Hello, and thank you for standing by for Yixin Group 2020 Annual Results Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Joyce Wei, IR Director at Yixin Group. Please go ahead.
Thank you, operator. Good evening, and welcome to our 2020 earnings conference call. This is Joyce Wei from Yixin IR team. Today with me are Mr. Andy Zhang, Chairman and CEO of Yixin Group, and Mr. Xiaoguang Yang, our CFO. After their prepared remarks, Andy and Xiaoguang will be available to answer your questions. Before we proceed, we would like to remind you that all our remarks today may include certain forward-looking statements. The number of risks and factors beyond our control may cause the actual results to differ materially from those contemplated by these forward-looking statements. During this call, we will present you both IFRS and non-IFRS financials. We will also discuss general market conditions for our industry, and such information will come from a variety of sources outside of Yixin Group.
For a detailed discussion of the risk factors we face and the non-IFRS measurements, please refer to our public documents on www.yixincars.com. As a reminder, this call is being recorded. In addition, a live webcast and a replay of the conference call will be available on our website. With that, I will now pass the call to Mr. Andy Zhang, the Chairman and CEO of Yixin Group.
Thank you everyone for joining our 2020 earnings.
Hello, everyone. I am very sorry. We are probably experiencing technical difficulty. Hi, speaker.
Thank you, everyone.
Oh, you are back. Thank you. You may now proceed.
Apology. Yes. Thank you everyone for joining our 2020 earnings conference call this evening. Year 2020 is quite unusual and it left indelible marks in the history. During the year, COVID-19 heavily and negatively impacted Yixin's business, consumers' consumption capabilities, various industries, and the macroeconomic of China, and even the whole world. In 2020, China's total sales of new and used passenger vehicles decreased by 4.8% year-on-year, according to data from China Association of Automobile Manufacturers and the China Automobile Dealers Association. Yixin's total financed automobile transactions were 356,000 in 2020, representing a 32% year-on-year decrease, and the aggregate financing amount was approximately CNY 27 billion. Other than the COVID-19 factor, the group took proactive steps to tighten its underwriting standards of the loans that were facilitated as we shifted more towards quality consumers with better credit records.
In the second half of 2020, we have seen a significant recovery of sales transactions. The number of total finance transactions in the second half of 2020 was 235,000, which was only a 1% decline compared to the 237,000 in the second half of 2019. We achieved this comeback without sacrificing asset quality. Impacted by the COVID-19, our revenues in 2020 were approximately CNY 3.325 billion, representing a 43% year-on-year decrease. Our new core service revenues, which include revenues from loan facilitation transactions and the new self-operated financing lease transactions we facilitated during the year, decreased by 47% to CNY 1.34 billion for the year ended December 31st, 2020. Accordingly, our gross profit decreased by 44% in 2020 to approximately CNY 1.556 billion, mainly due to the decrease in total revenues.
Our adjusted operating loss for the year of 2020 was CNY 1.114 billion, compared to an adjusted operating profit of CNY 458 million for the year of 2019, mainly due to the decrease in gross profit and the increase in credit impairment losses. It is worth noting that we recorded an adjusted operating profit of CNY 76 million for the second half of 2020 as compared to an adjusted operating loss for the first half of 2020. We have launched auto aftermarket services in the second half of 2020 to enrich the scope and added value to our platform services. This new setup generated CNY 28 million revenue for the year ended December 31st, 2020. We will continue putting effort into the aftermarket service sector to complete our auto ecosystem in the future.
In 2020, as global economic growth has slowed down and the downward pressure on China's auto industry continued to mount, in order to focus on the improvement of our core business and to seek to optimize cost control, the group successfully reduced its funding cost from 5.7% for the year ended December 31st, 2019, to 5.4% for the year ended December 31st, 2020. In addition, with a wide variety of credit risk control measurement, our 90+ day past due ratio presented a decline trend during the year, and December 31st, 2020, from 2.46% as at June 30th, 2020, to 2.28% as at December 31st, 2020. The 30 to 90 days past due ratio has also dropped to a more healthy level. As a result, the expected loss of finance receivables decreased to CNY 235 million in the second half of 2020, compared to over CNY 1 billion in the first half.
On December 2nd, 2020, we announced that the completion of privatization of Bitauto, our parent company, by the consortium led by Tencent, which effectively became our major shareholder. We look forward to exploring more business opportunities under this new shareholding structure. Looking ahead in 2021, as the COVID-19 pandemic continues to create extraordinary uncertainty to economic activities and the auto industry, the group is facing both challenges and opportunities simultaneously, while opportunities outweigh challenges. On the other hand, we are taking concerted action to accelerate the development of our loan facilitation services through our platform, and are continuing to adopt strict risk management for new loan facilitation. On the other hand, we will actively grasp arising opportunities such as after-sales market to complete our auto ecosystem, and to firmly secure our leading position in China's auto financing market.
Yixin will unswervingly utilize our resources to provide better financing products and services to our customers and partners. I will now turn the call over to Xiaoguang to discuss our financial highlights.
Thank you, Andy. Our total revenue in 2020 were CNY 3.325 billion, representing a 43% year-over-year decrease, mainly due to the decrease in the volume of our loan facilitation services and financing lease services. Our new core services revenue, which includes revenues from loan facilitation transactions and new self-operated financing lease transactions we facilitated during the year, decreased by 47% to CNY 1.34 billion, compared to CNY 2.5 billion in the previous year. In the second half of 2020, however, we have seen significant recovery of sales transactions. The total finance transactions in the second half of 2020 was 235,000, which is 94% increase compared to 121,000 in the first half of 2020, as well as a slight decline compared to 237,000 in the second half of 2019. Revenues from our loan facilitation services was CNY 1.185 billion, representing a year-over-year decrease of 29%.
For the year ended December 31st, 2020, we facilitated about 296,000 financed automobile transactions through our loan facilitation service, representing a 15% year-on-year decrease in volume. There was also an 87% increase from 103,000 for the first half of 2020 to 193,000 for the second half of 2020, as well as an increase of 5% compared to 183,000 for the same period for the second half of 2019. Revenue contribution from our loan facilitation services were 35% compared to 29% for the same period last year. Revenues from our other platform services increased by 69% to CNY 154 million for the year ended December 31st, 2020, compared to CNY 91 million in the previous year, mainly due to the increase in revenue from auto aftermarket services and guarantee service.
We launched auto aftermarket services since July 2020 to enrich the scope and value added to our customer, and generated revenue of CNY 28 million for the year ended December 31st, 2020, and that revenue was none in 2019. Our revenue from guarantee service was CNY 61 million for the year ended December 31st, 2020, increased by 723% from CNY 7 million in 2019. Due to the decrease in loan facilitation volume, our total revenues from transaction platform business decreased by 24% year-over-year to CNY 1.339 billion. But the contribution of transaction platform business to the total revenue increased to 40% from 30% in the previous year. Revenues from our self-operated financing business decreased by 51% year-over-year to CNY 1.986 billion in 2020, compared to CNY 4.041 billion for the same period last year, primarily due to the decrease in revenues generating from our financing lease services.
In 2020, we facilitated approximately 60,000 finance transactions through our self-operated financing business, representing a 66% year-over-year decrease in volume, reflecting our strategy to focus on loan facilitation services. Revenues from our financing lease services decreased by 48% year-on-year to CNY 1.952 billion. We generated CNY 154 million revenues from new financing lease transactions for the year ending December 31st, 2020, and CNY 1.798 billion revenue from existing financing lease transactions compared to CNY 850 million and CNY 2.905 billion, respectively, for the year ending December 31st, 2019. Revenues from our other self-operated service decreased by 88% year-on-year to CNY 34 million, primarily due to the decrease in revenues from automobile sales due to our strategy to de-emphasize such business. Revenues from automobile sales was CNY 23 million in 2020, compared to CNY 242 million for the same period last year. Moving on to cost of revenues and gross profits.
Cost of revenues decreased by 42% year-on-year to CNY 1.77 billion in 2020 compared to CNY 3.034 billion for the same period last year, primarily due to the decrease in funding costs associated with our self-operated financing lease services and the decrease of commissions associated with our loan facilitation services. Our total gross profit decreased by 44% year-on-year to CNY 1.558 billion for the year ending December 31st, 2020, compared to CNY 2.766 billion for the same period last year, primarily due to the decrease in total revenues. Our overall gross profit margin decreased slightly to 47% in 2020 compared to 48% for the same period last year. Gross profit margin of our transaction platform business decreased to 54% for the year ending December 31st, 2020, compared to 59% for the same period last year, primarily due to lower pricing as to our products.
Gross profit margin of our self-operated financing business decreased slightly to 42% for the year ending December 31st, 2020, compared to 43% for the same period last year. The average spread of net finance receivables was 4.5% in 2020 compared to 5.6% for the same period last year, primarily due to our sales promotion, which offered more products with lower interest rates. Moving on to the operating expenses. Selling and marketing expense decreased by 20% year-over-year to CNY 854 million for the year ending December 31st, 2020. Our admin expense decreased by 13% to CNY 439 million in 2020. Our research and development expenses decreased by 23% year-on-year to CNY 150 million for the year ending December 31st, 2020. The drop of the operating expenses are all primarily due to a decrease in salary and benefit expenses, shared- based compensation expense, and professional service fees.
All these are by and large in line with the drop in revenue. Credit impairment losses include provisions for expected credit losses of finance receivables, provision for expected credit loss of lease components, and provision for impairment of trade receivables and other receivables. It increased by approximately 64% year-on-year to CNY 1.812 billion for the year ending December 31st, 2020 compared to CNY 1.108 billion for the same period last year, primarily due to the increase in provision for expected credit losses of finance receivables. Provision for expected credit losses of finance receivables was CNY 1.616 billion for the year ending December 31st, 2020, compared to CNY 812 million for the same period last year.
During the first half of 2020, CNY 1.381 billion of expected credit losses was provided, which contributed approximately 85% of that for the year ending December 31st, 2020, as COVID-19 outbreak reduced consumers' repayment capability. The expected loss of finance receivables decreased significantly to CNY 235 million in the second half of the year 2020, as we took proactive steps to tighten underwriting standards we facilitated as well as reinforce our efforts on collection of overdue payments. Our adjusted operating loss was CNY 1.114 billion for the year ending December 31st, 2020, as compared to CNY 458 million of adjusted operating profit for the year ending December 31st, 2019, mainly due to the decrease in gross profit and increase in credit impairment losses.
It is worth noting that we recorded an adjusted operating profit of CNY 76 million for the second half of 2020 as compared to adjusted operating loss of CNY 1.19 billion for the first half of 2020. We recorded adjusted net loss of CNY 800 million for the year ending December 31st, 2020, compared to an adjusted net profit of CNY 439 million in 2019, mainly due to the decrease in gross profit and substantial increase in credit impairment losses as discussed above. Due to the same reason above, we recorded an operating loss of CNY 1.481 billion for the year ending December 31st, 2020, as compared to an operating profit of CNY 50 million for the same period last year. Now let's move on to the balance sheet and asset quality.
Our carrying amounts of finance receivables decreased to CNY 12.8 billion as of December 31st, 2020, compared to CNY 26.9 billion as of December 31st, 2019, primarily due to our strategy to focus on loan facilitation services. As of December 31st, 2020, our total borrowings were CNY 10.1 billion, compared to CNY 19.8 billion as of December 31st, 2019. The decrease was mainly due to our strategy to focus more on loan facilitation services. Total borrowings comprised of, number one, asset-backed securities and notes of CNY 2.7 billion as of December 31st, 2020. Second, bank loans and borrowings from other institutions of CNY 7.4 billion. Asset-backed securities and notes as a percentage of total borrowings was 26% as of December 31st, 2020. As of December 31st, 2020, we had cash and cash equivalents of CNY 2.712 billion, compared with CNY 1.587 billion as of December 31st, 2019.
The increase in cash and cash equivalents was primarily due to the collection of interest and principal from our finance and lease services. Our net cash inflow generated from operating activities was CNY 12.3 billion for the year ending December 31st, 2020, compared to a net cash inflow of CNY 11.5 billion for the year ending December 31st, 2019. As of December 31st, 2020, our 180+ days past due ratio and 90+ day ratio, which including 180 days, for all finance transactions, including both our self-operated financing lease services and the loan facilitation services, were 1.62% and 2.28% respectively. The ratio increased as of December 31st, 2020, versus the same numbers in 2019, mainly due to the COVID-19 outbreak in the first half of 2020. During the year ending December 31st, 2020, we adhered to more prudent strategies of credit risk control.
We took proactive steps to tighten underwriting standards of the loans as we shifted more towards quality customers with better credit record. Meanwhile, we made a variety of credit risk control efforts throughout product life cycle, such as more focus on collection measures for early- stage overdue, improving the efficiency of used car disposal, increasing the number and efficiency of litigation, et cetera. As a result, the 90+ days past due ratio presented a decline trend during the year towards the end of December 31st, 2020, from 2.46% as of June 30th, 2020, to 2.28% as of December 31st, 2020. This is our prepared remarks, and we will now open the call to Q&A. Operator, please go ahead.
Thank you. If you wish to ask a question, please press star one on your touchtone telephone. We will take as many questions as time permits. Thank you. Again, everyone, if you wish to ask a question, please press star one on your touchtone telephone. We will take as many questions as time permits. All right. We have our first question. It is coming from the line of Daniel Peng from BNP. I am going to unmute your line now, Mr. Peng. Your line is now unmuted. You may now proceed with your question.
Thank you. Thank you very much. Thank you, management team, for the presentation. My question is, can the management team give us more detailed plan of the cooperation with Tencent, given that Tencent is now the largest shareholder of the Group? We would want to know more about the company's future plan together with Tencent, and what is the support from Tencent to the group's business in the future. Thank you.
Okay, thank you for the question. Together with us, we have our COO, Zhi Gao, as well. He is going to answer this question in Chinese. We will translate simultaneously. Okay?
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Number one, as the controlling shareholder became Tencent, which has a much better brand name and reputation in the market, we are hoping to gain more trust and confidence from our business partners.
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Number two, we are working with the finance business team within Tencent, to improve our services to our customers.
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For example, we are building entry connections to Tencent's applications, so that the customers can tie up their payments to Tencent's payment function, which will significantly increase their payment likelihood, and also improve the customer experience. This will be done quite soon.
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Lastly, we are exploring more opportunities with Tencent team, in terms of big data, in terms of technology. We'll see what's coming next.
Right. If I have to summarize, I would like to say that we very much look forward to work with the Tencent team on the main three fronts. One is data and the credit analysis of our potential customers. Utilizing each other's credit analysis capabilities and also social, transactional, and as well as basic data that is enabling us to access personal credits at a more efficient and as well as a more trustful way. Because of this controlling interest fact that we are able to build such models together. This is one of the directions we are working towards, and as well as allowed by the governing bodies, because of the shareholding structure change. Secondly, obviously, we do have quite a few, now over 2 million customers as Yixin's own base.
On top of that, I think seeking out additional potential car buyers and also car owners who has potential leasing or finance needs on their vehicle or any other services that relates to the vehicle. This is also the second front that we are seeking opportunities to work together. I think a credit card within the [Non-English content].
So that's one of the examples that's how we are going to kick off this collaboration. I think rest assured, there are additional entry points we will gradually occupy to serve either our own clients better or serve potential clients that's in need of these type of financial services within the big Tencent asset range. I think lastly, obviously, there's also a potential collaborative funding partnerships between the Tencent and also maybe Tencent-involved financial institutions with Yixin. Because historically, we have already been establishing these type of relationships with those potential financial institutions.
But I think going forward, the options or the ways of collaborations can increase to additional fronts other than just on the loan facilitations then. I think on the direct funding level will also be something that seems to be more possible now versus before. These are the three main fronts that will actually affect us in the future. But right now, at the current stage, because our deal just closed about a month ago, I think we are gathering the teams to work together with each other to seek, to sort of a fine line as to what exactly what we can do together and what are the time and the pace of each of the potential collaborations will take. I think Yixin is doing that, and also Bitauto is also doing a similar work with Tencent as well. That's our answer. Thank you.
Thank you. We have our next question, comes from the line of Zhihang Wang from CLSA. I'm going to unmute your line now.
Hey, thanks.
Anyway, I appreciate your question.
Thanks, management team. I have two questions. First is regarding the current market share of the company in terms of the auto- dealing finance market and how the management team sees the market penetration rate going forward. Second is, what is the overall funding cost of the company now and what are the major channels? Thanks.
Zhihang, can you repeat your question again?
Okay. Sure. I have two questions. Am I clear? First is about the current market share of Yixin Group in terms of the auto- dealing financing market, and then how the management team sees the market penetration rates going forward. My second question is about overall funding costs and major funding channels of the company.
I think going forward-wise, let me answer the second question first. The first question that will give you a number very soon. I think going forward, obviously, looking around, we see less and less competitors. That is a fact. I think it was an uneasy year for everybody last year and even the year before, when the monetary policy was extremely tight back in 2018, 2019, and 2020. Right now, I think the sizable competitors within the market who actually occupies market share has been significantly decreased. Not saying that we are picking up businesses that actually has less quality than we have already been engaged in, but just to see the share potential competitor number and also the size of the business that they are conducting on the annual basis, our market share will look to be increasing on a pretty good pace.
That is approximately 2.4% right now because we have conducted [356,000] vehicles last year financing. Overall market has about 15 million that is done by carrying out leasing/financing. We are a little under 3% market right now. But I think going forward, this rate can reach up to as high as between 5%-10%, given that the competitive landscape is getting more towards our advantage and favor. Thank you.
All right. Thank you. We have our next question, comes from the line of Vincent Lai, also from CLSA. I am going to unmute your line now.
Hi, thanks.
All right, Mr. Lai, you may now proceed. Thank you.
Yep. Okay. Thanks again to our management team for the presentation. I just wanted quickly, if the company can share some color around how the company see their self-operated financing business going forward, because understanding that the company strategy currently is to focus on loan facilitation services. Perhaps, the company can share some more color around what is the rationale of doing that?
Thank you for the question. Yixin's strategy is, as we said many times earlier, to focus more on loan facilitation services, and which continue to maintain a high contribution level to our revenue and gross margin. However, we see self-operated financing business also as a healthy complement and a stable revenue generator. It also offers us some flexibility to approach our customers, in terms of more product choices and a better customer experience. We will continue to do this business. It is not that we are completely going to stop self-operated financing business. And we will try to maintain a healthy balance between self-operated financing business and our platform business.
Okay, thanks.
Thank you. Again, if you wish to ask a question, please press star one on your touch tone telephone. We will take as many questions as time permits. I guess that's it for now. I will now pass the call back to Mr. Xiaoguang Yang for the closing remarks. Please go ahead, sir.
Thank you everyone for joining the call today. We are glad to share the annual results with you guys. Hopefully, you find this helpful. It has been a tough year, but we were glad that there's some comeback on the second half of 2020. We look forward to a better year in 2021 and hope to talk to you soon. Thank you.
All right. Thank you, Mr. Yang. That does conclude our conference for today. Thank you for participating. You may now all disconnect.