UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

September 5, 2019

 

 

Commission File Number: 001-38590

 

 

CANGO INC.

 

 

10A, Building 3, Youyou Century Plaza

428 South Yanggao Road

Pudong New Area, Shanghai 200127

People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐            No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 

TABLE OF CONTENTS

Exhibit 99.1 — Cango Inc. reports second quarter 2019 unaudited financial results

 

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: September 5, 2019

 

3

Exhibit 99.1

CANGO INC. REPORTS SECOND QUARTER 2019 UNAUDITED FINANCIAL RESULTS

SHANGHAI, September 3, 2019, /PRNewswire/ — Cango, Inc. (NYSE: CANG) (“Cango” or the “Company”), a leading automotive transaction service platform in China, today announced its unaudited financial results for the second quarter of 2019.

Second Quarter 2019 Financial and Operational Highlights

 

•

Total revenues in the second quarter of 2019 were RMB336.3 million (US$49.0 million), representing a year-over-year increase of 42.3% and outperforming the high end of the Company’s guidance by 6.8%.

 

•

After-market services facilitation revenues in the second quarter of 2019 were RMB35.9 million (US$5.2 million), continuing to serve as an important driver for the Company’s revenue growth.

 

•

Income from operations in the second quarter of 2019 increased by 17.3% to RMB84.3 million (US$12.3 million) from RMB71.8 million in the corresponding period of 2018.

 

•

Net income in the second quarter of 2019 increased by 46.4% to RMB94.6 million (US$13.8 million) from RMB64.6 million in the corresponding period of 2018. Non-GAAP net income in the second quarter of 2019 increased by 66.7% to RMB116.9 million (US$17.0 million) from RMB70.1 million in the corresponding period of 2018.

 

•

The amount of financing transactions the Company facilitated in the second quarter of 2019 totaled RMB6,154.8 million (US$896.6 million). The total outstanding balance of financing transactions the Company facilitated was RMB36,394.0 million (US$5,301.4 million) as of June 30, 2019.

 

•

M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 0.72% and 0.30%, respectively, as of June 30, 2019, as compared to 0.77% and 0.37%, respectively, as of March 31, 2019.

 

•

The number of dealers covered by the Company was 48,367 as of June 30, 2019, as compared to 47,879 as of March 31, 2019.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, “Despite the continuing macroeconomic and industry-wide challenges, we maintained our solid growth trajectory with strong financial and operating performances in the second quarter of 2019. During the quarter, our core auto loan facilitation business continued to be a vital growth driver, and we further expanded and refined our after-market services. In addition, we achieved significant breakthroughs in our cooperation with the Industrial and Commercial Bank of China (“ICBC”) in relation to our automotive financing solutions. As a result, our total revenues increased by 42.3% year-over-year to RMB336.3 million in the second quarter of 2019. Going forward, we will continue to augment our leadership in China’s market for automotive financing services by bolstering our core competencies in auto loan facilitation services, expanding our dealership network, developing differentiated products and services, and harnessing our well-developed capabilities in big data and internet technologies.”

 

1

Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, “After a strong start in the first quarter of 2019, we continued to deliver healthy performances in the second quarter. Our total revenues increased by 42.3% year-over-year to RMB336.3 million in the second quarter. Our after-market services facilitation business continued to serve as an important growth engine, contributing RMB35.9 million or 10.7% of our total revenues in the second quarter. Our income from operations and net income increased by 17.3% and 46.4% in the second quarter, respectively. Looking ahead, we will continue to invest in expanding our dealership network, optimizing our service quality and efficiency, and advancing our technology through innovation. As we continue to deepen our collaborations with more financial institutions and original equipment manufacturers, we are confident that we will sustain our growth despite the persisting industry challenges.”

Second Quarter 2019 Financial Results

REVENUES

Total revenues in the second quarter of 2019 were RMB336.3 million (US$49.0 million), representing a 42.3% increase from RMB236.3 million in the corresponding period of 2018. This increase was primarily driven by the Company’s strategies to rejuvenate growth, increased revenue contribution from its after-market services business, and a significant increase in loan facilitation volume from the Company’s business partnership with ICBC.

Revenues from after-market services facilitation in the second quarter of 2019 were RMB35.9 million (US$5.2 million), compared to RMB12.3 million in the same period of last year.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the second quarter of 2019 were RMB252.0 million (US$36.7 million), compared to RMB164.4 million in the corresponding period of 2018.

 

•

Cost of revenue in the second quarter of 2019 increased by 55.0% to RMB125.8 million (US$18.3 million) from RMB81.2 million in the corresponding period of 2018. The increase was primarily driven by the Company’s business expansion and was in line with the increase in total revenues in the second quarter of 2019. Cost of revenue as a percentage of total revenues in the second quarter of 2019 increased to 37.4% from 34.4% in the corresponding period of 2018. This was primarily due to increases in the amount of incentives paid to employees per individual financing transaction.

 

•

Sales and marketing expenses in the second quarter of 2019 increased by 20.3% to RMB44.5 million (US$6.5 million) from RMB37.0 million in the corresponding period of 2018. The increase was due to increases in travel expenses as a result of the Company’s business expansion and higher share-based compensation expenses. Sales and marketing expenses as a percentage of total revenues in the second quarter of 2019 decreased to 13.2% from 15.7% in the corresponding period of 2018.

 

2

•

General and administrative expenses were RMB53.4 million (US$7.8 million), or 15.9% of total revenues, in the second quarter of 2019, compared to RMB31.4 million, or 13.3% of total revenue, in the corresponding period of 2018. The increase was mainly due to higher share-based compensation expenses in the second quarter of 2019.

 

•

Research and development expenses in the second quarter of 2019 increased by 29.2% to RMB12.3 million (US$1.8 million) from RMB9.5 million in the corresponding period of 2018. The increase was a result of increased investments in the Company’s research and development projects as it expanded its business. Research and development expenses as a percentage of total revenues in the second quarter of 2019 decreased to 3.6% from 4.0% in the corresponding period of 2018.

INCOME FROM OPERATIONS

Income from operations was RMB84.3 million (US$12.3million) in the second quarter of 2019, representing a year-over-year increase of 17.3% from RMB71.8 million in the corresponding period of 2018.

NET INCOME

Net income was RMB94.6 million (US$13.8 million) in the second quarter of 2019, representing a year-over-year increase of 46.4% from RMB64.6 million in the corresponding period of 2018. Non-GAAP adjusted net income increased by 66.7% to RMB116.9 million (US$17.0 million) from RMB70.1 million in the corresponding period of 2018. Non-GAAP adjusted net income excludes the impact of share-based compensation expenses. For further information, see “Use of Non-GAAP Financial Measure.”

NET INCOME PER ADS

Basic and diluted net income per American Depositary Share (ADS) in the second quarter of 2019 were both RMB0.60 (US$0.09). Non-GAAP adjusted basic and diluted net income per ADS in the second quarter of 2019 were both RMB0.75 (US$0.11). Each ADS represents two of the Company’s Class A ordinary shares.

BALANCE SHEET

As of June 30, 2019, the Company had cash and cash equivalents of RMB1,609.6 million (US$234.5 million), compared to RMB2,178.0 million as of March 31, 2019. The change was due to the fact that the Company invested certain amount of cash in term deposit over three months for better cash-on-cash return.

Business Outlook

For the third quarter of 2019, the Company expects total revenues to be between RMB300 million and RMB325 million. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

 

3

Conference Call Information

The Company’s management will hold a conference call on Tuesday, September 3, 2019, at 9:00 P.M. Eastern Time or Wednesday, September 4, 2019, at 9:00 A.M. Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers:

 

International:		+1-412-902-4272
United States Toll Free:		+1-888-346-8982
China Toll Free:		4001-201-203
Hong Kong Toll Free:		800-905-945
Conference ID:		Cango Inc.

The replay will be accessible through September 10, 2019, by dialing the following numbers:

 

International:		+1-412-317-0088
United States Toll Free:		+1-877-344-7529
Access Code:		10134672

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at http://ir.cangoonline.com/.

About Cango, Inc.

Cango Inc. (NYSE: CANG) is a leading automotive transaction service platform in China connecting dealers, financial institutions, car buyers, and other industry participants. Founded in 2010 by a group of pioneers in China’s automotive finance industry, the Company is headquartered in Shanghai and engages car buyers through a nationwide dealer network. The Company’s services primarily consist of automotive financing facilitation, automotive transaction facilitation, and after-market services facilitation. By utilizing its competitive advantages in technology, data insights, and cloud-based infrastructure, Cango is able to connect its platform participants while bringing them a premium user experience. Cango’s platform model puts it in a unique position to add value for its platform participants and business partners as the automotive and mobility markets in China continue to grow and evolve. For more information, please visit: www.cangoonline.com.

Definition of Overdue Ratios

The Company defines “M1+ overdue ratio” as (i) exposure at risk relating to financing transactions for which any installment payment is 30 to 179 calendar days past due as of a specified date, divided by (ii) exposure at risk relating to all financing transactions which remain outstanding as of such date, excluding amounts of outstanding principal that are 180 calendar days or more past due.

The Company defines “M3+ overdue ratio” as (i) exposure at risk relating to financing transactions for which any installment payment is 90 to 179 calendar days past due as of a specified date, divided by (ii) exposure at risk relating to all financing transactions which remain outstanding as of such date, excluding amounts of outstanding principal that are 180 calendar days or more past due.

 

4

Use of Non-GAAP Financial Measure

In evaluating the business, the Company considers and uses Non-GAAP adjusted net income, a non-GAAP measure, as a supplemental measure to review and assess its operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines Non-GAAP adjusted net income as net income excluding share-based compensation expenses. The Company presents the non-GAAP financial measure because it is used by the management to evaluate the operating performance and formulate business plans. Non-GAAP adjusted net income enables the management to assess the Company’s operating results without considering the impact of share-based compensation expenses, which are non-cash charges. The Company also believes that the use of the non-GAAP measure facilitates investors’ assessment of its operating performance.

Non-GAAP adjusted net income is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measure has limitations as analytical tools. One of the key limitations of using Non-GAAP adjusted net income is that it does not reflect all items of expense that affect the Company’s operations. Share-based compensation expenses have been and may continue to be incurred in the business and are not reflected in the presentation of Non-GAAP adjusted net income. Further, the non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

The Company compensates for these limitations by reconciling the non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company’s performance. The Company encourages you to review its financial information in its entirety and not rely on a single financial measure.

Reconciliations of Cango’s non-GAAP financial measure to the most comparable U.S. GAAP measure are included at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.8650 to US$1.00, the noon buying rate in effect on June 28, 2019, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

 

5

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the “Business Outlook” section and quotations from management in this announcement, contain forward-looking statements. Cango may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Cango’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Cango’s goal and strategies; Cango’s expansion plans; Cango’s future business development, financial condition and results of operations; Cango’s expectations regarding demand for, and market acceptance of, its solutions and services; Cango’s expectations regarding keeping and strengthening its relationships with dealers, financial institutions, car buyers and other platform participants; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Cango’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Cango does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contact

Caesar Cao

Cango Inc.

Tel: +86 21 3183 5088 ext.5521

Email: ir@cangoonline.com

Jack Wang

ICR Inc.

Tel: +1 (646) 405-5056

Email: ir@cangoonline.com

 

6

CANGO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

(Amounts in Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data)

 

		As of December 31, 2018				As of June 30, 2019
		RMB				RMB				US$
ASSETS:
Current assets:
Cash and cash equivalents			2,912,901,189				1,609,621,867				234,467,861
Restricted Cash			298,900,155				586,789,155				85,475,478
Short-term investments			265,869,717				546,167,864				79,558,320
Accounts receivable, net			86,513,830				135,437,250				19,728,660
Financing receivable, net			5,420,617				7,626,277				1,110,892
Short-term loan principal and financing service fee receivables, net			—				5,759,707				838,996
Short-term finance leasing receivable, net			1,123,703,618				1,499,097,355				218,368,151
Prepaid expenses and other current assets			61,272,518				78,004,663				11,362,660
Total current assets			4,754,581,644				4,468,504,138				650,911,018
Non-current assets:
Restricted Cash			668,627,618				805,081,110				117,273,286
Long-term investments			292,099,059				441,534,200				64,316,708
Equity method investments			1,448,416				—				—
Goodwill			145,063,857				145,063,857				21,130,933
Property and equipment, net			18,286,218				16,720,263				2,435,581
Intangible assets			1,693,407				33,776,532				4,920,107
Deferred tax assets			100,194,993				81,593,698				11,885,462
Long-term finance leasing receivable, net			1,282,457,409				1,577,577,084				229,800,012
Other non-current assets			36,687,583				9,493,492				1,382,883
Total non-current assets			2,546,558,560				3,110,840,236				453,144,972
TOTAL ASSETS			7,301,140,204				7,579,344,374				1,104,055,990
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings			660,000,000				1,110,000,000				161,689,731
Long-term debts—current			467,194,051				542,456,711				79,017,729
Accrued expenses and other current liabilities			211,458,501				215,035,436				31,323,443
Risk assurance liabilities			173,210,363				196,388,309				28,607,183
Income tax payable			53,517,717				7,418,417				1,080,614
Total current liabilities			1,565,380,632				2,071,298,873				301,718,700
Non-current liabilities:
Long-term borrowings			472,793,340				314,346,370				45,789,712
Other non-current liabilities			7,599,404				—				—
Total non-current liabilities			480,392,744				314,346,370				45,789,712
Total liabilities			2,045,773,376				2,385,645,243				347,508,412
Shareholders’ equity
Ordinary shares			204,260				204,260				29,754
Additional paid-in capital			4,444,078,463				4,481,629,026				652,822,873
Accumulated other comprehensive income			109,452,996				98,390,209				14,332,150
Accumulated retained earnings			698,036,438				611,766,717				89,113,869
Total Cango Inc.’s equity			5,251,772,157				5,191,990,212				756,298,646
Non-controlling interests			3,594,671				1,708,919				248,932
Total shareholders’ equity			5,255,366,828				5,193,699,131				756,547,578
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			7,301,140,204				7,579,344,374				1,104,055,990

CANGO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(Amounts in Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data)

 

		Three months ended June 30,												Six months ended June 30,
		2018 RMB				2019								2018 RMB				2019
						RMB				US$								RMB				US$
Revenues			236,287,811				336,303,754				48,988,165				485,107,011				687,962,259				100,213,002
Operating cost and expenses:
Cost of revenue			81,181,330				125,824,004				18,328,333				162,037,069				256,630,454				37,382,440
Sales and marketing			36,979,636				44,503,534				6,482,671				71,798,024				90,050,914				13,117,395
General and administrative			31,350,545				53,418,413				7,781,269				58,094,590				118,182,033				17,215,154
Research and development			9,481,415				12,246,050				1,783,838				15,933,541				25,593,854				3,728,165
Net loss on risk assurance liabilities			(4,951,451	)			2,379,706				346,643				(1,183,503	)			20,230,839				2,946,954
Provision for financing receivables			10,402,370				13,672,656				1,991,647				13,464,113				23,695,938				3,451,703
Total operating cost and expenses			164,443,845				252,044,363				36,714,401				320,143,834				534,384,032				77,841,811
Income from operations			71,843,966				84,259,391				12,273,764				164,963,177				153,578,227				22,371,191
Interest income			18,246,042				22,704,386				3,307,267				26,323,438				41,588,934				6,058,111
(Loss) income from equity method investments			937,549				(942,312	)			(137,263	)			(1,396,142	)			(926,205	)			(134,917	)
Interest expense			(4,712,329	)			(4,712,329	)			(686,428	)			(9,502,055	)			(10,006,574	)			(1,457,622	)
Foreign exchange loss, net			10,045,905				1,409,293				205,287				7,422,516				122,801				17,888
Other income			(975,669	)			856,340				124,740				21,046,154				21,593,278				3,145,416
Other expenses			(7,091,835	)			(168,717	)			(24,576	)			(7,197,923	)			(1,184,660	)			(172,565	)
Net income before income taxes			88,293,629				103,406,052				15,062,791				201,659,165				204,765,801				29,827,502
Income tax expenses			(23,677,171	)			(8,819,437	)			(1,284,696	)			(53,016,212	)			(35,808,056	)			(5,216,031	)
Net income			64,616,458				94,586,615				13,778,095				148,642,953				168,957,745				24,611,471
Less: Net income attributable to the noncontrolling interest shareholders			164,843				3,047,624				443,936				4,099,150				1,200,254				174,837
Net income attributable to Cango Inc.’s shareholders			64,451,615				91,538,991				13,334,159				144,543,803				167,757,491				24,436,634
Accretion of Series C Preferred Shares			6,991,289				—				—				6,991,289				—				—
Net income attributable to Cango Inc.’s ordinary shareholders			57,460,326				91,538,991				13,334,159				137,552,514				167,757,491				24,436,634
Net income per ADS(Note 1):
Basic			0.44				0.60				0.09				1.07				1.11				0.16
Diluted			0.44				0.60				0.09				1.05				1.11				0.16
ADSs used in net income per ADS computation (Note 1):
Basic			130,053,500				151,404,946				151,404,946				128,244,728				151,404,946				151,404,946
Diluted			131,667,341				151,404,946				151,404,946				130,443,925				151,404,946				151,404,946
Other comprehensive income, net of tax
Unrealized losses on available-for-sale securities			78,147				(108,594	)			(15,818	)			156,131				(146,801	)			(21,384	)
Reclassification of losses to net income			—				(276,843	)			(40,327	)			—				(276,843	)			(40,327	)
Foreign currency translation adjustment			43,890,855				31,329,909				4,563,716				43,890,855				(10,639,143	)			(1,549,766	)
Total comprehensive income			108,585,460				125,531,087				18,285,666				192,689,939				157,894,958				22,999,994
Total comprehensive income attributable to Cango Inc.’s shareholders			108,420,617				122,483,463				17,841,730				188,590,789				156,694,704				22,825,157

 

Note1:

Each ADS represents two ordinary shares.

CANGO INC.

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(Amounts in Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data

 

		Three months ended June 30,												Six months ended June 30,
		2018				2019								2018				2019
		(Unaudited) RMB				(Unaudited) RMB				(Unaudited) US$				(Unaudited) RMB				(Unaudited) RMB				(Unaudited) US$
Net income			64,616,458				94,586,615				13,778,094				148,642,953				168,957,745				24,611,471
Add: Share-based compensation expenses			5,467,240				22,273,101				3,244,443				5,467,240				37,550,563				5,469,856
Cost of revenue			224,157				913,198				133,022				224,157				1,539,574				224,264
Sales and marketing			1,164,522				4,744,170				691,066				1,164,522				7,998,269				1,165,079
General and administrative			3,794,264				15,457,530				2,251,643				3,794,264				26,060,087				3,796,080
Research and development			284,297				1,158,203				168,711				284,297				1,952,633				284,433
Non-GAAP adjusted net income			70,083,698				116,859,716				17,022,537				154,110,193				206,508,308				30,081,327
Less: Net income attributable to the noncontrolling interest shareholders			164,843				3,047,624				443,936				4,099,150				1,200,254				174,837
Non-GAAP adjusted net income attributable to Cango Inc.’s shareholders			69,918,855				113,812,092				16,578,601				150,011,043				205,308,054				29,906,490
Accretion of Series C Preferred Shares			6,991,289				—				—				6,991,289				—				—
Non-GAAP adjusted net income attributable to Cango Inc.’s ordinary shareholders			62,927,566				113,812,092				16,578,601				143,019,754				205,308,054				29,906,490
Non-GAAP adjusted net income per ADS-basic (Note 1)			0.48				0.75				0.11				1.12				1.36				0.20
Non-GAAP adjusted net income per ADS-diluted (Note 1)			0.48				0.75				0.11				1.10				1.36				0.20
Weighted average ADS outstanding—basic			130,053,500				151,404,946				151,404,946				128,244,728				151,404,946				151,404,946
Weighted average ADS outstanding—diluted			131,667,341				151,404,946				151,404,946				130,443,925				151,404,946				151,404,946

Note1: Each ADS represents two ordinary shares.