Q4 2020 FinVolution Group Earnings Call
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Hello, Ladies and gentlemen, thank you for participating in the fourth quarter and for your 2020, earning conference call for for information.
At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session of today's conference call is being recorded.
I'll now turn the call over to your host Jimmy tier kind of the.
That's the relationship for the company for me.
Please go ahead.
Hello, everyone and welcome to our fourth quarter and full year 'twenty 'twenty earnings Conference call. The company results of what you should be on newswire services earlier today and I pushed the online you can download the earnings release and sign up for the company's E mail alerts by visiting the IR section of our website at IR Dot group Dot com.
Mr Feng Zhang our Chief Executive Officer, and the Jaguar F. Shea, our Chief Financial Officer will start the call with the prepared remarks and conclude with the Q&A session. During this call we will be referring to sort of non-GAAP financial measures to review and assess our operating performance.
Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information per pet and presented in accordance with U S. GAAP for.
The information about these non-GAAP measures and be conciliation to GAAP measures. Please refer to our earnings press release before we continue. Please note that today's discussion will contain forward looking statements made.
Under the Safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 90 95.
Forward looking statements involve inherent risk and uncertainties as such the company results may be materially different from the views expressed today.
For the information regarding these and other risk and uncertainties are included in the company's filings with the U S Securities and Exchange Commission. The company does not assume any obligations to update any forward looking statements, except as required under applicable law. Finally, we post a slide presentation on our IR website, providing details of our results for the.
Quarter.
I will now turn the call over to our CEO Mr. Feng Zhang. Please go ahead Sir.
Thanks, Jimmy Hello, everyone and thank you so much for joining us today first of all on behalf of all steam of evolution I would like to express my sincerest appreciation to our shareholders and our stakeholders for all of their support over the past year.
2020, it was and the extremely unusual yeah with the enormous challenges. However, despite the economic uncertainties created by the pandemic and the fast evolving regulatory environment in which we operate I'm proud to say, we have done the market very well.
The strategic phase shifting to better quality borrowers, we delivered a solid financial performance over the past year with the appearance of TTP balances in 'twenty or 'twenty behind us our focus for 2021 will be on resuming high quality of growth.
After a strong recovery in the third quarter, we continue on our upward trend in the fourth quarter, helping us close the year on a small note for the fourth quarter. Our average AR was 26 point of 4%, whereas the known origination volume increased by 24 per cent from the previous quarter to 21 billion RMB ex.
Feeding the top end of our guidance range of 20 billion RMB, we attribute to these games to our strong strategic execution, our industry, leading technology technological capabilities and all of a sophistication and prudent approach to risk management.
We have successfully completed of our strategic transition towards better quality borrowers as evidenced by the significant improvement in our delinquency levels.
Because it was our framework for enhanced the risk assessment and the management, we were able to continue decreasing our funding costs, while simultaneously increasing the number of the institutional funding partners, allowing us to maintain ample diversified and stable funding sources on our platform. It is encouraging to see our strong growth momentum.
On continue as we enter into 2020 one.
Bullshit by our prudent approach to risk management, and our industry, leading risk management capability. We saw further improvement on multiple key risk metrics. For example, our day one delinquency rate was five 2% in February 'twenty 'twenty, one compared to 12, 5% during December.
2019, before the COVID-19 outbreak.
Primarily due to our transition towards higher quality borrowers and the effective risk management the capabilities.
Our vintage delinquency rate is expected to fall below 3% in the fourth quarter compared to around 6% in the same period in 2019 for.
Moving forward, we expect our vintage of delinquency rates to maintain at a similar levels in 2021, notably our 30 day loan collection recovery rate continuing to stabilize at over 90% portfolio of vertical delinquency rates for all outstanding loans on our powder for them is also at a new historical low for the.
Sample delinquency rates that are 15 to 89 days past due improved two one points three eight per cent compared to five 6% in the same period the dossier.
On the funding side on the I'll I'll kind of form of demand is stable and ample with growing numbers of the institutional funding partners. The number of our funding partners increased steadily to over 50 as we continue to attract new partners on board our quality assets have the spud of strong demand from Institute.
Things to facilitate loans through our platform.
With our strengthened the risk management capabilities as well as better credit profiles of borrowers. We further lower funding cost the cost of funds on our platform fell to seven 5% of in the fourth quarter compared with 10% in the same period of last year.
With regards to the C V I a CS notice on further regulating commercial banks online lending business, the new restrictions on focusing on the joint lending model, we do not rely on the junk 90 model to operate our business instead of weird.
We are empowering our financial institutional partners through our loan facilitation model in which funding partners provide 100% of phones for loans to borrowers as a founding partner of is highly diversified it with the mix of Internet banks private banks consumer is consumer finance companies and trust companies the new C. B I ask.
The regulations the impact on our domestic the domestic online lending operation is minimal.
Now I'd like to share a little more about our new strategic initiatives, specifically on how we plan to leverage of our technological capabilities in the industry Knowhow to propel further growth for our company.
Powered by our strong technical and technological capabilities and the credit risk assessment framework. We have also diversified the hour lumpy the loan business into the micro enterprise segment. In 2020, we originated RMB three 7 billion in loans to over 220000 of micro enterprises.
This year, we plan to extend the such of loan facilitation services to further cater to the operating needs of small businesses. We believe offering the financial support of for M. S. E will help fuel the growth and of prosperity of the overall economy, which is also in line with the regulatory guidance in China in 2020, our micro enterprise loan volume.
A concert for around 6% of our total loan volume and we expect this portion of our business to account for about 20 per cent of our loan origination volume in 2021.
Our international expansion is progressing rapidly with the Indonesia market, leading the growth, our Indonesia operations, which today represent the majority of our overseas business. The into further test gained further traction with better than expected loan volume growth loan origination volume for southeast Asia in the <unk>.
Fourth quarter increased by 100 per cent to 535 million RMB compared to the previous quarter over the past two years, we have obtained a tier two tier lending license from the financial services authority of Indonesia, and the capital market services license from the monetary authority.
Of Singapore.
These developments are significant for us as we believe the southeast Asia will be a fast growing market. We will continue the hottest state of the out of technology as well as our deep industry expertise and experience to make the financial services more accessible for users in the region.
In light of evolving market dynamics, our business remains solid with stronger on the probably the growth that started in the third quarter off on the 'twenty, but the.
We're supportive of our technological capabilities and the effective execution of our plan and the strategy with the successful transition to higher quality borrowers. We now expect of our loan volume to be in the range of I'm. The 100 billion to RMB 120 billion in 2021, representing an increase.
<unk> of 56% to 87% year over year.
In summary, our lives it into the performance in 2020 lays a solid foundation for us to drive further growth looking ahead of in 'twenty 'twenty, one will remain dedicated to controlling credit risk with our technological capabilities given on our.
Proven track record of in technology innovation prudent risk management, and the responsive measures taken to navigate the challenging economic and the credit cycles, we are well positioned to capture of the immense potential in China's consumer and the micro enterprise market as well as the southeast Asia, the fintech markets to deliver long term value for.
Our shareholders.
With that I will now turn the call over to children's shoe will discuss our financial results for the part of it.
Thank you for it and how do I, but what.
In the fourth quarter amid a recovery income of 19 vitamin team of men and trend that we deliver the non-GAAP operating profit of 593 billion on B.
Representing an increase of 34% year over year end for the demonstrating the read that in south of our core business model.
Our balance sheet remains strong with full price the expedia on the unrestricted cash and short term liquidity.
Leveraging our store of the technology capabilities, we look to capture new opportunities arising from the consumer finance market with both the mainland China and South East Asia at the we continue to expand and the deepening our relationships with business partners.
Now turning to the financial results for the fourth quarter in interest of time, I will not walk through each of the items of line by line on this call. Please refer to our earning release for more details.
That's the revenue for the fourth quarter of the tiny 'twenty increased by 15% to about 1.8 flags building on B well one to three P. M. B in the same period of 2019.
Primarily due to the adoption of ASC 326 at the beginning of the year and the increase in loan volume.
No for sanitation service fees increased by 19% to six countries and the 14th C meeting on B for the fourth quarter of 2024, well five country and the 39 many of them be in the same period of.
2019.
Primarily due to the increase in loan origination volume, which was partially offset by a decrease in the average of each of the transaction fees.
Pulse of the tissue service of fees decreased by 36 per se. The two 100, and the 76 million on B for the fourth quarter of 2020 for all 200, and the 17th day X and bid on being in the sand period of 2019.
Primarily due to the declining after any loss of it. So some of it's the by the company and then the ROE impact after deferred the transaction.
Guarantee income was 600 and the 16 7 billion on B for the fourth quarter of 2020 due to the adoption of ASC three to six.
Net interest income decreased by 36% to 200 and for me the M. B for the fourth quarter of 2020.
For all three countries and the 17 many of them be in the same period of 2019, mainly due to the reduction of outstanding loan balance of the consolidated cash.
Other revenue increased by 16% to 162 million on B for the fourth quarter of 2020.
But what kind of out of one of many of them being in the same period of 2019.
Mainly due to increase the customer referral fees Tusa the party service providers.
Non-GAAP adjusted operating profit, which excludes share based compensation expenses before tax was 600, and there's 13 beta on be it for the fourth quarter of the type of your 'twenty.
Representing an increase of 38 per cent for all 400, and the 45 million on B in the sand period all of the Typhoon 19.
Net profit was 400 and the 19 7 million on B for the fourth quarter off the type of 'twenty.
The 90, an increase of 21 per cent compared to 400, and the 13 billion on B and the same period of 2019.
Yes.
Our core business model is based on the loan facilitation model, whereby the institutional funding partners on our platform provide 100 per cent of the false for loans to borrowers and our job is to provide value added service to the founding partners as well as provide the borrowers of SaaS to credit.
We have a well capitalize the balance sheet and on average of he is the conservative.
If you divided the total outstanding loans on our platform of 26 billion on B by all the shareholders equity the leverage ratio across the business. It was only 3.2 times.
And our liquidity position remains strong with about four points the X billion on B of unrestricted cash and the short term investments at the end of December tiny of 'twenty.
Our strong balance sheet enables us to be well positioned in the current environment and it gives us significant flexibility.
We have continued to return value to our shareholders through dividends and share buybacks.
In the fourth quarter, we have deployed 13 million USD to buy back our shares.
I'd love to say about how the 'twenty, we have accumulatively at the point of 100, and the 29 million USD on buybacks.
Our board has also announced the dividend of U S value point of one seven per at the S for physical year tied to the pension for our shareholders.
This is our third consecutive dividend the car ratio Richard reaffirms, our confidence in our business model.
Our core capabilities and the long term market potential.
Since we began all of share buyback and the dividend initiatives in 2018, we have cumulatively at the point of USD 200, and the 17 2 million in this regard.
With that I will conclude my prepared remarks, and the we will now open the call of two countries.
The operator piece continues.
We will now begin the question and answer session to ask the question you May Press Star then one on you touched on some of you or you can keep yourself.
Pick up your handset before pressing.
To withdraw your question. Please press Star then two.
For the benefit of all participants on today's call. We kindly ask your questions to management in Chinese for.
And then repeat your question.
At this time, we will pause momentarily to assemble our roster.
Okay.
Yeah.
The first question comes from on Yang with 86 Research. Please go home.
Are you thinking about it.
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Can you go on Keystone will kind of all of what medium for Qunar.
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Thiago on teacher quite your takeaway Shin young from energy would be awesome.
Since then the Gen one tied to me.
Okay.
I can't think of that back on.
A number of talking Ghansham from the channel.
How would you parse out all of them.
The net accounting auditing of the take rate.
If you kind of on one keys for Biogen.
No.
When we got from kind of on they are you know with the put it on and get.
The way you can jump on more of.
Of that kind of find the way.
On the turnkey.
If you want and that's when I have a dream or sure sure Danielle.
Why don't you take off from here.
Good day.
Let me translate my questions. My first question is regarding on the Hong Kong kind of released team.
So any plan on the timetable for that of what would be helpful.
My second question is on take rate. So we're we continue to reduce the take rate of anything of any one.
And the last question on it's about our overseas business. So how we measure of the Etame in southeast Asia, and what do I mean, the proportion of the overseas business in terms of for patient volume.
In the next several years.
And what our primary business model and how we manage the risk in the area are assuming you're on the profile of risk differently. Thank you.
Shanghai out nigga, well equity that change.
I wouldn't you know the Eagle and teenage the way you just the Gulf, what's the Charleston decision.
Did idea of thought just since that call was Hudson that attaches to the always she did you all true.
The well monessen true what kind of shot well, maybe I shouldn't you be the Hudson.
Yeah for let's say the south from the Chinese shipyard that has really got you.
The city and agile woman.
Hudson's day, you can fit on true per day, you've got the good luck.
I know the two when we if we push it harder on the pin group Huh.
The change actually woman to cause I should say ethical people who talked about.
Okay. We have met the requirements for the secondary listing on the Hong Kong stock exchange and the company is still exploring the possibility of stitch is still very early stages, we will update the market when we have for the obvious from our site.
Okay.
The hotel will go into this equation of the take rate.
That's true yeah, Sue among our GA channel that's it.
I think the take away that she said the harsh the fashion and the ship in the class.
So you will see kind of losses, I think outweigh the English.
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The net yourself on your English as the top of the losses that are to go out to the super tight.
Simple meals.
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You're going to choose your finger on what I think I saw one.
I think that didn't quite of that.
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But like I said I was just.
Like all your interest of yeah. So listen why don't you should so which is the saudis.
The IPR food is that you've got coaching being pursued June single digit growth take off on that.
So tier ones for me I told you the to me that Josh It didn't gather took a hint she puts the debt. So you do on my yet she says the casino of whole net options either to go. So you can of course yeah.
The new idea of a woman.
Okay. Okay.
Okay, Let me do the translation for us Okay.
Let us recap of the regulator stance on pricing for four times L. P out when the likes of private lending and it's not a pickup for us on how genetics conducted using the loan facilitation model and from piece of perspective, we have the flexibility to adjust our pricing.
However, the the shrimp of price adjustment is dependent on several factors such as the economy, depending on the level of customer satisfaction and the level of infancy rates et cetera.
To consider all of these factors before making any changes.
And then the one that you said that you can take credit that's really the getting gateway attaching that lets you and share you're going to see to go from here. How do you like I said the theme trumpet.
I'll, let you kind of all women to the true city to Alban differentiate are you on a cheaper the Qatar for those of you what I see a couple of the gene since two of the center.
Essentially the nature.
The whole element that chico's, because you can somebody tell me that you're sort of out of Chile.
Yeah.
No well I know the material that you would share how should the you'll either.
Typically I think of the HIFU key novartis are too busy to hiseq wouldn't get to what you put the U C.
So the Geo December for each of that kind of the food to go up or they are yet since you could take care of the boxes that just simple you'll all of my sufficiently stretching okay. Apart.
But from pricing, we also need to consider other factors such risk the risk in our funding cost. For example, we have a really sharp with the market of our funding cost is expected to be below seven five.
And our risk is expected to be below 3% and from the point of view of where can we then to maintain the current take rate asphalt at 4% as we have the capabilities to reduce funding costs and further improve delinquency rates.
Oh. This is for I would just because of the 4% number if you do the calculation of if you do the math it is risk.
It is basically based on our current pricing, which is between 26 to 27 per cent and seven five per cent of funding costs and about 3% Pos. So it is based on these numbers they've come out with the take rate of 4% of about 4%.
Now as China has mentioned on the regulation has clarified that the the Supreme Court has clarified that the the.
For times LTR pricing cap doesn't apply to out of our business model. So in that case.
We do have flexibility and we do have group.
Two for the.
But adjusted our pricing.
The board or downward.
You for needed upward on the.
The take rate of side I was just to add the color.
On the quality side of what he juicy of all of them in the golf would you why you off of.
The woman she says that when I actually quite XI XI Jing he of.
To the mentioned to the channel that you could you would you say that you could you should talk a woman's ashutosh the Cheetah League of Italian synergetic with the weak, but they usually get pulled out of the year. When they just don't make liquid debt you can watch the safe with all of my political you Angel card you don't need the share of Parkway danger of licenses of four minutes of share because he yelled true.
Now on the same UGC genealogy, the PDP the price all the whole of money to.
If you go out to the I think Guy you Sue from credit in the timberland that we all true.
No well most of it don't eat up some of you on.
Most of the that's Russia Eagle often she the opinion, Doug I shouldn't eat a lot of Israel.
Okay, let us recap on the situation in southeast Asia.
Our new issue market is leading the group and we kept the sort of entry into other countries, such as Philippines, and Singapore, We will continue to keep abreast of the local regulations developments and keeps our operations within the limits of the.
Regulatory requirements for example, where you really have a P to P license in the nature and our average loan panel is between one to two months.
Okay.
The the whole.
Two of them all day today I'll tell you quite the to go without the fragile. Although you didn't ask your sort of you buy it because of the either this is half of which was I think Josh the extension onto the interest is highest vishal on your journey.
That should all quiet on that one way of who can choose to go way up from one edge of I shouldn't say between Hooper. The one kind of pull that yeah that your students shell changing in the tool. So that the fight of the tenure I should say on that.
We will continue to expand our market our market share in Indonesia, as we keep a lot of potential in Indonesia. It is just like China from a few years ago.
Hey, al tier.
She said she was on her hands on work through when you go on key total contact you don't actually book on that yeah, the year with of our.
So women can you share.
The Pax Americana interest four months for sure, especially ex at home with where the tenure.
One of them.
Net interest in that question. So what are the main competitors, saying the substrate Asia Southeast Asia market and.
He comes out of the loan for the patient visits model.
Okay.
Oh.
Oh, okay.
I really kind of just the adult initially you'll share took the gene into the show.
Judicial treaters of it you don't know what you are the cause of that even just the top connect you with some of it you know Jonathan for the epic, which all of it all because I thought it.
The tornadoes hail, which of the tick of puts us on board the whole notion of China.
The issue of Munich thoughts on share.
John you can share.
No well most of I told you should have on out would you, though on the English sheep.
So you might go day to go.
The well most of the open my daughters of Galactic of genius, because I think the team.
So the tier that you opened the call enabling them to quite hear what youre sort of let me tell the truth of it so I'm about to the underneath all of the play out you mentioned two tier.
So you got to go on when I see the if it's only for Hudson group. The whole message for you time your machine that you hit on the assets on and go sort of.
So so to speak of Dodge of Tianjin, you have any type of school.
Yes.
The Indonesian market.
Early stage and we do have the competence and kept the ability to replicate our success in China, but in the southeast Asia markets.
And by the way right I just want to add on debt. We are consistently among the top three.
The impact apps.
In the Indonesian market.
Okay.
I'll tell you if anything I say, hey, Jimmy if accounting true ex management very clear and helpful.
Yeah.
Yes.
The next question from Alex here of UBS. Please go ahead.
Okay.
So yeah claims until end of the two on the team.
Lots of Daniel if I can go into your day, you guys of Guangzhou of months like the tank right now it's.
No no that's it.
Each $10 you know might.
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Shall we say Oh My God, you know I was once you're watching the hands, they're going to tell me the Taiwan on Saturday.
No.
The Orange since we don't know what made it seems like right now.
When you're trying to take the channel wage a quiet in the month of ones you talked about how the it's rather small.
On a Buffalo P do not attend junior Oh, I'm thinking of tissue.
Yeah.
I know you've got the loss rate now a whole of months with the Mohawk hold on and how you choose what kind of the risk adjusted return on.
I was hoping to touch on me on.
The one do the childhood so yeah.
A J O the winches for Glenn.
When you took a hold of the time, but of course, it's you're going to do it.
On the outside of course of the T commerce not so good.
Yes, the economy.
So you got the core of course, that's like a slowdown.
I put on the tier that's it sounds of.
It's now called something out for Cook Supercuts, the shooting them Oh, let's see highlights as you can hope for.
On the two minutes that wants from now I will translate my question.
Three questions for as long as on our loan growth outlook.
The.
On loan growth guidance of 100 120 billion non volume between home loans, when it's strong growth so on.
Wondering how to manage the mine plan to a true up that growth.
It looks like our new customer growth momentum.
You are having return to a very high level.
And.
I'm wondering do.
Do we plan to reactivate our customers and increase the contribution from the higher ticket size to consumer attack a strong growth on the second question is on your and.
M. A C loan target so and you had mentioned that you are going to.
The MSA contribution to kind of per cent in 'twenty 'twenty, one so could you share with us the.
Some of the.
So it's kind of a M. A C loans, including ticket size on a vintage loss on that.
From a consumer and channel and.
And in.
In addition of how does the risk such as the return of that I mentioned on compared to your consumer credit and finally on your on.
That's the months acquisition cost.
It's been rising in the past few quarters of so that was partly driven by a higher quality customer a.
Of course, the shift strategy I'm wondering whether that kind of the height.
Because of my question cost is sustainable in the future.
Unless you ask about what else was actually at the Eagle when she heard sanguine.
So quite used to go and look at the guidance that you said you changed the I can't help but yeah.
The Ministry of Justice Ginnie Mae that continues to show a music of shingle a whole lot of customer self alita.
She's the accuses us of on a woman.
Could it be on share each institution of feet on challenging to go for that type of Oh, what's the I think the shingles food on Angus.
Youll, especially the she what are your group.
I see that in the Houston ship channel.
The net.
Shelby Tusa schedule C of O you.
You paid it down it gets in the top off now.
Now on the shall do you think of each union QC arches.
Shipyard JJ and the junior crews that you're on the history of pillar.
The only which is the cruise.
A lot of walnuts at the cellular and the Dickinson dodges to the B changing people who couldn't pay.
The whole of attrition she says that Jim good to go up a couple of share, which all of you name with you which of them little fish all parts of the machines don't fit on the hull.
Okay.
In order to achieve the target of between 100 to 120 billion RMB, we need to we need both the new and the old customers. For example in the fourth quarter, our new customer was around 370000, and this is of 50% increase compared to the creek water and really at a similar level compared to the same period of <unk>.
2019, and actually in December this level, essentially green bond book, and we expect the trend to continue into 2020 one.
All of the she has homes of the shinko they share our interest about like how well me of facial lesion kind of for like juices. She Nicaragua, a two one months ago P. Entitlement of pin pay debt. He got to go of children due to go to salute channel because I thought the fish into that you get to Houston. So you will learn to go on to a less chance of nickel tissue boxes.
On that you go home because of the Shaw will mean the configuration change.
Okay I'm sorry.
For the new customers on more acceptability of our brand as we realize that there are actually more registration of registrations actions from these new customers.
There's a whole lot of Colombian that just yet.
Our loans hold all CDR I took off the day the two P. D like hut touch each of them could shoot I told you on Shuda fish on the easier the Johnny that you shouldn't see what you think of a lot of clarity on what.
It used to detach the cynical that's the toe on maintenance out of your guidance. We have also seen similar trends with our customers as we have noticed the I repeat borrowing base has actually increased.
The all of that between tier tier two.
Because I think of a clue.
The insurance use all of the took a changing isn't necessarily beat on that are attached in the dollar to the IEA.
The two weeks, but like it's intact.
Are you going on which of the Hudson is that it can kind of tell me. It's usually on the ancient arch anything of a hint you can watch them of course, she said each of society for you for Michelle for it on the also within the.
Of course, you don't hit that day.
It's an all woman sorry, if you gave me a central registration you guys didn't so critical because it doesn't plenish asking anyway, and I assume the stagnant yourself is on attracting a machine that I told the street, you're talking kind of thought well when they go to banking book.
Since the launch of jungle, So just out of that well when the Treaty translucent act on it.
Our slow our growth in the past two years has been slow but prior to 2018, we have enjoyed very rapid growth.
During the last two years, we have been occupied with the PTP exit and trends.
The <unk> exit and the transition to better quality borrowers we have successfully achieved both of the packet.
And both of these both of these projects has been complete we have the ability to resume high quality high quality growth in terms of the loan origination volume.
On the whole sheen cooler well most of that's age of the.
Which was the final for me at your shoes Youll can do the hit towards the women side, you can share count yourself on the element.
The nature of it are that it's definitely helped the tour the challenging she got the 12 hours.
So no one day I think of you shouldn't have the try doing she's still the downtick of secret of which so you realize I put yourself on mute yeah. The total machine credit on the inside it.
We have been acquiring our new customers true of diversify of online and offline China's for the online China's we are acquiring them true information feeds China's.
The household attendance of been there can you kind of the art using acoustic and true chumpier She's the woman digger ought to be of help with a couple of doses that are well that's the way without actually chase. The Jonathan you go ahead because of gene.
That's the leases at June.
So the decision to Ohio to the cash on the take a walk to the screenshots.
So your woman that she's the are you didn't get to on one of them with you. The suggested that your guess is just about the quotes is that John that you go do you think the shipping.
Our customer acquisition cost in the fourth quarter on our Cps business is 500, plus similar to the level of in Q3, but do remember that.
On the fourth quarter was also impacted by the.
Singles Day event.
Yeah.
Oh.
Yeah, and the and going forward you know therefore as of Q4.
Q4, the cost of it will be little bit higher.
Higher because of the e-commerce on they have a lot of the.
Advertisement because of the debt yeah in the events.
And we're we're confident going forward that our oh of Cts on marketing cost of will be a control of at a similar level.
Given the better quality borrower base and the lower loss rate as well as the lower funding costs.
As such of such a Cps level, we think of it is a very healthy for our business model.
Yes.
At and I tried to answer the second question, Yeah. So our S.
That's M E a lot of business.
The the target customer of mostly on.
Those mom and pop shop owners on or in Chinese good he comes on.
And our ticket of size range from a few thousand to most weighted.
250000, RMB with an average of around 10000.
Is in the range of 18 to 27 per cent.
And the slightly lower than our average borrower on the the.
We havent seen like on a better risk quality for these customers on average of what we estimate the loss rate to be probably.
Probably the argument like.
One 1% ROA.
Then I will stand alone so the profitability, we expect that given the nice strides at a lower price the price is a little bit lower.
The also lower delinquency rates.
We expect same risk adjusted margin on the same on same of return.
So in terms of yes, I think I think that that's probably.
All of the things that you're asking the right yeah. Thank you.
<unk>.
Okay. Thanks, that's very true.
Okay.
Thank you Alex.
The next question is from I'm talking the job with China Renaissance. Please go ahead.
Equity income lines.
Parent I take it with you in the two went.
What's the Daniel Perlin Tier County, Georgia equally Sean she could actually go to part of that she really huge hole Daiichi.
So each of the Chicago Chico equal jumps on the deal.
He wanted to share its usual kind of on the shelf I E.
The five days between she will do.
Sure sure.
Just for my age again, the switch all the way to growth.
But they won't make she or he could change on the job.
The article in Puget Sound.
So the team to LNG quad.
Surgical on the Tonjes, usually at the TNG.
TC energy goes the room or should the equal.
Towards that and Oh God of war in Japan.
In terms of you know who group where you truly see if you go through most of the trial.
So thanks management for taking my questions I have two questions number one is about the borrowing demand.
Just wanted to check on what is the.
This trend.
The C from the borrower side in the first quarter and we see some additional borrowing demand from end users given we've seen from the news debt and she's cutting the credit line for the users and.
And second of that changed on the funding side.
We see our some of our peers.
The exploring the.
Profit sharing model with the funding partner.
So just wanted to check whether all of these oh.
Uh huh.
With each of our programs on the profit sharing model. Thank you.
I'll say it again.
A lot of what I'm, saying the wind tier.
Do you know why you eat you see to the Sugarplum, yet Oh, I think all of the filtration and she said the woman to go and you can cut the automakers. The the guidance you'll learn QC. The case, we got towards the end of the standard Hugo I should you should you can kind of what you said the one month ago I think of the financial agenda not only pay for she's just how are you guys.
Lots of who are two of them in the Eagle.
As usual 91 interest rate. So you can go who are due on the day you go because I think that took the.
So you don't do it until all of the magic trick or treating activism, which of course is due on meal recipes on xiaomi the machine shop.
Okay.
Okay. The demand is very strong based on our loan origination volume guidance in 'twenty 'twenty, one and also our Q4 loan volume guidance exceeded the top end of our guidance in Q3 and these are due to the support from our customers and our new customers.
The quite ambitious of.
Once you told me of calling out to go with you the.
Well, let's just make the mirror what you did as of the shoot you let the music.
The only okay for any idea do you sue on the name here.
She can't get initiation of Sheila Oh, one way of wait and see if we sort of cope with the have on hand, which was you wouldn't yet and the change from this year should on those on that when we issue the logic.
For the final quick to tell me that you can shoot of Columbia.
As you put to us the show juices or well, let the standing accumulate the.
We do not have 100% of them from the data.
Users are from the Internet dragging on but we are EBIT to indirectly estimates from some.
Of the overlaps with other players in the market. For example, we have conducted samples of the beef with the.
<unk>, reflecting debt demand has not been fully satisfied.
The old way and the tailwind here for Ya.
The child I wish I was once you get you on blah I'll ask Felicia the Cid on that so just to show the on the day kind of the became one of the stick a cigarette sales.
Jewel total shall I kind of to change once she should do you think it's true that Aqua for you it should bean meal being treated on <unk>.
So you just did it.
There are no specific guidance from the regulators regarding the capital light obese sharing model.
The whole talk also much I'll do the woman edge of the Fujitsu touches.
Touches the seagull actually with the work that you can wait until that kind of the thing you're gonna as it comes out of new.
That'd be I'll, just say net and then the tender on the need of good.
At the on the accuracy. So anytime that you can call the piece on the juicy eager because of how does it go the renewed.
From the Companys perspective regarding the capital light model, we will need to consider sort of issues such as leveraged ratio of cash positions and unit economics etcetera. Some.
Some of which enjoyed doing that of told to go on woman of the hidden in India, because I think that's how would your Ottawa all women the punch line I.
So I think it's true that just went on to that to go Moshe.
You still reach with shipyards to hold of it and at this moment the risk bearing loan facilitation model is most suitable for us that type of.
But on that just the wall, but that flow into the ocean.
So the boy.
She told towards that that's just you know in Virginia and say it was also on the about for a year since all of you got to go for the Google now.
Whole woman that union, the tick up a little bit also on the or more of a buffer chip for the full year, two where you can go you shouldn't you called for like I said, we've got PCA disbursement mean debt capital like model is not important for us in fact, the capital light model is one of our power the <unk> 'twenty 'twenty, one and growing the numbers of institutional partners working.
We felt that the capital light business remains our top priority.
That's the whole of the definitely the idea he and she net juices.
So that adds to the old machines that the he goes to the value of hurdle of the whole Digenea total overseas that.
You guys spoke yesterday of how to do that for them and Hugo cable assets.
And when you go to the the hurdles you would on tool.
So you are worried about it you go on hold to that for you. It when will you see your to go towards your hold of the tissue machine in does it go I think that's good for the kitchen.
As you know we already have over 50 institutional partners working with us and most of the institution of partners operating under the risk models are also of our institutional partners. This is why we believe that we have the fundamentals.
True.
And support if we were to venture into the capital of that modest became.
Oh sure Yeah Jackie.
Yeah.
And the interest tissues on say Jamie.
Okay.
Again, if you have a question. Please press Star then one.
Okay.
Yeah.
The next question is from Henri line for Jonathan. Please go ahead.
Okay.
Alright of me Henry line your line is open.
Oh, I'm, sorry, just military.
Hey, guys.
So all of these how long ago joins you probably all of them on sales.
Okay.
What's the kind of what's your ticket.
On the ball Corp on the.
Are you seeing there.
You've got the whole had challenging for wassa.
The golf on Friday, I saw Oh, I can do.
A woman.
Yeah.
Alright.
All of the dogs it was all what's hot in Hungary.
The muscle apologize I'm one of the lines.
Oh, you got to balance for Sundar.
I think it's on twice all Iot a solicitation of a piece of a piece of that.
They see the wind down.
Yeah Mayo woman.
So it's a much healthier for sandy.
THL woman.
For all of them.
All of them.
So basically congrats on the good results hands on it's free of surprising to see light or the matrix on volume profit above his life.
So well just wonder of life and you got to explain what's really behind our transition and like all of the fantastic.
Fantastic marches on.
Our core competitiveness.
Okay.
She's the whole react to go on here what else we'd aisha.
They are what do you do what he says you can kind of share. It's just the woman that say a cause of what she did she knows of what you want me was just on your niche.
On the whole woman's egg to go quite true Oh on ancient she's on the year on that she says you can feed how quiet it gets into the obligation I think I took the Jimmy Choo paid at Arlington, The Seawell medical upon day. She said that you want to go.
Send out of the garage to go out the lease at no of course early on your debt Here's a warm wishes of Candela shipyard either I think the so you got to go to Asia.
Those are the charts that you guys. The July a new wave of attrition inching yourself.
Okay first of all we have over 30 years of operating history, and if you look at two years ago. Our business is actually growing very rapidly, but during the past two years, we have been occupied with the <unk> and the upgrade to better quality borrowers okay.
So he knows on the edges of which of the dual always something on the way to where it fit us all shoe on the goal, which I shouldn't be here I think that's the Goto I've seen that now what your day, which you can find me the EBA now you're going to attrition of women and glad to go on to I decided to go I think of publish on them yet you didn't gushing she ownership, Utah Youll do the.
Because of what you mentioned.
The tier of an element of that countries that took a change for me are you guys I think of a fish on the took of Chow with no cash Nicobar I think the tracking the going for nickel to go on I think on Wednesday.
He signed on a jewel of Moon.
The of course should also I see G&A of the official towards Asia hooking the neat Oklahoma.
Oklahoma the quality, because you're doing the knee won't fit on childhood I frankly on the knee out when does it go tissue and the need not to hit the portal, our Walnut NGO sales try and this the whole nickel class for the traveler.
We managed to transform because the team has the foresight the.
To execute swiftly and the cockpit the capabilities in the risk technology.
Management and with all of these firstly on typically.
Typically we are able to transform very rapidly compared to most of our peers. Okay.
That's really the kind of.
Good Isa she said well more cautious where theres entry that has all of Mr. Zhao of new shipyard shuttering of the country.
And almost all of it of entry yourself because it's the more question just sort of going to hockey channel.
It's one of the concern we hear me I'll share that you have here.
Because I forgot if based on the protocol.
He said the so let me just of one of your Latin anything pursue gene J C. Eli.
Sure.
Yeah Yeah.
The woman debt securities in the I think of tissue could change your debt I think I'm washing I think of finally for me. She said all of them. If you got the initial quote on the.
So a huge young woman angle with the educators entering the tip of the tier one auto Scintigraphy, Australia took down the EBITDA when you go to IPO.
One on one for example, we have upgrade of our borrowers successfully from the subprime borrower workout, we used to do in the <unk> era to the better quality borrowers today. This is not only because of our capabilities in data and risk management.
Yeah.
The whole of she didn't do a lot less alright.
Okay she's on mute.
Hey, Harry.
Hey, Harry.
I'm on now.
Good day.
Day to day, especially that she's domains yourself from them.
The center there you go.
You've got sort of a Christmas with total should we go fish on kosta on the jogger she knows.
Now moving to go to neutralize genius in the tobacco at all what I should do a lot of short you're somewhat limited.
Jeannie Chu of Hudson's on actual Mccoughtry etame, well, Michelle it's entirely on the knee.
So it just opened two without the Hugo.
The only thing that you can book will walk us through our transition has basically comes to.
Temporarily stopped and now we have resume our focus on resuming our growth and based on our past track record, we have proven to the market and we do have the capability to resume growth rapidly.
The old Jack it up between the adjusted that well most of it on the India I can kind of what you want to ask what you yourself.
The fish on the the Shanghai.
She said essentially that you see when we get the T cell on any type of with the conclusion of nickel puzzle on putting the Corning nuclear parts of the Shelby Jewel of the video and it's all the stack, which is sort of thought you had plenty of it. All we have also we have for us will prove to the market of our capabilities and technologies our transfer of of both not only in China, but also on the international market.
And this means that we are able to replicate our experience in China to the international in the market.
Hey, Harry This is this is the phone I think China has fared pretty well.
At.
And give you more color I think you know there are a couple of things the why is our company.
I think what set us apart from a lot of other players in the market is we have a very strongest culture.
And we put a really high because our emphasis on.
Keeping like.
The risk.
At our targeted to the level and we don't sacrifice a risk for growth.
No.
On the wall of the things that I.
I can share is our president of our.
All kinds of President was the chief risk officer of the company before I joined the company in.
In 2015, and I joined the company.
As the Chief risk Officer, and now I'm I'm I'm the CEO of the company. So that kind of give you the the kind of like in the how the how important of the use of risk in our management focus and that's why.
Given our good risk track record.
We have a very smooth exit.
Of PDP and we have a very small transitioning to institutional funding facilitation model.
We also emphasize a lot on technology.
We continue to invest in technology as we believe that is of the.
The key competitive advantage for long term success in this fintech market.
Secondly, in the spring, Texas.
Business.
And finally, we have a very strong we have very strong team. So I think it is why why do you see like note payable southern today like how you see like a risk is good and the growth comes I think it really is it really is a groundwork of.
The result of many.
Many years groundwork.
We set our strategic.
Our goal of <unk>.
Direction on.
For better quality borrowers for institution facilitation model more than two years ago.
And.
We are seeing like on the fruit today, and we believe we will see even better going forward. So it is really a combination of we think a good strategic planning and the strong execution.
Okay.
The council.
Hi.
So a woman Nicole thank God.
What are you seeing daus.
Excluding blank.
I think they see the Tcf that's all for.
I sit inside of the leader.
The giggles at all.
Yeah.
So I think the non gold.
Non gold should all of your goal of somebody young.
I will just sort of woman.
Okay.
Some of them off.
On the monkey.
After the Q on my sense is on what the take rate.
Sure.
Alright.
Okay.
Total.
It's on time.
On a go.
And all of the Windows on the us home yet.
So thanks for the very insightful Terry and the various.
Quick follow up on the one that's like what the seller.
Marginal funding cost that we we kind of negotiating with the new appointment.
The current situation and for that.
On the <unk>, how much of this growth in our top line volume can be transit can be transitioned into the profit for all of light.
So on that hey, great. Thanks.
Oh, Okay, all right well I would actually I didn't see on wind tier.
David I just in the quarter you need to go to July just the I guess all on mother's day that took the surgical Winchester sales force.
The whole now on non say it took up half of all of them in the juices.
The <unk>.
Because of essentially that you the downtick of Chico.
So when you guys towards home for the 10 day Sanjaya.
Can you see yours of the gene pool. So you wanted to.
Okay.
Okay. The accounting for <unk> <unk>, we already have 10 to 15 partners into in our pipeline and we believe guys for their room for improvement in the funding fact.
That's not all of them what kind of because you have a lot of people business you can see kind of how they got the ginger, but passenger cars the way to the and I shall go much of that you see for me because what that took a checkpoint of the coke which yeah.
Cost of debt.
Oh, that's how the hit on the knee. She said what was due to the actual hips and yet the whole action Jessica two questions that go on and that's all the journey because your hurdle.
However, the funding cost is only one factor we would need to consider other issues such as funding partners ability the level of customer satisfaction. Among however at the current moment our priority is not to have the lowest funding costs per to find the most appropriate partners to support our high quality growth.
Nobody really the the.
That's usually WOMAC a lot of you are.
On the larger nation that guidance.
Well okay.
Take rate, although it took a change to the parts of that I think of since I think the strip Inc. John Let's just start graduate target of Neutrolin to the all of it to go on top of line Douglas just a mountain of UCP.
We have given out of whom origination guidance and we have given our guidance of around 4%. So if you do a calculation you would be able to have a sense of how much revenue that we are going to have total top line for bottler all of you dove, which of the Hudson.
Two years ago, you can't use of that.
Now you've got a lot of it.
Uh huh.
To listen to it that's how long of the Huntington as you're good to go for Ya artisan that she said she didn't change how we traded debt.
However from top line to bottom line the activist factors influencing this for example of customer push you shouldn't you spun off that and we need to recognize these cost upfront okay.
Just a couple of years you continue that ease of failed two of switching on the two most of the kind of to the doses to go to <unk>.
The watch as do all of that agenda took of sponsors.
How do you weigh that turned out to the depression of what did you see on.
On the particle a whole class of catching of totally okay new.
Customer new customer acquisition is not purely of course for us if you understand the risk and we know that new customers is required for growth. This is why we view new customer acquisitions as a form of investment. Okay. So on let's say, if we took a bunch of wishy washy, well more weight to the to go through the heart of cheat because I think on sheets opens.
For the whole cooked I think of such that for you maximize from a try to maximize.
The acquisition of new customers on our site.
On the leeway for each other assets as you go try to share it.
So just on the maybe the S Saturday the Saudi let's go to the.
Sure.
Ah so the trigger the such interest in the Shadow who is the blank sheet.
And other factors influencing the Bottomline is the see the accounting.
So you see that it used to on that pushed it out of a total top line of alternate on that you'll see the wage has been shipped.
Because of these two.
These two situations it will cost some diversions from the topline and bottom line when doing the calculation, but well make it on a face value of Shinji sorry to go boating on isn't a day live with all of the Nash the bus Eagle I think of.
Official what agenda on that you've got.
On it but how about on we are still computer interest.
We are still continuing to maintain a steady growth in the bottom line trend.
Okay got it.
This concludes our question and answer session I would now like turn the conference back over to the company for any closing remarks.
Okay. Thank you everyone for joining our call Tonight. If you. If you have any further questions feel free to reach out to the IR team Tonight.
This concludes the conference call you May now disconnect. Your line. Thank you.