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  • eHi Car Services Announces Third Quarter 2016 Results

    eHi Car Services Announces Third Quarter 2016 Results

    eHi Car Services Limited rentals and car services provider in China, today announced its unaudited financial results for the third quarter ended September 30, 2016.

    Third Quarter 2016 Highlights

    • Net revenues increased by 47.8% year-over-year to RMB582.1 million (US$87.3 million[1]) for the third quarter of 2016, from RMB393.8 million for the third quarter of 2015.

    Three months ended September 30,

    Year-Over-Year

    (RMB ‘000)

    2015

    2016

    Comparison

    Car rentals

    300,700

    464,271

    54.4%

    Car services

    93,080

    117,783

    26.5%

    Total Net

    Revenues

    393,780

    582,054

    47.8%

    Gross profit[2] increased by 83.9% year-over-year to RMB165.7 million (US$24.8 million) for the third quarter of 2016, from RMB90.1 million for the third quarter of 2015. Gross profit margin[2] increased to 28.5% for the third quarter of 2016, from 22.9% for the third quarter of 2015.

    • Net income increased by 269.5% year-over-year to RMB22.3 million (US$3.3 million) for the third quarter of 2016, from RMB6.0 million for the third quarter of 2015. Net income margin increased to 3.8% for the third quarter of 2016, from 1.5% for the third quarter of 2015.
    • Non-GAAP adjusted EBIT[3] increased by 97.4% year-over-year to RMB80.6 million (US$12.1 million) for the third quarter of 2016, from RMB40.8 million for the third quarter of 2015. Non-GAAP adjusted EBIT margin[3]increased to 13.8% for the third quarter of 2016, from 10.4% for the third quarter of 2015.
    • Non-GAAP adjusted EBITDA[4] increased by 60.0% year-over-year to RMB264.5 million (US$39.7 million) for the third quarter of 2016, from RMB165.3 million for the third quarter of 2015. Non-GAAP adjusted EBITDA margin[4]increased to 45.4% for the third quarter of 2016, from 42.0% for the third quarter of 2015.
    • Total average available fleet size[5] increased by 46.5% year-over-year to 41,742 vehicles for the third quarter of 2016, from 28,499 vehicles for the third quarter of 2015. Total fleet RevPAC[6] increased to RMB152 for the third quarter of 2016, from RMB150 for the third quarter of 2015.

    [1] The Company’s business is conducted in China and substantially all of its revenues are denominated in Renminbi (RMB). However, this earnings announcement contains translations of RMB amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.6685 to US$1.00, the effective noon buying rate as of September 30, 2016 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.

    [2] Gross profit is defined as net revenues less cost of net revenues (vehicle operating expenses).  Gross profit margin is defined as the percentage representing gross profit divided by net revenues.

    [3] Non-GAAP adjusted EBIT is defined as net income before share-based compensation, interest expenses, interest income, provision for income taxes, gains from waiver of warrants and gains from sale of cost method investment. For more information, refer to “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release. Non-GAAP adjusted EBIT margin is defined as the percentage representing Non-GAAP adjusted EBIT divided by net revenues.

    [4] Non-GAAP adjusted EBITDA is defined as net income before depreciation and amortization, share-based compensation, interest expenses, interest income, provision for income taxes, gains from waiver of warrants and gains from sale of cost method investment. For more information, refer to “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release. Non-GAAP adjusted EBITDA margin is defined as the percentage representing Non-GAAP adjusted EBITDA divided by net revenues.

    [5] “Average available fleet size” is calculated by dividing the aggregate number of days in which the Company’s fleet was in operation during a given period by the total number of days during the same period. In determining the size of the Company’s fleet in operation, eHi includes all vehicles in its car rentals and/or car services fleets except for vehicles that have been written off in accordance with its accounting policy and vehicles that have not been consistently made available for rent and that it may consider to dispose of when appropriate opportunities arise.

    [6] “RevPAC” refers to average daily net revenue per available car, which is calculated by dividing the net revenues during a given period by the aggregate number of days in which the Company’s fleet was in operation during the same period.

     

    Average Available

    Fleet Size

    RevPAC

    (RMB)

    2015Q3

    2016Q3

    Year-Over-Year

    Comparison

    2015Q3

    2016Q3

    Year-Over-Year

    Comparison

    Car rentals

    26,200

    39,227

    49.7%

    125

    129

    3.2%

    Car services

    2,299

    2,515

    9.4%

    440

    509

    15.7%

    Total

    28,499

    41,742

    46.5%

    150

    152

    1.3%
    • Fleet utilization rate[7] for car rentals was 71.9% for the third quarter of 2016, compared with 73.8% for the third quarter of 2015.
    • As of September 30, 2016, total period-end fleet size[8] was 48,934 vehicles.

    [7] “Fleet utilization rate” refers to the aggregate transaction days for the Company’s car rental fleet during a given period divided by the aggregate days the car rental fleet was in operation during the same period.

    [8] “Period-end fleet size” refers to the aggregate number of vehicles in the Company’s car rentals and car services fleets as of the last day of a given period which the Company holds legal title to and reflects in its balance sheet, including vehicles that are currently missing but have not been written off in accordance with its accounting policy. The period-end fleet size as of September 30, 2016 excluded 144 vehicles which the Company had written off from its balance sheet in accordance with its accounting policy.

    Mr. Ray Zhang, eHi’s Chairman and Chief Executive Officer, said, “Our business continued to thrive during the third quarter, leading to both strong top-line growth and significant improvement in profitability. As a fast-growing company, we are committed to driving ongoing operating leverage and are well-positioned to capture the growing demand from China’s rapidly rising domestic tourism and business-related travel.”

    “The recent regulations regarding online car-hailing business in China, we believe, provide us with greater potential to explore business and strategic cooperation opportunities to enhance our competitive position. Looking ahead, we remain focused on continuing to execute on our growth plan and achieving our strategic objectives,” Mr. Zhang concluded.

    Mr. Colin Sung, eHi’s Chief Financial Officer, said, “We are pleased to report strong third quarter results with net revenues increasing by 47.8% year-over-year, while recording 269.5% bottom-line growth from the prior-year period. Notably, our continued focus on operating efficiency and cost control measures contributed to broad-based margin improvement. Our gross margin and non-GAAP adjusted EBITDA margin both reached record-highs of 28.5% and 45.4%, respectively. Our financial discipline is well-established, and we remain committed to prudent expansion and a balanced approach between growth and profitability.”

    Third Quarter 2016 Financial Results

    Net revenues for the third quarter of 2016 were RMB582.1 million (US$87.3 million), up 47.8% year-over-year, attributable to increased net revenues from both car rentals and car services.

    Net revenues from car rentals for the third quarter of 2016 were RMB464.3 million (US$69.6 million), up 54.4% year-over-year, primarily driven by the growing average available fleet size for car rentals in response to customer demand.

    Net revenues from car services for the third quarter of 2016 were RMB117.8 million (US$17.7 million), up 26.5% year-over-year, primarily driven by the increased car services RevPAC as we provided services to more business clients.

    Cost of revenues (vehicle operating expenses) for the third quarter of 2016 was RMB416.4 million (US$62.4 million), up 37.1% year-over-year, primarily driven by increased depreciation and labor costs.

    In the third quarter of 2016, 486 used vehicles were disposed of, and 358 used vehicles were under sales contracts pending title transfer. The Company recognized a disposal loss of RMB0.3 million (US$0.04 million) in aggregate for these 844 vehicles. In addition, a disposal gain of RMB0.7 million (US$0.1 million), which was unrecognized in the previous quarters, was recognized in the third quarter of 2016 as a result of the completion of title transfer during such period. The disposal loss and gain were both recognized as adjustments to the vehicle-related depreciation expense as part of the cost of revenues.

    Gross profit for the third quarter of 2016 was RMB165.7 million (US$24.8 million), up 83.9% year-over-year. Gross profit margin for the third quarter of 2016 was 28.5%, compared with 22.9% for the third quarter of 2015. Gross profit margin improvement was due to certain cost controls primarily in vehicle insurance, and to a lesser extent, in vehicle repair and maintenance as well as labor costs, in connection with enhanced economies of scale and operating efficiency.

    Selling and marketing expenses for the third quarter of 2016 were RMB28.5 million (US$4.3 million), up 81.8% year-over-year, primarily due to increased channel marketing and promotion fees as the Company expanded branding and channel promotion activities during such period.

    General and administrative expenses for the third quarter of 2016 were RMB63.1 million (US$9.5 million), up 38.6% year-over-year, primarily due to increased employee-related costs including salaries and welfare expenses as a result of increased headcount, as well as a foreign exchange loss in the third quarter of 2016 compared with a foreign exchange gain in the third quarter of 2015.

    Profit from operations for the third quarter of 2016 was RMB77.0 million (US$11.5 million), up 124.2% year-over-year.

    Interest expense for the third quarter of 2016 was RMB55.7 million (US$8.3 million), up 79.5% year-over-year, primarily attributable to the interest expense associated with the Company’s senior unsecured notes of US$200 million due 2018.

    Net income for the third quarter of 2016 was RMB22.3 million (US$3.3 million), up 269.5% from RMB6.0 millionfor the third quarter of 2015. Net income margin for the third quarter of 2016 was 3.8%, compared with 1.5% for the third quarter of 2015.

    Basic and diluted earnings per ADS for the third quarter of 2016 were RMB0.32 (US$0.05) each, compared with basic and diluted earnings per ADS of RMB0.09 (US$0.01) each for the third quarter of 2015.

    Non-GAAP adjusted EBIT for the third quarter of 2016 was RMB80.6 million (US$12.1 million), up 97.4% year-over-year. Non-GAAP adjusted EBIT margin for the third quarter of 2016 was 13.8%, compared with 10.4% for the third quarter of 2015.

    Non-GAAP adjusted EBITDA for the third quarter of 2016 was RMB264.5 million (US$39.7 million), up 60.0% year-over-year. Non-GAAP adjusted EBITDA margin for the third quarter of 2016 was 45.4%, compared with 42.0% for the third quarter of 2015.

    As of September 30, 2016, the Company’s cash, cash equivalents and restricted cash balance was RMB1.5 billion (US$223.7 million).

    Recent Development

    On August 30, 2016, the Company entered into a US$150 million syndicated loan facility agreement. This loan facility agreement includes an initial facility of US$110 million and a greenshoe facility of US$40 million. The loan facilities have a three-year term and will be repaid in installments. The interest margin is priced at 350 basis points per annum over LIBOR. Deutsche Bank AG, Singapore Branch is acting as the original mandated lead arranger of the loan facilities. The Company had fully drawn down the US$150 million facility as of September 27, 2016, and used part of the proceeds for repaying certain existing indebtedness with high interest rates. The remaining proceeds will be used for funding capital expenditures and other general corporate purposes of the Company.

    Outlook

    The Company estimates that net revenues for the full year of 2016 will range from RMB2.1 billion to RMB2.2 billion, and total period-end fleet size will reach approximately 57,000 vehicles as of December 31, 2016. This outlook reflects the Company’s current and preliminary view, which is subject to change.

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  • Mobile financial services booming in emerging markets

    Mobile financial services booming in emerging markets

    The total transaction value of mobile financial services in emerging markets will reach $500 billion in 2021, up from $198 billion in 2016, Juniper Research estimates.

    The estimates include revenue from domestic money transfers, deposits on loans, insurance products, and savings accounts.

    The research argues that by introducing insurance offerings, operators had the opportunity to substantially reduce churn levels.

    It cited the example of Telenor Suraksha life insurance scheme in India, which has seen nearly 50% of its 45 million user base sign up since its December 2015 launch.

    “The model underpinning the Surakhsa scheme – requiring consumers to top-up airtime on a monthly basis to receive the insurance cover – should be widely replicated. It enables operators to maintain average revenue levels within low-income, low-ARPU prepaid environments and allows consumers to reap the benefits of micro-insurance cover,” said Lauren Foye, research analyst, Juniper Research.

    However, the research cautioned that a key challenge would be tailoring financial service products to the needs of individual markets. It cited the case of several early implementations of mobile financial services in markets such as India, the Philippines and Nigeria achieving limited adoption where products were often ill-suited to their target audience.

    Opportunity in New Markets

    The research also highlighted the Asia-Pacific as a region which, while currently under-served due in part to the complexity of national regulations, has strong potential for future product launches.

    Whilst restrictions have been in place previously, largely due to cultural beliefs, Juniper found that attitudes are changing in under-served regions, with Indonesia acquiring its first ever microloans product Kashmi in 2017.

    Additionally, specialized products have been launched to address religious requirements, such as Achuwat in Pakistan which provides interest free loans to meet Sharia requirements.

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  • VinaPhone launches Vietnam’s first 4G services

    VinaPhone launches Vietnam’s first 4G services

    Vietnam’s VinaPhone has become the market’s first operator to launch 4G services, commencing with a deployment providing full coverage of Phu Quoc Island.

    The VNPT mobile subsidiary has deployed 100 4G base stations to provide total coverage of the island.

    The operator plans to rapidly deploy 4G services in 2017, installing 21,000 base stations nationwide.

    Pricing will be set at the same or in some cases lower rates than 3G services. The company will use the network for services including mobile TV and cloud video conferencing.

    VinaPhone began commercial 4G trials in January, and was awarded a commercial license in the 1800-MHz band last month, along with MobiFone and Viettel.

    Viettel has separately revealed plans to launch its own 4G services in the first quarter of next year. The operator is ready to deploy services nationwide following extensive testing in the province of Vung Tau.

    According to the report, Viettel plans to differentiate by focusing on nationwide expansion, in contrast to deploying in major cities first. The company took a similar approach during it 2G rollout around a decade earlier.

  • AIS to offer family safety services

    AIS to offer family safety services

    Thai operetor AIS has awarded a contract to Gemalto covering the company’s LinqUs Mobile Protection solution.

    Gemalto will provide integrated sophisticated safety-checking features for digitally connected consumers, allowing mobile users to seek real-time location information and online protection for their loved ones.

    AIS expects to use the capability to enhance customer engagement by offering services aimed at keeping subscribers safe and connected to their families. Gemalto will also provide support services to AIS.

    Gemalto partners with iMobileMagic, a provider of cloud based family location and protection products, to offer a service which will allow users to receive real-time notifications when their kids, elderly or other relatives arrive, leave, or stray away from designated areas.

    Families can expect to be able to instantly locate their loved ones or send panic alerts during emergencies. Parents will have the additional ability to put restrictions on their children’s device usage.

    This cloud-connected mobile application, which runs on a wide range of devices and wearables, can help AIS customers to stay close to their families and even pets, in a simple and cost-effective way.

    “Safety and security are the key issues on everyone’s mind these days, and Gemalto’s LinqUs Mobile Protection solution allows us to meet the rapidly changing needs of our society, with lower cost of ownership,” said Titipong Khiewpaisal, SVP for consumer marketing and sales at AIS.

    “It is easy to deploy, scalable, and even available on wearables, making it easy for our customers to stay up to date with the status of their family members, anytime and anywhere,” he said.

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  • Nepal Telecom revs up rollout of new services

    Nepal Telecom revs up rollout of new services

    Nepal Telecom chose Tecnotree to supply its Agility Mediation and Interconnect system, which will enable the rapid rollout of new services for the telco’s 14 million subscriber base.

    The Tecnotree Agility Mediation and Interconnect system will replace Nepal Telecom’s existing systems for GSM and other networks – and supports mobile, fixed line and broadband lines of business as well as future services.

    The solution will be delivered as a turnkey project, including complete hardware and third party software implementation.

    “By enabling the integration of new and legacy network components we are pleased to help Nepal Telecom to execute its convergence strategy and achieve its objective of complete optimized Business Support Systems,” said Padma Ravichander, CEO of Tecnotree.

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  • GoDaddy launches in 11 more APAC markets

    GoDaddy launches in 11 more APAC markets

    Small business technology services provider GoDaddy has expanded further into Asia, launching in 11 more markets including Hong Kong.

    The company has launched its suite of cloud-based products for SMEs across the region. With the launch GoDaddy services are now available in 14 Asian markets, also including Japan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

    GoDaddy offers a suite of cloud-based products and services including domain registry, website hosting, website development and productivity tools.

    The company offers also local language customer care and direct phone numbers in each of its new Asian markets.

    GoDaddy CEO Blake Irving noted that SMEs account for over 97% of all enterprises and employ over half the workforce across APEC economies.

    “Asia is home to one of the largest, most vibrant small business communities in the world,” he said.

    “As internet growth and smartphone adoption continue to accelerate across the region, it’s important that these businesses are able to create strong digital identities that will help them achieve their goals and compete online.”

    Globally, GoDaddy now services small businesses in 53 markets, supporting 26 languages – including 10 Asian languages – and 44 currencies.

  • Indonesia could block internet services

    Indonesia could block internet services

    Indonesia is the latest country to question the tax arrangements of the world’s internet giants, issuing a threat to block their services if they fail to comply with local set-up requirements and pay tax.

    “All have to create a permanent establishment, like the contractors for the oil sector, so they can be taxed,” stated Bambang Brodjonegoro, the finance minister, although the Jakarta Globe reported that he did not name any particular businesses.

    According to Communications Ministry estimates, digital advertising was worth around $800m last year but was untaxed because of the loopholes in regulations.

    A spokesman for the Ministry said that imminent new regulations would address this issue and would apply to streaming and messaging providers as well as social media websites.

    Indonesia is one of the most social media-connected countries in the world. It is Facebook’s fourth-largest market target, while Jakarta is the most active city for Twitter – Jakartans account for 2.4% of all tweets worldwide.

    Accordingly, major brands are looking to tap into this high level of digital social engagement while local entrepreneurs have been able to use social networks as an inexpensive platform to build their brands and do business.

    But these activities could be at risk if the government carries out its threats: the Communications Ministry spokesman, Ismail Cawidu, indicated that those internet businesses that did not comply with the new regulations faced a reduction in bandwidth or, in extremis, being blocked completely.

    While some of the businesses potentially affected have already set up legal entities in Indonesia, others only have representative offices.

    And even those, such as Google, that do have a properly constituted business may not be immune from government scrutiny.

    “Google has an office in Indonesia, but digital age transactions do not go through that office,” Communication Minister Rudiantara told Metro TV. “That is what we’re looking to straighten out,” he added.

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  • After Delhi-NCR, Snapdeal to offer home services in other metros

    After Delhi-NCR, Snapdeal to offer home services in other metros

    E-commerce giant Amazon.com might be planning to launch local handymen services in the Indian market after having done it in the US a few months ago, but Snapdeal.com has already started providing plumbing, electrical and other household services in some cities.

    The Gurgaon-based company, the second largest online marketplace in the country, is betting big on the growing needs of consumers for such services.

    After a pilot project in Delhi and NCR in October, the company has started offering the services in Bengaluru last month, and will go live with Mumbai, Hyderabad, Chennai and Pune in January. By March next year, it plans to target about 10 more cities, where people can call for a plumber, electrician, hardware professionals, carpenters and home cleaning services online.