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Cango Ends Day One on NYSE Up 14%; CFO Says "Great Moment" for Team

Anna Vodopyanova 2018-11-19 14:56 PM
Cango Ends Day One on NYSE Up 14%; CFO Says "Great Moment" for Team
CEO Jiayuan Lin, Chairman XiaoJun Zhang, and CFO Yongyi Zhang (Bilin Lin / CapitalWatch - New York)

Cango Inc. (NYSE: CANG), one of three Chinese tech firms to hit the markets today with an initial public offering, received a warm welcome on Wall Street as its shares rose 14 percent through the day.


(Source: NYSE Twitter)

Cango rang the opening bell on the New York Stock Exchange, raising $44 million by selling 4 million American depositary shares. The pricing of the shares at $11 per ADS was the midpoint of the expected range.

The stock of the company closed at $12.52 per share on its Day One.


Cango closed at $12.52 per share, up nearly 14 percent, on its first trading day.

(Source: Thomson Reuters Eikon)

"It's a great moment for our company," said Michael (Yongyi) Zhang, the chief financial officer of Cango, in an interview with CapitalWatch.

Cango operates an online platform connecting businesses and consumers in the Chinese auto industry, including dealers of new and used cars, financing institutions, and car buyers.

The online car marketplace started small eight years ago and has since greatly increased its network, now covering the largest number of new car dealers in China, as reported by consultancy Oliver Wyman Consulting (Shanghai) Ltd. Last year, Cango facilitated the largest number of financial transactions among Chinese auto marketplaces, according to the report.

It has also attracted some giant Chinese players like Tencent Holdings Ltd., ride-hailing company Didi Chuxing, Warburg Pincus Financial Global Ltd., and Taikang Life Insurance.

Cango has also recently partnered with Industrial and Commercial Bank of China (ICBC), the world's largest bank by assets. Zhang said the collaboration would allow the platform to grow its network in China's tier-one cities and expand into the higher-end market.

Zhang said Cango's platform was unique in China. Rather than taking on all credit risk and lending its own capital, the company connects car buyers with partnering financial institutions. This allows Cango to grow faster than the lenders in China's auto industry, Zhang said. Jincheng Bank and Jiangnan Rural Commercial Bank, which have been financing the majority of Cango's loans, carries the loans on their own books.

In the first quarter of 2018, Cango has arranged financing on more than 97,000 car purchases with the amount of loans reaching $900 million, representing a 7 percent growth from the same time last year, according to the firm's prospectus.

In the first three months of 2018, Cango&`#`39;s revenue increased by 27.5 percent year-over-year to $39.7 million. Net income during the first quarter grew to $13.4 million, a 13 percent increase. For 2017, Cango reported its revenue grew 142 percent to $167.7 million. Earnings during the year surged 162 percent to $55.7 million.

The amount of the offering in New York was a reduction from the 12.5 million American depositary shares the company had anticipated to sell according to its amended prospectus filed July 16, and an even bigger drop from the $300 million the company reported in its initial prospectus of June 22.

Zhang said the proceeds of the stock sale would fund the further development of Cango's online platform, as well as the expansion of its businesses. Among its short-term plans, the company hopes to add an auto insurance service, but Zhang did not share any definite acquisition plans. He said the company would pursue greater penetration in the Chinese market before it considers looking overseas. Cango is also looking to expand its strategic cooperation with China's giants and online platforms.

When asked about cases of financial concern that U.S. stockholders have regarding some Chinese companies, Zhang said, "We use our real performance to prove that we are a company that is worthy of investors."

The words that would best describe his company are "solid" and "think big," he added.