Q3 2020 Jiayin Group Inc Earnings Call

Quoted 2020 earnings conference call group.

But he just cash.

Later, we will conduct a question and answer session and instructions will follow.

I do my day.

Today's call.

He has any objections you may disconnect at this time.

I will now critical low weight to Ms. Julie Chan.

Good day show.

Okay.

Hello, everyone. Thank you all for joining us on today's conference call to discuss giant group's financial results for the third quarter Twentytwenty. We released the results earlier today. The press release available on the company's website as well as from Newswire services on the call with me today on Mr Yen in Kuwait.

Chief Executive Officer, Mr., Charlie Fine Chief Financial Officer, and Mr., Ji Funke, Chief risk Officer before we continue. Please note that today's discussion will contain forward looking statements made on the safe Harbor provision of the U.S. Private Securities Litigation Reform Act I've mentioned that do five all day.

Taking that you won't have any risks and uncertainties as such the Companys actual results may be materially different from the expense ratio right. Today. So the information regarding these deposit risks and uncertainties is included in the Companys public filing says do you see the company does not assume any obligation to update.

Any forward looking statements, except as required on that people also please note that unless otherwise stated all the Shaygan mentioned during the conference call I can you find be weak that then emailed to the port over to our CEO wait let me begin with speaking Chinese and Oh I had that right.

I will translate his comments to English go ahead, Mr yen.

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Hello, everyone. Thank you for joining our call. It 20 times earnings Conference call. We are pleased to report another solid quarter.

We made significant progress in driving our business transformation shifting some resources to institutions.

And optimizing our cost structure.

Most notably we are excited to have reached an important milestone.

No.

November 10th Twentytwenty outstanding loan balance Oh that C. P to P. Linden business was reduced to zero.

This signifies that we have successfully completed the transition to being open to that company was approximately 45 institutions [noise].

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Well, they facilitate and enable financial institutions to also products and services to our large database of Barack good.

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The magnitude of this transition is remarkable just one year ago, our castle with over 90% funded by individuals [noise].

Being able to fit to compete institutional funding just the one year demonstrates our agility and art understand and I'll send the execution capability.

By transforming our business process, well able to enable the functionality of our platform that's true up institutions can onboard and integrate easily with.

With this the team anikas relative to scale and the trust them to Oh, I think I saw this company was a technology pets flow ought to optimize the two still financial institutions.

When you saw into foundation under our business combined with strong brand recognition now called the data we have achieved robust growth for years to come.

Do you want to sort of treading water on Jani that you show momentum.

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Despite the market doesn't he has incredible speed off our business transformation.

Just in the attractive profit abilities throughout the process.

Well chip the healthy margins true vision into cost control and the better operating efficiency.

Nothing called reached RMB <unk> 8.4 million is called her up 818.1% year over year and 115.1% sequentially.

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We cannot achieve.

With our successful business transition, we will able to accelerate collaboration with me choosing a promise to further diversify our funky resources.

Dropdown our funding costs.

Since announcing all know them. The tests that are index C. P to P lending business was down we immediately on boarded another three institutions.

We now have 19 institutions all of the platform and have another statistics institutions in discussions and preparation with.

We believe we are well positioned to achieve great to pose questions and you have to true [noise].

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On the regulatory front regulators have put in place policies and the guidance associated with the development of think accordingly.

The price is mainly cover Microlending and a colony, which have limited impact on our business model.

We have fully involved in talking to our company providing cash from services.

Well think governmental regulators recognize the value that's fintech companies bring towards the financial systems, such as online customer acquisition and servicing big data analysis and the risk management.

Accompaniments traditional financial institutions by creating more efficient process death benefit everyone.

This is all positive and we think it's good news for us.

We have a proven track record of being able to be agile team fully compliant with evolving policies well maintained the attractive profitability.

That's one of the leading tech players.

Well I'm optimistic about the future.

With our business model transition completed we're still well positioned to two <unk> economic growth and the benefits from the faster growing consumer that's marketing in China.

I should note that until October woman, EPS, which is how when shoddy tiny changes.

I will now turn the call over to our CFO tiny tiny. Please go ahead.

Thank you Mr yen and they're sharing.

And thanks, everyone for joining our call today.

As Mr Yen just dimension.

Moving to three on a strong note.

Notably.

As of November 10.

Dying isn't no longer I P to P lending company.

The way it goes out all lost individually phone get it at all.

This quarter we.

We continue to operate a conservative winning while achieving a check and profitability.

We stayed I'll focus on serving high quality borrowers.

Which led to all the people falling rate, reaching 7% to 4.5%.

Loans upon the well and investor confidence remained strong.

This creates an outstanding foundation for future growth.

Now let me briefly go over the phone financial results for the third quarter.

Please note that unless otherwise specified.

All financial figures I couldn't be.

In the interest of time I.

Well not to walk through each item by line on this call free.

It's a good book to our news release for more details.

Oh wait just highlights some of the key points here.

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Loan origination volume was RMB $3.3 billion.

Punk at 9.4% year over year, but.

That's up for 4% to 8.8% sequentially.

This was impressive considering the state of our business transition and the current market conditions.

Net revenue was RMB 400, and the 1.3 million.

Downtime to 1.4% year over year, but.

But the up 6% to 3.8% sequentially.

The big sequential jump was due to the other revenue of RMB 77 million.

The increase was primarily due to the variable consideration related to automated thing that's when the program recognized for our own previously facilitated I was at a P to P business.

Since we have not because they said it would be lending our P to P. Erase the revenues will continue to shrink and there will be no further Peter Peter I said revenue starts and thrown together under one [noise].

Moving onto a cost.

That's yes cost cutting efforts are bearing fruit.

As you can see greater EBIT used operating expenses this quarter.

Total operating expenses were RMB 251.3 million.

1% to 1.2% year over year.

Origination and the servicing expense as well on the 59.5 million.

Down 41.1% year over year.

Primarily due to decrease in loan origination volume.

And it also for uncollectable receivables and the Contra assets was RMB 15.8 million.

Tom seven give 6.7% from RMB six to 7.8 million in the same period of time to 19.

The decrease was primarily due to two factors first.

First overall.

Overall decrease in for sufficient volume in a second the low credit risk on the new business model.

[noise] Gen expense and I'm, you expense Satchel RMB $37.3 million and RMB, So did not point 2 million respectively.

This wasn't mainly due to decreased share based compensation expense allocated to gen <unk> and R&D expenses.

So as low a compensation and other fitness related expenses.

We continue to reduce our cost him acquisition and advertising spending.

While still focusing on higher quality borrowers this.

This enabled us to effectively day, but used to sales and the marketing expenses related to loan originations.

Sales and marketing expense was down 34.7% year over year to RMB 99.5 million.

This quarter.

Our conservative basis.

Also had that RMB 4.6 million loss provision related to a short term investment.

Well that growth at a modest as a process and to take the necessary actions to minimize their offs.

[noise], we were able to achieve attractive profitability flow tied to cost controls and improved operating efficiency.

We posted a net income fine be eight to 8.4 million.

Up 8.1% year over year, and a 115.1% sequentially.

Turning to the balance sheet well.

And in the quarter was RMB nine to 4.8 million in cash and equivalents compared to waive six to 9.9 million ties up a June 30 21 day.

Before I conclude.

I want to mention that asked about Tamba 30 day, we've completed the acquisition of a 35% equity interest income past investments.

The purchase price was a Hong Kong dollar well hunger and the five minute approximate right U.S. dollar 17 million.

This was supported by offsetting against the receivable was held by the company from small pay.

Came faster has the internet micro lending licensee in China.

The government has a low them out and the policies to further regulate the micro lending industry.

Well to me.

So it just our strategy and assess our investment according to this ever evolving rules and the policies.

In summary.

We're making steady progress in all the dogs were optimistic about the long term promise I was hoping pegging that's true.

With the optimized the business structure and a strong execution capability, we can navigate through any future policies changes and the job growth and profitability.

With that we can open the call for questions Mr.

Mr Yen how cheap.

Oh, CEO and Mr. shoot adjusted Ouch, Chief risk officer will answer questions.

Operator, Please go ahead.

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[laughter] session and for your questions be specified the number one.

Yeah.

You can see the request.

Well.

So your question.

These best Taiwan telephone.

The first question is on Tonight at Bad Daddys price of Roth capital.

Good morning, and thanks for taking my questions. Congrats on the quarter very strong results and great to see the progress you guys are making.

First question here.

Her thoughts a revenue and margin so great group quarter on the top line I can you provide some extra information on the other revenue.

77 million on the it was it was a big big game, there quarter over quarter and year over year. So it's not true details on on the other revenue and I'm very strong margins this quarter.

Looks like you guys are good and well cost controls is that something that we'll be able to.

They study over the next few quarters. These strong margins any color you can provide there would be great as well.

Yeah sure. Thanks, My question and I will take this one.

Other revenue was it related to a decrease of the P to P greater outstanding loan balances.

With a combination of for the reversal of the overall estimate of the fund than I predicted item and other factors.

The revenue was generated its around that like 77 million for this quarter and that's true that's a longer coating revenue, where the Peter Peter I'm down to zero in November we should I have very little P to P. Greater revenue in Q4 and going forward. The the clause I'll pick up the outstanding balance had decreased zero so were not see it.

That's I haven't had a mall I mean, Peter will be greater revenue.

That's the answer to your first question and second line are you asking about our margin and the mother and driver actually thought business is a very dynamic oh.

Which is a a final outcome based on the skewed up it fitness the funding costs, they're having to take rate and quite Costa and also the operational efficiency level.

You can see some ups and downs so follow a profit margin historical range.

Active BYOD comprise efforts.

The regulation that began to transition a actually true things.

No we have forwarded it 'cause it to the P to P. A business and a 100% is shifted to the institutional loan facilities. Your model and chasing is now in a much better position than before to further lower the pricing to meet the requirements of the strictest a founding partner.

What kind of low or the funding cost by partnering with more financial institutions.

Good day credit cost to by acquiring the quality asset.

Assets and improving our fiscal management capability and then we can also get the better margin by improving our operating efficiency by overall cost control and integration that give us the technology.

Oh, I think that management team is very confident that to a long term perspective net profit margin will be maintained that you know that is stable and healthy double digit to level.

Well I hope that helps.

Yeah group that was a very helpful and good segue into my next question. So can you just provided an update on your Ah why take rate right now and the cost of acquisition, especially now that you guys have transitioned away from the PDP lending and if you guys have a kind of target marks there that you are working towards.

Yeah, Oh Q3, it took a day to actually has a very similar to talk here too because the uncoated free 100% of follow low or are you thinking about him comes from the.

He said, there's no founding and its around 7%.

I'm curious I'm not sure if you compare that to ways, our take rate last year last year I'll take rate to use above 10%.

And Oh, we are seeing the 11 to take rate to keep at that level and in public at a lower why this away low a pricing and that allow funding cost and not allow a credit cost.

As they try and objective well deserving.

Great. Thank you and then last question for me now congrats on the acquisition or the.

The investment in to keep the best investment can.

Can you just kind of provide some more color around the strategy. There and then if you guys have plans to make some more investments in true.

But I I talking about shutting investment that we made a provision of 34 million RMB. This this quarter.

Yeah, I'd add to that the.

Our acquisition of I can best investment, but 35%.

You guys you guys Oh, okay.

I mean, yeah right right right.

Yeah sure Yeah, what we're.

We're quite a fair pipe percentof the shares of the company and then it came faster right and we the consideration or for 105 million how long Doris.

And that's true that decision wasn't made the in the first quarter of this year.

And we can say, though this will be very beneficial to our overall business.

When the decision was made and the share transfer agreement actually it was signed in Q1 this year and the deal whether officially closed.

By the end of Q3, so if you look at the top but initially to hook up end of Q3, the balance of the long term investments that I might and increased and the feel free longer they have hockey balance decreased to so the Russian low wait a minute. This thing is when we made that decision cool one way to think of the micro lending business license will get better.

Helpful and beneficial to our long term business. So what made this decision and now we all know that to the other elaboration is kind of getting tighter than that because of the.

For the micro lending business, but to ask you are assessing the.

The value of this investment and well see low which we can do about this investment going forward, yes, and no I think everything is open well open minded it is.

For this kind of thing that and Oh, let's see whether we can do about that.

Great. Thank you that's all for me now.

Thank you once again, we wish to ask a question. Please press star and the number one actually cleaning.

Once again for your questions. Please press star.

Number one and lead free.

Yeah.

The cancer, the V. quarter, there's a pattern.

Thank you and saying no more.

The Q, let me try to close acting CFO Mr. Charlie said.

Thanks.

[noise] Oh, thank you all again.

This concludes the call you may now disconnect. Thank you very much.

[noise]. Thank you ladies and gentlemen, this concludes the conference for today. Thank you.

Participating.

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