Hello everyone, dear investors, good evening. Thank you for attending the 2024 interim results conference of TUHU Car. I am Chen Zhe, the IR head and company secretary. This conference includes a format of teleconference. Please allow me to introduce the leaders who will participate in today's conference. They are Mr. Chen Min, the Chairman of the Board of Directors and the CEO of TUHU Car, Mr. Zhang Zhisong, the Chief Financial Officer of TUHU Car. Please read the disclaimer carefully before starting the session. By attending the session that includes in this presentation or by reading the presentation materials, participants implicitly agree to be bound by the limitations in this disclaimer. We will have three parts. First, I would like to have Mr. Chen Min to introduce the company's business overview and performance in the first half of 2024.
Then Mr. Zhang Zhisong will give a review of company's overall financial performance and highlights in the first half. Finally, we will have some time for Q&A. If you would like to ask a question, please click the Raise Your Hand button in the conference system. Next, I would like to first welcome Mr. Chen Min, the Chairman, Board Director, and CEO of the company, to talk about the overall performance and progress of the company in the first half of 2024. Over to you, Mr. Chen.
Hello, everyone. Dear analysts, investors, and friends from the capital market, good evening. My name is Chen Min. Thank you for participating in the conference of 2024, the interim results conference.
This is our first full half-year performance period since listing. All the industries in China, especially the consuming industry in China this year, are experiencing the pains of the differentiation brought by increasing unfavorable factors in the global economic environment. We found out that the consumer's demand in automotive industry is becoming more stratified. The maintenance cycle is gradually lengthening, and the consumer demand for replacement product is growing, which puts forward higher requirements for the industry in terms of the product streams, service capability, and operational capability. Under this environment, we have continued to serve our customer with our core brand concepts of genuine, low price, professionalism, by digging deep into consumer needs, actively expanding service category, optimizing profit structure of our product service, upgrading operational capacity, strengthening the service standard of our technicians, achieving stable, healthy growth. Now let's look at the performance.
In the first half of 2024, we achieved operating revenue of CNY 7.13 billion, with a 9.3% increase YoY. Thanks to our industry-leading position, our scale expansion, continuous improvement of bargaining power on the supply chain side, and continuous optimization of management efficiency, the company achieved adjusted net profit of CNY 360 million in the first half, a 67% increase compared with the same period of last year, and cash flow of CNY 260 million, achieving end-of-period cash of CNY 7.06 billion with sufficient capital reserve. On the user side, we have continued to explore the quantity and quality of users. As end of June 2024, the number of registered users exceeded 126 million, continuing our position as the largest independent automobile service platform in China.
We continue to optimize our product and service, along with more effective digitalized operational tools, to continuously improve the conversion efficiency of new user acquisition and thickness, and the viscosity of the users. At the end of the period, our cumulative number of users in less than 12 months amounted to the large amount, and the penetration rate of the new energy trading users reached 8.4%, and this number is still rising rapidly. It will help us to grasp opportunities in the new energy industry and build a solid foundation for the future development. On the store side, we first optimized the layout on the basis of our original nationwide store network to fill in the blank areas. As of June 30, 2024, we had 6,311 TUHU workshops nationwide, an increase of 402 stores compared to the end of 2023.
Numbers of stores in the second-tier cities and below accounted for 58.2% of the total number. While maintaining continuous expansion and responding to changes in the market environment, our stores still maintain solid profitability and efficiency. In June this year, the percentage of profitability of a TUHU workshop remained at around 90% of the stores. The entire automotive service industry has been undergoing drastic changes and reshuffling in the past few years. The upgrading of industry technology and changes in consumer demand have put forward higher requirements and challenges, and we are benefiting from these changes. We can see that the dealer network system, which was dominating the industry, has been shrinking over the past years.
According to the data of China Automobile Dealers Association, the number of outlets of 4S store system retreated more than 3,000 in 2023, maintaining the trend of the past few years and in the first half of this year, this trend further accelerated. The contraction of the OEM authorization system has brought development opportunities to the independent third-party automotive service system, which has been seen our historical store expansion. As a leader in this area, TUHU has gained a high degree of user acceptance and competitive advantage in the service industry, in the market, with the number of stores and users leading the industry by a wide margin. Now let's look at the detail about the business. Now let's look at the stores.
In the first half of this year, we have focused on the further solid development and the regional supplementation of our store network, continuously to provide car owners across the whole country with more convenience and comprehensive service that is covering a wider range of categories. We now cover over 300 prefecture-level cities in almost all provincial administrative regions, and even more than 1,700 counties. Our coverage of counties with more than 20,000 passenger cars is close to 2/3 of the country. During this period, our landmark of the 6,000th store was opened in Chongqing in the first half. In the regions where we've already made the inroads, we've surpassed the milestones of 600, 300, and 200 stores in the first half of the year, respectively, in the economically strong provinces of Jiangsu, Sichuan, and Fujian.
In the low-tier cities that we've been emphasizing, the number of new stores in the first half of this year accounted for more than 60%. In the remote areas, for example, the Xinjiang autonomous region, the number of stores in the same period last year increased by 74%. It's worth mentioning that our store network has opened in Hong Kong. We have two stores in Tsuen Wan and Chai Wan this year, which signifies that we are gradually replicating the operation supply chain experience to the overseas market. In the first half, we continuously optimized the franchise policy and optimized the site selection, cooperation development, store opening process to further enhance the quality of the process of investment and join the work of efficiency.
In terms of the results, the number of applications submitted by franchisees in the first half increased by 22%, and the intention of opening stores was 2.5 times higher than the same period of last year. Expanding store coverage through key strategic franchisees and further exploring other business cooperation opportunities has been one of our key focus. As of the end of June 2024, we've cooperated with 12 important strategic franchisees of well-known enterprises, including Dongfeng Nissan, PetroChina, Sinopec. Among them, the cooperation with Dongfeng Nissan has covered converting 14 TUHU workshop stores by June of this year, which is beginning to take shape. We're always looking for the ways to solve the difficulties and challenges, and pain points by our franchisees in the process of opening stores to enhance their store opening experience and convenience.
Since 2022, the average time taken from prospecting intention to signing contract has dropped from 73 days to 27 days, an improvement of about 63%. In the future, whether it's the number or quality of stores to expand, we'll continue to work hard and to work with franchisee partners to jointly build a huge national first independent automotive service chain brand. Also, the core effort is improving store management. We use the digital system as a tool to continuously improve the store management and customer experience. In the first half of this year, we focused on optimizing management of goods in our workshop stores with the implementation of the national intelligent assignment system for workshop stores, and we significantly improved the accuracy and operational standards.
By June 2024, the discrepancy rate of the first inventory count in the stores had been optimized by nearly 50% compared with that of the end of the last year, which further guarantees the accuracy of the goods in store inventory. In terms of improving user experience, we've taken a series of measures through positive incentives to guide franchisees, store managers, and technicians to pay attention to user feedback through the user interaction, enhancing the word-of-mouth operations on social media. At the same time, we focus on the management of problems such as difficulties in booking appointments and concentrating the feedback so that it significantly improves the key experience and related customer complaints rate dropped by about 16% and satisfaction rate increased by 3% YoY. In the first year, we also focused on establishing more comprehensive standardized management, improving the quality of store service.
We had the layered management and the benchmarking system. We will take warnings and discouragement for the bottom performance franchisees. We also increased the standard setting through the system to guide the stores to reasonable consumption recommendations so that in the first half, the user complaints against excessive sales dropped by 40%. In terms of platform operation, on the basis of ensuring user experience, we continuously explore the quantity and quality of users. Through the diversified operational means, we continue to improve the user reach rate and activity. We will continue to develop multi-channel traffic attraction methods. We have the account streaming in Douyin and social medias, which get more mature. We also planned six supplier special sessions. We arranged the special session of Michelin plus TUHU. We also have the local lifestyle business we expanded to the Kuaishou platform.
The [GMV] of single-day is over [CNY 150 million], hit a historical height. In the social media, we also had word of mouth. This platform also has the fastest growth this year and become a very important channel to get to know us. In terms of the users and the market feedback, at average monthly activity of TUHU's own app in the first half of the year increased by 16% in terms of the user reach with the integration of the market. We add charging surveys on the online platform, so lots of users get to be used to the TUHU Car and to use us as a daily management tool for their automotive services.
In terms of the user to market feedback, the average monthly activity of the TUHU's own app in the first half increased by 16% to reach 11.5 million people. We can see that the TUHU brand in high-tier cities, the mention rate reached about 60%. The announced mention rate in lower tier cities close to 40%. In the future, we will continue to deepen the user operation and expand our leading position in the industry. In terms of the products and services, we have been committed to digging deep into the value of the supply chain, continuously enriching our product metric to bring users with more valuable platform service and better consumption experience, and also help to consolidate our competitive advantage in the market.
In tire business in March this year, we work with 20 domestic and foreign well-known tire company and take the lead in launching the industry's first tire Gold Medal warranty service, provide consumer with platform plus brand, 1 + 1 double quality assurance. At the same time, we also actively work with consumer in response to the users growing demand for cost effectiveness, cost performance, launched with the tire players to gain market shares. We have several high-performance, self-controlled, self-labeled, private labeled products. These products, not only in the performance and appearance can be compared with high-end brands, but also maintain a very good attraction. For example, [Shuāngqián] and [Shuāngxīng] already have the sales exceed 1.5 million units in the first half. We also made a lot of progress in the maintenance business.
In this May, we work with Shell Helix to launch the industry's first lubricant product named after the National Geographic recommended self-driving routes. We also work with a lot of brands and their products. These products are not only in the performance and appearance comparable to high-end brands. In product pricing, we also maintain full attraction. In the first half of year, we've worked with Shell Helix, Bosch, TotalEnergies, Saudi Aramco . We also work with TotalEnergies, [Ouka], to have a brand cooperation, so we can lead the whole industry to upgrade to high-end. By in-depth cooperation in terms of product and supply chain, we have a higher percentage of exclusive products, private label products. In the first half of the year, in terms of the car wash and car beauty, we've achieved a great progress.
We've actively promoting the construction of workstations and service capacity supplementation for the car wash and beauty business in our stores on the service end. At the end of June, we have more than 5,300 TUHU workshop nationwide equipped with high beauty service such as car washing, waxing, and more than 1,600 TUHU workshop providing deep beauty service such as film coating. This makes one of the largest car service network in China, one of the largest professional service networks. We also work with Henkel, 3M, Sanyou of China Aerospace, and other famous brands at home and abroad to reach the product matrix, and specialized beauty care solutions to strengthen the wash business, and the beauty business has brought rapid growth in the number of users, and more comprehensive user experience and demand development.
In the first half of the average, monthly number of users in the online beauty wash business increased by more than 40% year-on-year, and the frequency of user orders increased by more than 30% year-on-year. We have a relatively high frequency care service category, but this brings high quality customer sources, also reflects a good user retention and cross-selling ability. We see that 40% of conversion rate within the 12 months. In the first half of the year, we continued to improve the logistics supply chain in the distribution structure, warehousing, logistics, and distribution efficiency, comprehensive procurement costs, and aspects of further optimization and enhancement. We've optimized and upgraded network coverage of regional warehouses, front distribution warehouses, and relocated and merged some of the warehouse. We are opening new warehouses.
We can see the regional warehouses has amount to 29, while the warehouse areas still increase year-on-year. The unit rental cost decrease year-on-year, effectively improving the efficiency of storage capacity. Number of front distribution warehouse reached 509 at the end of the period. We continue to maintain industry leading 30 minutes within 5 km delivery time. The number of the front distribution warehouse reached 509 at the end of the period. Our three-tier warehousing and distribution system, regional warehouses, front distribution warehouse, and store warehouses combined with self-supporting distribution, regional logistics, third-party courier, and other former logistics. We have more than 100 cities covered with an average daily volume of more than 100,000 parcels.
This proportion on the same day next year, delivery order from the original warehouse has increased to 77.2%, and the 5 km 30 minutes arrival rate for delivery from front distribution warehouse has reached 97.5%. Throughout the warehouse network distribution continuous operation capacity structure and line planning continue to improve. The warehouse paving logic of an upgrading and iteration, systemic construction, and refinement, effective operation of the landing, wherein the warehouse distribution system continues to achieve efficiency. We can see the cost reduction and the efficiency enhanced in the first half of the year to optimize fulfillment of the cost rate decreased by 0.3 percentage point.
With the development of the market, TUHU continues to deepen the field of the new energy business. We see that the new energy transaction users has reached 1.85 million in 12 months, and user penetration rate has risen to 6.8% last year to 8.4%, ranking the first in the industry in terms of scale of new energy user among independent third-party platforms of automobile services. We also enrich our product offering for the specific needs of new energy users in the various business lines. For example, in the beauty and automotive sector, we've customized and developed specific products and services such as window film, interior dusting, and special automotive products for popular car models. For the more high-frequency needs of new energy users, we should effectively double the number of users of relevant business categories.
We see the e-powertrain maintenance repair business as the core value segment of the new energy after-sales fields. In the first half of the year, we continued to make efforts to further extend the platform's new energy battery repair service network. At the end of June, we established network layout consisting of central team of technicians, battery repair service covering 73 cities and specialized battery repair stores, giving us the ability to provide a wide range of new energy battery repair service with both timeliness and cost advantage. We built new energy technology center in Shanghai, which has invested more than service capacity building and R&D technology solutions prepared from the e-power maintenance. We have also built the talent reserve for the e-power maintenance. We have in-depth analysis and diagnostic systems and equipped this service with our talent.
Now, we can also repair new energy cars, just like to repair those few combustion vehicles. We've also built the warehouses that can provide hundreds of SKUs of batteries for new energy cars. We also have further built the maintenance capacity for other high voltage systems besides batteries, including motor, electronic control, and also onboard chargers, DC-DC air conditioning compressor, and other assemblies, and have constructed e-power maintenance, realizing the broadening scope of new energy specialized repair service. While we are expanding our business, TUHU Car, as the leading company in the industry, is also willing to take responsibility socially, actively participate in social welfare, and take initiative to contribute to the development of the industry and social progress.
We participate in the drafting and formulation of a number of automobile service industry standards, especially in the construction and development of new energy automobile after-sales service, and other emerging industry standardization, talent training, and other effective practice and make contributions. TUHU Automotive Service Standardization Pilot Project has been selected as a national service industry standardization pilot project, and we participate in the establishment of the National Intelligent New Energy Automotive Aftermarket Industry and Education Integration Community, which has carried out preliminary explorations and accumulation of new energy inspection and maintenance talents. In the face of natural disasters, we take the lead.
In the first half of the year during the torrential rains and the floods in the southern area of China, we urgently mobilized the company resources and actively responded to the needs of all walks of life, providing different forms of emergency services and support for users, the public, and franchisees. We have launched a free hotline for emergency rescue service in the affected areas to provide convenient services to the affected citizens. We also have reduced and waived the costs of more than 100 workshops in the affected areas by more than CNY 1 million in total. We are passionate about social welfare, and during the college entrance examination period, we organized many TUHU stores across the country to provide love and care service and logistical support for students.
We join hands with China Aerospace, Sanyou, to jointly launch the Sailing for the Future public welfare activity in Xizang.
We have been working with our partners, and we provide students with the best service and logistic support for them. We believe we will have our advantage and contribute to the healthy development of industry and society.
Thank you very much, Mr. Chen, for your introduction of the first half of the year's overview. I would like to introduce you, the CFO of TUHU Car, to share with you the financial performance of 2024 first half.
Thank you very much, all the investors, analysts. I would like to introduce to you the financial performance for the first half of 2024. We have been talking about the two pillars of our platform, our trading users in the past 12 months, and also the growth trend. We see that in such a challenging environment, we have been increasing the number of workshop stores and also trading users. First of all is the trading users.
In the first half, we see the platform's 12-month trading user base as of June 30th improved by 18.8% compare to same period 2023, building on last year's high base to around 21.4 million for the first time in our history, it surpassed the 20 million trading users mark. The number of workshop stores at the end of the period. Mr. Chen has just introduced in the first half of the year the number of our workshops compared to the end of last year, a net increase of more than 400 compared to June 30th last year, a net increase of close to 1,200. Second tier and the following cities in TUHU workshop stores accounted for more than 58%. This is in line with our store opening plan at the beginning of the year.
The growth of these two fundamental indicators also laid a solid foundation for the growth of our financial figures during the reporting period. Let's take a look at the revenue growth during the period under review against the backdrop of the weak overall consumer environment and impact of our continued downsizing strategy. Our first revenue grew by 9.3% year-on-year to CNY 7.13 billion. All the segments achieved year-on-year growth. Our two largest revenue contributors, tire and chassis parts and car maintenance. We can see these are the major contributors to our business. They grew 11% and 10.7% respectively, faster than the company's overall revenue growth. Among them, tires and chassis spare parts segment continued to benefit from the delayed release of demand during the pandemic, continued to maintain a high growth rate, but part of the growth was offset by the decline in customer orders.
The more sensitive to the consumer environment of the maintenance business, although the core categories to maintain a sustained growth. But at the same time, we face some small number of non-core service categories demand decline and impact of the decline in the customer orders, the payment per customer order brought about by the offsetting growth. Our other automotive products and service segment grew by 4.3% primarily due to significant growth in the light detailing and deep detailing businesses, which drove growth across the segment, partially offset by a decline in revenue in the car orders.
We can see Qipeilong business segment began to return to year-on-year growth in the first half of the year, and although the wholesale revenue within the Qipeilong is still declining, our Qipeilong business grew by 3.2% in the first half of the year, thanks to growth in revenue from our front-end warehousing and just-in-time purchasing services. Overall, advertising, franchising, and other service grew by 4.3% year-on-year, with revenue from franchising service growing at 6.1%, primarily due to higher management fees from our store expansion. Advertising revenue grew by approximately 22% year-on-year, primarily due to increased collaboration with vendor partners on our platforms. Platform revenue were also partially offset by the continued contraction of our new energy, new car sales business, and the used car business as part of a strategic initiative that began in the second half of the year.
Gross profit wise, we also realized a year-on-year improvement. The first half of the company's overall gross profit amount increased by about 70% to CNY 1.85 billion. Gross profit margin rose from 24.2% in same period last year to 25.9%, an increase of 170 basis points. Despite an impact of decline in customer orders and gross margin of the integrated automotive products and service segment rose 100 basis points thanks to our supply chain capability. Let's take a look at the business segments. Thanks to our proprietary and own self-controlled products accounted for the increase as well as the decline in the purchasing price, tires, and chassis part segment gross profit margin increased by 150 basis points. Comprehensive maintenance segment in oil and liquid business, gross margin was basically flat.
We can see that the overall gross profit margin of comprehensive maintenance segment fell by 70 basis points year-on-year. Other automotive product and service, including beauty and wash, also the metal spray and the car supermarket business, the gross profit margin increased significantly by 560 basis points, mainly due to the improvement of the beauty and the wash business gross margin. Driven by the continuous downsizing of the low margin auto parts wholesale business, the overall gross profit margin increased by 160 basis points to 7.7%. At the same time, our advertising franchise and other services revenue growth margin improved by approximately 250 basis points as we continue to experience lower profitability growth in advertising revenue and reductions in our low margin platform innovation business.
We also see that the consolidated full expense ratio as the percentage of revenue has accounted for, 2023, on the basis of 24.4% of the full year revenue, further down by the first half of 23.6%, in line with the trend of our historical range, including the sales and the marketing expense in the cost of the placement of customer acquisition related costs rose slightly this year, but due to the continued optimization of fulfillment costs to offset this impact. So the overall sales and marketing expense as a percentage of the year-on-year declined still. In terms of other operating expense control, our operating and the support expenses as a percentage of revenue declined by 20 basis points as we continue to refine our operation and increase the use of wisdom and digital tools. Research and development expense declined 40 basis points.
We can see the overall profitability in the first half of the year has been further consolidated and strengthened. Adjusted EBITDA and adjusted net income reached CNY 450 million and CNY 360 million, corresponding to the profit margin of 6.3% and 5.5%, the best level in the history.
When we look at the free cash flow also increased in the first half, up by 42% compared with the same period of last year, pushing our total cash reserves further up to CNY 7 billion level. We've also further optimized the composition of our total cash reserves by strengthening our internal fund management discipline and increasing our demand for internal funds. We've adjusted some margin of the safety of our liquid cash, reduced the proportion of restricted cash in our total cash reserves, and increased the proportion of medium and long-term financial investments. At the same time, since our listing last year, we've been placing greater emphasizes on returns to shareholders and long-term incentives for employees.
Since announcing our repurchase program on March 15, with a total of CNY 2.04 million of our own funds in the first half of the year, we purchased more than 12.2 million of Class A Shares from the open market. In addition, in order to avoid further dilution to existing shareholders while providing reasonable incentives to our employees, we announced on June 25 the phase II post-IPO share plan, under which we plan to repurchase up to 33 million Class A Shares from the market through our employee trust in the future for the purpose of further future equity incentives for our employee to ensure that we are able to attract and retain the key talents. In the future, we will continue to protect and enhance the interest of our shareholders through various reasonable means. That is all for the financial report. Thank you.
Okay. Thank you, Zhisong, for the sharing.
Very informative and very inspiring.