Q4 2020 Jiayin Group Inc Earnings Call

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Good day, ladies and gentlemen. Thank you for standing by and welcome to g i n group fourth-quarter and full-year of 2026 conference call currently all participants are in a listen-only mode later. We will conduct a question-and-answer session and instructions will follow at that time as a reminder. You'll be under calling today's call. If you have any objections, you may disconnect at this time. I will now turn the call over to mister managing director of bank blueshirt group Asia Michelle, please proceed. Hello everyone. Thank you all for joining us on today's conference call to discuss our financial results for the fourth quarter and the for year of 2020. We release the result early today. The press release is available on the company's website as well as for news wire services off.

On the call with me today.

Make the engine chief executive officer Mister Shelley Bai and the midsection Lincoln call Chief Financial Officer and the Mitsubishi Funk Chief risk officer wage, before we continue. Please note that today's discussion will contain forward-looking statements made under the Safe Harbor provision of the US private Securities litigation Reform Act of 1995 or looking statements involve inherent risks and uncertainties as such the companies actually return may be materially different from the expectations expressed to them further information regarding this and other alternative is included in the company's filing with the SEC. The company does not assume any obligation to update any forward-looking statement except as required on the capable Law Offices merge that unless otherwise, it's takes all figure know to the during the conference call in Chinese IMB phone number.

Let me now turn the call over to our for you. Let me see anything way Mister was speaking Chinese and then I'll call here for 35 will translate his remarks to English. Go ahead. Let me see em.

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Duncan

hello everyone. Thank you for joining our first quarter and full-year 2020 earnings conference call with an on Europe especially year for us wage is probably the economic uncertainty is created by the pandemic and every involving regulatory environment. We achieved significant progress in our business transformation.

Most importantly we completed the shift our funding funding sources from individuals to institutional founding Partners in November 2020. We cleared all of the full balance, which is this in part by creating a similar that simplifies institution know on boarding and by enhancing our platform to enable integration and the better scalability the number of our founding Partners increases steadily to $25 and another 45 institutions are now in discussions of operations. It was remarkable to accomplish this business transformation. I made the challenges and also the same caused by the pandemic

Thanks.

Home and can be turned off about what time do you want us to further optimize our cost structure and improved operating efficiency with the sophisticated risk management platform and the and the laser like focus on driving a business transformation and improving our operating efficiency. We were able to generate a better than exactly results in the fourth quarter. Thank you for our net income Group by month.

159% year-over-year to I'm be if you one point 1 million our loan origination volume increase the 6.5% year-over-year to unveil 3.5 billing the repeat the bar or switch the 70.4% this oil. Demonstrate our ability to execute

sure. Can you hold on?

What is the balance comes a scalable platform Superior risk management and favorable economic recovery are focused for 20 21 will be to resume off my father investing in technology and improving our services.

So here I am with you.

First we're going to leverage technology and process expertise to expand into other geographical or International expansion into Mexico and Indonesia are growing grass and we intend to Target the countries in Africa next would believe that are the ones the risk management system basic consumer Behavior analytics and operational can be easily utilized in other markets is a China. Yes, ma'am.

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Max see what time you will be home. He in The Jungle Book Series 8000 go off on these kinds of messages off the Apostle could help or she's inquiries wage.

I can do as a leading Finance technology company. We never lose sight and future career opportunities. We are presently increasing our exposure to different jobs economic or excess of an increase in in sports. For example, this call is rapidly gaining acceptance you to the participation of a broad Coalition of Corporation. It's usually investors and the retail investors from Festival module Chris Gayle people millions of years Global users can buy sell trade crypto-currencies to purchase Goods. Well blockchain-based and the digital assets are developing rapidly regulatory uncertainty warrants are more prudent and conservative wage H to pursue this opportunity on April 5th announcement acquisition of business, which engaged in design of chips for cryptocurrency mining wage.

Semiconductor chips my new hardware as a management of money farms and pools Bill next does not directly mine cryptocurrencies as they say in a good rushing want to sell the picks and shovels will net will be managed as a separate business unit until we can identify products and services images with our Core Business wage. We do have a plan to consolidate the finance and general administrative functions to streamline the supporting functions. We are excited about this opportunity and we all share more with the call.

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Is that I don't know turn over to our cozy phone selection. Go ahead.

Thank you. Mr. Ian and Shelley and thank you everyone for joining our call today at Missouri and just mentioned we generated encouraging results and the fourth quarter. We continue with the operator conservatively and the chipped outstanding bottom-line growth in Q4 our not napping, Rich 281.1 million RMB up to hug, the 58.8% year-over-year the results fully reflect our Relentless efforts to optimize our cost structure and improve our operating efficiency wage.

We also Remain the Prudence in our operations with increased emphasize on risk management and the credit assessment we continue to focus on serving higher-quality repeat borrowers. You can see this in our repeat borrowing base, which was 70.4% in Q4 versus 65% and the same. 2019.

For the full-year 20/20 repeat a bar or a rate reaches 75.3% compared with repeat borrowing rate of 48% in 2019. The increase of repeated borrowing rates improved our credit regular profile and ensure the quality that long performance. We remain dedicated chefs controlling platform credit risk without improve the credit scoring system and events the technology capabilities.

No, then it goes through our financial highlights for the quarter before I go into details. Please note that all numbers presented our in our and our fourth quarter. 20/20 unless stated otherwise all percentage change on the year-over-year basis.

Las otherwise specified detailed analysis is containing or earning press release which is available on our earnings release as well as our our website off. The interest of time. I will not walk through each item line-by-line on this call. I will just highlight some of the key points here long origination volume of 3.1 billion RMB up 6.5% This was impressive considering the state of our business transition and the unfavorable market conditions would cost by the pandemic and the regulatory uncertainties.

Nat surviving you was 340.3 Million MB down 3.5% The decrease was primarily due to the lower outstanding loan balance revenue from local cities. Your services was 291.3 a millionaire and be up 5.3% in line with the growth of our life ordination volume with experience of P2P balance left in November. We are glad to see resume the growth with high quality borrowers and the stable institution of choice.

No.

Other Revenue grew by 66.3% reaching 45.4 million RMB. The increase was primarily due to overseas Business Development moving on to cost we continue to optimize our classic structure to further improve operating efficiency wage is reflected in a greatly reduced operating expenses in Q4 total operating expenses for 287.4 million RMB down 24.6% from 381.3 million MB lot a year or imagination and the servicing senses were 64.5 million R&B don't 17.1% primarily due to reduce the collection costs. We no longer provide this service under birth.

Are you this is model allowing receivables on the contractor assets was 20.3 Million MB down 63.8%, So 56 million in the same period of 2019.

The decrease was primarily due to two factors first the overall decrease in Long origination volume and the second lower credit risk under the new business model.

Zhi at Napleton's was 42.9 Million RMB don't 43.5% primarily due to not sure based compensation expense being allocated to GNA census. R&D expenses was 41.9 Million MB up 8.5% This was mainly due to higher salaries and personal expenses allocated to research and development as we continue to increase investment into technology development.

So it was in the marketing expenses were down 11.3% to 117.5 million RMB while we're still focusing on higher-quality Bowers, which enabled us to effectively reduce the sales and marketing expense this quarter. We had a game stuff 170 million R&B wage, which was due to the wave the contingent the consideration payable related to the disposal of the Shanghai tying.

To be conservative. We also booked and thirty two point six million die and be lost provision related to a short term investment. The last was primarily due to the estimator related to the convertible notes issued by Cornerstone Management Inc. Held by the company.

We achieved a tracking possibility too tight cost controls and improve the operating efficiency. We posted a net income of 81.1 million RMB 250 8.8%

No, let me quickly provided some key financial metrics for the full year 2020.

Revenue was 1300.2 Million MB down 41.7% The decrease was primarily due to decrease the volume and the chef to institutional founding Partners. We Remain the visual that don't cost control to the same margins and improve our operational efficiency. Total cost was 998.1 Million MB compared with 1695.5 million RMB last year. I had a balance sheet as of December 31st 2020.

We had a cash on the equivalent. 117.3 million MB compared with 122.1 million RMB as of December 31st, 2019. All sufficient cash balance positions are favorably and the current environment and the gifts are significant flexibility to make future Investments.

Last as Michigan just mentioned April 1st, we entered into your framework acquisition agreement with Shanghai brunette and its shareholders Thursday applicate consideration. 95 million. MB giant finance will own 95% of the equity of of Shanghai Green Dot on closing we expect that investment in shall have three nuts will provide a more business opportunities and benefits both sites and facilitate our future growth.

Move into our guidance given the recovery. Chinese economy and the fastest-growing Consumer Finance Market. We expect our loan origination volume down 1 20 21 will be between 30% to 40% growth year-over-year.

With that we can open the call for questions. Mr. Ian our chief officer and I will answer questions operator, please go ahead.

Ladies and gentlemen, we will now begin the question-and-answer session. If you wish to ask a question, please press star followed by one on your telephone, and please wait for your name to be off. If you wish to cancel the request, please press the pound or Husky once again in Star followed by one person.

Do you have a question from the line of Scott from ahead?

Good morning, and thank you for taking my questions and congrats on the strong quarter. My first question is about the successful expansion into Mexico and Indonesia. I don't want to congratulate you on that the hard work you've done there. You kind of provide the outlook for the expansion in in 2021 and maybe the vision for the company growing in international markets over the next couple of years.

Hi Andrew, thank you for the question. This is I'm going to take on that question. So far. We are not yet close to providing guidance on our financial outlooks for expansions in those two markets, but I want to confer the confirm International expansion is a key component of em, well strategy as you have noticed before whether years of proven track record in managing risk, so we would like to further extend also skated a risk management capabilities to towards the national markets so far. We are gathering our cloud-based technological capabilities and to facilitate online learning on line off my home loan organization and management in a variety in a range of markets is one of our leading markets in the market. We are playing now so far we are dead.

Glad to report that we all want one of the leading players. Well, one of the leading players in Mexico Market. We are starting to see more of appears from Chinese markets are starting to enter that market. But so far we are only taking a leading position. They're comparatively in Indonesia took it as we have reported about a year ago over a year ago that we are in a trial period of operating online Landing Landing license in Indonesian Market wage, they end up position. We hopefully to looking for more progress on that front so far as status as a trial month on a trial mode, we are expecting our overall volume to take off as soon as we acquire hour or for license.

Great. Thank you. That was very helpful.

I have a follow-up here on unrelated. So it looks like sales and marketing expenses was a little bit higher in the quarter than it has been moved across 2020. So I was just wondering if there's anything you guys were doing differently to attract new borrowers or if that was just extra noise in the quarter.

I was all speak to the city from again. I will speak to our approach to acquire new customer and Affiliates cannot speak to the magnitude of the shifter home change on that metric in 2020. We are still operating in a way just to acquire new customers online primary through partnering with other internet platforms as well as Queen customers through information feeds channels and we believe those two channels are not going to stalk and going to be our main customer customer acquisition channels in terms of the the magic numbers. I will I will give that to 2 to 6. Okay. So in terms of the the customer acquisition cost I I would like to incur if I don't answer because we are it's like well

A pic a lot of initiatives to improve to to to lower the acquisition costs like we computer models with our channels and wage try to improve the efficiency and also to acquire the customer and the more economically way. So I think themselves and the marketing expenses will be the in line with our long the volume Scrolls in the twenty Twenty-One. And although I've done this will really depends on the we will wait and see what the result will be at the end of the year where does things will end up at? Yeah, I think basically you will in line with our loan volumes.

Yeah.

Great. Thanks. That was very helpful. And one last question. If I may just want to say congrats on the improved credit quality and and increase your repeat borrowers are just wondering if there is a target number for the percentage you guys are looking for a repeat borrowers versus new new borrowers in the long term as you guys try to write way out for balance growth and a strong credit quality.

Sure the see if I'm again I'm going to take on that question. We do have a long-term long-term risk levels that we are seeking to hold as well as we are improving our overall credit profiles of our customers, but in regards to the percentage of repeatable rolls portion off for our overall business and we are going to play it as a flexible just to to to to go towards our growth needs in 2020 that we're expecting much higher growth relative to our 20 20 21. We expecting a higher growth rate of a 2020 lawn generation volume. It's like as you can see in the same one was in twenty-five to forty percent of the growth. We're expecting somewhat high growth in the in the rest of the year as we are. We are working off.

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To improve our way of interacting with our existing customers by providing better customer experience and more likely to shifting towards how we interact with the customer to to to Really gain traction Zone how repeat the customers portion of our volumes where we are in the same time. We're speaking compared to June 2020. We're seeking a much higher growth on our new new new customers as part of overall growth strategy, but overall on top of that in terms of em, on top of our overall growth volume growth was still holding a high bar on the risk levels.

Thank you very much. Once again congrats in the quarter and it's it's all for me.

Once again, ladies and gentlemen, it is star followed by one to ask a question.

We have no phone at this moment. I would like to have the conference back to our host. Please take over.

Thank you operator, and thank you all for participating on today's call and thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter all progress.

Thank you. Ladies and gentlemen that concludes our conference call for today. Thank you all for your participation. You may disconnects. No.

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