A few days ago, US stock research institution Zach released a research report to Youxin (UXIN) valuate US$2.15 per share. The agency pointed out that Youxin will usher in the threshold of rapid profit growth in the next 3-5 years and may continue to grow after that.
In this research report, Zach conducted a comprehensive investigation and gave high praise from the aspects of policies, supply chain, omni-channel model, proprietary technology platforms, user word-of-mouth improvement, financial improvement, etc.
Policies are favorable. The second-hand car industry ushers in a period of rapid development. Starting from October 1 this year, the restrictions on second-hand car relocation in the National Five China second-hand car industry has been officially cancelled. Policy measures such as defining the attributes of used cars and limiting the number of personal transactions are also about to be implemented. China's second-hand car industry is ushering in a historic golden opportunity period. Used car transactions will gradually shift from single price competition to an era of diversified dimensions such as quality, service, and guarantee.
Zach believes that China's used car industry is highly fragmented and inefficient. The new regulations on strengthening supervision of the used car industry will come into effect next year. The new regulations require used car dealers to operate as compliant automobile companies, which will make it difficult for "self-employed" dealers to operate, making the second-hand car industry transforming to scale, specialization and formalization.
As the first stock listed in China's second-hand car, Youxin has a professional management team and brand advantages. More importantly, Youxin used car is constantly improving the quality of the vehicle and service quality, and its first-mover advantage is more obvious.
business model has been verified. Omni-channel operation provides convenient car purchase services.
Zach's research report pointed out that the company's omni-channel model, including online and on-site purchase of used cars, provides inspection, modification, pricing and logistics services, allowing them to gain an advantage in front of competitors and improve customer experience.
data shows that since 2020, Youxin has accelerated business model innovation and built a national, online and offline service system that can not only meet consumers' one-stop car purchase needs such as online car viewing and placing orders, but also meet the consumption habits of Chinese people for online shopping, and support offline car pickup and door-to-door delivery.
It is worth mentioning that Youxin has built two major stores in Xi'an and Hefei, with its business radiating to the northwest, east China and central China. The latter covers an area of 100,000 square meters, with a warehouse of 2,800 cars, covering 54 brands, and is well deserved to be the "largest used car store in Anhui." These two major stores have relatively complete systems such as front-end product selection, inspection, procurement, preparation and renovation, logistics, etc., and the inspection standards are strict. It is reported that all second-hand vehicles are only allowed to be put on the shelves after more than 300 tests, and the risks of major accident vehicles, fire-burning water-burning , meter adjustment vehicles, etc. are eliminated.
In addition, Uxin has independently developed patents through the second-hand car sales big data accumulated over the years and has achieved its advantages in the pricing system. In terms of after-sales guarantee, Uxin took the lead in proposing "seven-day no-reason return" and "lifelong refund of vehicles for major problems".
From the quality of used cars to pricing and after-sales service, Youxin has achieved comprehensive optimization of the entire chain of used cars in terms of standards and specifications. At the same time, this series of operations has also played a decisive role in creating user reputation. Data shows that since Youxin launched NPS (customer net recommendation value) at the beginning of 2021, it has achieved an increase for six consecutive quarters.
broadens the growth curve and adds to the new energy vehicle market
In this research report, Zach also mentioned Youxin's layout in new energy used cars, believing that this will be another major measure to expand market share.
Zach said that in 2021, China's electric car sales were 3.5 million, exceeding the total of other parts of the world. Currently, more than 300 electric vehicles are on sale nationwide. The company provides used electric car products including top brands such as Tesla , NIO , Ideal, Xiaopeng and BYD . The company actively establishes car purchase channels and develops inspection, preparation and other service capabilities specially designed for second-hand electric or hybrid vehicles. The company is establishing a strategic cooperation relationship with electric vehicle manufacturers, spare parts suppliers and new energy vehicle dealers.
In Zach's view, in addition to improving the vehicle quality and service system and deepening the existing market, Uxin used cars will also become its next growth engine to target the new energy vehicle market.
strong support and light-fitting runs out of "acceleration"
In the research report, the company conducted debt-to-equity conversion with two major creditors in July and August, reducing the debt burden of about US$75 million (530 million yuan).
The company said in its latest financial report: "The company believes that its current cash and cash equivalent , as well as the cash support received (or will be received) from recent financing transactions, will be sufficient to meet its expected working capital needs , and repay the debts due within the next 12 months." In addition to financing,
's performance growth potential also brings confidence to Youxin. According to the latest financial report, Youxin expects that its revenue will reach between 590 million and 610 million yuan in the quarter from July to September, far higher than 346 million yuan in the same period last year. The company also said that it is expected to reach 5,800 units during the period, with about 3,000 of which are from retail transactions.
Zach believes that the Chinese government's new regulation of the used car industry may increase Youxin's market share, so the revenue growth rate may be significantly higher than the estimate. In addition, as Uxin's operational efficiency improves, meaningful profits or timelines generated may be shortened.
