Hello, and thank you for standing by for Yixin Group first half 2020 earnings 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, Helen Wu, IR Director of Yixin Group. Please go ahead.
Thank you, operator. Good evening, and welcome to our first half 2020 earnings conference call. This is Helen Wu 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 questions. Before we proceed, we would like to remind you that our remarks today may include certain forward-looking statements. A number of risks and factors beyond our control may cause the actual results to differ materially from those compilatively by those forward-looking statements. During this call, we will present both IFRS and non-IFRS financials. We will also discuss general market conditions for our industry, and such information may come from a variety of resources outside of Yixin Group.
For a detailed discussion of the risk factors we face and the non-IFRS measures, please refer to our public documentation 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, Chairman and CEO of Yixin. Andy, please.
Thank you everyone for joining our first half 2020 earnings conference call this evening. The year 2020 is quite unusual and left indelible marks on the history. During the first half of 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. China's total sales of new and used passenger vehicle for the first half of 2020 decreased by approximately 21% year-on-year, according to data from China Association of Automobile Manufacturers and China Automobile Dealers Association. Yixin's total financed automobile transactions were 121,000 for the first half of 2020, representing a 58% year-over-year decrease, and the aggregate financing amount was approximately CNY 9.3 billion. Our financed new and used automobile transactions contributed 69% and 31% for this first half of 2020.
Impacted by COVID-19, our revenues for the first half of 2020 were approximately CNY 1.624 billion, representing a 49% year-on-year decrease. Our new core service revenues, which include revenues from loan facilitation transactions and the new self-operated lease transaction services we facilitated during the first half were approximately CNY 476 million, representing a 57% year-on-year decrease accordingly. Our gross profit for the first half of 2020 decreased by 52% to approximately CNY 735 million, mainly due to the decrease in our revenues. In these six months ended June 30th, 2020, we booked net impairment losses on financial receivables of CNY 1.381 billion due to the outbreak of COVID-19 and the reduced repayment capability compared to CNY 256 million for the same period last year, which negatively affected our profit.
As a result, our adjusted net loss for the first half of 2020 was approximately CNY 871 million compared to an adjusted profit of CNY 343 million for the same period last year. While we are accompanied by the challenge arising from COVID-19 in this first half of 2020, and maybe the rest of the year, we are delighted to see the social activities and the sales of our China auto industry, as well as Yixin's businesses were gradually resuming starting from the second half of 2020. Yixin's total financed automobile transactions, including new and used for the second quarter, increased by 33% quarter-on-quarter to approximately 69,000, and our new core service revenues increased by 15% quarter-on-quarter. Besides that, starting from the second quarter of 2020, along with the work resumption and the economic recovery, we also delighted to see improvements of repayment cash flow on a daily basis.
As of June 30th, 2020, our 180-days-plus and the 90-days-plus past due ratios for all financed transactions for both our self-operated financing lease services and our loan facilitation services were 1.4% and 2.46%, compared to 1.55% and 2.6% as of March 31, 2020, respectively. As you may all know, on June 12, 2020, Yixin's holding company, Bitauto, announced that it has entered into an agreement and a plan of merger. Pursuant to which, Bitauto will be acquired by the investor consortium led by Tencent and Hammer Capital. Upon the merger becoming effective, there will be a change in statutory control in Bitauto, and as a result, this consortium or their affiliates will acquire control of Yixin through a possible unconditional mandatory cash offer. However, Yixin will remain as a Hong Kong-listed company and operate independently. Looking ahead, we believe that the challenges arising from COVID-19 will continue.
Our business and the industry will take some time to reach a full recovery. Despite a delighted improvement quarter-on-quarter, we will remain cautious for the full year 2020, and we will stick to the conservative risk assessment methodology to ensure the healthy development of Yixin. To sum it all, the sun also rises, and the various and inspiring local government supports were launched in the second quarter and in the August working meeting of People's Bank of China. It is pointed out that more support and assistance should be provided to small and micro businesses to help lower their financing costs to overcome the difficulties. We believe all of these will instill confidence in the market, and Yixin will definitely leverage our leadership and advanced competitive advantages to be better positioned. I will now turn the call over to Xiaoguang Yang to discuss the financial highlights.
Thank you, Andy. Our total revenues for the first half 2020 were CNY 1.624 billion, representing a 49% year-over-year decrease, mainly due to the decrease in our loan facilitation services and the financing lease services. Our new core service revenues, which include revenues from loan facilitation transactions and new self-operated financing lease transactions we facilitated during the period, decreased by 57% to CNY 476 million, compared to CNY 1.1 billion for the same period last year. Revenues from our loan facilitation services was CNY 462 million, representing a year-on-year decrease of 45%. For the six months ended June 30th, 2020, we facilitated about 103,000 financed automobile transactions through our loan facilitation services, representing a 37% year-over-year decrease in volume. Revenue contribution from our loan facilitation services were 28%, compared to 27% for the same period last year.
Revenues from our advertising and other services decreased by 20% year-on-year to CNY 34 million, due to our strategy to de-emphasize such services. Due to the decrease in loan facilitation, our total revenues from transaction platform business decreased by 44% year-on-year to CNY 496 million, but the contribution of our transaction platform business, the total revenue increased to 31% from 28% the same period last year. Revenues from our self-operated financing business decreased by 51% year-on-year to CNY 1.128 billion for the six months ended June 30th, 2020, compared to CNY 2.28 billion for the same period last year, primarily due to the decrease in revenues from financing lease services. In the first half of 2020, we facilitated approximately 18,000 finance transactions through self-operated financing business, representing an 85% year-over-year decrease in volume, reflecting our strategy to focus on loan facilitation services.
Revenues from our financing lease services decreased by 47% year-on-year to CNY 1.11 billion. For the first half 2020, we generated CNY 1.097 billion revenues from existing financing lease transactions in prior periods and CNY 14 million revenues from new financing lease transactions, compared to CNY 1.82 billion and CNY 261 million respectively for the same period in 2019. The average yield of our net finance receivables was 9.7% for the six months ended June 30th, 2020, compared to 11.7% for the same period last year. We conducted several sales promotions and offered more products with lower interest rates to stimulate the recovery of financed automobile transactions from COVID-19. Revenues from other self-operated finance services decreased by 92% year-on-year to CNY 17 million, primarily due to the decrease in automobile sales.
Revenues from automobile sales was CNY 11 million for the first half 2020, compared to CNY 171 million for the same period last year. Moving on to cost of revenues and gross profit. Cost of revenues decreased by 45% year-on-year to CNY 889 million for the six months ended June 30th, 2020, compared to CNY 1.63 billion for the same period last year, primarily due to the decrease in commissions associated with our loan facilitation services, the decrease in funding costs associated with our self-operated financing business, and the decrease in costs associated with automobile sales. Our total gross profit decreased by 52% year-on-year to CNY 735 million for the six months ending June 30th, 2020, compared to CNY 1.532 billion for the same period last year, primarily due to the decrease in total revenues.
Our overall gross profit margin decreased to 45% for the first half of 2020 compared to 48% for the same period last year. Gross profit margin of our transaction platform business - 58% for the six months ending June 30th, 2020, compared to 61% for the same period last year, primarily due to the change of revenue mix in our transaction platform business. Gross profit margin of our self-operated financing business decreased to 14% for the six months ending June 30th, 2020, compared to 44% for the same period last year, primarily due to the decrease in revenues from financing lease services. The average spread of our net finance receivables was 4.1% for six months ending June 30th, 2020, compared to 6% for the same period last year, primarily due to our sales promotions which offered more products with lower interest rates. Moving to operating expenses.
Selling and marketing expenses decreased by 31% year-on-year to CNY 402 million for the six months ending June 30, 2020, primarily due to the decrease in salary, employee benefits, share-based compensation expenses, and professional services fees. Our admin expenses increased by 8% year-on-year to CNY 222 million, primarily due to the increase of provisions for impairment of other non-current assets, and partially offset by the decrease of salary, employee benefits, and share-based compensation expenses. Our research and development expenses decreased by 1% year-on-year to CNY 82 million for the six months ending June 30th, 2020, primarily due to the decrease in salary, employee benefits, and share-based compensation expenses. Credit impairment losses include provision for expected credit losses of finance receivables, provision for expected credit losses of risk assurance liabilities, and provision for impairment of trade receivables and other receivables.
It increased by approximately 181% year-on-year to CNY 1.489 billion for the six months ending June 30th, 2020, compared to CNY 530 million for the same period last year, primarily due to the increase in provision for expected credit losses of finance receivables. Provisions for expected credit losses of finance receivables was CNY 1.381 billion for the six months ending June 30th, 2020, compared to CNY 256 million for the same period last year, primarily due to the outbreak of COVID-19 and reduced consumers' repayment capabilities. Our adjusted operating loss was CNY 1.19 billion for the six months ending June 30th, 2020, compared to an adjusted operating profit of CNY 384 million for the same period last year. Our adjusted net loss was CNY 871 million for the first half of 2020, compared to an adjusted net profit of CNY 343 million for the same period last year.
The decreases were mainly due to the decrease in gross profit and the increase in credit impairment losses. Due to the same reason above, our operating loss for the six months ending June 30th, 2020, was CNY 1.372 billion, compared to an operating profit of CNY 164 million for the same period last year. Our loss for the first half of 2020 was CNY 1.053 billion, compared to a profit of CNY 123 million for the same period last year. Now let's move on to the balance sheet and asset quality. Our carrying amount of finance receivables decreased to CNY 17.7 billion as of June 30th, 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 June 30th, 2020, our total borrowings were CNY 14 billion compared to CNY 19.8 billion as of December 31st, 2019.
The decrease was mainly due to the company's reduced direct lending and a strategy to focus on loan facilitation services. Total borrowings comprised of, number one, asset-backed securities and notes of CNY 4.4 billion as of June 30th, 2020, and number two, bank loans and borrowings from other institutions of CNY 9.6 billion. Asset-backed securities and notes as a percentage of total borrowings was 31% as of June 30th, 2020. As of June 30th, 2020, we had cash and cash equivalents of CNY 2.168 billion, compared with CNY 1.587 billion as of December 30th, 2019. The increase in cash and cash equivalents was mainly due to the collection of interest and principal from our financing lease services. Our net cash inflow generated from operating activities was CNY 7.4 billion for the six months ended June 30th, 2020, compared to CNY 3.9 billion for the same period last year.
Due to the negative impacts arising from COVID-19 and reduced consumers' repayment stability, we saw our past due ratios were pushed up in the first half of 2020, especially in the first quarter. Starting from the second quarter of 2020, along with the work resumption and economic recovery, the repayment cash flow on a daily basis has been improved. As of June 30th, 2020, our 180-days-plus past due ratio and 90-days-plus past due ratio, including 180-days-plus for all finance transactions, including both our self-operated business. Go ahead.
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. Your next question comes from Frank Chen from Macquarie. Please ask your question.
Good evening, management. Thank you for taking my question. I basically have two questions. 1st, I just want to understand why Yixin's quarter-on-quarter recovery trend seems a little bit weaker than the quarter-on-quarter rebound of the underlying auto industry, especially auto sales in China. How should we think about the trend, if we are looking to the second half and the relative growth trend compared with underlying auto industry? The second question is that we noticed that Chinese regulator is putting a maximum lending rate of 15.4% on private lenders. I just want to know how this would impact your business in overall. Thanks.
This has been done by choice. We have been putting up stricter credit assessment policy to ensure that the business fundamentals are there. The financing industry is always lagging behind in terms of the automobile transactions. In Q1 we have experienced the COVID-19, and also, as I mentioned earlier, the lack of repayment stability from some of our consumers. So we took this action to ensure that the asset is safe. But starting from June this year, from the numbers I can see, we have been recovered quite well as a matter of fact, and the July numbers, it is quite good. The sales productivity on average basis has been equal to or better than the same time last year. To your second question, I think the new regulation has just been out for a few days, and we are still waiting for the dust to settle.
Our early assessment is that the impact to Yixin will be minimal in the short term because the majority of our products, in terms of pricing, is below the threshold put out by the Supreme People's Court. At the same time, we have the stability to maintain the margin by lowering the commission for our sales panel. On the other hand, some small players in this industry may not have the advantage to do so because their strategy was high price, high commission, and that may not be able to go on. As a matter of fact, we see there are some opportunities in the market maybe. That means that in the longer term, our assessment is that in the light of sufficient liquidity in the whole market, the LPR rate itself may go in the downward trend.
That would put some pressure on our pricing in the longer term. To be honest, there are still many things to be clarified. For example, the 15.4% rate, is that a nominal annual rate or effective annual rate? We do not know yet, and we are still waiting for the feedback from the banks and some financing institutions which we have relationships with. I think it may take some time for them to sort out with the CBIRC, which is their regulator.
Great. Thank you.
Thank you.
Your next question comes from Brian Gong from Citig roup. Please ask your question.
Thanks, management. I have two questions. First is regarding the past due rates. The past due rates have been pushed up by the COVID-19, and may I know how does management plan to control the rates? The second question is regarding the second half of this year. Will there still be large amount of provisions? Thanks.
Okay. Thank you, Brian, for your questions. To your first question, yes, we have seen the impact coming in after Spring Festival this year, which is February, because of two reasons. Number one, some of the consumers may not have stable income sources, which impacted negatively on their repayment capabilities, which I just also mentioned a little bit earlier. 2nd, also some of our workforce cannot be put to work because many of them were quarantined after January and February time. This is a double impact to the performance. What we have seen, and actually the management team has done a couple of things in the past few months to ensure we can have a good sleep during the night. Number one, we put enough, I think, quite a bit workforce in collection and team, and they have been working in full force.
Number two, we are speeding up the litigation process to make sure that all the cases are being dealt properly. What we have seen in the past actually two months was the flow rate from the delinquency bucket have been stable and even improved somewhat. That gave us a little bit of confidence in terms of forecasting and controlling the delinquency ratio for the second half of this year. Of course, we cannot foresee what the economy will be like in the months to come, because there are still a lot of uncertainties. Because the trade war, the relationship between China and the U.S., and our economy even itself, how it's going to perform. There are still a lot of question marks. Based on what we have seen, there are also opportunities.
In the first half, we wrote off about CNY 1.3 billion-CNY 1.4 billion delinquent assets on our book. That does not mean we will not be able to recover. It takes time. As I mentioned, we are undertaking efforts primarily in the legal litigation suite, through the legal litigation process, which takes at least one year and a half. So, we'll see. That will add back to our income statement once we can truly come to that conclusion period. I would say that the worst time has passed. I'm pretty certain that the second half of this year will perform better. I believe I answered both of your questions.
Yeah
Let me I have not.
Yeah, definitely. Thank you. That is very helpful.
Your next question comes from Ashley Xu from Credit Suisse. Please ask your question.
Thanks, management, for taking my questions. There are two from me. One is that, could management share your views on the latest industry situation and how you think the second half momentum would be? Secondly, would management share more colors on the competition landscape, please? Thank you.
Thank you, Ashley. Obviously, the market is recovering. We have seen different numbers in terms of car sales coming from different OEMs, as well as dealer groups, as well as the associations within the industry. I think July was a good month, just passed. I think Xiaoguang just mentioned that we have seen actually month-over-month recoveries in terms of market share, in terms of the growth of our business, that we have already witnessed in that pretty much resuming to the point where that we have seen in the past.
I think from a quarter-over-quarter basis, you also saw the growth second quarter from the first quarter. But if you look at month-over-month, I think the growth rate is also quite on the track of where we want it to be. I think hopefully by end of the year, we will be back to where we were before the virus attack. That's actually adding a lot of comfort to us in terms of how we see this market growth.
But since I do see from other sources of numbers that even though the second half will be recovering in terms of auto sales, for the whole year, I think the lack of selling on the first half of almost 3 million, a little bit shy of 3 million units, most likely will not be fully recovered through the second half. In other words, the growth rate in the second half of the year will not necessarily be able to cover what we lost in the first half. So it's reasonable to assessing the market where we're looking at about maybe 17 million - 18 million new passenger car sales in 2020.
That was the number that we actually had discussed with different people within the industry, obviously on the more private terms as to what their outlooks are to the industry, what our intakes are. So we're definitely missing out somewhere between 2 million - 3 million units, compared to 2019, for the year. I mainly mean that in the retail side, not necessarily on the wholesale, but on the retail side for sure. Again, if you look at the bright side, it's still 17 million, 18 million units, still the largest new car market in the world. We will actually host the Beijing International Automotive Exhibition, which will be probably the only one international scaled auto show globally this year. So we do expect fourth quarter to be a good rebound. The auto show will start at the end of September.
It will last all the way through the October 1st vacation holiday time for China. So hopefully, we see the golden September, the silver October thing coming back this year. So I think we are ready as to in terms of facilitating whatever that's necessary for the consumers to purchase on the leverage, either through a bank loan or through a leasing. So we're getting the teams ready. We did take some headcount shed in the first half of the year, but we actually started to adding more sales team already in the second half of the year. So that's also a good sign for us.
Just on the grand market side, other than the auto market, we'll talk a little bit about financial services market, mainly the cost of everyone's funding. I think the prior question from another analyst stated that the recent cap they're putting on, the 15.4%. But I think that's something that everyone's needing time to digest as to what are the actual impact will be, how retroactive, how everyone's readjusting their product mix and whatnot. But I think so far our intake is a minimum impact on us because we rarely have any products over that. But what I would also like to add is that we also have seen our funding costs in general has been decreasing from what we had seen at the highest level ever last ye ar, 2019, to what we have seen currently.
I think the overall funding cost for us has gradually coming down somewhere around 50 basis point-100 basis points. Hopefully, this trend will continue for the next 6-12 months, or at least be more or less stable to that level. If that situation really pans out or sustains, they also help us in terms around on re-engineering some of our products to get better clientele base as well as to contribute a little bit more on the profit side as well. That is what we are looking at in terms of on the financial services area where that will having a little bit impact on us. Your second question was relating to the market share basis, right? The competitors, how are they doing? I think the biggest competitor for us is still Ping An. Throughout the history, there are different competitors coming in and out.
But on the sustainable basis, on the longevity basis, I think more or less Ping An is the key. I think Ping An, not only they have their own auto financing division within their banks, but also they also have the leasing division as well in terms within the auto sector. Yeah, and also because of their funding cost advantage, as well as part of their credit analysis capability, as well as their clientele bases. While, yeah, this is a tough competitor, but again, this market is more than a trillion RMB market every year. I think not a single player will just take up any material market share. But for us, I think as a pure third-party player, I think we do sustain the leadership in the sector. I think we have also seen some of the areas where that regional players had died out.
More and more regional markets will be claimed and reclaimed either by us or bigger players like Ping An. I think for us, we hate to deal with those regional small players where that they are not necessarily, a lot of times, not necessarily play by the rules, so to speak. But because the size of our company and because of our status and as well as the license that we carry, we are actually under a lot of scrutiny from different parties all over.
So a lot of times, we are at a competitive disadvantage to these smaller players at the regional level. But because of the limitation of 15.4%, because of this whole virus situation where that the long tails has really seen the long tails being fading out, more and more markets are being taken by the half players. I am just happy to see that we are still the half player in the sector. I think given the trend I am looking at from July, this past July, as well as this last half a week from August, my guess is that we are still sustaining leadership in the industry for the year as well. Hopefully this will pan out as I predicted. All right. Thank you very much.
Thanks. That is all for the Q and A section. I will now pass the call back to Mr. Xiaoguang Yang for the closing remarks.
Thank you all for joining us today. If you have any further questions, please contact our IR team at ir@yixincars.com.
That does conclude our conference for today. Thank you for participating. You may now all disconnect.