Ladies and gentlemen, thank you for standing by for Autohome’s Fourth Quarter and Full Year 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to introduce your host, Aggie Zhao, Autohome’s IR Manager. Ms. Zhao, you may begin.

Thank you, operator. Hello, everyone, and welcome to Autohome’s Fourth Quarter and Full Year 2018 Earnings Conference Call. Earlier today, Autohome distributed its earnings press release, and you may find a copy on the company’s website at www.autohome.com.cn. On today’s call, we have Mr. Min Lu, Autohome’s Chairman and Chief Executive Officer; Mr. Haifeng Shao, Autohome’s President; and Mr. Jun Zou, Autohome’s Chief Financial Officer. After the prepared remarks, Mr. Lu, Mr. Shao and Mr. Zou will be available to answer your questions. Before we begin, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectation. Potential risk and uncertainties include, but are not limited to, those outlined in our public filings with the Securities and Exchange Commission. Autohome does not undertake any obligation to update any forward-looking statement, except as required under the applicable law. The earnings press release in this call also include discussions of certain unaudited non-GAAP financial measures. The press release contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and is available on Autohome’s IR website. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will also be available on Autohome’s IR website. I will now turn the call over to Autohome’s Chairman and CEO, Mr. Lu.

Thank you, Aggie. Before I begin, on behalf of Autohome, we would like to thank all of our users, clients, partners and shareholders for your trust and contribution to our continued success. In 2018, we again delivered record results, stemming from our 4+1 strategy with respect to our core businesses and the new initiatives backed by advanced data and technology. Fourth quarter revenues increased 36% year-over-year. More importantly, adjusted net income in the fourth quarter grew 39% year-over-year to over RMB 1 billion, representing a net margin of over 49%. Before going through each of our business lines, please, let me address some macro factors that may be on your mind. For 2018 and into 2019, trade war tension and the relative softness in Chinese economy and the automobile industry continued. As consumer sentiment remains cautious, we are seeing the overall number of auto dealers decline, aligned with the drop of new vehicle sales volume. However, we maintain strong conviction about the long-term future of Autohome because OEMs and the dealers have been more stringent in reviewing their budgets to eliminate platforms with a lower return on investment, while enhancing cooperation with platforms that are generating actual sales benefits. Next, I would like to provide some highlights and planned future endeavors for each of our business pillars. First, our core media business growth consistently outpaced the market and our competitors throughout 2018. This again was driven by our content innovation and big data technology leadership. In December 2018, the number of average DAUs who accessed our mobile website and app increased 10% year-over-year to 29 million. And our mobile advertising revenue in the fourth quarter grew 43% compared to the same period of last year, accounting for almost a 58 of our media services revenue. For PGC, we have aggregated…

Thank you, Min. Hi, everyone. As Min has highlighted, we are very excited for another excellent quarter and a very strong 2018. Please note that I will reference RMB only in my discussion today. Net revenue for the fourth quarter was RMB 2.19 billion, representing a 36% year-over-year increase. Media solutions revenue outperformed the underlying auto sector, increasing at 20% year-over-year to RMB 1.09 billion. Despite the challenging auto market, Autohome continued to be automakers' partner of choice. Lead generation business increased by 24% year-over-year to RMB 781 million, primarily driven by an increasing ARPU and an expanded dealer client base, both of which are strong evidence that we continue to build confidence among dealers. Online marketplace and other revenues for the fourth quarter increased by 381% year-over-year to RMB 314 million, largely attributed to auto financing data solution businesses. So we are very pleased with the increasing market demand for these initiatives. Now our cost of revenue for the fourth quarter increased by 8% year-over-year to RMB 250 million. Gross margin for the fourth quarter was 89% compared with 85.5% in the same period last year. The increase was primarily due to the effective cost control programs we’ve implemented last year. Now for operating expenses. Sales and marketing in the fourth quarter were RMB 473 million compared to RMB 507 million in fourth last year, mainly because of the increased cost in offline execution and branding expenses. T&D expenses were RMB 296 million compared to RMB 266 million in Q4 2017. Again, this reflects our commitment to technology advancement and our professional talent. Finally, G&A expenses were RMB 65 million compared to RMB 54 million in Q4 2017. The increase was primarily attributable to an increase in salary and benefits. Overall, we delivered an operating profit of RMB 899…

Thank you. [Operator Instructions] Your first question is from Wendy from Macquarie, your line is now open Please go ahead.

Thank you management. I will ask questions first in Chinese and translate it into English. [Foreign Language] So my question first is mainly on the macro outlook. So a few months ago, I remember you were expecting a flat auto sales in China and the OEM, well, actually also made their advertising budget based on that kind of underlying assumption. So what’s your latest view on the overall auto sales in China based on the latest changes in market? And also, given the recent dispute with the dealers, can you give us update on the latest dealers' stop duration as of the end of February? And also, how was the payment duration? Related to that, has the dispute with the dealers affected your negotiation or talk with OEM about 2019 renewal contract? If not, can you completion with OEM about framework contract? Thank you.

Thank you. Let me take the question. [Foreign language] Now the first question is about the auto sales. If you look at the January number, the number is not very promising. It’s negative 4%, I mean the retail sales. [Foreign Language] If you look at the wholesale market, it’s negative 17%, but we focus primarily on the retail market. [Foreign Language] Well, this is only the outlook for this year. Relatively speaking, we don’t have to be very pessimistic. [Foreign Language] Why I say so is due to the following reasons. Firstly, the central government adopted promotion policy of delivering more cars to the rural market. [Foreign Language] Secondly, the A markets is getting bullish. We do see the transaction volume hit very high. [Foreign Language] If the A market really get into the bullish market, we do see that the wealth would be created because real estate market had a lot of cooling down policy. So I think the first market it will stimulate will be the auto market. [Foreign Language] Even if under such circumstances, if the auto market is still not very promising. [Foreign Language] For Autohome, actually, ever since the later half of last year, we always get a lot of questions, such as, if the auto market is down, would you have positive growth? [Foreign Language] Now in the past six months, if you look at our performance data, our performance have indicated that we have answered the question well and our projection were all correct. [Foreign Language] So when the market was down, actually, the OEMs would be more cautious in spending their marketing dollars. So that’s why the – actually, the big players would benefit out of such market scenario. [Foreign Language] So that’s why if you look at our performance of later…

[Foreign Language] I just want to clarify. On the dealers number, you just mentioned 22,000. Is it just the number of dealers who have renewed their 2019 contract, but not the total paying dealer rates right now? Because this number looks actually low compared to 26,000 in Q4 and the 24,600 in Q1 last year. And also, I noticed our OEM number actually record new high at 100 in fourth quarter. What’s the driver behind that and how sustainable is it? Thanks. That’s all my questions.

[Foreign Language] The 26,000 was the year-round number of last year. The 22,000 was just this Spring’s number. It’s not a year-round number. [Foreign Language] As we said, some of the dealers will continue to sign and renew their contract with us along the future six months. [Foreign Language] The OEMs number is just that number. That won’t change much.

Thank you. Our next question comes from Hillman Chan from Citigroup. Your line is now open. Please…

[Foreign Language] I thank the management for taking my question. So my question is about the new business. For data product, what is our strategy to raise our penetration among dealers and OEMs in 2019? And regarding the auto loan and insurance business, could you share with us the respective growth outlook and strategy 2019 and how we should think about the profitability for 2019 and in the longer-term? Thank you.

[Foreign Language] Now the second question, which is related to the auto finance, I would refer the President Mr. Shao Haifeng to answer this question. Now I want to to take the first question first. [Foreign Language] Now talking about the data product. Last year was the first year we launched this product and it’s a new start for us. That’s also true for the OEMs. [Foreign Language] We carried 43 OEMs last year. [Foreign Language] It’s a diversified model, actually working with OEMs. Some were online, some were just using our data report, so we are going to launch more online. [Foreign Language] Now talking about the dealers. Last year, the number was 9,000. [Foreign Language] And in this year, the number will grow very robustly. Actually, out of these 22,000 dealers, 13,000 of them already signed the contract to procure our data products. [Foreign Language] Because our data products, as I said, they can directly help them to be more efficient in the telemarketing and in invitation through telephone, through store visit. [Foreign Language] So, not only improving store visits, but also helps these stores to improve with the efficiency and management. [Foreign Language] Actually, during last year’s conference, we already launched the future product. For example, we do have the AI-based audio helping services, which helped the pop-up parameters display on the screen after the AI identified the keywords out of the tele-conversation. [Foreign Language] With the pop-up window showing the parameters needed for any car model, this would greatly help the professionalization of the DCC. [Foreign Language] This is just one example out of the many examples of our new innovative offerings. So, not only this data products, but also the OEM products and also the – lot of new other products on the way. And we are also continually selling our own products. [Foreign Language] Mr. Shao?

[Foreign Language] Talking about our auto financing business, we would stick to our previous strategy, which would be like the light asset model business. We would only take commission out of this business model. So, in this way, we don’t invest heavily in the asset side. [Foreign Language] Auto is two businesses, one is auto financing, another is auto insurance. [Foreign Language] In 2018, our major focus on the auto financing is to provide the loan facilitation services for the OEMs. [Foreign Language] Our partner is Ping An bank and other financial institutions under the Ping An. [Foreign Language] We actually offer credit to more than 3,000 OEMs and out of them, 2,000 already successfully utilized the funding. [Foreign Language] Well, actually, in terms of the credit side and the funding side, the growth [indiscernible]. We are very confident that within half a year in 2019, we would basically catch up and even be better than one of our competitor. [Foreign Language] And also, for the individuals auto sales business and auto financing business, we act as agents. [Foreign Language] And we actually settle with the financial institutions through the CPR model. [Foreign Language] Now we are in the exploration phase in terms of trying to charge a higher commission based on the closed-loop transaction. So we are going to offer a new model which can generate a higher commission. [Foreign Language] In 2018, the auto insurance business is more off-line. We are actually helping the Ping An auto insurance to cover the OEMs and – which they have not covered before. [Foreign Language] Actually, out of that model, our commission rate is quite low. [Foreign Language] Although the business volumes were quite significant. [Foreign Language] And on the same way, we’re [Foreign Language] Yes, targeting at the individual carbuyers, we’re going to launch the pure online model. [Foreign Language] To better cover the 2C side, we have launched the pilot project in three places, in three cities, offering low price and a low commission. [Foreign Language] So talking about the financing business. Actually, last year was the first year we started this new business. We tried really hard and poured a lot resources. So I have to say last year, we laid a solid foundation. This year, we think the business will be even more promising. [Foreign Language] That’s all for answering your question. Thank you.

Thank you [Operator Instructions] Your next question is from Monica from Credit Suisse. Your line is now open. Please go ahead.

[Foreign Language] So I have one question on the traffic growth, which we see slowed down sequentially in this quarter. So can management elaborate more about what’s the reason behind? Do we see more competition from other platforms? Or are we considering to acquire more traffic from outside Autohome platform? What’s the general traffic growth expectation and spending on branding for this year? Thank you.

[Foreign Language] So thank you for your question. Well, we have always been very focused on how much traffic. [Foreign Language] In terms of the revenue and the profit, actually, in the past 2.5 years, we have doubled the growth. It’s like creating a new Autohome business. [Foreign Language] Talking about the DAU. Actually, back in 2016, the traffic was about 22 million. And until now, it’s 38 million. It’s less than double. [Foreign Language] So the traffic growth is one of my priority in my work. [Foreign Language] I would like to share with you some of my thoughts. Firstly, we want to focus more on the mobile side. That’s for sure. [Foreign Language] If you look at the mobile app, actually, we have a lot of updates and renews. Every month, we have two updates. One big one, one small one. [Foreign Language] (52:26): In this way, the users would have a very subjective summarized report of any car model. They would immediately understand what’s good and bad about this car model. [Foreign Language] The summary report was very objective. So in this way, the users or the surfers can actually understand what are the media comments about this car model and what are the car owners', the users' comment about this car model. It’s a one-stop solution. [Foreign Language] Now talking about our used channel. Our DAU is about 1.3 to 1.4 million. [Foreign Language] We also have the traveler channel which we have over one million visitors. So we do have a bottom line which is for any channel, we have to make sure we have at least one million DAU. [Foreign Language] This is only about the major mobile apps. Actually, we – in Autohome, our positioning is we help the users who search for…

[Foreign Language] Another comment is for the competitors and other players in the market, their traffic is only about 2 million or 3 million DAUs. But for us, it’s 10 times more, it’s 20 million to 30 million. [Foreign Language] That is all about the mobile side. [Foreign Language] Thank you very much. That’s all of my answers.

Thank you. There are no further questions at this time. I will turn the conference back to the management for closing comments. Please go ahead.

Thank you very much for joining us today. We appreciate your support, and we look forward to updating you on our next quarter’s conference call in a few months' time. In the meantime, please feel free to get in touch with us if you have further questions or comments.

Thank you, speakers. Ladies and gentlemen, this concludes our conference for today. Thank you all for your participation. You may all now disconnect.