Q1 2022 360 DigiTech Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the first.
First quarter 2020 earnings conference call.
Also note todays currently being recorded at this time I would like to turn the conference call for today Ms. Mandy Dong final data.
Please go ahead.
Thank you.
Hello, everyone and welcome to our first quarter 2022 earnings Conference call.
Our results were issued earlier today and can be found on our IR website.
Me today.
I show, our CEO and director, Mr. Alex <unk>, our CFO and director and Mr. Joe <unk> our CFO .
Before I begin to propel the remarks I'd like to remind you of our safe Harbor Dana.
Earnings Press release, which also applies to this call. We may refer to forward looking statements based on our current plans estimates and projections also this call includes discussions of certain non-GAAP magic. Please.
Please refer to our earnings release.
For the Asian between non-GAAP and GAAP one yeah.
Unless otherwise stated all siegler mentioned are in RMB.
I'll now turn the call over to our CEO Mr. Haisheng.
Yeah.
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Gentlemen.
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Sure.
Hello, everyone I'm very happy to report that scale start to 2022.
In Q1 total loan origination and the facilitation volume reached RMB 98 8 billion.
33% year on year, and 2% Q on Q.
Outstanding loan balance reached RMB, $146 7 billion up 44% year on year.
Year, and 3% Q on Q.
Despite the seasonal impact on the Chinese new year, and the macro and the Kony hotline, our solid performance continued to Dan with greater convenience and flexibility of our operations.
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Jim.
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Yes.
I read all the major concern to the market right now is the kony outbreaks to deal with the situation.
Precautionary player to took rapid response magic to make the impact on our business under control.
And in fact response derived from our successful experiment handling the pandemic hit that.
In 2020.
That's been our response was seen as very timely and effective in the industry.
As the call me resurgence in Q1, and a number of Chinese cities, our team more fact and implemented a land jobs quite empty counter measures.
For example.
Our multi period of pandemic alert system for the cities that are key to our business.
In addition, we strategy really scaled back our business for high risk customers in the industry got hit by the outbreak.
Such as.
Asian and hospitality.
Meanwhile, we proactively communicated with major founding partners about potential extension for long as a payment.
For Barbara.
Able to make repayments on time or lost the capacity to repay in the near term.
Colby.
Our customer service team step in and help them to apply for repayment expansion.
In the city is severely affected by the Lockdown it was very difficult for our offline team to acquire new customers.
In such cases, we quickly shift our team okay.
Offline customer acquisition to serving existing customers.
This allowed us to alcohol tomorrow and sustained business performance.
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Thanks to the factory managers to mitigate impact.
Colby and our strategy to optimize customer base.
We successfully keep the impact to our asset quality under control.
In the first half of this year.
Working to upgrade our customer base. This includes to acquire more high quality users <unk> resource to better serve high quality users and then reducing exposure to high risk borrowers.
With these measures in place.
As Dan page of our category a yoga those with the best credit profile.
Lately increase some budgeted level.
Our first payment for 30 days, which represents the percentage of our direct payment before for 30 days for.
O'neal organization also dropped Q on Q.
At the same time, we upgraded our cloud bank system, which can match consumer demand with institutional offering.
Matching.
Meaningfully improved asset quality of online loan facilitation segment.
For example, expected vintage loss rate decreased to two four to two 7% recently Graham to eight 3% in Q4 of last year.
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Jim.
Yes.
The credit quality of our new customers in Q1 was better than our previous quarter.
Even with the impact of Covid risk of formats.
With better than last year.
And we believe it will continue to improve.
Although there was some fluctuation quarter asset quality of our existing loan book Yoga Colby.
Overall impact is still within the control.
Currently the day, one delinquency rate of existing loan book.
497%.
That had been last year and at a relatively low level one backward.
Our collection rate dropped in Q1.
Denise can gap in the lockdown cities, such as Shanghai and Julian.
However, well noticed that by May.
Collection rate has stabilized in this region.
And it started to improve national wide.
As our user base continued to optimize our risk performance will keep improving gradually.
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Ladies and gentlemen that is if you see that we can work with us on that.
In Q1.
Our offline operation with restricted in some cities and our Colgate Lockdown such as Geely.
The lockdown will temporarily put some pressure on offline user acquisition.
The overall impact on our user base was limited.
They do notice some yoga, where less leading to spent in the challenging environment.
<unk> with its relatively low locked down our total transaction volume only showed a small decrease compared to the pre lockdown levels.
Currently most municipal districts in Shanghai have reached zero culminate at the community level and the businesses are expected to resume operations in the near future.
As such our operations in these regions are likely to gradually return to normal.
Julia.
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Hello, gentlemen.
Although call me and related uncertainties are likely to persist throughout this year with the setup counter solutions rehab, Detroit overtime, and our enhanced ability to effectively respond to new outbreaks. We are confident that we will continue to.
Keep the impact of the pandemic to a manageable level.
Quarter Utica.
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Thank you Franco.
Next let me provide an update on industry policy, which the market follows closely.
Thanks, Jonathan.
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We have seen positive top down policy development for the industry.
April 2000 is a political bureau, making patched support.
As a development platform economy and to complete <unk> rectification measure for the platform economy.
Oc and see the IRC made similar comments at following special meetings.
Those regulators about to complete rectification of financial operation of platform company.
Implement normalized supervision and support healthy development of the platform economy.
These senior note that the current rectification of the industry is close to an end.
Related Internet platform company will complete roughly vacation process under the guidance of financial regulator and it will be under <unk> afterwards.
After over a year along that dislocation. This company will be the first in the industry to be fully compliant and there will be well positioned to develop.
<unk> on a more sustainable framework.
How many of those are going to perform.
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At the industry policy level.
In early April this year to be Oc and safe jointly issued a notice to enhance financial service to support pandemic control and the economy and the social development.
The documents mentioned leveraging the benefits of financial service provided by Internet platform company why are promoting the discipline and how we battle commence up such as services.
This is a recognition by the financial regulator of the positive ROE Internet platform companies play in financial services.
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Okay.
On the business front, our strategy focus this year is to structural optimization of our user base and funding sources.
To enhance the lifetime value and increase the sustainable contribution of high quality founding there.
Therefore further improve our operational resilience.
In Q1, we achieved a notice of our progress in some key areas.
So to do from here.
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On the funding front, we continued to optimize our funding structure.
We ensured a sufficient funding.
To support business growth.
We continuously optimize the funding costs and the contractual terms with our funding partners.
Our high quality assets.
High demand by financial institutions.
Third we expanded founding partnership with joint stock Bank, and the major urban and rural commercial Bank.
Okay.
Further we will know coverage and a strong funding supply.
Such expansion, where prepay up to.
Better serve business grow and deal with economy uncertainty.
So far we have connected with approximately 70% seven zero percent of national wide financial institution.
Although to add three more national joined banks or private bank into our partnership.
And have another seven in the pipeline.
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At the product ramp.
Following the regulatory guidance closely.
Specifically starting in April .
All loans are originated through our platform is within 24% ahead of the regulatory timeline.
Regarding credit Agency report, we actually proactively and have defined a robo structure with credit agency.
You tend to gradually implement these procedures.
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Thanks, John .
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In addition, we have also adjusted product offerings to align with our optimized our funding structure, reflecting the asset preference of new national found in source it.
This allowed us to improve our loan approval rate.
In Q1, we connected with more national joint stock banks. Meanwhile, given the preference of big banks, while higher quality assets and the increase the risk of near Prime borrower in the current macro environment.
We structured our asset distribution engine to optimize the margin between loans and the funding institution.
We also introduced a dynamic adjustment mechanics for the return of financial institution.
The mechanics that allows banks to get assigned loans that are aligned with their preference while ensuring their expected return.
The loan approval rate our partner bench goes above 75% in kilowatt ground roughly 77 zero last December .
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Thank you.
We're turning over your question is would you.
Maybe in two or three years.
Without asking Goldman do good things you can have a major co leader attributable to personally visit adoption.
As for our users.
Our key strategies is.
Is to improve the quality of user base. So far we have achieved very noticeable progress specifically, we leveraged a combination of newly developed a model RTA real time, API technology and capacity expansion to effectively optimize.
Quality of user acquisition.
The customer that had the line into one.
<unk> received the highest rating down the financial institutions they are low.
That profile.
Multiple key indicators of yoga quality continue to improve.
Such as ratio up user with fewer multi platform <unk> lines.
With mortgage and the car loan yields the reserve stable income and Uber with tangible assets.
The improvement of these indicators show that we have greater in house, the resilience of our business and increase user time value.
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Thank you Sundar funding went down 100, engineered wood, which eventually will be concerning mobile.
The external environment brought a lot of challenges to our business in Q1. However, our team once again met the challenge and delivered solid results.
The ongoing uncertainty related to the Colgate <unk>.
They'll continue to stay vigilant and potential risk and maintain prudent operation in order to accomplish our strategic objectives in this transitional year.
Continuing the hernia.
Thank you Michael.
Thanks.
Doug with regard to the year.
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Bruce.
Thanks for your attention.
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Shareholder.
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Thank you Linda.
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Johan Youll hold this year.
Sure.
2022 it will be a quite challenging year for both our company and the industry.
There is pressure on the Sino U S relations on ADR regulatory developments for industry and impact from the pandemic.
Nonetheless, we believe these factors are gradually turning around especially with recent positive policy signals.
Additionally, our consumer loan asset demonstrate very strong resilient during the pandemic.
Looking at our current data comes out for the time.
Okay.
All right.
<unk>, we are quite confident from business prospects.
The most recent wave upcoming outbreak gradually start to sites in China.
Back to see business activity has returned to normal.
The structural upgrades, we have made this year on our user base and the founding network will put us in a more competitive position.
Have seen greater demand for our survey both from end users and from financial institutions.
And that precisely this max our growing value.
Going forward, we will invest more in technology to boost our operation efficiency. This will enable us to continually build.
Our competitive advantages.
Our markets are quite scale and mechanistic.
Jimmy Choo woman those CFO Alex Mandel.
Certainly the freezer.
Next I'll turn to our Sappho Alex.
Okay. Thank you Sean good morning, and good evening, everyone welcome to our first quarter earnings call.
As John discussed earlier, we had a pretty solid quarter in the round rather rough period of time from microeconomic perspective.
Consumers' demand for credit came in more or less consistent with normal seasonality.
What.
Well, we did experience some impacts from the resurgence of Covid in some regions in China.
Overall asset quality was actually modestly improved during the quarter.
As the optimization of our risk model and the contribution from high quality, new borrowers more than offsetting COVID-19 related fluctuation among existing partners.
Of the two leading indicators of asset quality overall day, one delinquency improved to five 2% from five 4% Q on Q.
More importantly day, one delinquency for new borrowers in Q1 came in well below 4%.
Indicating clearly better quality versus existing borrowers.
Overall, 30 day collection rate declined modestly to 86% from 87% Q on Q.
Mainly because we have to make necessary adjustment to our collection operation in regions being significantly impacted by Covid.
Again, we see clear deviation between new borrowers and existing borrowers.
New borrowers 30 day collection rate remained above 90% in tier one.
These risk metrics further validate the effectiveness of our user acquisition strategy, which focus on our high quality segment of the market.
Total net revenue for Q1 was $4 3 billion.
Or is this $4 4 billion in Q4, and $3 6 billion a year ago.
Revenue from credit driven service capital heavy.
It was $2 9 billion.
<unk> to $2 7 billion in Q4, and $2 5 billion a year ago.
The year on year and the sequential increase was mainly due to longer average tenor of the loans.
Growth in the on balance sheet loans as well as the releasing guarantee liability on previous loan balance.
More than offsetting the negative impact from decline in average prices of the loans.
Have a facilitation revenue take rate actually improved modestly versus Q4.
Also due to longer long tenor.
Revenue from platform service capital Light was one 4 billion compared to $1 7 billion in Q4, and $1 1 billion a year ago.
The year on year growth was mainly driven by a significant increase in capital light loan balance.
The sequential decline was due to a decrease in capitalized loan volume along with the decline in capital light revenue take rate in Q1.
During the quarter <unk> and other technology solutions contribute roughly 54% of the total loan volume as.
As we discussed in previous calls, we expect to capitalize and other tech solutions percentage contribution to our total volume to remain fluctuating around current level throughout this year.
Longer term, though we will continue to pursue tech driven business model and expect capitalized to become a larger portion of our business in the long run.
During the quarter average prices of our loan portfolio dropped by 50 basis points.
And we're below 24%.
In fact, all new cap heavy and capitalized loans are already priced below 24% at this point in time.
We are very confident to achieve the rate cap requirement ahead of the regulatory deadline.
During the quarter sales and marketing expense declined approximately 12% Q on Q.
Mainly because Chinese because of the Chinese new year holiday as well as our prudent control of the pace of our user acquisition.
On a blended basis average cost per user was approved credit line was 417 compared to $3 19 in Q4.
Again, this blended calculation given the spread sales marketing expenses among users with high credit line of between 102, two to 200000 RMB as well as the dose regular users with credit line between 10 to 20000 RMB Lodge.
Logically unit cost to acquire those high ticket size users should be justifiable, a much higher than the regular users. Therefore make a comparison of blended user acquisition cost become neither relevant nor reliable.
So on the Apple to Apple basis, excluding large ticket size users average cost per approved credit line of regular users was approximately 322 in Q1 compared to 246 in Q4.
More importantly average cost per dollar amount credit line remained relatively stable Q on Q for regular users.
As always we will continue to use lifecycle, ROI and LTV as key metrics to determine the pace and scope of our user acquisition strategy to ensure the sustainability and the profitability of our operations.
Although overall risk profile of our user of our loan portfolio modestly improved in Q1 due to the contribution from high quality users.
The impacts from micro uncertainty and Covid resurgence, we're still noticeable among existing users.
Therefore, we continued to take a prudent approach in booking provisions against the potential credit loss.
New provision for contingent liability for loans originated in the quarter was approximately $1 4 billion.
Meanwhile, approximately 440 million of provisions for contingent liability.
Previous period loans was written back as actual performance of those loans with better than expected.
With strong operational operating results and a stable contribution from capital light model, our leverage ratio, which is defined as a risk bearing loan balance divided by shareholders equity was at historically low at four two times.
Tier one compared to five four times a year ago.
We expect to see rather stable leverage ratio for the time being until capital light contribution resumed growth in the future.
We.
Rate approximately one 4 billion cash from operations in Q1 compared to 2 billion in Q4.
The decline in operating cash flow was mainly due to some COVID-19 related timing issue.
Sean Hi, being locked down late in Q1, we were unable to complete some administrative procedures that normally I required near the end of the quarter to collect receivables from some financial institutional partners as such a price had been lay 400 million Q1.
Receivable are pushed into Q2 to connect assuming the lockdown in Shanghai Gratulate easy.
Total cash and cash equivalents was $9 8 billion in Q1 compared to $9 6 billion in Q4.
Non restricted cash was approximately $6 2 billion in Q1 versus $6 1 billion in Q4.
As always a significant portion of our cash would normally be allocated to support the security deposit and other usage.
In our normal business course.
As we continue to generate healthy cash flow from operations. We believe our current cash position is sufficient to support the growth of our business to invest in key technologies.
Satisfy potential regulatory requirements and to return to our shareholders.
Cordis was the dividend policy approved by our board last year, we declared another dividend of U S. Dollar 22 cents per avs for Q1.
The cash dividend represent approximately 20% of our Q1 earnings.
Finally regarding our outlook for 2022.
As we communicated to the market previously.
We believe 2022 will be a transitional year for the industry.
The participants are adjusting to the new regulatory settings.
Meanwhile, the unexpected outbreak of Covid as well as associated measures to control the outbreak create additional macro uncertainties.
Therefore, we want to maintain a prudent approach to plan, our business and mitigate potential risks.
At this point in time, we would like to keep our full year loan volume guidance of between RMB 410 billion and RMB 450 billion unchanged.
Representing year on year growth of 15% to 26%.
We view this transitional year as the opportunity for us to optimize our operations strengthen our technology platform and upgrading our customer base to build an even stronger foundation for our future growth.
As always this forecast reflects the company's current and preliminary view, which is subject to material change.
With that I would like to conclude our prepared remarks.
Operator, we can now take some questions.
Thank you management will now begin the Q&A session. If you have any questions. Please have zero one on your telephone keypad.
And zero to two cancel for those who can speak Chinese. Please ask your question in Chinese first followed by English translation.
In order to have enough time to address everyone on the call. Please keep it to one question and one follow up and we've kind of grief you have more questions.
So once again zero one follow up questions.
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Then I'll do the translation part so the first one is about we have made a couple of injunction last year for our micro loan license and could you. Please elaborate more about how we plan to use it.
Preparation for paying for a national license or are we actually starting to using it as an alternative funding source.
Maybe in the very near future.
And the second one is considering the resurgence of the COVID-19, and uncertainties in the economy or there will be some challenges, especially in the loan collection and in the offline business development. So it could be more specific how are we going to dealing with the situation.
Yeah.
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Good day.
Hi.
Two of your question with respect to one.
Yes, you are right Spotify <unk> NAND technology that can be used to inject into the micro lending license on the other hand that we also leverage the capital.
At the founding late night through the channel of ABS or joined <unk> London.
Perfect.
Which proved.
Our leverage ratio.
For your second question.
First off why aren't we do not do that post.
Collection for offline depend on the impact act only through the offline help democratization.
Off our loan collection process conducted through online.
Is that the amount of that amendment, what it sound pandemic.
Presumably nuclear.
I hope this clarifies your question.
Yes.
Our next question is Thomas Chong of Jefferies.
Yes.
Tom.
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Joe.
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No.
And then Michael on that.
So sure.
Woman.
Did you say it again.
Essentially this is Sam.
Sure.
Business trends.
Vince management for taking my questions.
Quick question.
Ryan.
On a month by month basis.
April and how should we think about the low end and high end of the guidance.
And our assumption about a couple.
Couple of Richmond.
In the coming quarters, and how should we think about.
Couple of in terms of the consumer sentiment in coming quarters. My second question is about.
How are we seeing the business trend.
In the top and lower tier cities, given the pandemic impact more on the tier one cities. Thank you.
Okay great.
After that.
Okay.
Okay.
Hi, Thomas.
Thanks for your question so.
From the overall business trend, we look at our current assumption is that.
You know that Shanghai will be gradually.
Sort of reopen.
Starting from May be June and so we are assuming a certain level of activity to return.
Two two Shanghai maybe.
Maybe starting next months.
And.
We don't expect a sort of a V shaped turnaround.
The way I don't think thats build into our model, we are expecting a rather compared to say 2021.
Pandemic happened it was a reshape turnaround, but this time, we are expecting a rather slower gradual kind of.
Recovery.
After the after the Covid. So that's what that's what we are building.
In our in our forecast.
In terms of tier one cities.
Again, the Shanghai situation.
Well publish that and.
Like I said.
We at least according to the official media.
It is gradually reopening and we expect to get some kind of a return.
Yes.
Operating normal operation starting from June .
For other city like Beijing.
For one we from operational wise, we're probably don't have much.
A large exposure in Beijing, but too.
The situation is slightly different from Shanghai, or I wish a quite different from Shanghai, meaning like.
A significant portion of the normal life and city still remaining.
And yes, there are certain kind of a community lockdowns and so on so but.
The situation is much better than it was in in Shanghai at the peak of the pandemic.
Last much and so.
We are again for this kind of situation.
Obviously, we're closely monitoring that.
<unk> lending Beijing.
But I don't think it will be anywhere near the Shanghai situation in terms of impact to our to our business.
Thank you.
Thank you.
Okay.
Next question.
It's alexey from UBS.
Great.
Hello.
Okay.
Morning, Ken Goldman.
Kind of going.
We did realize some.
Thank you.
That's.
One correction.
Trend.
So.
Yes.
Excitement in Q2.
Wait wait wait to see what kind of stuff.
Okay.
Okay.
We're excited.
It's probably been largely what you would see is home audience.
But I'll touch on touch on the audience for dialing in.
Sure thing.
It's in the loan book I, just wanted to Sunoco.
Sunoco.
The other one is acquiring APR.
Okay.
Thanks, Matt.
Since you've only got about <unk> of course, the whole women.
D R Horton element when a high corporate counsel.
Capital not bigger than the take rate based growth outlook.
We deeply.
I just saw Q2.
How does it how would you do.
Susan BRCA cohort.
Carmen.
Exactly.
And at that point.
That's helpful.
And so what you do at home.
Sam.
Okay I will translate my question first one is on the court.
I think give us some color on your latest trend on day, one and then one collection rates.
We would expect them to remain stable or some deterioration in Q2 and also just wanted to clarify that Mike mentioned executive into loss will improve.
Comparable 8% coupon for the 27% just wanted to confirm whether that referred to the total loan book.
And second question is on the take rate.
So I'm wondering what's your average API now and whats the current 10 from coming out to Q2 expected to further decline.
Do you expect your take rate to Q1, or maybe continue to edge down.
And then.
Or your new users.
With lower risk.
They will also have a lower APR.
With that perspective.
Return compared to a deal.
Thanks.
Yes.
Suzanne.
The children so can you.
But I got to use Google.
Francois.
So here.
So I'll tell.
Tell you that.
Sure.
<unk>.
But also how does the adjacent.
They compete in the <unk>.
<unk> seen that citizens, we've begun the ship fitness.
Does it seasonally.
Just a woman who truly.
No.
I'm not sure that those tenants.
Just kind of materially.
I see a third crew is it also.
This is Scott Sandy hook loads.
<unk> does that since you've done that.
Again.
<unk> done that with good deep with that that is essentially.
Distributor.
Great.
Literally like kind of <unk> and.
When you kind of exist.
It seems that the.
Hi.
CET.
But some of the different Chicago bleach shipments IPC offering either.
Great.
I'm here with my comment to me.
No.
Well the easy source.
We like that.
Each ecosystem.
Yes.
Sure.
The site itself.
Hudson.
Okay. Thank you.
Okay. Thank you for your question so regarding to the vintage loss.
In the case of the new transactions drop out in the first quarter and for the new customers. We acquired I think in the first quarter actually the performance will be better than the new transactions in the first Heather the costs that we have seen the quality of our new quest customers have been improved.
For your first question the delinquency rate also referred to the existing loans on book and we have seen that it has been decreased in April and May and HPE check for new transactions and it will be priced two 3%.
Regarding to the recovery or collection rates and apart from regions like Shanghai, Beijing, and Hong on for other regions.
Our recovery rate is better than April .
So we foresee that.
Our risk performance or cover rate of manufacturing in the second quarter help me clarify your question.
Okay.
Okay.
Yes.
Uh huh.
Oh.
Great.
I think that would be great.
Goldman.
Okay.
Silicon module.
The improvement.
We began the on fleet Capex.
Continuing to total between the high yield because again, if we can.
Our CFO will then continue to be good.
And I'm thinking about Jack up.
Willa.
Excuse me if I'm wrong.
Hmm.
Thank you guys.
Joining forces.
And with that group.
Right.
Possibly if you could have done with <unk>.
Okay.
Okay.
Yes, starting in April .
Our.
That's in the pages.
And maybe I'll pass one is about 22% in the near term leaseback base rates.
Relatively stable.
Now it's back to EBITDA.
Alright.
Okay.
Glen.
Singapore, who you are.
Anytime you go to Cushing.
Yeah, it could be.
Okay.
So again that gives identical.
What was the topic of kind of.
Thank you.
Yes.
Could you maybe they don't get it done so really a good deed and won't be Theresa this would be kind of having bigger could.
Do you pay for the times, you're aiming to achieve.
What are you seeing there.
Okay Cool and then I kind of hope we can do this year.
<unk>.
So we ended up with that kind of what's embedded.
Kansas is a peak, which youre going to work.
Sure Dan how do you customize we've acquired in the first quarter.
If we only look at assured her great, yes compared to play there.
Is that uncertainty.
We value more lifetime value, Matt. Thank you.
This contributes a lot much better than the previous quarter.
Okay.
Okay.
Yes.
As a reminder, please press zero one follow up questions.
Operator would probably half the time to take one more.
Yes.
If any.
Yes.
Okay.
Our next question is Ethan Wang from CLSA.
Okay.
What emission compliant philosophy is that just going to take place at the lenses.
Yes.
<unk>.
So funding Congress will wind up on that question.
One man.
And just in time.
Running closer to one.
You've been consummated.
So in Sweden.
So some shutdowns in there Brian .
The womens.
In general funding constitute our shipping system.
Yes.
Okay.
Just one quick follow up question.
Take rates between notes at rates also affected by funding costs just wondering.
Plus the environment, where the defense, we approximately plus some pressure on that.
Terrific.
Just wondering if management can offer more color on that thank you.
Let me close the woman.
Susan I kind of like those will continue.
This new tool.
Quarter over quarter.
Yes.
<unk>.
<unk>.
A little bit.
And there will be an angle to be doing there kind of obviously the good news.
And thank you all virtually because once we get.
We have a hard time.
Thank you.
We're kind of in its disciplined examples.
Okay.
Looking at the table.
Okay.
Can you get to the other.
During the quarter.
Yes.
Yes.
And to answer your question first we do notice we have sufficient supply this year.
We noted.
Funding costs declining trend, we feel like and we do not.
Now just about decline actually happen this is Kent.
In <unk> 2021 we have already brought down I'm not.
Our funding cost.
And next point Ya Li.
We focus more on our CAC.
For example capital bank, reaching that's impacted by funding.
Yes.
Okay.
Yes.
I just wanted to add.
A quick point there so basically the passion means that as we expand into the large national banks.
That's actually all of our focused shop for this year, along the way there will be modest drop in funding costs, but not as significant as what we did in the last year or previous couple of years because at 7% actually we are already probably one of the best.
Funding costs among our peers.
Thanks.
Okay.
Thank you.
Okay.
Yes.
Yes.
And this is the end of the Q&A session now I hand back to management for closing remarks. Thank you.
Yeah.
Okay. Thank you again for everyone to join our conference call.
If you have additional questions. Please contact us offline. Thank you.
Yeah.
This concludes our conference call you may disconnect now goodbye.
Okay.
Okay.
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