Q4 2019 Earnings Call
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Thank you.
The next question comes from me Pani, please. Go ahead.
Good morning, and evening and welcome to the CN Finance fourth quarter 2019 Financial results conference call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal and Conference specialist by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions.
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Please note this event is being recorded.
I would now like to turn the conference over to Simon, please. Go ahead.
Thank you. Hello everyone and thank you for joining out today. See you in finance earning release was distributed earlier and available on our our website as well as PR news when service is off on the call today from CNN Finance Mister Bingley Chief Financial officers will review business operations and Company highlights followed by Financial results. And the Q&A said I will see old me to drive want me to send his regrets. He can join our call today because he has meetings with our Regulators to ensure. We are in the best Market position when you are back in business.
And here from every breath. I have three questions. The first one is how is the company planning exactly to scale the collaboration model? The second one is under the epidemic. How is the company's collection going? And the third one is how is the name is the disposing system of the company going.
Before we before we can I'd like to remind you that this conference call contains forward-looking statements within the meaning of section 21e of the security exchange Act of 1934 as amended and as defined in US private Securities litigation Reform Act of 1995. This for statement is false statement can be identified by terminology such as will expect anticipate future intent plants leaves estimates Target going forward with Outlook and similar statements such statements are based on management current expectation and current market and operating conditions and related to event that involved and unknown risk uncertainty and other factors all of which are difficult to predict and many of the on many of which are beyond the company's control which may cause companies wage.
Hold on 1 minute. You got you got all the questions. I will answer.
About how we're going to acquire effective sales planners, sometimes the fact that you look like they introduced the we have been fine-tuning our system our policy regarding the sales Partners. Give a green 2019 black Honda.
And based on the information we're having now we have tried to setup networks scheduled across the country and we have feedback from our sales Partners home phone, like a woman, like our platform is highly attractive to our sales partners.
True results performance and achievements to differ materially from those in the forward-looking statements further information regarding these and other risks and uncertainties of factors is included in companies filing with the Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information. So usually event and otherwise except as required under law is now my pleasure to introduce mentioning, please go ahead. I don't see yeah, I think. Yeah. May you have a phone call.
You may think a single quote you at home and there is a certain way to Thursday. For the sales planners as well.
Please think I think like I said something like a dog again based on the feedback from our sales partner. First of all, we don't see many competitors that's doing the similar model as us and second thing is that our model recognized of the sales planners as well. So what we're thinking about now is just how to roll out this model to the whole country.
You don't usually thank you for joining a call today. We would like to report on business operation and development and financial results in the last quarter of 2019 and 2019 as a whole. I know you're even more interested in and I will talk more about the impact of Cold War nineteen outbreak of the finance business the challenges and potential opportunity presents during our birthday China Sea and finance Implement operating policy to ensure the health and safety of our employees partners and clients. We will continue to grow and equip value for our shareholders month later. We will answer your question.
Don't you have an incorrect starting from the second half of 2019? We have been giving seminars and just introduce this new model to the potential sales Partners. So you could take a shower or anything else you can you come like Thursday at 3:00, but you don't sleep very first Google for a salesperson or if they have achieved very positive goals standing up to our collaboration mod.
So this is an easy one. Yeah. Well, mr. Chen your showroom various times a year off quarantine how you most of the revenue and net income wage? I mean at Redmond be five hundred ninety-eight million. I remember the 61 million respectively for the physical year of 2019. We recorded a revenue of them industry building on an outing come off from Indy five hundred five hundred thirty-five million after four years of business model upgrade. We transform from a captive Aire Force business model.
I think their their experience their success was very convincing to the other sales partners. Are there potential sales Partners? I think the main source of the potential sales standards are our former competitors in the market.
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okay with you I think about you know what my shoulder. Yeah, because that's your time off as we keep on promote our collaboration model. I think its advantages will quickly show itself to our potential sales partner and we have started the market as we said there are many small and Scattered Loan facilitators in in in the country. So we think the potential Market of the Dog BBQ in China.
2:00 creation model operation self model 2019 has proven to be a year of establishment and development of an abstract efficient and more cost-effective business model. Although the total long generated from the new model with short of our original Target.
Based on the last one. We learned we are confident that the advantage of collaboration model will be fully realized in the near future. So you can you put off the phone plan off homerun Washerwoman an engineer champignon children. She said she took too long.
She was just too often do more promotion and let the sales planners. Earn what they deserve.
And I think that's that's the key factor to our potential success. That's where your first question.
Yeah, I went to school. We have to admit the name under the epidemic or collection was somehow troubled.
For Seattle Finance further tightened the risk-control betrayer in the first quarter of 2019 due to the uncertainty of the market condition and slow down the GDP growth in China. The average ratio was adjusted down to 55% in first quarter consequently, the total large Nation volume was short of a Target another contributing factor of the slower loan origination value coverage Nation growth in 2019 was the longer than expected time for us to establish and find you in the collaborative model in the first half of 2019.
Think about connected to each like that but it's not just for us is for his spared by the entire indikitch. So you met each each month of the epidemic many some of our former collection methods could could not be conducted at the moment.
Origination volume started to show steady growth in the second half of 2019 as a measure of risk control and a key further of the collaboration model. We reduce in-home cell course significantly in 2019 as a result in finance able to cut down six calls such as employee conversations and office space rentals same time in the 237 million in whole year there for the company has successfully transferred itself to the new business model and reach out and reach our goal business operations. She's from consoles. Wonder. It's so easy for Thursday.
Usually I think Shaman such as outside collecting I think yeah, it is a moment. Please hold a cigarette but it is also a great opportunity to see if what we did last year was successful. We have set up several methods several different ones too for the loan collection home, And please hold for the outside. This is collection is only one of the procedure we could be using Smith shene. Yeah. Well, I'm going to Tom sure that your time for D. We have go more for judicial procedure during birth.
15 time off so I can we maintain the high liquidity in a second half of 2019 and finance came into new equipment with our existing just passed. Yep and finance to transfer the replacement of lost to the trans Partners without continuing to pay interest on ideal cash and you maturity of the law the modification A reduced amount of Ideal cash and interest cost phone by seeing the finance.
Mm during to the lighting and the third one is and also we we seek to transfer off non-performing loans to third parties in Polk as well. Just a tall woman.
That's made our collection procedure more flexible.
Let me go home. This posed about 2 billion R&B of non-performing loans during 2019. One moment. You said it was a woman you don't need a charger for that. I think our advantage is the variety of collection method we could be using and that's our that's our biggest competitive Advantage as well is your first name is very under the circumstances where everybody in the market is impacted. I think we on the contrary isn't impacted as much as our competitors.
Which was a major cost in the first half of 2019 more importantly as another key further of the collaboration Model season Finance has received Remember Me 1 billion in total inquiry in quite agrees modification position paid or fronted by ourselves Partners when they sign up to the collaboration model which helped make the company more risk received.
Do you need service Once Upon a Time for friends? Who are you calling?
Well, she went down, you know.
I'm quite sure. I'm sure that you can see the time.
And especially under the new model. We have developed another another very helpful collection method where the our sales Partners will also try to discourage. Those are collect those non-performing loans for us off because they have to put out the credit risk medication position as they guarantee to the loans. They introduced the are also very motivated. She said to deal with the delinquent loans with us.
Third season finance a salaried disposals in the first quarter based on our negative outlook on property price and the quiddity in certain city as a result of the government continued emphasize housing for leaving not speculations and Associate housing regulations to save stabilize land and property price on a run in the first quarter of 2019. We dispose in the total amount of MB 600 million representing a collection recovery rate of 97% The quick turnaround is crucial to reduce risk to our operating results. We will continue to monitor the black market in China and a Job Disposal process based on our assessment of the market condition.
Luke was what I thought it's hardly a job offer loans and the sales Panthers choose to 48 the credits medication position. They have pulled up it actually gives gives us more room in the price in negotiating the price whenever we try to be exposed to the number for Malone's it gives us a possibility to put more discount on it. It couldn't be achieved under the same channel model.
Oh, yeah, Lena.
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2020 will be a year of both challenges and opportunities for finance benefiting from the infrastructure of the collaboration model established in 2019. Season Finance has a solid foundation to access and respond to risk and Achieve sustainable growth in the wrong long run. We will leverage our advantage to see same opportunities here so resistant.
So I think our the power collection method our collection procedure is very competitive in the in the market in the industry like dead dead or third question is pretty much contained in the second one. I hope this answers your question.
Guarding guarding internet, so you should see them go losing the Union in the first few months of twenty-twenty. The outbreak of the coronavirus has never took effect all business in China Sea in finance is no exceptions. We expect long origination violence and delinquency rates to deteriorate off during the first half of 2020. However, we are confident that we can further the temporary downturn on the strength of the collaboration model. Which transfer phone number.
This is a result.
Thank you.
This concludes our question-and-answer session. I would like to turn the conference back over to Simon for any closing remarks.
Thank you that can cause it's a nice call. If if you have any further questions and comments, please feel free to reach out. Thank you and goodnight.
Okay, the conference is now concluded. Thank you for attending today's presentation disconnect.
operation to a low fixed-cost low Capital dependent and highly creative remodel
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Secondly, I want to talk about our products and services due to the shutdown and how of operation and production. We focused a surge of demand for working capital after the description of business and production in China. The virus financial support provided by the government will not for limited the demands from the embassy owner. And therefore we expect explosive demands in long-term potential customers to capitalize on this unique opportunities, we and our transponder and working together to develop new products to meet the financial financing needs of Highly qualified customers.
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At the same time these epidemic will bring consolidation to home equity loan industry. It is wild while you are likely that many smaller competitors in Industry will go back in the in the in the tough environment. We believe that it's that it will be the best time for us to further develop our collaboration model expand our money sure, we will cherry-pick and invite the qualify long facilitator across the country to join our platform huge growth in the scale of collaboration model is dead. Expected. Yep. Yep.
In summary 20/20 will be a challenging year for C in finance. They will be also bring many opportunities opportunities as a leader in a home equity loan business. We will apply all of our resources and knowledge accumulated from the past decade to rule out better products and serve our customers. We will continue to provide example affordable and efficient financing solution to em at the owners in China.
Since June 12th, they took their swimming now our fourth quarter and a physical year of 2019 financials. I believe year-over-year comparison is the best way to reveal our our performance unless otherwise stated all percentage change and going to give will be on that basis.
So hear me, I need to figure of twenty twenty nine things first followed by that off a physical year of 2019 future earnings on your phone number 31st, 2019, total outstanding loan principle decreased to $11 billion be compared to sixteen billion be as of December 31st 2018.
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Entries and it's financing service fee on loans was 597 MB a decrease of 43% primarily due to the decrease of the loan origination volume, which is result of the companies stage such strategic focus on ensuring long quality over long rolls and devoting is resolved the new collaboration model started since 2019. So you'll be truthful very young age by the jumping.
Interesting expensive was 237 million MB compared to $470 million be in the same period of 2018 primarily due to a decrease in a very empowering which has higher interest rate and be the instant pavement to trust companies after borders made payments for the underlying laws which result in a decrease of idle cash the insurance on my vehicle off or on lately.
Collaboration cost for sales Partners increase to 76 million MB for the fourth quarter of 2019 compared to the nail in the fourth quarter of 2018 primarily due to the development of the new collaboration model started since 2019.
Do you feel drunk 155 you need a question again?
Provision for credit losses was forty million a decrease of 68% from 122 million MB in the same period of 2018 off the decrease.
Primarily due to Poland reason a the decrease the overall outstanding principle of non delinquent loans and Loans delinquent within ninety days result in a decrease collectively as a set of Lawrence and be under the new collaboration model the company the company fails Partners provide quite agree with medication position as guarantees for long originated through them.
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