Q4 2020 X Financial Earnings Call
Hello, and welcome to the X financial fourth quarter 2020 earnings conference call on.
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I would now like to turn the conference over to Tom Your word.
Net.
Thank you operator.
Hello, everyone and thank you for joining us today.
On the names of resolve where it made early on and a vertical on the company's IR website.
I shall income.
Oh.
On the calls a day, so as financial Mr. Pennington.
And Mr Fishman Chief Financial Officer.
It doesn't get to a free also you of the company's fishing operation and highlights so did I Miss It then well go through the financial.
Oh available to answer your question during the current assessment.
I remind you that this call may contain forward looking statements under the safe Harbor provisions on the car based Securities Litigation Reform Apple I think maybe five.
The statements are based on management's current expectations and current market and operating conditions.
They relate to events that you know on the risks uncertainties and other factors all of which.
Which are difficult to predict and many of these IP on the company's control, which may cause the company's actual results performance or achievements to this deferred maturity on those in the forward looking statements.
But the information regarding this and other business.
This is Arthur in PS and factor is included in the company's filings with the U S could you say exchange Commission.
That's not taken any obligation to update any forward looking statements as a result of new information future events or otherwise except as required under law.
It is now my pleasure to introduce Mr. Simon Cheng Cheng. Please go ahead.
Hello, everyone.
Yeah, we're very pleased to close out.
2020 at least a substantial business recovery in the fourth quarter.
Our top line so the year on year growth, mainly driven by the recovery in the loan facilitation amount, which was almost back to the levels of the same period of 2019.
I am pretty sedan paid challenge due to the impact of COVID-19, and.
I'm very proud of our team in navigating the challenging environment, our business was significantly impacted.
We also have successfully company completed our business a transformation from the P to P model to the low precipitation model based on 100% institutional funding.
In February 2021.
The China banking and insurance regulatory Commission fight on I've got my interest alone business by commercial banks with the clarification uncapped only meets enjoying demanding and other requirements there.
The tangible to be favorable for industry in the non right along with the Chinese government's work on the anti monopoly law. We believe all of these initiatives will help you a healthy and a sustainable business and Wyman for online for online lending business.
And to provide more opportunities for quoting by the low supposed to be papers off where certain scale.
And the present some level of funding partners have been gradually adjust T. Adjusting the way they cooperate with us in order to comply with the new regulations in the meantime, we will closely monitor regulatory developments and the evolving industry landscape and adjust our strategy.
And our services in compliance with government policies and market trends.
We are encouraged by the operational performance during the quarter debt. It will help drive most growth in 2020 one day.
Driven by increasing the amount of share in card loans our flagship.
<unk> flagship product our known for these patients a month.
Joe you can cause alone increased by 16, 8% quarter over quarter.
In the meantime to total member of loss force is paid to the best selling cut alone increased by 14 post re.
Quarter over quarter.
At the end of time, you're trying to get our total loans outstanding balance of showing cut along reached RMB 13 billion on increase of 19, 6% quarter over quarter.
In 2020, one we will continue to optimize our product portfolio with a focus on show you can cut it all with cash.
Did the crime horrors and has a proven to meet customer needs and better into our strategy to drive long term profitable growth.
By the end of 2020, we have also create owed on 17 loans in our PDP business and because it is all related to the pizza business.
In the meantime, we further strengthened our cooperation with financial institutions.
We achieved 100% institutional funding, but the new loan facilitation through other practical but at the end of the second quarter of talking 'twenty.
Moving forward. This year, we will continue to expand our cooperation with more financial institutions.
You speculate regional pending partners to enable Mojo grip geographic coverage of our loan product offerings.
In the meantime, well explore more opportunities to deepen our cooperation with existing funding partners by leveraging our proven.
Capabilities offering better products technology on our risk management systems.
Looking ahead, our business recovery has continued to be driven by growing market demand. So far this year, the average leverage our quality borrower base cutting edge at risk imagine must eastern trustworthy brand and a strengthened partnership with financial institutions, we will continue to improve our topline and bottom line.
Short term and I believe we are on track to deliver long term sustainable growth.
Now I'll turn the call to Frank who it goes through our financials.
Thank you Simon and Hello, everyone.
Pleased to announce the started the growth in total net revenue and assets.
Our total net revenues increased eight percentage quarter over quarter, and a seven 7% year over year.
Taking advantage of the big data AI driven technology.
Consumer constantly improving risk control and asset quality resulted in Burlington.
Improvements in the equity delinquency rates.
As of December 31, 2020, the delinquency rates for standing loans that are pass throughs for 31 day to 90 days and the 91 day to 80 days dropped to one important five per cent and 2.53%.
Respectfully.
The lowest level in three years the improvement to our current low risk profile has bought a significant decrease output on.
62 million in debt bad debt provisions for accounts receivable on the loan receivable in the fourth quarter when compared with the previous quarter.
In addition, we continue to expand our partners partnerships with third party financial guarantee companies to further optimize financing cost for both of us.
During the fourth quarter, the provision proportion proportion of the low amount we facilitated covered by a third party financial guarantee companies increased to 38, 8% from 25 three.
<unk>, 3% in the previous quarter, we expect to increase the coverage ratio of third party financial guarantee companies to over 50% in 2021.
In conclusion, our business profitability.
I'd expect to steadily improve in the first half.
As we flipped further improve our investment in the effective acquisition of a high quality borrowers and optimize our cost structure.
We'll continue to embellish on market conditions to capture more growth opportunities and increase our market share in the consumer finance industry.
Now I would like to brief several financial performance.
Total net revenue in the fourth quarter.
<unk> increased by <unk>.
Seven 7% to RMB $716 3 million equivalent U S. U S is about 109.
8 million from RMB $665 1 million in the same period of time.
2019.
Primarily due to our coverage in the product mix was the increased low precipitation amount with Shelley Carlo.
Partially offset by a slight decline in total loan facilitation amount in this quarter when compared with the same period of 2019.
Origination and servicing expenses in the first quarter of 'twenty total increased by 38 per cent to RMB $557 million.
U S 80, $484 4 billion from RMB $421 2 million in the same period of two.
2019 per.
Primarily due to the following factors.
An increase in collection expenses, resulting from a more collection efforts made to address the increased integration rate in the first hospital, yet due to the impact due to the impact of the COVID-19.
And the second that's the increase in the interest interest expenses as a result of an increase in payable to the institutional total Thomas Meanwhile to better reflect the origination and servicing expenses incurred in connection with the loan facility.
Sure.
Consolidated Trust the management fee paid to the third party truck companies.
Moving to RMB, nine 3 million compared with RMB seven 9 million in the same period of time.
2019.
Have been reclassified from the general and administration expenses for the origination and servicing expenses. This comparable figures have been reallocated to come flow with the current period's classification.
Well most of our mouth rinse.
<unk> and the contract assets in the fourth quarter was RMB $13 2 million.
About 2 million U S compared with the provision for the account receivable on the contract assets.
$52 3 million in the same period.
<unk> 19, primarily due to a decrease in the estimated before rates.
Provision for the loans receivable in the fourth quarter of 2020 was RMB 33 7 million U.
U S $5 2 million compared with RMB $16 7 million in the same period.
2019.
I'm really due to that increase.
Ingalls receivables some of the equity loans and the revolving loans.
Provision for the deposits to the institution Cooperators in the fourth quarter of 2021.
IMT knock on just 70.
<unk> 3 million U S $148 7 million compared with the same period of 2019.
Company collaborate with a number of other institutions that have collapsed guarantee for the loan facility by other companies. The company is required to pay deposits to such institutions cooperators and amount of deposits as a separate agree with each institution cooperator.
To maintain a collaborative relationship with <unk>.
Institutional cover at us and to avoid any material adverse impact on the company's current business model other future transaction cost the company used deposits amounting to RMB $970 million to compensate for such institution cooperates this loss.
For the amount that we had to pay.
Better claim right arising from before by the borrowers.
The company also assumed the rights over.
Surrogate patients and related rights against the performing borrowers, which was sold to the third party was a consideration of RMB 10 minutes.
The company has recognized above loss of RMB 916, moving an impairment of the deposits and it has also provided an allowance to total impairment of RMB $10 3 million for the potential losses off the remaining deposits.
Net loss attributable to the X financial shareholders in the fourth quarter of 2020 was RMB 655 five minutes.
U S 100 million <unk> 5 million compared with net income attributable to the X financial shareholders.
RMB $79 7 million in the same period of 2019.
Cash and cash equivalents was RMB $746 4 million as of December 31st 2020, compared with RMB $324 3 million as of September 32000 and findings.
Now for our business outlook.
Our business visibility has improved to a certain level.
Therefore, we will provide quarterly guidance moving forward for the first quarter of 2021, we expect total loan facilitations to be RMB 10, 9 million and the preliminary result, after net net income attributed attributable to the X financial.
<unk> share with us to be no less than RMB 110 minutes.
For the second quarter of 2021, we expect total loan facilitations to be in the range of RMB 90 billion to RMB 12 billion and net income attributed to the X financial shareholders to be no less than RMB $140 million.
This forecast reflects our current and preliminary view, which is subject to the changes now. This concludes our preferred remarks, and we will like to open the call to questions operator. Please.
Thank you we will now begin the question answer session.
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This concludes today's question answer session I would like to turn the conference back over to Tom you were on for any closing remarks.
Thank you everyone for joining us on our call today, if you haven't got the chance to raise sufficient.
Pleased to answer them through a flow of contact they look forward to speaking with you again in the near future. Thank you.
Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
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