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K Car Co Ltd (XKRX:381970) Q2 2024 Earnings Call Highlights: Strong Revenue Growth Amidst ...

In This Article:

  • Revenue: KRW589 billion, up 16.5% YoY.

  • Gross Profit: KRW59.7 billion, up 3.5% YoY.

  • Gross Profit Margin: 10.1%, down 1.3 percentage points YoY.

  • Operating Profit: KRW18.1 billion, up 17% YoY.

  • Operating Profit Margin: 3.1%, flat YoY.

  • Retail ASP: KRW17.22 million, up 11.5% YoY.

  • Total Units Sold: 39,017 units, up 6.2% YoY.

  • Online Retail Sales: Increased by 2.5% YoY.

  • Offline Retail Sales: Increased by 7.7% YoY.

  • Inventory Turnover: 11.2 times, highest globally.

  • SG&A Expenses: KRW41.6 billion, 7.1% of revenue.

  • CapEx: KRW1.1 billion, 0.2% of revenue.

  • Dividend: KRW300 per common share, 58% increase from last year.

Release Date: August 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • K Car Co Ltd (XKRX:381970) achieved double-digit growth in both sales and operating profit year-over-year, driven by increased used car retail ASP and units sold.

  • The company maintained high inventory turnover, enhancing per unit sales profit through AI-enabled forecasting and non-face-to-face sourcing channels.

  • K Car Co Ltd outperformed the market with a 7% growth in vehicle sales, capturing a 12.3% share in the serviceable available market.

  • The company recorded a significant increase in retail ASP, continuing a five-quarter uptrend, supported by resumed procurement of high-end vehicles.

  • K Car Co Ltd increased its quarterly dividend by 58%, reflecting improved performance and a commitment to shareholder returns.

Negative Points

  • Gross profit margin decreased by 1.3 percentage points year-over-year, despite a slight quarter-on-quarter improvement.

  • The online sales share has been stagnant, with a decrease compared to the previous year, potentially impacting higher-margin online sales.

  • The entry of large corporates and startups into the used car market presents increased competition, posing a potential threat to K Car Co Ltd's market share.

  • Marketing spend decreased significantly by more than 52% year-over-year, raising concerns about reduced media exposure amid new competitors.

  • Despite improvements, the gross profit margin remains under pressure, with operating profit margin flat year-over-year.

Q & A Highlights

Q: With OEM automakers and large corporates entering the used car market, how does this impact K Car's competitive dynamics and market share goals? A: CEO Jung In-Guk explained that while new entrants pose challenges, they also present opportunities for market growth and diversification. K Car plans to leverage its experience and adopt new technologies to maintain market leadership, aiming for a 30% market share in the serviceable available market.