Q3 2019 Earnings Call
Hello, and welcome to the ex financial third quarter 2019 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signally conference specialist by pressing the star key followed by zero.
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I would now like to turn the conference over to Jennifer Zhang Investor Relations. Please go ahead.
Thank you operator, Hello, everyone and thank you Tony yesterday. The company results were released earlier today, and our Babble company I website at <unk> Dot Shying go down.
On a call today from a financial are Mr., Simon tone, President and Mr., Kevin Josh Chief Financial Officer.
I told you a brief overview of the company's business operations and highlights followed by Mr. Jones, who will go through the financials and guidance.
So all available to answer your questions during the Q recession [noise].
I remind you that this call may contain forward looking statements under the safe Harbor for beat in the private Securities Litigation Reform Act of 1995.
Such statements are based on the management carnage that patients under current market an operating condition.
I relate to events that involve known or unknown risks uncertainties and other factors, all which are difficult to predict into many of which RPM companies can call. You may call. The company's actual results performance or achievements to differ materially from those into far keeping it [noise].
Further information regarding based and other risks uncertainties and other factors is included in the company's fighting.
With a U.S. Securities and Exchange Commission.
The company does not undertake any obligation to update any forward looking statement as result of new information to trade events or otherwise, except I do quite Oh I.
It's now my pleasure to introduce Mr. Simon Chong Mr. Jones. Please go ahead.
[noise] Hello, everyone.
We are pleased to report a good water with strong financial and operational performance.
In particularly I'd like to highlight the follow you because it can be said the progress we have made across our business.
Firstly, we believed that controlling the credit reserve.
The Orange Navy Squeaky cool.
Oh, the plastics, Mark we have heighten our credit policy and the Fiftyth, our customer sentiment to higher quality segment.
Two pre now for difficult regulatory and economic or you why it.
Good England sees our portfolio.
Have decreased.
These helped us to achieve a more stable business and it reduced known people into longer time.
Secondly, we are very pleased to report that institutional benzene.
Accounted for 65.7% off the long facilitate feed through a radical in the third quarter.
Increasing from 26.7 in the previous quarter.
Particularly the pushing all spending from institutions increased to 52.4 of the Togo loans for city page you hope to Koper 2000.
19.
We expect institutional you Westars to fund almost all our new no warrants nations.
From the beginning of next year, that's not PDP platform.
Our gradually too faced out.
We have being actively negotiating with our funding partners.
Including the idea is the truck.
Putting them back.
Ben.
Waste on Ben, Yes, Hi bank and the others.
To further lower our funding costs and provide the best the Sylvia you all customer.
Luckily it is very encouraging to see our revolving loan product shelf.
Yeah, Tim Wow previous previously loading or Shelley Wally growing very rapidly.
Transacting body.
For the out him Jeff.
Sick leave ability to RMB.
One point.
Point 4 billion this quarter for RMB and I had to the 71 million in last quarter.
And.
Then the NOL balance increased to RMB 949 million in early September slippage in 2019 for RMB 570.
8 million this up at June Thirtyth 2019.
The number of transaction, we actually on why in the quarter of 2019 increased.
3.8 million from 2.9 me Onea in the second quarter.
The net both active users.
Wow, what's the Rob.
330000 represented an increase from.
220000 as of June 30, it's a 50% increase.
We believe that Bob Yes, now why USIS, well keep rest of growing.
The business, where gradually accounted for a lot percentage of revenue.
But we've already proto.
Lanco cost them, a lifetime offers multiple types of cross sell opportunity.
Furthermore.
For yourself.
We are able to offer more diversified.
To enhance the user experience.
We are gradually we are planning to gradually transitioning from a pure financial service provider to a comprehensive service provider.
Overall, our cost in the second then well be shifted to a higher quality customers.
And the more our income welcome from comprehensive service fees.
Such as the merchant fee membership fee.
Et cetera, yes, teaching too low facilitating fee.
At the same time, there will be.
Lower delinquencies down the road and lower funding costs.
In conclusion, we are very confident.
In our future growth perspective, and our capabilities to create long term value following last first and the shareholders.
As the industry is and the consolidation there will be fewer players.
To continuously grow wide that user friendly and the convenience person if I mean, just service through the broadly in China.
China's consumer financing market is huge and the growing.
Interest rate and the funding costs.
And the decline tread.
We believe there.
Enormous potential follow business grow.
This company they seem period.
I'll turn the call to Kevin who will go through our financials.
Thank you Simon.
We finished the quarter were solid operational and financial results total Overfish amount was about 10.7 billion for the quarter, showing our significant increase year over year.
While net revenue Ken I can mean actually maybe.
Great and 67 million, which also increased our year over year basis.
Well, we are glad to see the number all back to your borrowers inquiries significant neutral Android and the 40000, just portal, which demonstrates continued strong demand for the market.
The frequency rates fall off any long, but I'll talk to you for because he went to 90 days and the 9100 80 days as of September , it's certainly something banking or 2.95% and 4.5%, respectively compared with 3.1% for problem.
4.99% respect Joan Solotar, you're talking banking.
We believe this effect.
Improving quality of our launch.
We will continue to stress our risk control capability and the provides the best loan service to our customers.
Yeah fishing.
Just to see the proportion offerings.
Funding and they run the contribution will follow ups access business model continuing to grow our self tender. So if you're talking amounting to quite a long provided by our white city parlor. So we've got wrong I mean, the so hey, I was just the HP there and I see is being extended it towards maybe 48 good bye.
End of October 29 thing.
Turning to operate in compliance with 310 lot in their reputation and a cable making that transition.
Modoff combined ratio for no offense, and the dark low and there's nothing like us.
What's more the loan products. The we process that will cover the by July is showing up just quit.
Decreased to 70.
Defense industrial quarter 29.
We will continue to reduce our winter insurance coverage right to lower our customers borrowing halt and not the rough.
Alternative ways to provide a guarantee for certain long product.
Well go next we will continue as I tried to our Michelle Opana. So you show. It's you before you can find extrapolations to reduce cost and the improving efficiency and acquitted model for rocket somebody to shareholders.
No I would like to break on financial performance.
Lastly on renewals in the so called off to the margin increased by 4.4 or 5% to RMB 867 million fraud, and maybe 879 million in the same cared authentic aging.
Primarily due to a increase in transaction volume of shouting party loan and the Yelchin last quarter, when compared with NPL rate often 18.
Alright, Thanks, yes, everything expenses during the so called to often do not see increased so it may be a 456 million.
And maybe 280 formula in the same period of time the 18.
Hi, My Georgia, the following factors.
Hey, increasing cutting expenses for the come accumulative effect also flooring business and the second continuing investment in customer.
Acquisition, especially therefore, there isn't going to launch with revolving credit project for you all channels.
The field and the market expanding the so called turnaround 19 decreased by sort of 43% talking Mindy.
Fantastic committed.
From maybe a 45 million in the same period of time to 18.
I Wonder if you will try researching promos motion, though and it kind of excitement to the status since we already know funding for under Picozzi model.
The non-GAAP net income you sort of course, I'll start and talking to quite frankly.
Andrea and attempt.
17 minutes.
Which is the main Israel's resulting from our continuous investment.
Customer acquisition.
We believe we've got us it's actually you all I recommend it will benefit us in that are already both for the high cost customer and the wrong you also.
He also lifecycle.
Now turning to guidance, we expect that lets hope that total loan for fishing for fourth quarter of trying to not into PR rohit, maybe eight tune unfair.
Obviously gives excluding the volume of consumption settlement I'll be auction Fox, which were lost generates revenue so that guidance or would it be especially indicator for the financials.
We get full quarter reflects the company's currency and the preliminary views, which are subject to change.
Now this concludes our prepared marks remarks, and would love to open the call for questions operator fees.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you were using a speakerphone. Please pick up your handset before pressing the keys.
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To assemble or.
Roster.
Once again, if you have a question.
Please press Star then.
Then one on a touchtone phone.
The first question comes from John Hi of Morgan Stanley . Please go ahead.
Yes.
Hi.
Even in Benjamin.
Thank you for taking my questions.
Questions I guess, the first one just about.
Oh, great performance financing.
Thats delinquency rates.
Decline sequential basis due to the tied them and that's why they pulled into previously so.
What do we think of the current.
On the sector is meaning that you.
Do you see it soon.
Oh, it's a time that because we have already controlling the previous access to raise its a time for us to take them all is now.
Oh, I see you buy remember risk environment that them engines.
We see and.
Settlements on vitamin encompass the imbalance loans.
That's the first one that's taken one.
You see these were nice to know more about an hour products segments. So we see that.
Hi, more details I follow up with some momentum we've all been maam.
This quarter, so just wonder.
It's the management can share about the economics of the term timber on buses for new mobile.
And then I think it is a changes essentially you should be a positive changes on the take rate for this quarter. That's gone. So if the management can can comment about the take rate changes that they would be helpful. In Israel.
But there's no question.
That's a bit technically on the on the revenue side I see that Hmm facilitation income.
From the intermediary model.
Pickup for these two quarters I'm not sure why is that because my understanding is that most of the office a division you should be under the direct model.
Oh, Yes, that's everything my question. Thank you very much.
Thank you John This is Simon I'll answer the first question regarding the the credit quality and the Kevin towns or the last two only regarding the financials.
We we Oh, we haven't Titan ER, our credit policy and the automotive one important and yesterday, we see power.
Pop in the second two high quality segment so.
On the road it was the only keeping couldn't keep going down.
And the disease the.
One of the does that come in a change Oh, you know addition to our prudent body control policy.
On.
The financials or Kevin Costner.
Okay.
Hi, John Thank to play all felt quite strengths first though a about how up at a profit mix for the second I would I say, it's where at this moment attended a a ton normal well fuel a lot of tenant Turkey, Okay product and always will tend to go to market and I think 5% all the total revenue.
And our profit and then you may see Oh, when we're talking about at the low volume at the so called or they are about a 1.41 portfolio with a 1.4 billion off the traction wondering whether come from a Friday I will jump out the revolving credit product. That's all that's also tend to see I talked to total transaction.
No, but at this time a way off too are you factoring in DC revolving accretive long, so actually and they're going to come <unk> contribution and.
The profits are forcing fall for our recycle product for rocket two of our membership.
And then when talking about what that take rate.
But the other paternalistic, where we fall for all of our terminal Grumpy Biosimilar took a total sequoia that doesn't mean, it's not wrong, but 10% and awareness.
And I think I'll jump off to the for central product, it's terrific rate is up almost certain circumstances.
Okay got the Iowa, a term loans and actually.
Oh, great our May say falls to you.
The last fall drafting me, either and I was sort of pricing I remain challenging and now off I didn't call and at that and I want you to persuade it's off a relatively stable. So there's sort of take rate lumpy or it's a inversely middleware toward production.
The Q2, but I wouldn't I food for Joy, Okay that I previously mentioned them by my side, Yeah, we are packaging high quality quality customized.
No I know and we are also change our parking me they kind of isn't how do you said all people on that front I feel so everything can oh, we already are received.
Oh come for having sales income by the Iraqi I'll walk you with up I seem to our membership systems or from a from a phone November there. So I see I saw package of rice I wish I can post all kind of deals you have rights and if I know you're right we're off to yourselves how long members. So so late so our around your we all.
And.
For Q pop what are the farmed out what the pure are still to loan processing revenues and the other remaining wealthy sun seven cents, a milestone with income compressing silicon carbide started direct traffic to Taiwan talk or someone else and as they used to compress it was a incomes on upcoming funded a waste of with what's the long.
So that's about what the other for chance you I in the future.
I I thought that moment, so with what they have like a different view about how how other Arctic ready to a tick retrench. If that makes you got to for the titratable dropping below that but the way how we'll have some additional comprehensive servicing costs yeah.
I hope that just couldn't can't ridicule constraints.
The New York certain restaurants, when you're talking about bobbing from either as a does.
All right then the around your father immediately model yeah.
Actually when we do you mean imputed interest rate, what we have the loans.
What's your sense models actually some somehow.
Yes, they I I would have to oh, well have to transfer the.
That's what that that right.
From a just I'm, sorry, Oh, well, what we offer.
Sure the roll some view I'll talk to know my core loan companies and data transfer towards those infusion funding upon us so I I sort of under this model Yeah, we will have more intermediary.
Never revenue, so thats why would I like I'm going to be care and tell me that were level increase into two into Q3.
Thank you that's helpful. So Oh, if I may follow up on the risk of so I'm just once we get a sense off the management assessment of the current you buy Roman because.
I heard that Oh, some payers, asking a nice and risk and.
And it's also I'm, calling you know regulatory Titan then come up on connection speed data and then it takes et cetera. So so what's the management assessment on the current mr. level.
On the facts I hope so so oh do you see that is more risky now as compared to maybe a call to go and then and how does the regulations impact that comes out with all of them you know a connection that for carbon migraines delinquency rates.
Yeah, just any comments on that often dimension the would be Oh, maybe helpful. Thank you.
Right. Okay. Thank you John I'm actually I said, he's already passed but ER regulatory again, why am I right now yeah, Yeah Uh huh.
Ted Heath and ER recently.
Overall, we believe.
That well actually Ah Ah either through a industry consolidation and some players oh, well well well be well leave.
The industry and ended the new environment.
But for US actually we were well prepared for the and then that's a week as I said at Liberty L., we will see between our cutting segment two high quality segment.
This means that.
We can easy to have done that.
Issues that leaves them recent recently a recent.
Regulatory ER.
Element and also a they said that according segment or more we listen to the economic check.
So this is a busy so our strategy and overall we believe.
For certain segments.
Yeah, yeah might be I could hear racing situation.
But a pool for pool for well for the second when are we are talking right now actually.
It's still quite healthy and the pool for employment industry in China is quite a stable and a and AFFO for the consumer finance business.
For the float for the highlight a quality segment actually I see steel.
Quite stable.
Yes.
Thank you Simon.
[noise] again, if you have a question. Please press Star then one on a touchtone phone.
The next question comes from Louisiana, Han a private Investor. Please go ahead.
[noise] suggest for keeping my question all my questions about the credit risk.
Oh, we can see a risk items you can't Alice likes.
Permission for account permission for accounts receivable and contrast that and so star value Jovana atoms lifestyle that adjustment related to a financial guarantee to eradicate ascent of fair value adjustment related to.
That's one of their check.
We can finish that I'm seeing creators to compare by Q2.
Not to mention data delinquency ratio was improved to compare.
Compared with the Q2, snow, which slide shows a real credit risk.
Thank you.
Okay.
Since you were thinking okay, perfect extra I didn't generate all right I'll Oh product portfolios our football all other wife, where we mentioned has improved.
Well anyway Golf course, Okay. Now for example, you see some somebody.
I'd like a confusing for example, the provisioning for accounts receivable on for you.
Professional football Outdoorsy volume quickly into two or three anyway, we're making some passthrough.
Well, there's some type of true true.
Actually what does that and so from a mall or come to mind definitely [laughter]. Other Q1, Oh, Oh, what caused the performance imports, but I got to commonly I'm not sure on whether this will.
Maybe a bit so painful so actually we did not do on a timely.
Truck rental for those are quite the adjustment so all things impact well actually agent or other testing Institute to where we are more sure off that.
I will unfold on to offer our credit.
And to Oh extra Dr.
So I guess, we have some so if we take somebody that's also a those I saw this fall fall for the Oh, Yes, you know you're lucky we definitely wealthy parsing that out towards result, Zales port density in Q3, I couldn't give us a small off our town or are you picked off without countrymen when we're done.
And some so some kelly and adjustments.
Uh huh.
So it means that you are.
ER.
The accident, Indiana El show does still true risks.
Yes.
Oh, I don't know Souljah also in Italy.
Sure comfortably well actually went so well I would talk.
When we talk about Oh, so I love about somewhere if you often you are comparing those waste Oh boy Oh with all four wrestling.
Since you already taking all all sorts of waste or worse.
But you also talking I'm, saying I'm not sure.
Oh, well or what type of strat comm catalyst.
Compared with tension Nike Inc. Q2.
Okay, Yes, yes, yes, I thought I don't know nation for top of generally I I'll credit risks off are you pulled and stable are well aware the idea and also Q1, we actually see Oh, yeah. They are oh implement the ball winch enough to most I suppose adjustment.
What came out because the way I'm not sure what do you see Puma and well be sustainable. So so I don't know way I'm all for that and he and offered you always need soccer field trend, that's our current Oh sophomore staples and not improving so actually all those impacts obsessively <unk>.
In Q2, so so that's sort of I mean, if you see I saw a small I'm also a whole for those are comfortable for racing they seem to true but are you for you. What do you feel can pass compared to Demopolis Jude accounts receivable permission to here with the average I'm about to ones too.
You mean, so the average amount off the top that where people are similar.
Yes, I tend to talk.
Voting.
<unk>.
Okay, Okay. So Q.
[noise] again, if you have a question. Please press Star then one.
This concludes our question.
To answer session I would like to turn the conference back over to Jennifer Zhang for any closing remarks.
Thank you everyone for joining us on the call today, if you haven't got a chance to your question. Please.
Please ask them to spot contracts. They just started speaking video game in near future. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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