Q4 2022 Yiren Digital Ltd Earnings Call
Speaker 1: Thank you for standing by and welcome to the Year in Digital Fourth Quarter and Fiscal Year 2022 Earnings Conference Call.
Speaker 1: All participants are in a listen-only mode. There will be a presentation followed by a question and answer session.
Speaker 1: If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad.
Speaker 1: At this time, I'd like to turn the conference call over to Kao, Investor Relations Officer. Please go ahead.
Speaker 2: Thank you, Oveta. Good morning and good evening, everyone. Today's call features the presentation by the founder, chairman, and CEO of CreditEase, RCO Ms. Ming Tang, and CFO Ms. Nga Mei, or CTP Ms. Mei Zhao. Meanwhile, Ms. Ming Tang, CEO of CreditEase, is the founder, chairman,
Speaker 2: Our FCT needs Xiao Xiao and you can select your own Mr. Ray Monfong, our Head of Consumer Finance Business at Wert-Wong for joining us in the Q&A session.
Speaker 2: Before beginning, we would like to remind you that discussions during this poll contain forward-looking statements made under the Safe Harbor provision for U.S. Private Security's Mitigation Reform Act of 1995.
Speaker 2: Such statements accepted risks, uncertainties, and factors taking close actual results to differ securely from those contained in any such statement.
Speaker 2: For the information regarding potential risks and dependencies, all factors are included in our filings with the U.S. Exchange and the U.S. Securities and Exchange Commission.
Speaker 2: We do not undertake any obligation to update any forward-looking statements as required under this relevant law. During the call, we will be referring to certain NAND GAAP financial measures and supplemental measures to review and assess our operating performance. These NAND GAAP financial measures are not intended to be considered in isolation.
Speaker 2: or as a substitute for the financial information prepared and presented in accordance with the US GAAP.
Speaker 2: For information about those nine GAAP measures and written situations to GAAP measures , please reach across all nearest studies.
Speaker 2: I will now pass it to me for opening remarks.
Speaker 3: Thank you all for joining our conference call today.
Speaker 3: We are pleased to deliver an impressive quarter with robust growth in both revenue and profitability.
Speaker 3: making the full success of our business restructuring and product optimization.
Speaker 3: despite the volatility of external environment.
Speaker 3: I mean, the Kobe resurgence.
Speaker 3: Now, as the macroeconomy starts to recover, post the COVID.
Speaker 3: and the industry is heading to a more positive direction.
Speaker 3: we are looking to an accelerated growth of our business.
Speaker 3: First, an update on our holistic wealth business.
Speaker 3: as we previously projected.
Speaker 3: Our insurance brokerage business continued in strong momentum in the fourth quarter 2022.
Speaker 3: Total premium reached more than RMB 1.3 billion.
Speaker 3: representing 34% increase, quarter over quarter.
Speaker 3: over 50% growth year on year.
Speaker 3: For the full year of 2022, our total premium reached the increase by 61%.
Speaker 3: to approximately RMB 4 billion.
Speaker 3: significantly outperforming the industry average of 4.6% annual growth rates.
Speaker 3: What's behind this graphic world is our strategy in product innovation and customization as well as operational upgrades.
Speaker 3: on product innovation.
Speaker 3: Hejiang has been strengthening cooperation with corporate partners and insurers.
Speaker 3: and making great efforts to better serve individual and institutional clients through a growing number of diversified products.
Speaker 3: For example, in order to meet our client's needs for better financial protection as well as higher investment return.
Speaker 3: We started to work with the only mutualized insurance company in China and launched the three tailor-made products for our high-net work lines months ago.
Speaker 3: which are rarely seen in the Chinese market with limited penetration.
Speaker 3: The product has been proven and immediate success right after our launch.
Speaker 3: In the fourth quarter alone, those three products contributed more than RMB 200 million premium.
Speaker 3: and the number is still growing.
Speaker 3: Also, as for our customized exclusive whole life insurance product, Yimai Xiangtuan, that we mentioned last quarter.
Speaker 3: The premium saw a quarterly increase of 68%.
Speaker 3: to post to RMB 100 million.
Speaker 3: reflecting its high popularity among our clients. Another example from our property insurance products. As China's Alban investment and construction businesses extend at a fast pace, the demand for relevant insurance protection is under rise.
Speaker 3: that brought in approximately, are the 40 million premiums with large ticket-sized policies as of the end of last year. And it's expected to pose continued solid growth in the year of 2023.
Speaker 3: As of December 31, 2022, Poh Hiang Insurance brokers had established approximately 40 offline branches nationwide and offered over 840 insurance products from
Speaker 3: more than 100 insurers.
Speaker 3: Some of our one-on-partners include Thai Kung Life Insurance, AIA, Aviva Kuala Khau Life Insurance, etc. Just to name a few.
Speaker 3: Moreover, our regional upgrades will have been improving our service quality and building up our elite agent team since last year.
Speaker 3: Currently, 10% of our agents in Hoshia are members of MDRT, an independent association of the world's leading insurance, and financial services professionals.
Speaker 3: And the proportion is much higher than the industry average of 0.2% in China.
Speaker 3: In October and November last year, the financial regulators issued new rules on life insurance industry.
Speaker 3: including the regulated cap on Commission's fee rate and investment returns.
Speaker 3: The actual impact on our business is manageable, and we have already optimized our product offerings and selections.
Speaker 3: It responds to the rapletary direction.
Speaker 3: to ensure 100% compliance. So due to the product meet adjustment, our revenue generated from insurance business in the fourth quarter shows a slower growth compared to the quick ramp up of our premiums.
Speaker 3: We believe that the new regulations benefit us in the market competition, given Hejiang's rich and diversified product lines that cover both life and property insurance, and the both 2B and the 2C businesses.
Speaker 3: Now, moving on to our super app, Wealth Platform, E-Rin select. In order to better serve our mass-atlon clients in the comprehensive manner.
Speaker 3: E-LIMP Select has put more effort to provide customized products and services.
Speaker 3: in areas of healthcare and beauty, education and study, lifestyle and luxury.
Speaker 3: which enhance our client engagement and help drive up our new client acquisition deficiencies.
Speaker 3: In the year 2022, the number of our clients who made a transaction on EventSelect or through our institutional partners.
Speaker 3: saw an increase of 88% year on year. Looking into our holistic wealth business.
Speaker 3: Total client assets reached more than RMB 23 billion as of December 31, 2022, representing an increase of 21% compared to the end of 2021.
Speaker 3: Going forward, we expect to continue our high-quality growth with competitive profitability as we continue to optimize our products and operations.
Speaker 3: focusing more efforts on our core business with higher values and seizing new market opportunities.
Speaker 3: Meanwhile, as the synergies within e-mail digital's different business lines keep growing.
Speaker 3: Operational efficiencies are expected to further improve. With the micro economy recovering and the domestic consumption rebounding, we expect a healthier business expansion in the year 2023.
Speaker 3: Now, I will pass it to Maine, who will go through the highlights of our credit tax business for the fourth quarter.
Speaker 2: Thanks, Ning and Hello, everyone.
Speaker 4: Now I will give you an update on our credit tag business.
Speaker 4: In the fourth quarter of 2022, our two total long volumes reached RMB 6.8 billion, representing an 8% increase quarter over quarter despite the COVID surgery and the inflection peak.
Speaker 4: post-opular reopening in November and December . The momentum is mainly driven by our consumer loan business. I need our more revolving loan product, Yixia Huan.
Speaker 4: In this quarter, our small revolving loan took close to 80% of our total loan volume, compared to 65% in the same period of 2021.
Speaker 4: Reflecting a vivid transition of our product makes upon the completion of the business structure. Lone facilitation of our small revolving loan products reached the RMB 5.3 billion is poured together in this water.
Speaker 4: showing a 15% quarter increase and 32% annual growth.
Speaker 4: As our domestic consumption starts to recover, we expect the momentum to continue in the coming quarters.
Speaker 4: One highlight I would like to mention regarding this a record of growth in our strategy to optimize customer activation and traffic operations.
Speaker 4: Instead of relying on our traffic platform partners, we have been expanding our own traffic channels and consistently accumulating our traffic pools.
Speaker 4: In our fourth quarter of 2022, nearly 90% of the new customer traffic comes from our own channels, either via our social media platforms, application markets, or our social media platforms.
Speaker 4: or our online campaigns.
Speaker 4: Meanwhile, we have also set up a membership system with exclusive and diversified benefits to increase our customers' thickness and engagement.
Speaker 4: Through our continued efforts, the number of borrows served in the fourth quarter in joint and increase of 39% year on year, and MAU raised to 2 million on our Yi Xiang Hua platform. The number of borrows served in the fourth quarter in joint and increase of 39% year on year, and MAU raised to 2 million on our Yi Xiang Hua platform.
Speaker 4: Consequently, our acquisition costs per user see a visible declining trend.
Speaker 4: translating into a healthier UE. As for our SME loan business, we're tightening our risk control policies and proactively constrain in the growth of the maintenance, the overall product mix, and access to quality with the proper level and current macro...
Speaker 4: Therefore, we start to offer those customers with the fast-track online loan and rehabilitation services to Yixiang Hua.
Speaker 4: since December last year.
Speaker 4: We should further help to cut down our acquisition costs.
Speaker 4: We will adjust our product mix dynamically, dramatically, in accordance to recover piece off the business activities.
Speaker 4: On the funding front, as the number of our funding partners continue to grow and the liquidity in the market improves, we expect a further decline in our funding costs in the year of 2023.
Speaker 4: Last but not least.
Speaker 4: On the asset quality due to the COVID situation, our delinquency rate showed a slight volatility in the fourth quarter with FTB's 30-class delinquency rates reaching 0.67%.
Speaker 4: before we covered it was this historical ball level in the February in the 2023.
Speaker 4: The already indicators have shown our assets quality continues to improve as our collection ratio increases and the borrower's capability of the repayment recovers. With that, I will now pass it on to Nga who will go through the financials for this quarter.
Speaker 2: Since L and the halo l- one for the fourth quarter of 2022 were able to deliver a strong quarter. We both top and the bottom line, reizance a two digital growth and us year strong. Now I will focus on key financial highlights and the pleased to refer to our annual ly and the IR desk of a detailed further.
Speaker 2: In the first quarter of 2022, total revenue is $1.1 billion, representing a 29% increase quarter over quarter and 7% year over year due to our rapid growth in scale. Revenue for Holistic's growth measurement increased by 9% quarter to $3.20 million, according to about 29% of our total revenue.
Speaker 2: and RMB 639 million this quarter, increased by about 30% quarter over quarter and 4% year over year. To realize our mission of financial inclusion and align with regular directive, our average bar rate capped around 24%.
Speaker 2: It is the power momentum of our quality business, which has a further two digital growth in low facilitators in the year of 2023. On this test set, we are pleased to see a concrete decline trend, quarter by quarter, as we finish business translation and continue to optimize our cost structure.
Speaker 2: Our total equity expense was RMB 436 million this quarter, decreased by 34% from private the first quarter last year. Fills and the equity expense by 56% to RMB 100 and 3 million from the future last year.
Speaker 2: due to our optimization of our offline business and improvement of our decision efficiency. Our internet service and other operating costs decreased by 2% year-over-year to remain 212 million, which largely remains stable. Gen 8 plans decreased by 29% year-over-year to remain 185 million.
Speaker 2: As we continue in our Italian digital operation, which led to the cost savings for our supporting departments, this type of red-up alarm audio allows for our control assets, receivable and others, flooding increased by only 7% year-over-year for the May be 59 meeting due to our organization or our product needs.
Speaker 2: When onto our bottom line, we deliver a strong profit of RMB485 meeting this quarter, increased by a significant 49.7 year-over-year and 18% quarter-over-quarter. In the full year 2022, total net profit reached RMB1.2 billion, making an increase of $60.5 billion.
Speaker 2: Compared to the profit year, despite impact for the close of offline business line, that leaves a deepening full-year revenue. Now, profit margin, prior to 35% in 2022, from 23% in 2021. A wide reflection of our full efforts to optimize our unit income, will be missed transition under confirmed costs.
Speaker 2: Meanwhile, our catch position goes stronger with youth forecast, which will then be 5.2 billion. 11 increase compared to the end of last quarter. If a solid foundation for us to expand our business assesses as new opportunities in our future. Looking forward, this is our seismic of our business and the machine conditions. It has our 2023 full year revenue to stand between these six.
Speaker 1: we'll begin the question and answer session. If you wish to ask a question, please press star and one on your telephones and wait for your name to be announced.
Speaker 1: If you wish to cancel your request, you may press star and two. If you are on a speaker phone, we do ask you please pick up the handset to ask your questions.
Speaker 1: Our first question today comes from Matthew Larson from Cincadia. Please go ahead with your question. thereby
Speaker 5: Okay, hey, good evening. Thanks for taking my call.
Speaker 5: Good quarter, as you've been doing very well over the last two years. Got a couple questions. We've reiterated in previous conference calls.
Speaker 5: the intention to buy back up to 20 million dollars worth of stock, but I don't see a reduction in the outstanding share count. Have you bought back any stock yet based on your goal to do so?
Speaker 2: I will ask you a question about our shell's approach response. As we mentioned in our last preliminary, we are calling our shells pibil and after the conference will performers apply.
Speaker 5: I'm not sure. Did that? Yeah, I'm missing something here. So you did buy back shares since last quarter. Yeah.
Speaker 5: You did, alright, and you said 400 million RMB or... That would be about 5 or 6 million dollars. I'm sorry, no. How many shares did you buy back, I guess is a better question.
Speaker 2: Okay, totally we will use about 400 to 500 million dollars to do our share purchase feedback. And for the detailed number of the shares, we can collect the numbers and our leader will send you later. Okay.
Speaker 2: I'll correct my number. Our use of color is now $400 million. It's $4 million.
Speaker 5: Yeah. $4 million. Okay. So you bought back what? $2 million shares or you know, so you bought back $4 million of the $20 million that you plan to. Okay. So all right. So you did buy back a few. Okay. $4 million. Your book value must be, book value has got to be above $9 now.
Speaker 5: and you have a lot of cash, what sort of interest have you been earning?
Speaker 5: on the cash. I haven't really looked over the the court. I just looked at the news release.
Speaker 5: With interest rates higher most places around the world, that could be a very good source of income. What sort of return are you getting on that cash?
Speaker 2: Yeah, we have strong cash deposits and accept we use our cash to perform our share feedback plan. And now, all of the buys is considered the risk and the liquidity purpose where the back deposits and our interest is about 3 to 4% annualized. Of course, as you mentioned, we have the strong cash position and we also want to use our
Speaker 5: on the amount that you have 600 million plus. It was very good quarter, so congratulations. Your stock, that remains.
Speaker 5: extremely undervalued by any measure. It's one times cash flow from what I can see and a little over one times earnings.
Speaker 5: What plans do you have to...
Speaker 5: to, I guess, get greater recognition by more people about your company so that you could generate greater investor interest in it? Have you thought about getting some research coverage or some public relations?
Speaker 5: people who can put the word out about how well you're doing.
Speaker 5: of people who can put the word out about how well you're doing. So if you could address that, I appreciate it.
Speaker 2: Yes, thank you for your protection and yeah we will try to attract the M?ori Westerns to recognize our contribution to our company and to recognize our marketing value. Thank you. We'll talk more to the investor community.
Speaker 5: You are talking more with the investor community? We'll try to do better. Okay. I mean, I do remember, frankly, I remember when you went public through Morgan Stanley back in December of 2015.
Speaker 5: I bought on the IPO and of course your stock was quite a bit higher over the years before some of the regulatory changes made peer-to-peer lending. You know, a business that was not...
Speaker 5: recognized and you've been able to pivot quite well so that your business is a lot more diversified not just loans but of course the insurance and things like that the wealth management
Speaker 5: And so you're doing a very good job. It would be nice to see the stock reflect that. I think it should be worth several times where it is. And so it would be worth your while to try and get some research coverage or go to some conferences or what have you to...
Speaker 5: Okay, thanks for your time.
Speaker 5: Thanks for your time.
Speaker 1: And ladies and gentlemen, once again, if you would like to ask a question, please press star and one.
Speaker 1: To withdraw your questions, you may press star and two.
Speaker 1: Once again, that is star and then one to join the question queue. And we do have an additional question. This comes from Ethan Yu from FirstTrust China. Please go ahead with your question.
Speaker 6: kind of a question that I'm interested in.
Speaker 3: knowing how your whole business development is progressing. Thank you. This is about our overseas business development.
Speaker 3: how your whole business development is progressing. Thank you. It's about our overseas business development, right?
Speaker 3: Yeah. Your own business development. Yes, and last quarter we started to do business in Southeast Asia to be specific in the Philippines.
Speaker 3: It's in early stages of business operations, but we do see it become a bigger and bigger portion of our business.
Speaker 3: credit tax business revenue. Yeah, and we will go from the Philippines to other countries, other markets in Southeast Asia and potentially other parts of the world.
Speaker 3: leveraging our FinTech capabilities established in home market. It's still in early days, but we are very hopeful that it will become a key part of our business.
Speaker 3: And it's very strategic for us to do this capability expansion right.
Speaker 3: We have a team in the Philippines and we did our first long, yeah, last quarter in the Philippines. We have a team in the Philippines and we did our first long, yeah, last quarter in the
Speaker 1: Great, great, great. Thank you. No more questions. And ladies and gentlemen, in showing no additional questions, we have a question from the audience.
Speaker 1: We'll conclude today's question and answer session, as well as today's conference call. We thank you for attending today's presentation. You may now disconnect your line.
Speaker 1: question-and-answer session, as well as today's conference call. We thank you for attending today's presentation. You may now disconnect your line. Thank you.
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