AIHS: A Detailed Look at the Automobile Transaction and Online Ride-Hailing Platform Provider

Published on September 24, 2024 | Ticker: AIHS

Senmiao Technology Limited (NASDAQ:AIHS) is a provider of automobile transaction and related services, as well as online ride-hailing platform services, in the People's Republic of China (PRC). The company operates through two main segments: Automobile Transaction and Related Services, and Online Ride-Hailing Platform Services.

Business Overview

Automobile Transaction and Related Services

Senmiao's Automobile Transaction and Related Services segment encompasses a range of offerings, including automobile operating leases, service fees from new energy vehicle (NEV) leasing and automobile purchases, automobile sales, automobile financing, auto management and guarantee services, and other supporting services for online ride-hailing drivers.

Since the acquisition of Hunan Ruixi in November 2018, Senmiao has facilitated financing for an aggregate of 1,687 automobiles with a total value of approximately $23.5 million, sold 1,468 automobiles with a total value of approximately $14.1 million, and delivered approximately 3,310 automobiles under operating leases (including 1,826 automobiles used to be delivered by its former VIE, Jinkailong, before March 31, 2022) and 161 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.

During the nine months ended December 31, 2023, Senmiao's Auto Operating Leasing, Auto Financing, and other services income accounted for approximately 88.2%, 1.1%, and 10.4% of its total revenue from the Automobile Transaction and Related Services segment, respectively. This represents a shift from the nine months ended December 31, 2022, when these revenue streams accounted for 76.7%, 0.9%, and 15.7%, respectively.

The increase in Auto Operating Leasing revenue was mainly due to the increased average utilization of the automobiles for operating leases, which rose from approximately 65.0% to 77.6%, as well as an increase in the average monthly rental income per automobile from $389 to $485.

Online Ride-Hailing Platform Services

In October 2020, Senmiao began operating its own online ride-hailing platform, Xixingtianxia, through its wholly-owned subsidiary Hunan Xixingtianxia Technology Co., Ltd. (XXTX). The platform provides services to qualified ride-hailing drivers to assist them in providing transportation services to riders looking for taxi/ride-hailing services.

During the nine months ended December 31, 2023, approximately 4.1 million rides with a gross fare of approximately $12.5 million were completed through the Xixingtianxia platform, and Senmiao earned online ride-hailing platform service fees of $2.1 million, after netting off approximately $0.2 million in incentives paid to active drivers. This represents a decrease from the nine months ended December 31, 2022, when approximately 4.8 million rides with a gross fare of approximately $15.7 million were completed, and the company earned online ride-hailing platform service fees of $3.0 million, after netting off approximately $0.4 million in incentives.

The decrease in online ride-hailing platform revenue was mainly due to a decline in the number of completed orders, which was caused by increased competition and compliance checks conducted by Senmiao's platform partner, Gaode Map, in Chengdu.

Financials

For the fiscal year ended March 31, 2023, Senmiao reported annual revenue of $6.8 million, annual net income of -$4.2 million, annual operating cash flow of $7,241, and annual free cash flow of -$664,438.

During the nine months ended December 31, 2023, Senmiao reported revenue of $5.5 million, a net loss of $2.5 million, operating cash flow of $254,749, and free cash flow of -$541,204. This represents a 12.4% decrease in revenue compared to the same period in the prior year, which the company attributes to the decline in online ride-hailing platform services revenue.

Gross profit margin improved from 15.0% in the nine months ended December 31, 2022 to 24.8% in the same period of 2023, primarily due to the increase in profitability of the Auto Operating Leasing business, which offset the decrease in profitability of the Online Ride-Hailing Platform Services.

Liquidity

As of December 31, 2023, Senmiao had cash and cash equivalents of $1.1 million, compared to $1.6 million as of March 31, 2023. The company's business is capital-intensive, and it has determined that there is substantial doubt about its ability to continue as a going concern due to its net loss, accumulated deficit, working capital deficit, and purchase commitments.

To alleviate the going concern risk, Senmiao is seeking equity financing, other debt financing from PRC banks and financial institutions, and financial support from related parties. However, there is no assurance that the company will be successful in implementing these plans or obtaining additional financing on commercially reasonable terms, or at all.

Risks and Challenges

Senmiao faces several key risks, including its ability to increase its automobile lessee and active driver base, effectively manage its automobile rentals, price its services competitively, collect receivables in a timely manner, and manage defaults and potential guarantee liabilities. The company also faces risks related to the regulatory environment for online ride-hailing services in China.

Outlook

Despite these challenges, Senmiao remains focused on expanding its driver base for its platform and automobile rental business, while strengthening the loyalty of drivers who both lease its cars and use its platform. Senmiao also plans to continue providing a series of product solutions to sustain and further increase the number of automobiles for operating leases.

In the near term, Senmiao's performance will likely continue to be impacted by the competitive landscape in the online ride-hailing industry and the effects of COVID-19 on its operations. However, the company's emphasis on its automobile rental business and efforts to improve the efficiency of its online ride-hailing platform may help mitigate these challenges and drive future growth.

Conclusion

Senmiao Technology Limited is a provider of automobile transaction and related services, as well as online ride-hailing platform services, in China. The company has seen mixed results, with growth in its Auto Operating Leasing business offset by a decline in its Online Ride-Hailing Platform Services. While Senmiao faces significant risks and liquidity concerns, its focus on expanding its automobile rental business and improving the efficiency of its online platform may help it navigate the challenges ahead. Investors should closely monitor the company's progress in executing its strategic initiatives and managing its financial position.

Zoomcar (NASDAQ:ZCAR): Pioneering the Future of Mobility in Emerging Markets

Business Overview and History Zoomcar Holdings, Inc. (NASDAQ:ZCAR) is the leading peer-to-peer car sharing platform in India, providing innovative mobility solutions to consumers and businesses. With its robust technological foundation and strategic focus on expansion, Zoomcar has emerged as a trailblazer in the rapidly evolving transportation landscape of emerging markets.

Senmiao Technology (NASDAQ:AIHS) - Adapting to the Evolving Ride-Hailing Landscape in China

Senmiao Technology Limited (NASDAQ:AIHS) is a financing and servicing company focused on the online ride-hailing industry in China. The company has also operated its own online ride-hailing platform, providing a platform for qualified ride-hailing drivers to serve customers in several cities across the country. Senmiao's journey has been marked by both challenges and opportunities as it navigates the dynamic landscape of China's ride-hailing market.

AI Transportation Acquisition Corp (NASDAQ:AITR): Building a Resilient Future in the Evolving Transportation Landscape

AI Transportation Acquisition Corp (NASDAQ:AITR) is a special purpose acquisition company (SPAC) founded in 2022 with the ambitious goal of identifying and merging with a promising business in the transportation sector. Amidst the dynamic landscape of the transportation industry, AITR has emerged as a strategic player, positioning itself to capitalize on the rapidly evolving trends and opportunities within this critical segment of the global economy.

Carvana Co. (CVNA): Revolutionizing the Used Car Buying Experience

Carvana Co. (CVNA) has emerged as a transformative force in the automotive retail industry, redefining the way consumers purchase and sell used vehicles. As the leading e-commerce platform for buying and selling used cars, Carvana has leveraged its innovative business model and technological prowess to provide customers with a seamless, transparent, and efficient car-buying experience.

Zoomcar Holdings, Inc. (NASDAQ:ZCAR) - Transforming Mobility in India through Asset-Light Innovation

Zoomcar Holdings, Inc. (NASDAQ:ZCAR) is the leading marketplace for self-drive car sharing in India, connecting vehicle owners, known as "Hosts," with individuals seeking temporary access to automobiles, referred to as "Guests." Founded in 2013 and headquartered in Bengaluru, Zoomcar has pioneered an asset-light business model that is revolutionizing personal transportation in the world's second-most populous country.