Cheche (CCG) Q3 Earnings call transcript Nov 26, 2024

In the recent earnings call, Cheche Group, a leading player in the Chinese auto insurance technology sector, shared its financial results for the third quarter of 2024, highlighting its strategic growth and operational achievements. Lei Zhang, Founder and CEO, and Wenting Ji, CFO, led the discussion, providing insights into the company's performance, market trends, and future prospects.

Financial Performance and Market Trends

Cheche Group reported a notable quarter, with net income on both a GAAP and adjusted basis, marking a significant milestone in the company's growth journey. The company's strategic focus on auto insurance technology and its expansion in the rapidly growing electric vehicle (NEV) market are paying off. According to Lei Zhang, Cheche has provided quotes for nearly 50 million vehicles and placed over USD 9 billion in written premiums, demonstrating its market leadership. The NEV market in China is undergoing a transformative shift, with sales overtaking conventional Internal Combustion Engine (ICE) autos in July 2024. This trend has profound implications for the auto insurance ecosystem, with insurance increasingly being sold and renewed through OEM apps and vehicle screens. Cheche's strategic partnerships with 14 NEV manufacturers, including major industry players, position it well to capitalize on this trend.

Strategic Partnerships and Expansion

Cheche's growth strategy hinges on its partnerships with NEV manufacturers and insurance carriers. The company's agreement with Great Wall Motor Company's insurance subsidiary is a significant step towards expanding its service capabilities and market reach. Cheche's partnership with Tokio Marine's Chinese subsidiary underscores its ambition to broaden its service offerings and geographical footprint. The company is also investing in SaaS and data analytics tools to enable medium-sized insurers to compete more effectively in underwriting auto insurance for both NEV and ICE vehicles. This expansion is crucial to driving competition and adding value for consumers.

Gross Margin and Operating Expenses

Wenting Ji provided a detailed analysis of Cheche's financial performance, highlighting a 4% increase in total written premiums placed and a 5% increase in the number of policies issued in the third quarter. The company's strategic focus on the NEV market, with its lower commission rates but higher profitability, bodes well for its future financial health. The decrease in selling and marketing expenses and general and administrative expenses, coupled with the positive net income, underscore the company's operational efficiency and financial discipline.

Future Outlook and Strategic Directions

Looking ahead, Cheche is focused on expanding its presence in the NEV market and embedding itself across the life cycle of these vehicles. The company's role as a trusted third party in determining liability in case of accidents involving self-driving vehicles underscores its strategic importance in the evolving auto insurance landscape. Cheche's plans to extend its partnerships with auto manufacturers beyond China into Southeast Asia and the Middle East, leveraging its experience and data in the Chinese market, further underscores its ambitious growth trajectory.

Investor Confidence and Share Buyback

Lei Zhang's confidence in Cheche's future prospects is reflected in his continued purchase of shares in the open market and the company's planned share buyback. This investor confidence, coupled with the company's strong financial performance and strategic direction, positions Cheche Group well for continued growth and value creation in the dynamic auto insurance technology sector.