and based on the data up to now. And we still need maybe one or two quarters to do more works, I mean on the delinquent as a measurement to control the asset qualities. And you know that due to the COVID-19 outbreak in China with the delinquent asset management, I mean, and the work is not as usual, due to I mean, the lockdown of all the work in China. So we started to resume the delinquent asset management work at the end of the February. So we still need some time, but we are very confident that we will control and we will manage the quality of the credit asset, as well as we do before. And due to those -- I mean, due to the current situation, we already raised up our day one provision in the -- for the guarantee loans we facilitate for the banks in the fourth quarter of 2019. That means we already raised up our day one provisions to reflect maybe the current status of our asset quality of the credit asset. Thank you.

Thanks.

Sorry, I have to translate that into Chinese sorry.

Thank you. [Operator Instructions] All right. As there are no more questions at the present time, I would like to return the floor to management for any closing comments.

Well, if no further questions, I would like to announce that we call it a day for now. Thank you all for joining us.

Thank you. The conference has now included. Thank you for attending today's presentation. You may now disconnect your lines.