Good morning, and good evening, everyone. Welcome to Cango Incorporated's Second Quarter 2022 Earnings Conference Call. [Operator Instructions] 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. Michael Zhang, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct the 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 am now turning the call over to Mr. Jiayuan Lin, Chief Executive Officer of Cango. Please go ahead, sir.

Hello, everyone, and welcome to Cango's second quarter 2022 earnings call. During the second quarter, especially in May and April, lock downs in Shanghai and other cities, exacerbated supply chain challenges. Despite a series of favorable policies since June, demand in the automotive market has remained sluggish due to COVID's substantial impact on automotive manufacturing, logistics and retail sales as well as heightened risk aversion and weakened consumer confidence amidst the pandemic. Facing these headwinds, we achieved total revenues of RMB289 million in the second quarter, of which revenues from our car trading transaction business accounted for RMB219 million or over 75.6% of our total revenues. Revenues from our traditional business lines, including automotive financing facilitation and aftermarket services facilitation totaled RMB25.14 million. In terms of revenue mix, our business model of car trading transaction platform with multiple monetization avenues is becoming more and more robust. Next, I would like to share the progress of both our trading platform business and traditional business lines in the second quarter. I'll begin with the car trading transaction platform business. As a one-stop platform serving car dealers nationwide, Cango is committed to providing safe, secure, sustained and consistent end-to-end professional car trading transaction services for participants in both the upstream and downstream of the industry value chain. While current favorable government policies, including vehicle purchase tax relief and NEV promotion campaigns in rural areas focus primarily on car purchases, supporting services also need to be improved, so as to truly make car sales easier for dealers and car purchases simpler and more enjoyable for consumers, especially in the lower-tier markets. Based on transaction scenarios, Cango addresses the unmet needs of medium and small-sized dealers by offering an array of services, spanning car sourcing, car supply, including self-owned cars, warehousing and logistics and car…

Thanks, Jiayuan. Hello, everyone, and welcome to our second quarter 2022 earnings call. Before I started to review our financials, please note that unless otherwise stated, all numbers are in RMB terms and all percentage comparisons on a year-over-year basis. During the quarter, macro headwinds and a wave of COVID resurgence across China, posed ongoing challenges to the domestic auto industry. Months of pandemic-related disruptions significantly impede our business, resulting in total revenue of RMB289.2 million in the second quarter. Our car trading transaction division, which delivered revenues of RMB218.6 million still play an essential role in our transformation to our platform model. Now let's move on to our cost and expenses during the quarter. Total operating costs and expenses in the second quarter of 2022 were RMB643.3 million compared with RMB933.5 million in the same period 2021. Cost of revenue in the second quarter of 2022 decreased to RMB272.7 million from RMB697.8 million in the same period 2021. As a percentage of total revenues, cost of revenue in the second quarter of 2022 was 94.3% compared with 73.7% in the same period 2021. The change was primarily due to an increase in car trading transaction share of total revenues. Car trading transaction normally represent a higher cost revenue ratio, thus pushing up the overall ratio. Sales and marketing expenses in the second quarter of 2022 were RMB41.8 million compared with RMB60.9 million in the same period of 2021. As a percentage of total revenues, sales and marketing expenses in the second quarter 2022 was 14.5% compared with 6.4% in the same period 2021. General and administrative expenses in the second quarter of 2022 were RMB124.7 million compared with RMB64.7 million in the same period 2021. As a percentage of total revenues, general and administrative expenses in the second quarter…

[Operator Instructions] And the first question we have will come from Shelley Wang of Morgan Stanley.

I'm Shelley from Morgan Stanley. I have 3 questions. The first question is could you give us more information on the independent app that you mentioned earlier. For example, the position of the app and target customer base as well as what kind of services do you offer on this app? And second question is about car trading transaction business. Could you tell us more about the take rate? Has there been any improvement in the take rate? And the third question is also about car trading transaction business. So what size do you expect the car trading transaction business to reach?

Thank you, Shelley. I will take your 3 questions. Well, the first question first. The Cango Haoche app is the foundation of the company's efforts to build a car transaction service platform and represents a comprehensive upgrade of our original WeChat Mini Program. The app is a one-stop B2B transaction service platform for dealers across the country, providing a swift, secure, sustained and consistent supply chain services with car sourcing, financial, insurance services and other non-car sourcing, supply chain, sales management and sales optimization tools. In addition, it offers a complete set of management tools for the upstream and downstream of the automotive industry trend and comprehensively empowering dealers and enabling those who partner with Cango to enhance their competitive advantages. Since the launch of the app just 2 weeks ago, more than 1,000 car dealers, I mean, registered car dealers have migrated to, or have been registered on the app, covering 30 provinces and cities nationwide, excluding Tibet, Hong Kong, Mekong and Taiwan. As a result of our consistent efforts, we have seen continuous improvement in car dealer activity and conversion rates on the platform. Conversion rates from our management services have reached 4.5% in June, well above the industry average of 2.5%. Going forward, in addition to ensuring high-quality car supply, we will further increase user engagement and stickiness, focus on standardizing our services and strengthen our supply chain service and digital capabilities. As for your second question on take rate, well, so far, our car trading transaction business has maintained a gross margin of about 1% as our business model features centralized procurements of vehicles from OEMs before selling to small and medium-sized dealers without any control over the production process, our gross margin is relatively low. Our industry peers have also [Technical Difficulty] around 1%. So…

Next, we have Sophia Xu of Goldman Sachs.

Thank you. Sophia from Goldman Sachs. I have 3 questions. So the first question is, could you give us more color on the company's plan for the used car business? And also could you describe to us the competition dynamics in this market segment? And the second question is, could you give us more details on your cost control measures? And the third question is about your collaboration with NEV OEMs. I mean, how are -- could you tell us more about what kind of collaboration do you have?

Okay. I will take your first question on used car market. Well, with the increase -- with increasing new car ownership, we see more demand for car replacement, and this is becoming more and more evident. And this demand actually will lead to the continuous expansion of the used car market [Technical Difficulty] the recent release of favorable policies will accelerate the development of the used car market as well. So we are optimistic about the future of used car market, especially in terms of NEVs. We see great potential, particularly in the lower-tier markets. However, a huge market potential and strong development prospects always attract a lot of players into the used car market. So the market has always seen a fierce competition. And during the lockdowns, we started to try the used car matching service on our platform, and we have seen a good progress so far. Well, car services, we provide the combined functions and features for our users. And actually, we borrow our expertise from our new car service platforms, such as logistics service. So - but of course, all these services are provided in view of the special characteristics of used cars. So we are now trying to expand our business in the used car market, both along the upside -- the upstream and the downstream of the [Technical Difficulty], and we are expanding our business in a targeted way. And right now, we are building a dedicated used car trading platform. And we -- well, with our efforts, successfully built a national delivery network offering uniform and standardized services. Well, based on the results so far, we believe the used car platform actually will be more active than the new car platform. The second question is on cost control measures. Well, to achieve our…

[Operator Instructions] I do have an additional question and it comes from Brian [ph] of Sachs.

I feel like maybe Sophia got a copy of my notes because she asked pretty much everything I was going to ask. But the one thing I was just wondering if maybe you could clear up for me would be the increase in noncurrent liabilities on balance sheet. And then everything else, I think -- and then I guess, if I'm correct in assuming that you have roughly $70 million open still on the stock repurchase agreement. Those are the 2 things I just want to clarify.

So for these technical questions, I will turn to our CFO, Michael Zhang.

Thank you, Brian, for your questions. I will take your 2 questions. First of all, about the increase in noncurrent reliabilities, it is because we recognize the long-term tax item on our balance sheet under the heading of noncurrent assets. And we said the tax item will be realized in 2 to 3 years' time. So that's my response to your first question. The second question, as for the balance of about $71 million was of share repurchase authorization as of June the 30th. Well, based on our previous – based on last BoD meetings authorization, these authorization actually were terminated by August 26. And so actually, last year – last August, authorization terminates, will terminate – I mean, will have terminated by August this year. So for this authorization, starting from this August, the size of the repurchase program for the first half of 2022 will be about $50 million.

Well, we have no further questions at this time. I will now hand the conference back over to management for any closing remarks.

Thank you for joining us, and this closes this earnings call.

And thank you for your time today. Again, the conference call is now concluded. At this time, you may disconnect your lines. Thank you. Take care, and have a great day, everyone.