Q1 2021 X Financial Earnings Call

Good day and welcome to the X 5.

Good day and welcome to the X financial first quarter 'twenty 'twenty, 1 earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then 1 on a touchtone phone to withdraw your question. Please press Star then 2 please note. This event is being recorded I would now like to turn the conference over to Tania win. Please go ahead.

Thank you operator.

Hello, everyone and thank you for joining us today, the company's results of rare disease or the other day and all of minimal on the companies of all but felt and I all of the salaries of Gopro com.

On the call of the Baseball X financial the Kennedy Center.

And Mr Benton Chief Financial Officer.

Mr. Lee will give a brief overview of the company's besides the operations and the highlights for all the by Mr. Zhang who will go through the financial they are all available to answer your questions really nice range session.

I remind you of that this call may contain forward looking statements under the safe Harbor provision of the private the 6.

So it is litigation Reform Act of 95.

Such statements are based on management's current expectations and the kind of muffy and operating conditions and the related to events. The in most of them on.

Risks uncertainties and other factors of the fish on the call to predict in any of the choppy on some of the company's control, which may cause the company's actual results kopelman of cheapness would be for maturity on those in the forward looking statements.

The information regarding risks and the.

Then the and other risks uncertainties and factors is included in the company's filings with the U S Securities and exchange cognition.

The company does not undertake any obligation to update any forward looking statements.

Gulf of new information future events, or otherwise, except as required by the law it.

It is now my pleasure to introduce Mr. Kennedy.

Please go ahead.

Hello, everyone.

The only place to report of still start of the year as all of our business will be back on the growth trajectory, even if the subsidy and COVID-19, and then at the time.

In the first quarter, all sorts of Jason do you want both all.

Both of our operational and financial results continuing to show progress against our strategy of 2 objectives.

The objectives.

Our top line significantly improved on both of our yearly on a quarterly basis in line with the substantial increase on our loan facilitation amount we're on.

Also managed to turn profitable with net income exceeding our guidance on outperforming comparator with the fourth quarter of 2019, just before the COVID-19 pandemic and then.

During the first quarter, our total loan facilitation of the amount to which the RMB 10, 9 billion on Ingersoll of $59.1 per cent year over year on the 25 point.

2 per cent quarter over quarter, representing a record the high in the last 2 years.

This was mainly driven by the strong growth of non facilitation amount out of bounds all of the showing card loans, which increased 145.4% year over year on the 35, 7% quarter over quarter.

Since the last year, we have shifted our product focus to show you on card no, which youre country of the 400 per cent of the total loan facilitation of amount for the first quarter of attendees from day, 1 compared with 92, 2% in the previous quarter.

Our focus the product strategy has proven to the effective in gaining traction among borrowers on a delivered profitable growth.

As of the year of March 10, do you think the 1 total outstanding loan balance of of shell in card loan reached the RMB 16.3 billion, an increase of 29, 4% compared with the prior quarter. We will continue to enhance on the focus on selling card loan products to address consumers.

The financing needs going forward.

In the meantime, we have been working to expand our service of coverage by exploring more opportunities cooperates. It was more of original financial institutions, well diversified geographic reach will further enhance our business flexibility and the soap awesome navigate the uncertainties in the macroeconomic and expand our file.

On the sources.

He is 1 of our key based on just the given devoted and the strategies in 'twenty or 'twenty 1 of them would be.

In addition, we will further strengthen risk management by increasing by introducing more advanced than the effective data analytics and the further improve asset quality.

You May proceed on day, 1 we received approval from the local financial regulator of repeal of of Tianjin Municipal municipality to set up of Shenzhen Shelley Microcredit of co Ltd. Shallow you microcredit, which is the newly established entity as 1 of our <unk> for the purpose of out of operating a micro.

The credit business selling microcredit he's the first company all of these kind of successfully transform from Peter with the business to our online micro on the crowded quite the business fashion on approval is a major milestone toward our fully regulatory compliance.

So expand our services beyond the consumer financing on the provide a more comprehensive financial services to the large pool of micro line of small business and the self employed individuals in China, which are key drivers on the contributor of soft Chinese economic of girls. The government is taking a series of active measures to promote of the device.

On the micro in the small business and self employed individuals we will cooperate with other license the financial institutions to meet their financial needs.

So you can kind of of our credibility and gave us the advantage when we cooperated with our other financial institutions, including the benefit of cutting intermediate costs.

We're expecting to come into the operations in the third quarter of 10 do you think of what.

Moving forward market demand of our prop.

Alex on service continues to grow and we expect to maintain our current growth momentum throughout the year true.

China's consumer financing on a micro and small business financing markets, how great credentials. We believe we are well positioned to capture opportunities.

With our talk to the brand.

For the regulatory compliance and our deepening co op cooperations with the financial institutions.

Now I will turn to the turn of the quota Frac, who will go through our financial.

Thank you, Tim and Hello, everyone. We are pleased to kind of a delivered a strong financial performance. During the first quarter total net revenue increased 71, 3% year over year on the 26, 5% quarter over quarter to RMB $906.3 million.

Our net income for the quarter was RMB 192.8 million.

Compared with net loss of RMB $196.3 million in the same period of last year and the net loss of RMB $655.5 million in the previous quarter.

The significant improvement in our top line on the bottom line resulted mainly from the strong growth.

Loan facilitation amongst enhance operational efficiency and the ink in passive.

In borrowing basis.

During the first quarter the <unk>.

The portion of the loan amount, we facilitate kind of third party financial guarantee companies increased to 48 point.

What percentage of 38, 8% in the Peerless quota.

Our efforts to expand partnerships with the third party financial guarantee companies to further optimize the financing cost flow.

The borrowers and the remains our agenda throughout the year.

In conclusion the progress we have made this quarter has the strength of our position and the reputation in the market and improve our ability to expand and deepen cooperation with the financial institutions.

We are entering a new chapter.

The only as our core kind of similar financing business gets back on track and we are ready to explore additional opportunities in the micro credit sector as well with the.

The main confidence of the enormous cash of the industry and our capacities.

There's a lot of kind of gross and the returns of other shareholder.

Now I would like to brief set of financial performance.

Total revenue in the first quarter of our 'twenty 'twenty, 1 increased by 71.3 per cent to the.

I don't have the <unk>.

6 point of $3 million.

U S.

The U S. Dollar was $38.3 million from RMB 520 line.

In the same peer rate of 2020, primarily due to a change in the product mix with the increase in total loan facilitation of moms of the shell in cargo in this quarter when compared with that in the sales period of time on.

The funny.

Our origination and the service servicing expenses in the first quarter of 2021 increased by 28% true.

RMB 500.

The 72.5 million U S dollar $87.4 million.

On the $447.2 million in the same period of 2020 per.

Primarily due to the increase in the commission fee and the insurance cost.

Resulting from the increased total loans facility about in this quarter when compared with the sales period of the 'twenty 'twenty.

Provisions for the accounts receivable and kind of assets in the first quarter was RMB 17, 3 million USD, 2.6 billion compared with RMB $82.1 billion in the same period of 2019, primarily due to a decrease of the average estimate before rate.

Compared with that in the the same period of time, the timing and the partially offset by the increase in the AR accounts receivable, so almost facilitation certification services.

The result of the.

The increase in total loan facilitation of market in the in the first quarter of 'twenty kind of what.

Provisions for the loans receivable in the first quarter of 2000 and kind of what was RMB $26.6 million U S of $4.1 million compared with RMB $42.8 million in the same period of 25 day, primarily due to a decrease of the average estimate the full rate compare.

Was that in the same period of 2020.

Income from operations in the first quarter of 'twenty kind of what was RMB 251.2 million.

You have the U S.

All of our 38.

$8.3 million compared with the loss from the operation of R&D work on with 30.

Moving in the same period of 2020 of them.

Net income attributable to X financial share for us in the first quarter of 'twenty kind of where it was RMB $192.8 million USD $29.4 million compared with a net loss attributable to the X financial shareholders. The quota of RMB 190.

6 seasonally in the same period the outline of the tiny.

Non-GAAP adjusted net income attributable attributable to X financial shareholders in the in the first quarter of 'twenty to 'twenty 1.

$212 million.

$32.4 million compared with the non-GAAP adjusted net loss contributed to the X financial share photos of.

The $159.9 million in the same period of 2000 plenty of.

Cash and cash equivalents was RMB.

199.8 million U S dollar of $122.1 million as of March 31st 2 sort of foot.

Let me tell you what compare with <unk>.

IV.

$646.4 million as of December 31, 25 years.

No.

For our business outlook for the second quarter of.

Plenty of Honeywell, we raised the guidance for the total loan facilitation to be in the range of RMB 12, 4 billion to RMB 13 billion and.

The net income attributable attributable to the exponential share for us to be no less than RMB.

200 kind of getting this forecast reflects our current and preliminary views, which are subject to changes now is concludes our prepared remarks, and we'd like to open the call. It the question operator please.

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At this time, we will pause momentarily to assemble our roster.

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As there are no questions. This concludes our question and answer session I would like to turn the conference back over to Todd on your win for any closing remarks.

Thank you everyone for joining us on the call today. If you haven't bought the test rate. Your question really pretty pleased the accident too far off the look forward to speaking with you again in the near the thank.

Thank you.

Yeah.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.