Q3 2019 Earnings Call

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Starchy followed by zero.

After today's presentation, there will be an opportunity to ask questions.

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Please note today's conference is being recorded.

Now, let's turn the conference over to Christian Arnell. Please go ahead Sir.

Thank you Hello, everyone and thank you for joining us today in finances earnings release with distributed earlier and is available on the IR website at <unk> Dot cash China dots yen as wells on PR Newswire services.

On the call today from Cm Finance and Mr. Bean, <unk>, Chairman and Chief Executive Officer, Mr., namely Chief Financial Officer, Mr., John I will review business Operation and company highlights followed by Mr. Lee will discuss financial.

We'll be available to answer your question during the Q and a session that follow.

Before we begin I'd like to remind you that this conference call contains forward looking statements within the media protection 21, we have the Securities Exchange Act of 1934.

As amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward looking statements can be identified by terminology such as we'll expect anticipate future intends plans believes estimates targets like.

Look and similar statement.

Such statements are based upon managements current expectations and current market in operating conditions I relate to events that involve known or unknown risks uncertainties and other factors all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results performance or achievements that could differ materially.

Those into forward looking statements.

Further information regarding these and other risks uncertainties are factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward looking statement as a result of new information future events or otherwise, except as required under applicable law.

My pleasure Chase Mr. John Please go ahead.

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Operational development and discuss our strategy and a future path for creating shareholder value. Despite the softness in Calgary.

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As we discussed on the last quarter call call.

In order to provide more effective and convenience somebody that fall itself popular we launched a long partnership start with it got fall which include training for everything I be start with it.

I will not come the occasion and it's like with it was for falling following loan pool I would like to gain a more detailed introduction I'll application, we define boardex l. partner, it's called so whilst the identification of verified self pointing out that you did that to upload due diligence filed.

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These are the case.

That's now widely recognized voice quality attributes when it myself partner since its launch.

Number rivals and deal with her with 101170 asphalt September 32000 lighting, we believe our call competitive advantage, it's providing call from like for with it.

South partner and I see team will keep.

Upgrading the application to provide outsell partner with better user experience and help than people thought about that.

Entity and conduct they've kind of had to be waste the possible.

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Although we have made relatively stable adjustment to our business based on more than 10 year coffee experience in home I could see long industry. We are also depay aware that we already know natural killer, yet where there are both challenges and opportunities facing the current mark.

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The peoples Bancorp try not really enjoy destroying the calls her that politics. So not being you know speculation we continue to drive down policy itself.

Given the impact that microeconomic headwinds are having on the value and the liquidity of a collateral.

Oh, that's what the Queen outreach profile and safeguard interest top all shareholder we decided to put them more stringent control over our LTV ratio.

We're all LTV ratio decreased to 58% at the end of the third calls her up 2019.

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Hi, <unk> commitment to shareholder seriously when developing strategies that are stable effective and it can drive long term sustainable growth.

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Oh, one can we continue to do it on our long partnerships or with the thoughtful and now I'm not successfully turning many hallmark and part of her into south partner body and offer calls her we have fine incorporate smell cooperation agreement with 1150 South Park.

600 off which I've already some say the law.

So it's all our origination volume reached 1.7 build out and then be joining the call. Her outsell athlete devoted extensive resort that sort of crop rotation model, we got sucked into all aspects of the protest I'd like to conduct and Dave discussion we sell popular.

We're able to understand their most urgent need and gave a lot of valuable experience right now the number of south Florida, that's rates on sort of scale, we will emphasize oh upgrading to sell to talk about system, such as Roger only carry out that words, if I start with it.

That based on long term incentive incentive mechanism.

All you, Alberta to support future development of the collaboration model.

We think that because back in November upsells partner to reach 15 sporting hundreds by the end up is yeah, and total large national Marlow, well, yeah, I'll say, the only got him in B.

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<unk> for backing up because I see beam I'm wondering if things either kind of from high yield.

So I see no pose a threat almost like TV you know huh.

Oh, I am going forgetful parents' choice, yeah, we're hopeful that are kind of them.

All the other had we continue to explore cooperation that opportunity with wireless out or financial institution. So.

So in the called her we depend cooperates with existing trough comedy partner, such that China, Baltic chopped and job shop.

And also began partnering with new ones, including well I'm sure that chassis international trough.

I'd have to successfully launched new lending business drawing do during the quarter.

In addition, we also proactively reach out for a number of bank and phone call, Dave will discuss potential business opportunity.

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[noise] as our collaboration model extensive scale and we further reduced funding call. We believe well be ideally positioned to provide a cost summer with more affordable and accessible financial services in the near field trial.

This will help that they brought them then I'll conclude with finance and that's part of our effort to meet the financial nave macro and small enterprise or.

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With that I wouldn't dollar hand, the call all brought to our Chief Financial Officer leaning who will walk through our financial result, this quarter.

[laughter] Trust me to try and a fast again, so everybody going out today.

Well, what kill quickly through our third quarter out.

Actual.

It really yeah, what are your comparison years I passed away to reveal our peppermint [noise].

Unless otherwise stated Oh percentage changes I'm going to give or be a lot of basis.

That's all September 32019, total outstanding loan principal equates to tell feeling R&D compared to 16, BD <unk> I thought December 31st 2018.

Oh laundry is or what else.

Well once all the southern hundred eight and 9 million the IB compared to 2600 and street, mainly on D. SNP read outs to fund.

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And I think it's always a fee alone.

676 mini I'm beat a decrease I was 29% primarily due to that decrease of the law the nation water, but she is that there's all the companies that do you think further on your screen loan quality or no girls and the only thing. It's three thought it's on the Neal collaboration model.

This slow down the alone facilitation and led to a decrease in the interest and the financing service fee alone.

Interest expense it was 295 million <unk> compared to 522, many I'd be you know centuri throughout 2018, partly due to the decrease in interest bearing barring resulting from a 10 or decrease off the loan origination water.

Collaboration Cop four sales Potter inquiries to 57 million RMB, well the sort of caught out 2019.

Well I'm Neil in the third quarter out 2018 Prime late deal to let the betterment of the Neal collaboration model probably in 2000 the Nike.

Provision for credit losses.

Well, it's 55, many are indeed, a decrease though 37%.

Hey, 87 million in R&D unison period out 2018.

Total operating expenses, well 113 mini I'd be a decrease of 41% compared with 191 million <unk> you know its MPR read I'll provide an 18.

Income tax expenses.

What six to me I'd be a decreased from 83. Many IB you know some people read out 2018.

Net income was 177 million <unk>, a decrease of 25% from 235 million <unk> you know same period out to fund 18.

That's all December 13, 2019, the company had cash and the catch the equivalent of 1.5, feeling IB comparatively is 3.2 Beanie IB as of December 31st 2018 I.

The aggregate delinquency rate or laws are all originated by the company.

Fisher reprise that total balance of outstanding loan principal well beach and installment payment you stop deal.

It's a percentage off the aggregate total amount of loans.

Oh originally had since 2014 slightly slightly decreased phone.

7.6% as of December 31st to fund, the 18% to 6.2% I South sometime but certainly 2019.

It's not I mean, I like to open the call for <unk>.

Thank you.

Thank you.

Well now begin the question and answer sessions.

Ask a question you were press Star then one on the Touchtone phone.

If you are using the speaker phone. We asked you. Please please help your handset before pressing the keys.

At any time in question husband addressed and you would like to withdraw your question. Please press Star then too.

Todays first question comes from the beginning of S.W.H. wide. Please go ahead.

I know.

Yeah, well use arent you know new Gen only need all Nick.

Chicago or taking the time, well gosh I'm sure sure. What we are shouldn't you should be in showing she goes on for sure.

Oh sure notch I'm sure. All these are the charger, which I'm just curious on Russia or something.

I've two questions first CFO Mr. Li.

The first one is on cash and cash equivalents on the balance sheet is lower than the same cure period off last year and the second question or some other liabilities show some increased comparing to the same period of ER last year I Wanna.

Ask Mr. leach, okay. They are great explain off that.

I want to at least I did when do you sense, just wait how I'm not sitting in the general Yeah somebody else will shoot me I'm, sorry, $1.10 latter shortly.

Let's talk about past first.

<unk> decreased from 3.2 building RMB, if on last year or two one and half building now.

And then I'll start third quarter.

Well I mean, the since you should probably defer that should we oh, sorry beat on top of innocent. He should also some promising 40 vessels.

Most off our cash on cash of krill equivalents, no matter, what and 3.3 0.2 building RMB or when the half building RMB. Most part out there was the cash we put into transplant.

I think our kids unified Josh and should I wasn't Ferguson pool for cannot see it seems like you called that you'll.

The drop off the cash amount represents a badger negotiation. They made racy trust plans to a bad or structural or found.

Each and the shouldn't you and type of Angela showed all the Talladega, but she can't Miss younger so you need to how does she was shown if you don't eat.

It was restricted by his tenure and before so it wasn't really.

It wasn't really like fish and before I. Let these funds you do a woman because your mobile Unfortunately, didnt I Talladega causal time, when the G. But did you had European Dodge when those on T. and you're not you don't think infotainment.

Other jumped either she engines the in the chart, you'll see should a woman make a keyboard.

Well, what do you hold me, but people that do Thomas yet it seems that legal genome shelf Jewish solutions, you already thought Aki golf.

In the third quarter of 2019, we have reached.

Pass all pastoral agreements with many else to trust companies. So that they don't have done much idle cash that way, where you're actually saving interest on that.

John Hart. Some do you want I don't want me don't wait you know she was the only Chagall woman does it didn't touch on but so much on but you're really talking about.

So we are using the cash more effectively and or the overall expands on the cash it's actually lower and the filter.

Just a change in the judge on them and he that's about the decrease else cash.

Lee hard just to.

That's how about that Johnson on for that definitely you got other than I did it either you got some job now, though there say account on the balance sheet called a other liability I want to talk about this increase for now I think definitely young woman should or should it be gosh, you mission them washes on that.

On the first thing I want to point now is that this increase out other liability is caused by our new model years I've seen them washingtons out so he may be backlog.

Then the hopper and thoughts on now right into our sure well you'll die.

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Entered a new model for Ari.

Lonely originate the sales parlors have to put out they credit risk medication position, which you closer to around 20% healthy loan amount then you kind of all the data SIGA how to use already bath <unk> body on she could easily yours.

Oh, what you're not a whole Josh so among the other liabilities there is around.

0.7 building RMB that is the credit risk medication position put out by the if there was partners.

Susan I really like really you know you again goes from here.

It is somewhat special.

Who watch Wasnt, a cohort from top honors anyhow talk on and usually going happy to even thought she can they ought to you know ticket if the clients or the the borrower. They pay on time, if it's the recognized I'd say liabilities because the way they will have to return, though this amount of money back to them because it helps partners.

And with a couple years. She does he won't know who oh I'm, putting on though I'm not here either you seem to legal I feel quite yet when yet on that.

They should all women so trying to drive down he got.

And a in the in the circumstances when there is that delinquent loan and the other sales dollars for it feels to bad to repurchase the.

D.

The delinquent loans that they leave it alone. That's that's part of the other liabilities will just be used to be worse, our asset and increased and increase our quality.

The policy on the asset.

So you take I think a figure I think our liability.

So what do we see it how to Cushing, but okay. So that's why I called this part of that ability to special.

Well, if we dollar I hope your friend Downs are helpful.

Well that's it.

Thank you.

And ladies and gentlemen.

Once more if you ever questions. Please press Star then one at this time.

Oh, okay.

Actually are they on.

My question from that for me.

And.

It's asking I see their quality off your asset has been improved a little bit.

I want to ask CFO Mr. Lee you took a break explanation on that and how he see it goes into future chosen you're sure what kinda most of the financial downside scenarios look I shall not much I'll lay this out in the south holding in general for the users on Mike you talked and then kind of late last night and should or the mail.

Huh.

Sure Yeah, Gunflint country now digital before.

The first thing I want to point out is that a quality off the asset up the company has always been good in the past Michelle what Mr. Yu yada.

Yes. It will eventually you'll do yada to try to let's say I cannot that Oh, they're actually I, usually you E. Cig. He actually hits you should also see just again, let's see those are crucial there okay.

The first thing is.

We have collateral for every.

Long they put up lift facilitate.

Even though it shows some of their delinquent loans on the financial stuff on the financial reports.

As time has five they cannot always get back those still it's part of a big holiday, it's collect that those part also laws.

Are you maybe even a woman law. The you know isn't that a phone <unk> genius, GGR, Mindy actually going but I thought I see Todd the T.J.P.T., but how you do much about flat.

Yes, hi doors.

As we have completely shut down our old business model at the end of last year. So they the delinquent loans under the old model has all been exposed and we don't see much more coming from old model in a filter.

The problem here, even seen what you thought you do we social you'll should again that well Gee you got she didn't call do though not mosquito because again to see you alluded to what they each have nobody's yet.

You know dock mutual T. C. I'm just right. We showed that you know you got to your though all the other hand when it comes to deal collecting all fun nonperforming collecting all delinquent loans. It takes time. So most of the on 'em delinquent loans under the old model has entered into the a collection period.

So it shows a lot of collection alone.

Its home phone fooled me that itself and I don't think a tick up <unk> hi border Sam Donaldson, Yeah, you've got to pool.

Hi, Joe.

Looking into the future, we don't really see that delinquent rate should go higher.

It's just going to be lower and lower as contest just by the she'll take let down you may yield.

Okay Fair enough. We go ahead.

Let me, yes, we see on what you hear.

He.

And should keep it on do you all to go over and you put color sweet tea and I pod I think she didn't Hungary, Turkey as for the new motto says we have play.

Our repurchase or buybacks Las Vegas, our sales partners, we have seen some ah delinquent loans, but most out there has been has been repurchased by the sales partners.

Well I don't want minimum age he got together.

Yeah with the.

He got to take a SIGA, they really seen garden and go convey you guys someday be are either.

So <unk> again looking into the filter first so no model.

Considering all those factors weight, thank the delinquency rate well remain.

Stable yellow into future.

[laughter] I hope this well I hope you'll find it sounds very helpful.

Thank you and ladies and gentlemen, once more to ask your question. Please press Star then one.

Our next audio question comes from William.

Gregozeski Greenridge <unk> Greenridge Global please go ahead.

Hi, what was the average loan size during the quarter and what was the amount of loan origination between the sales partners and your existing.

Customer base.

Chosen to your sure side it sounds a little Joan lunching during the late done study, that's all calendar Deutsche all or alcohol, its I phone congenital adrenal, you'll adore shellfish industry ocean or.

Similar to this off on or around your they'll she'll woman dropped logical or in the sheltering that's off on it.

Ah Ah Eagle in <unk>.

Huh.

Due to our two times in the background Lucky Jameel kinda talk to them off soccer sandals Wendell you.

As for your first question on the average ticket size.

Wasn't Chad I didn't really change a lot comparing to.

Other other time it remained at a round point Sixmillion RMB.

Are you May want me to kind of the yield Temblador sure loosen. She a lot yeah will almost 500 people thing really too because I thought I'd.

Hey, good Jane Fonda, Tequilas, all over the horizon pharma three much ambushes pension and essentially have shut down our oh they'll come completely.

So in this three quarters.

All of the loans was facilitated under the new model.

Okay alright, thank you.

Take a woman meals Melinda welcome.

Okay. So does it.

And ladies and gentlemen, I was their final reminder, if you like to ask your question. Please press Star then one at this time.

Ooh pause momentarily to assemble a roster.

And today's next question comes from Jim Young.

First trust. Please go ahead.

I do hope you all these oh well once you start when John just when Youre doing Baldwin Jinko coupons. So do you are going to war going so yeah, we'll kind sounds like you're talking about any of the holiday season. The called people see it was you know she knows what type of.

NAV question for Mr. Li.

Under the new model since there is a credit risk medication precision has the company consider to go to a more cities to facilitate loan.

And even the ones you know how you're not cigarettes, you just see more should give them and Santa Ana.

No problem in that you get you go farther and.

Okay.

I'm not what's a good question.

I think the Neal model has brought us to opportunities.

Oh Gee development off the off our business you know you all know Horton to take the trigger.

I'm going to drive all the time to seek to see good yeah functional or you were telling on it then Josh.

I should here so you should I wasn't enough once you.

We can somebody they should though on that.

True usually I'm sure you just that Chinese I'm, yeah, Okay, even going to go in a quota.

Okay.

Since there is the fiftyth existing itself or sales partners. The first thing is take Irish out for a business and the second thing is is there are putting up 20% around 20% off the credit risk mitigation precision, it's actually lowering our at risk as a as a that risk off the platform. So that way it gives gives us.

More choices.

And designing products and the selecting cities.

I don't think it's easier to what I know you May you want me how soon do you achieve.

Sure Yeah socially.

It's Josh Yeah, no as I tell you, what I'm wondering evenly or I should say, yes.

Please do you guys I'm sure that figure I cant tell the should get thoughtful though.

I learned a nail model when we had won two or do I loved business and Neil City, we have to train our own sales personnel, but since the sales Thunder, if they come to us with business.

It it seems so lots of time again regarding elfa training or sales so that give us give us on us more twice this when entering into new cities.

Well you know you they cannot you've just seen that im sure well woman really secrets I'm sure. Some that I don't want going in hardware mcleish with on the T. golf.

[noise] speaking of the risks.

As we enter into a new C.D. and we consider it as say city with a highly risk we whale a josh the percentage of credit risk management position.

Hi, John if he oversaw the fall woman the figure I think that sort of clean room here.

So that way Israel, our lower our at risk.

Protect protect us from the risk profile, that's well hold vehicle violent you'll see not too and it won't really.

The a problem for us to enter into new areas.

Okay.

Thank you hope you'll find is helpful.

Oh, it's usually don't give up.

Thank you Mr. yu. Thank.

Our next question today, it sounds from its quite Oh Fotis. Please go ahead.

[laughter].

Oh, yes, you can save them smoking with you're actually going to cheat sheet is actually Jon Chappell anytime you see why you need there.

Machines are you, hoping sure limiting your catching Josh I appreciate you Chen and Tecan machines, you only gently I'm Joe machine to machine Hogan should come the Atlantic Sea Huh, [laughter] cheating and speaking yes. It was shot in there you go teaching you Gotta, you're now can now well she does your home.

Well the CIMB bank, we Josh on the machines aren't going to show I couldn't go to any good. So when I got you can but even if you're going to come back.

She's yet.

Thank your for the opportunity to get to ask a question I have a two questions for the management you have mentioned that a you'll see in exploring cooperation I'll turn to service the Neo trust companies under the new model. So first thing I want to ask that.

Under the Neil the new model N B I would model on was the.

The structural on trust companies, who have been working with and second thing is I have heard from you that.

You are considering and trying to lower the financial expense up the company.

Wanted to ask was the outrage financial expense rate, that's where I know.

So its young woman syndrome, which I like downs without a whole bunch of anymore.

Right now in this particular period.

Until now our biggest ponder is still kind of Flotek Trust.

Let me go see Vogel <unk> how to.

How to how to go you shouldn't I'm not sure.

I think every on trust company has its own competitive advantage.

Ah, yes into one of them with the money until.

And.

Some of the trust companies are really good at a rate things out.

Do you everybody watching what to think that Tom seasons in the Ziggo greenhouse if you should see but these are they called <unk>.

For example, China Flotek has the fast long term found.

For lighting Trust.

I can I guess is always downtown so when I seem to walk wondrous, though it sounds easier or transition from even effect once or twice and told them. That's one piece in the kinda talk or something.

And there are other trust companies, such as well noninterest Shanxi International Trust or drill high trust that they have an advantage that they are cheaper.

In short term.

As far raising.

Generally good I'm talking about that.

I think I couldn't chunky that you're talking about where you young for do you think that Chinese approach on T. that'd be good filling out the real monuments either.

Scenario when she doesn't institute him because he said yours.

And there are other trust companies.

ER has rate even cheaper rate on the you have a long longer term.

Saw raising because they are they are bringing and that's money.

So that where they can provide us with a five year 10, near our 80 or tenure put up.

So well machine tools within 10 night, California.

The thing for them, but I think I got it seems like you know the ones.

They really take it seriously.

With Oh, the trust companies that we have been working live and Ah we are working with right now.

For me I see on from what is known for less than that.

Okay.

And we're hoping that create 18th fair trade portfolio will bring us they better structure of Oh, the found source out the company that's on each home, but it doesn't I don't want mentioned that the blend seasonally is where you need a need somebody you guys had problems.

As for the financing cost.

For those products that sure that's a within one year, we have say interest rate at around 10%.

Chunky like young woman Dinesh unusually low for the long term.

Found.

Everything is so wrong or 11% hit African [noise].

What I wonder, if we docile, notably documents.

I Hope my answer could.

Huh.

Thank you.

And ladies and gentlemen, our next question today comes from summer soon a private investor. Please go ahead.

Oh, no attention when John I'm sure Joe the key to heal accounts had team does fields you shall show like Oh. It just it was just I pod. We show is gonna be sure Oh, you body. So he only I wish that we found that shouldn't mail she decent Sheila.

I heard from a C O merger and he is ER.

<expletive> that though they recover rate out the company during the third quarter was around 1%. So does that mean there is no actual loss as for far from the company.

What do you guys did I answer them.

Yes to stick overall, yeah is there is no actual loss double this woman either go up yet I shouldn't studio, but some people not only on citizenship, that's moving on I know people Nielsen sure.

The late do recognize laws, maybe ice certain transactions.

But I'm just thinking Oh wait till now recognize any loss.

Yes, it should essentially Undrawn music on yeah. They got a bunch of course, it's hard to what I got to see Nigel.

On the transaction, which caused causes a lost to us is a lever there.

That's holds only that don't end, you're talking about you guys. Unfortunately, nimble <unk> and just again, we from since since the beginning to right now we have in and they have been able to recover every loan.

Other block.

Thank you.

Oh, that's just yet.

And ladies and gentlemen, as a final reminder, if you'd like to ask your question. Please press Star then one at this time.

Once again, I don't know pause momentarily to assemble a roster.

[noise], ladies and gentlemen seen no further questions I'd like to turn the conference back over to Christian I know for any closing remarks.

Thank you that concludes tonight's call. If you have any further questions or comments. Please don't hesitate to reach out to the IR team. Thank you and Goodnight.

Thank you Sir <unk> today's conference has now concluded we thank you all for Titan in todays presentation. You may now disconnect your lines have a wonderfully lists.