Q4 2022 Jiayin Group Inc Earnings Call

March 29, 2023

Speaker 1: Yeah.

Speaker 2: Good day ladies and gentlemen, thank you for standing by and welcome to the Gyn Group's fourth quarter 2022 earnings conference call. Currently all participants are in a listen only mode. Later we will conduct a question and answer session.

Speaker 2: and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time.

Speaker 2: I will now turn the call over to Mr. Sean Tsang from Investor Relations of Giant Group. Please proceed.

Speaker 3: Good day everyone. Thank you all for joining us on today's conference call to discuss Jaiying Group's financial results for the fourth quarter and full year of 2022.

Speaker 3: We released the results earlier today. The press release is available on the company's website as well as from Newswear Services.

Speaker 3: On the call with me today are Mr. Yen-Din-Gui, Chief Executive Officer, Mr. Fan Chun-Lin, Chief Financial Officer, and Mr. Xu Yifang.

Speaker 3: Chief Risk Officer. Before we continue, please know that today's discussion will contain forward-looking statements made under the sea parable provisions of the U.S. Private Security litigation reform act of 1995.

Speaker 3: Forward-looking statements involve inherent risks and uncertainties.

Speaker 3: As such, the company's actual results may be materially different from the expectations expressed today.

Speaker 3: Further information regarding these and other risks and uncertainties is included in the public filings with the SEC.

Speaker 3: The company does not assume any obligation to update any forward-looking statement except as required under applicable law.

Speaker 3: Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese streaming B.

Speaker 3: With that, let me now turn the call over to our CEO , Mr. Yan Jingwei. Mr. Yan will deliver his remarks in Chinese and I will follow up with corresponding English translations.

Speaker 3: With that, let me now turn the call over to our CEO , Mr. Yan Dingue. Mr. Yan will deliver his remarks in Chinese, and I will follow up with corresponding English translations. Please go ahead, Mr. Yan.

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Speaker 3: Hello, everyone. Thank you for joining our fourth quarter, 2022, Arnie's Conference call.

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Speaker 3: 2022 has proven to be both challenging and opportunity stick for our company.

Speaker 3: During the year, we faced the strictest quarantine lockdowns in China.

Speaker 3: followed by the lifting of almost all COVID restrictions in December .

Speaker 3: Looking back on the last three years now, we witnessed the COVID outbreaks that disrupted businesses worldwide.

Speaker 3: policy changes that reshape China's FinTech industry and escalating geopolitical conflicts that further press.

Speaker 5: the global economy.

Speaker 3: If by these macroeconomic disruptions and increasing uncertainties worldwide, we are proud to report that our execution of our group strategy remains stay fast.

Speaker 3: throughout 2022. We maintain our focus on strengthening our core competing competencies of technology innovation and risk management.

Speaker 3: We also improved our innovation capabilities and efficiency in refining our operations to better meet the involving market demands.

Speaker 3: As a result of our solid execution, we delivered growth in line with our expectations and rewarded our shareholders' long-term support with a strong and satisfactory performance in 2022.

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Speaker 3: As we expand, our top priority remains ensuring full compliance with regulatory requirements.

Speaker 3: and we are actively collaborating with policymakers and partner institutions towards that goal.

Speaker 3: in response to the PBOC's directive to stop direct data connections between Internet platforms and a financial institutions.

Speaker 3: We have made significant progress and preparation.

Speaker 3: We are confident that we can work with our partner financial institutions to complete the system switchover within the required time frame.

Speaker 3: In current delay, we are also seeing positive regulatory development under way to support the healthy growth of China's Internet platform companies. For example, the CPIRC's interim measures for the management of commercial bank Internet loans.

Speaker 3: have officially endorsed and regulated partnerships between banks and internet platforms like ours, providing a solid foundation for our operations.

Speaker 3: Additionally, regulatory authorities recently announced that rectification among major Internet platform companies is most likely completed at a PBOC's financial market department.

Speaker 3: has also pledged to promote healthy development of the platform economy.

Speaker 3: Overall, we believe that these regulatory developments indicate that China's policy regulation of Internet platforms is moving towards a period of normalization.

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Speaker 3: In 2022, the Chinese market experienced a strong demand for consumer credit.

Speaker 3: In 2022, the Chinese market experienced a strong demand for consumer credit, driven by several factors.

Speaker 3: Firstly, the insurance of the 14-5-year plan for promoting the development of small and medium-sized enterprises by 19 government agencies.

Speaker 3: And the joint release of the Nordic-Austrithening financial services for new urban residents by CBIRC and PBOC have spurred the growth of Fintap products and services for both individual and SMEs.

Speaker 3: Secondly, our financial institution partners have been able to provide abundant funding to meet the demand for long facilitation services.

Speaker 3: In fact, PVOC reported an 11.1% year-over-year increase in the balance of RMB loans by financial institutions in 2022, and the full-year RMB loan volume increased by 21.31 trillion.

Speaker 3: representing an additional 1.36 trillion increase from 2021.

Speaker 3: However, rather than bluntly expanding our business scale, we choose to take this opportunity to improve the structure of our borough base on our platform. In terms of borough operations,

Speaker 3: We focus on enhancing the quality and scope of our borrower acquisition capabilities.

Speaker 3: adding approximately 1.53 million new boroughs throughout the year.

Speaker 3: A 52.4% increase from the previous year.

Speaker 3: We also increase the proportion of loans by borrowers with the credit score of 60 or above from 68% to 88% in 2022.

Speaker 3: Additionally, we concentrated exploring border lifetime value and refining our operations.

Speaker 3: For high quality new borrowers, we match them with funding sources offering lower interest rates.

Speaker 3: promoting a year-over-year increase of 22.1% in the average boring amount. The average ratio of repeat boroughs for the four quarters in 2022 remains stable at about 67%.

Speaker 3: and the average borrowing amount reached about RMB 9,737, a 71.4% increase from the previous year.

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Speaker 3: and future risk challenges, we have refined our border segmentation.

Speaker 3: As our business has scaled, our ballerad base has consistently demonstrated healthy and sustainable character instincts.

Speaker 3: Moving forward into 2023, we will continue to refine our borrower segmentation and adjust our borrower acquisition strategies based on market conditions. In the long term, we anticipate that new borrower will make up...

Speaker 3: 2230% of our borough base, allowing us to maintain stability and sustainability.

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Speaker 3: As a result of these efforts, we established a solid foundation to achieve expected

Speaker 3: As a result of these efforts, we established a solid foundation to achieve expected growth in 2022.

Speaker 3: In particular, our efforts in fine-turning our operations have resulted in increased efficiency in funding allocation and consistent improvements in our revenue scale.

Speaker 3: In 2022, our long-origination volume, net revenue, and net income increased by approximately 153%, 84%, and 152% respectively.

Speaker 3: In 2022, our long origination volume, net revenue, and net income increased by approximately 153%, 84%, and 152%, respectively. During that year…

Speaker 3: This exceptional growth demonstrated our solid progress in expanding funding sources, improving asset quality, enhancing risk management capabilities, and refining our operations.

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Speaker 3: On the funding front, the overall supply of funding in the market remains sufficient during 2022 and the funding cost has declined as well.

Speaker 3: As such, our created costs are stabilizing while our business girl keeps expanding. Since we have already acquired relatively sufficient funding sources, we continue to expand and depend our core operation with key funding partners.

Speaker 3: to effectively leverage them fulfill the credit needs for high quality borrowers on our platform.

Speaker 3: As of December 31, 2022, we have partnered with 53 financial institutions, and we were currently in discussion with another 62. Notably, the funding sources without regional limitations still contributed to the majority of our total loan origination volume in the fourth quarter.

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Speaker 3: Moreover, we are empowering our partner financial institutions through our technology-enabled services to develop their own self-operated business models. As of 2022, we have already empowered five financial institutions.

to digitize their own online business and we are now interfacing with another two financial institutions will actively negotiating with six more institutions to explore potential collaborations.

As the COVID control measures ease...

Towards the end of the year, we will be able to further expand our business and improve our efficiency in engaging with new founding partners or implementing new partnership models.

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In late 2022, the whole industry experienced significant risk volatility,

which affected our risk metrics to a certain extent. However, I'm pleased to report that our risk profiles have already stabilized as our 61 to 90 day delinquency rate.

has remained stable as of December 31, 2022. The application of AI technology in FinTech has been instrumental in quickly addressing challenges posed by market volatility.

Going forward, we plan to continue our investments in FinTech AI applications to further strengthen our risk management capabilities.

Specifically, we will leverage voice and semantic recognition, user identification,

as a quality control and anti-fraud AI modules to enhance our efficiency and risk management while improving users' experience.

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In addition to facilitating consumer loans for individuals, we also continue to expand the scale of our services for small and micro business owners.

In addition to facilitating consumer loans for individuals, we also continue to expand the scale of our services for small and micro business owners. We all know that University of angles dis direction from our individual partners.

The COVID-19 pandemic has a severe impact on businesses around the world, particularly small and micro businesses.

In response, the People's Bank of China and other government agencies issued a number of policies calling for financial institutions to increase support for small businesses facing difficulties in production and operations.

Our extensive experience in fintech services and business operations enabled us to collaborate with financial institution partners to better serve micro and small business owners.

As such, we actively responded to this call and expanded our specialized long program to help small business owners overcome financial hardships.

Throughout 2022, we saw a steady increase in the scope and proportion of long facilitation volume from small and micro business owners.

Looking ahead, we remain fully committed to providing financial support and helping these businesses thrive in the face of challenges, ultimately creating value for our borrowers and the society.

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Moreover, we also made excellent progress in our global expansion efforts.

In Indonesia, we have continued our former investment and closely monitored the region's growth potential.

In Nigeria, we have achieved significant business and revenue growth by boosting our long-origination capabilities in the local market.

Our revenue growth in Nigeria was substantially faster in this quarter year over year.

We are pleased to know that our successful business operations and risk management capabilities have been replicated and validated on a global scale, enabling us to mitigate potential uncertainties in any local market as we expand internationally.

Moving forward, we remain focused on enhancing the profitability of our overseas operations by developing innovative partnership models and accelerating our product development and penetration in local markets.

By tapping into diverse business opportunities in these regions, we expect our global operations to become a meaningful driver of sustainable growth for our company in the long term.

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I'm glad to report on our recent strides in cooperating social responsibility.

our commitment to empowering others through technological

driven financial inclusion is at the core of our philosophy.

in August 2022.

We published our letter threeapiune.WARN. virulentad Abbas ? glowingwith dell.

First, in Environmental, Social and Governance report, which set the tone for incorporating social responsibility into our business operations. venue throughout 2022.

We demonstrated our commitment to making a positive impact on society through various initiatives.

In September , for example, we partnered with the Shanghai Song-Ching-Ling Foundation to launch the Let Children Smell Youth Mental Health Foundation.

For example, we partnered with the Shanghai Songqingling Foundation to launch the Let Children Smile Youth Mental Healthcare Program.

This program, in addition to our ongoing charity education campaign, aims to provide comprehensive support to underprivileged children, focusing on both their physical and mental wellbeing.

Later in December , we collaborated with local governments in Vinland Province to provide mental health care training to teachers and students.

Furthermore, we donated school supplies to the central primary school in the town of Xiu Tang in Guizhou province, including computers, books, and school uniforms to ensure that left behind children are dangerous.

have access to better educational resources. We also invited...

psychology experts to conduct mental health training for all teachers in show town, enabling them to better attend to our psychological needs of their students while fulfilling their educational duties.

our unwavering commitment to ESG principles.

underscored our pledge to make a positive impact on society, and we look forward to continuing our efforts in this direction.

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We achieved robust growth as we expected in 2022 as a result of our efforts in strengthening our partnership network, improving our risk management strategies, evaluating our technology capabilities and expanding our

and expediting our global business expansion. Looking ahead, we remain resolute in our pursuit of sustainable growth and a margin expansion. As the regulatory environment stabilize and the COVID pandemic becomes a thing of the past.

We are confident that our proven strategies will continue to drive our success in the years to come.

In line with this expectation, we are pleased to forecast that our long facilitation volume for the full year of 2023 will be around RMB 70 billion.

with RMB 19 billion from the first quarter of 2023.

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Based on the strong operational outlook and our robust capital vision, our board of directors has authorized and declared our first ever dividend policy.

We expect to pay dividends twice a year in cash, subject to some conditions.

The annual total dividend distribution shall be no less than 15% of our net income after tax in the previous fiscal year.

These declarations underscore our commitment to creating value for our shareholders and our confidence in the long-term growth prospects of Giant Group.

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With that, I will now turn the call over to our CFO , Mr. Fan Chunlin. Please go ahead.

Thank you Mr. Yan. And hello everyone for joining our call today.

I will now review our financial highlights for this quarter. Please note that all numbers will be in RMB.

and percentage changes referred to year-over-year comparisons.

The changes refer to year-over-year comparisons unless otherwise noted.

As Mr. Ye mentioned, we delivered a record growth in 2022, particularly in the fourth quarter.

Our long origination volume grew by 249.2%.

to $18.9 billion as we defined our partnership operations and improved our funding efficiency.

Our net revenue was $1.1 billion, up 186.4%.

driven by a 149.2% increase in our revenue from loan facilitation services.

Other revenue grew significantly to 154.7 million from 7.1 million in the same period last year.

mainly driven by incremental revenues from individual investor referral services and post-facilitation services.

Moving on to cost. Origination and servicing expenses were 195.1 million, up 130.1%.

In line with our long-origination volume growth, around 4-on-crash ball receivables, counter-access, long-receivable, and others, reduced by 12.2%.

215.1 million, compared to 17.2 million in the same period last year.

Sales and marketing expenses increased by 138.4% to 374 million, mainly reflecting higher borrower acquisition expenses.

As a percentage of net revenue, SM expenses decreased to 35.5% from 42.6% in the same period last year. GNA expenses were 59.3 million up 26.7%

Primarily driven by an increase in staff costs in the quarter. As a percentage of net revenue, G&E expenses reduced to 5.6% from 12.7% in the same period last year. R&D expenses were $64.4 million.

compared to 46.6 million in the same period last year. We recorded a high employee compensations and benefits, as well as increased fees for professional services in the quarter.

As we prudently managed our fences and the crew our revenues at a much faster pace, we were able to further expand our progress scale in the fourth quarter.

Our net income for the fourth quarter increased to 533.7 million from 122.5 million in the same quarter quarter.

Our basic diluted net income per share was RMB 2.49 compared to RMB 2.49 compared to RMB 2.49.

0.57 in the same period last year. Basically, in the dilute net income per ADF was RMB 9.97. We ended this quarter with 291 million in cash and cash equivalent.

Up from 217.5 million as of September 30, 2022. As of December 31, 2022, we have repurchased approximately 1.5 million for our ADSF. For US dollars, 3.5 million on our US dollar 10 million shared repurchased plan were announced in June 2022.

to 3.3 billion.

Net income grew by 152.3% to $1.2 billion, while net margin expanded to 36.1%.

Net income per ordinary share and per ABS were RMB 5.48 and RMB 21.92 respectively.

With that, we can open the call for questions. Ms. Xu, our Chief of Staff and I will answer your questions.

Operator, please proceed. Thank you. If you wish to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.

To withdraw your question, please press star 1 and 1 again.

If you prefer to ask your questions in Chinese, please repeat your question in English immediately after the convenience for everyone on the call. Please stand by while we compile the Q&A roster.

We will take our first question. Our first question comes from the line of linear format through through securities. Please go ahead. Your line is open. Thank you very much. I am here to do the correct linear format.

The first question is who can show within this software system? One of the industrial companies is in another procurement system, and also enters the exhibition room. Is this because a company lacks so much information? Support web technology and Internet technology will become more accessible to NOVA. Thank you.

And I would do the translation for myself. I'm Lin Yao from Positive Security. My first question is about your first average deep-toned policy. Since you are buying back shares and paying deep-toned, that means you don't need that much cash.

Would you be better off investing the cash to expand your borrower base and funding partnership network for stronger growth? Thanks. Okay Arocking 1985 I should say the first volume to complete by John

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This is Sean Zhang from the Investor Relations. You now all due to the corresponding.

translations in English. So thank you Ling Yao for your question and it is true that the company's current condition of operation is sound and stable. Probably you can see that our performance shows a very fast growth in this years and our operational and financial indicators are significantly improved.

And also the company's operational cash flow is nice and solid. And our balance sheet is pretty strong.

But at the same time, you can see that the P ratio of our companies is very low, which is below 2.

two, two times. Yeah. So the management believes that the current price of our company's ADS failed to reflect our inherent value, or you may say that we are actually under value. In June 2022, the board...

approved the 10 million repurchase plan and in addition to that our board just approved our dividend policy in order to further protect the interests of our investors.

I do believe that an autonomous space or gaselectric shock has the samess I hope you have enjoyed the video. Please subscribe and like the video. See you in the next video. Thank you for watching. Please subscribe and like the video. Please subscribe and like the video.

If you want to know more about the company, you can go to the link in the description. Okay. So as you know that cash is the king nowadays. So the company will always consider the necessary cash...

the board and the management have fully considered in the cash required for the company's operation and strategic development. There is strategic development and there is way enough room left after that.

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Okay, so Mr. Yan just gave out our yearly loan facilitation volume guidance of 2023 at a level of RMB 70 billion, which made it pretty clear that the company will keep a sustainable growth in the long run and the management is very confident to...

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I will do the translation for Mr. Yan. So Mr. Yan just gave out two slides.

probably two reasons. So the first reason is that we will definitely keep investing the new borrower acquisition. But we do have a plan for that. We all know that the new borrowers, if you compare with the repeat borrowers.

there are usually more uncertainties. We really need to avoid some risk during this process. So the second reason will be that we didn't really meet the goal of 2023.

at the, probably based on our goal of 2022. And we can see that this is a goal made very carefully.

So the main reason is that we need to keep the asset quality at a very healthy level and to avoid probably some risk in it. So, Mr.

So, Mr. Yell, can you please provide the translation of your questions, please?

Sorry about that. Yes, sure. Yes, sure. My translation for my question is my second question is about the robust market demand throughout 2022 that CEO just mentioned. I was expecting that to change in 2023. Your outlook only reflects...

26% loan facilitation volume growth in 2023 compared to your 153% loan facilitation volume growth in 2022.

Why are you forecasting such a deceleration in the growth? Thanks. Thank you for the translation.

Ms. Yao, this is Yi Fang Xu. I'm just adding a little bit on your question to the answer to your question in addition to what Mr. Yen has provided so far. On your first part of the question, you asked about overall outlook. As Mr. Yen has mentioned in his opening remarks.

There were several factors pointing us towards we will remain positive and healthy expectations throughout 2023. These couple factors including on the regulatory front, we're seeing positive developments and we're seeing a sudden decline of specifications and we're seeing possible improvements in

as well as the official endorsement towards the partnerships between Internet platforms like us and financial institutions.

This, while such improvements warrant for an institution to pursue further interests or deepen their partnership with us, therefore to guarantee our healthy funding sources going into 2023 and on the forward. Similarly, on the consumer demand side.

We are seeing the growth on the consumer loans on the nationwide, as well as the request and funding resources supplies from the institutions that we already in the past.

In addition to that, you will also ask about adjusted a sentence growth rate in 2020 but let's first go back looking at the absolute numbers. Although there are these numbers in actual terms. In 2021 overall transactions is around 22 billion.

In 2022, this number we just reported a 55.5 billion. So with a little over 30 billion growth, a primary coming from China has been in this market for over 10 years. We have hunk of hanging low hanging fruits in 2022 by focusing on our repeated followers. So followers.

We focused on exploring and maximizing their potential, their foreign needs and having their needs to match with competitive products offered through our platforms in partnership with our financial institutions. Going pretty much in the fourth quarter of 2022, we have changing gears into a more dynamic experience during the iterative process. Getting everything I mentioned today was so powerful to

by introducing and introducing and

higher quality, credit quality customers to go through this to more competitors, acquisition channels and bundled with more competitive product offerings to these channels to these new customers.

in helping that to grow our overall customer portfolios, as well as to deliver a healthy risk, and also to help them out of the risk metrics.

So with that, then you're looking at our growth in 23 outlook. It's going to be from 55 billion to 70 billion so far. But as you can also notice, that 70 billion is relative to conservative view by in considering the seasonality change.

And in slightly answering this in the second half of 2023, regarding to the overall landscape in this industry, we are pretty confident in delivering such numbers, but we also have the flexibility of adjusting upwards when the time we feel it's comfortable to do so.

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I hope this answers your question.

Thank you.

Okay, so operator, I think we can move to the next participant who wants to ask a question.

Of course, thank you one moment please. Your next question comes from the line of assembly. Who is an individual investor? Please go ahead. Your line is open.

Thank you very much. I am the first person to be responsible for my personal problems.

I will translate for myself as well. Thank you for taking my question. My first question is that you have recorded a higher net margin Q4 compared to some of your peers. Would you like to share some possible reasons for that? Thank you.

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And we will finally be able to set the targets I hope that you will enjoy this video. I hope that you will enjoy this video. I hope that you will enjoy this video.

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Okay, so this is Sean Zhang, and I will do the translation in English. So thank you Sam for your question. So from the perspective of our performance in the financial indicators, Q4 is an excellent quarter with very nice profitability. It is true that if you look into the margin, it is...

probably slightly higher than our peers. So in Q4, our operating margin reached nearly 33%.

And for the full year of 2021, it is about 36.1%. And I think there will be two reasons for that. The first reason is that the scale effect generated by our rapid growth in the performance. And the second reason is probably because our fixed cost

Due to gap?? restroomHii, one piece of grain loss is closest to light job. The mind is also tilted slightly, and still has a wide angle. Mainly travel space paintings are major challenges in compared to daily life. This is a complete turning point for us in terms of continuance and growing general-ource. What we call a large improvement in

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Okay, so the net margin is slightly higher, it is true. So our net margin of Q4 reached more than 50%, which was higher than the operational margin.

mainly because of the impact of some extraordinary reasons. For example, some of our core entities for our businesses just obtained the qualification of high-tech enterprises.

which benefit us that our applicable income tax rate is now adjusted to 15%. And as you know that it is, which can be traced back to 2021. And that will be one reason of that. What did I know, man?

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Sir, can youvas me the control room for I am just blanking at the moment. I will Ankur Kfirep, ITastondependency BREmom of Committee on defect usage abilities,

Can we expect your vintage rate to improve even further in 2023? Thank you. This is Yifan Xu. I'm going to take on your questions. First I want to answer your question in English and then I will transfer myself in Chinese. So I first thought that I will continue to focus on improving our VISC metrics throughout 2023 and forward.

just as a company focusing on the lending business, having a good control over our risk metrics and practice prudent risk management philosophy is intrinsic inside within our company philosophy.

23 from three digits percentage growth rate to double digit growth rate. I was still expecting a significant growth from 55 billion to over 70 billion.

As we continue to grow our platform by over 20 billion, almost 20 billion throughout the course of 2023, our key focus of the risk factors are going to be primarily focused on two fronts. One's from the new customer acquisitions. So as we continue to practice

constraints on the number of new customers and new launch nations as part of a portfolio in our total new launch nations.

We also want to focus on choosing the right acquisition channel mix and the product offerings.

So both the decisions or acquisitions channel mix and product offerings are solely based on.

to improve our overall the Cosmo credit risk profiles.

Going forward, as we have started probably over a year ago, we want to focus on improving our customers' credit risk profiles and we continue to do so by choosing our precision channels that gave us a broader and greater access to better customers. Similarly, in the product offerings and other trends, we associate the troubleshooting of the Egyptian product with the shrouded

We are going to match the product in terms specifically to the loan interest rates from our institution financial institution partners with a higher, lower interest rate products to our new customers in order to attract the right customer segment to our platforms. So that's on our new customer acquisition side, how we are going to continue to...

drive over 20 billion overall growth and still continue to improve upon our industry rates. So now that we've pitted customer borrowers.

how focused one will be enhancing the customer level risk modeling and decision, you know, in addition to what you see the typical on the low level risk decision models and the decision frameworks. So that allows us to really focus on the high value customers, making sure that we are not

we will be also exploring external third-party data along with our internal customer behavioral data and through focusing such data mining on more complex, complicated...

the customer level data will allow us to improve upon all the models over the entire lifecycle of the customers.

So next I'm going to translate my interest in Chinese.

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Thank you. No more questions from me. Thank you. We've reached the end of the call. I will return the call back to Sean for closing remarks. Please go ahead.

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 on our progress. This concludes today's conference call. Thank you for participating. You may now disconnect.

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For more demonstrated events come fromadeart Westernslime. Signup at acknowledging Eyecticatron shots. Thanks for watching!

Good day ladies and gentlemen, thank you for standing by and welcome to the Gyn Group's fourth quarter 2022 earnings 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, we are recording today's call. If you have any objections, you may disconnect at this time. I will now turn the call over to Mr. Sean Zhang from investor relations of Giant Group. Please proceed. Good day everyone. Thank you all for joining us on today's conference call.

to discuss Jia Ying Group's financial results for the fourth quarter and full year of 2022. We released the results earlier today. The press release is available on the company's website, as well as from Newsware Services.

On the call with me today are Mr. Yan Ding Gui, Chief Executive Officer, Mr. Fan Chunlin, Chief Financial Officer, and Ms. Shiyi Fang, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Public Security Administration.

risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law.

Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese agreement B. With that, let me now turn the call over to our CEO , Mr. Yan Jingwei. Mr. Yan will deliver his remarks in Chinese and I will follow up with corresponding English translations. Thank you.

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Hello everyone. Thank you for joining our fourth quarter 2022 earnings conference call.

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2022 has proven to be both challenging and opportunistic for our company.

During the year, we faced the strictest quarantine lockdowns in China, followed by the lifting of almost all COVID restrictions in December . Looking back on the last three years now, we witnessed the COVID outbreaks that disrupted businesses worldwide.

policy changes that reshape China's fintech industry and escalating geopolitical conflicts that further press

the global economy. If by these macroeconomic disruptions and increasing uncertainties worldwide, we are proud to report that our execution of our growth strategy remains steadfast. Throughout 2022, we maintain our focus on strengthening our core competing...

competencies of technology innovation and risk management. We also improved our innovation capabilities and efficiency in refining our operations to better meet the involving market demands. As a result of our solid execution, we have improved our innovation capabilities and efficiency in refining our operations.

We delivered growth in line with our expectations and rewarded our shareholders long-term support with a strong and satisfactory performance in 2022.

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the United States House of Representatives. Inín Vályin Square Health office, a Logic spl Sunshine we bring with us tonight as a special Levin Emma

Our top priority remains ensuring full compliance with regulatory requirements. And we are actively collaborating with policy makers and partner institutions towards that goal.

In response to the PBOC's directive to stop direct data connections between Internet platforms and financial institutions,

We have made significant progress and preparation. We are confident that we can work with our partner financial institutions to complete the system switchover within the required timeframe. Currently, we are also seeing positive regulatory developments in the industry.

underway to support the healthy growth of China's Internet platform companies. For example, the CPIRC's interim measures for the management of commercial bank Internet loans have officially endorsed and regulated partnerships between...

banks and internet platforms like ours, providing a solid foundation for our operations. Additionally, regulatory authorities recently announced that rectification among major internet platform companies is mostly completed and PBOC's financial market department has also pledged to promote

healthy development of the platform economy. Overall, we believe that these regulatory developments indicate that China's policy regulation of Internet platforms is moving towards a period of normalization.

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The Chinese market experienced a strong demand for consumer credit, driven by several factors.

Firstly, the insurance of the 14th Five-Year Plan for promoting the development of small and medium-sized enterprises by 19 government agencies, and the joint release of the Notice on Strengthening Financial Services for New Urban Residents by CBIRC and PBOC.

have spurred the growth of FinTech products and services for both individual and SMEs. Secondly, our financial institution partners have been able to provide abundant funding to meet the demand for long facilitation services. In fact, PBOC reported and...

11.1% year-over-year increase in the balance of RMB loans by financial institutions in 2022. And the full year RMB loan volume increased by 21.31 trillion.

representing an additional 1.36 trillion increase from 2021. However, rather than blindly expanding our business scale, we choose to take this opportunity to improve the structure of our border base on our platform.

In terms of borrower operations, we focus on enhancing the quality and scope of our borrower acquisition capabilities, adding approximately 1.53 million new borrowers throughout the year, a 52.4% increase from the previous year.

We also increased the proportion of loans by borrowers with a credit score of 60 or above from 68% to 88% in 2022. Additionally, we concentrated on exploring borrower lifetime value.

amount.

The average ratio of repeat borrowers for the four quarters in 2022 remained stable at about 67%. And the average borrowing amount reached about RMB 9737.

a 71.4% increase from the previous year.

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such initiatives reflect our expertise in precisely and effectively leveraging our funding sources to better meet the financing needs

of borders on our platform. This expertise is particularly valuable during industry-wide fluctuations in risk levels.

To prepare for current and future risk challenges, we have refined our borrower's segmentation. As our business has scaled, our borrower base has consistently demonstrated healthy and sustainable characteristics. Moving forward into 2023, we have expanded our borrower base to a more sustainable and sustainable environment.

We will continue to refine our borrower segmentation and adjust our borrower acquisition strategies based on market conditions. In the long term, we anticipate that new borrowers will make up 20 to 30% of our borrower base allowing us to maintain stability and sustainability.

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the As a result of these efforts, we establish a solid foundation to achieve Expect a...

growth in 2022. In particular, our efforts in fine-tuning our operations have resulted in increased efficiency in funding allocation and consistent improvements in our revenue scale.

In 2022, our long-origination volume, net revenue, and net income increased by approximately 153%, 84%, and 152%, respectively.

During the year, this exceptional group demonstrated our solid progress in expanding funding sources, improving asset quality, enhancing risk management capabilities, and refining our operations.

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On the funding front, the overall supply of funding in the market remains sufficient during 2022, and the funding cost has declined as well. As such, our credit costs are stabilizing while our business goal keeps expanding. Since the beginning of the pandemic, we have seen a decline in the number of people in the market. We have seen a decline in the number of people in the market.

We have already acquired relatively sufficient funding sources. We continue to expand and deepen our core operation with key funding partners to effectively leverage them, and fulfill the credit needs for high quality borrowers on our platform.

As of December 31, 2022, we have partnered with 53 financial institutions, and we were currently in discussion with another 62.

Notably, the funding sources without regional limitations still contributed to the majority of our total loan origination volume in the fourth quarter.

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We are empowering our partner financial institutions through our technology-enabled services to develop their own self-operated business models.

As of 2022, we have already empowered five financial institutions to digitize their own online business and we are now interfacing with another two financial institutions while actively negotiating with six more institutions to explore potential collaborations.

As the COVID control measures ease towards the end of the year, we will be able to further expand our business and improve our efficiency in engaging with new funding partners or implementing new partnership models.

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and the development of the new technology that will be available to the industry. In late 2022, the whole industry experienced significant risk volatility, which affected our risk

metrics to a certain extent. However, I am pleased to report that our risk profiles have already stabilized as our 61 to 90 day delinquency rate has remained stable as of December 31, the application of AI technology in FinTech.

has been instrumental in quickly addressing challenges posed by market volatility. Going forward, we plan to continue our investments in fintech AI applications to further strengthen our risk management capabilities.

Specifically, we will leverage voice and semantic recognition, user identification, asset quality control, and anti-fraud AI modules to enhance our efficiency and risk management.

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In addition to facilitating consumer loans for individuals, we also continue to expand the scale of our services for small and micro business owners.

We all know that the COVID-19 pandemic has a severe impact on businesses around the world.

particularly small and micro businesses. In response, the People's Bank of China and other government agencies issued a number of policies calling for financial institutions to increase support for small businesses facing difficulties in production and operations.

Our extensive experience in fintech services and business operations enabled us to collaborate with financial institution partners to better serve micro and small business owners.

As such, we actively responded to this call and expanded our specialized loan program to help small business owners overcome financial hardships. Throughout 2022, we saw a steady increase in the scope and proportion of loan facilitation volume.

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Moreover, we also made excellent progress in our global expansion efforts. In Indonesia, we have continued our former investment and closely monitored the region's growth potential. In Nigeria, we have achieved significant business and revenue growth.

by boosting our loan origination capabilities in the local market. Our revenue growth in Nigeria was substantially faster in this quarter year over year.

Moving forward, we remain focused on enhancing the profitability of our overseas operations by developing innovative partnerships models and accelerating our product development and penetration in local markets. By tapping into diverse business opportunities in these regions,

We expect our global operations to become a meaningful driver of sustainable growth for our company in the long term. We expect our global operations to become a meaningful driver of sustainable growth

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Last but not least, I'm glad to report on our recent strides in cooperating social responsibility. Our commitment to empowering others through technological driven financial inclusion is at the core of our philosophy.

In August 2022, we published our first environmental, social and governance report, which set the tone for incorporating social responsibility into our business operations.

Throughout 2022, we demonstrated our commitment to making a positive impact on society through various initiatives.

In September , for example, we partnered with the Shanghai Song-Ching Lin Foundation to launch the Let Children Smile Youth Mental Healthcare Program. This program, in addition to our ongoing charity education campaign, aims to provide comprehensive support to underprivileged children.

children, focusing on both their physical and mental well-being. Later in December , we collaborated with local governments in Vinland Province to provide mental health care training to teachers and students. Furthermore, we donated school supplies.

to the central primary school in the town of Xiu Tang in Guizhou province, including computers, books, and school uniforms, to ensure that left-behind children have access to better educational resources. We also invited psychology experts to conduct mental health training for all teachers in Xiu Tang.

We look forward to continuing our efforts in this direction.

to continuing our efforts in this direction.

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Radio- To conclude, we achieved robust growth as we expected in 2022 as a result of our efforts in strengthening our partnership network.

improving our risk management strategies, evaluating our technology capabilities, and expediting our global business expansion. Looking ahead, we remain resolute in our pursuit of sustainable growth and emerging in expansion.

As the regulatory environment stabilize and the COVID pandemic becomes a thing of the past, we are confident that our proven strategies will continue to drive our success in the years to come.

In line with this expectation, we are pleased to forecast that our long facilitation volume for the full year of 2023 will be around RMB 70 billion with RMB 19 billion from the first quarter of 2023. Thank you.

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and the development of the new technology to be developed in the future. Based on this strong operational outlook and our robust capital position,

Our board of directors has authorized and declared our first ever dividend policy. We expect to pay dividends twice a year in cash, subject to some conditions.

The annual total dividend distribution shall be no less than 15% of our net income after tax in the previous fiscal year.

These declarations underscore our commitment to creating value for our shareholders and our confidence in the long-term growth prospects of Giant Group. Thank you, Mr. President, please go ahead.

Thank you Mr. Yan and hello everyone for joining our call today. I will now review our financial highlights for this quarter. Please note that all numbers will be in RMB and our percentage changes refer to year over year comparisons.

As Mr. Ye mentioned, we delivered a record growth in 2022, particularly in the fourth quarter. Our loan origination volume grew by 249.2% to $18.9 billion as we defined our partnership operations and improved our funding efficiency.

Our net revenue was $1.1 billion, up 186.4%, driven by a 149.2% increase in our revenue for our loan facilitation services.

Other revenue grew significantly to $154.7 million from $7.1 million in the same period last year, mainly driven by incremental revenues from individual investor referral services and post-facilitation services. Moving on to costs. The total cost of the plan and the service expenses were $195.1 million.

up 130.1% in line with our loan origination volume growth. Around four incredible receivables, contra assets, loans receivable and others reduced by 12.2%.

to $15.1 million compared to $17.2 million in the same period last year. Sales and marketing expenses increased by 138.4% to $374 million, mainly reflecting higher borrower acquisition expenses. As a percentage of net revenue, SM expenses decreased to 35.5%.

from 42.6% in the same period last year. G&A expenses were $59.3 million, up 26.7%.

Primarily driven by an increase in staff costs in the quarter. As a percentage of net revenue, G&E expenses reduced to 5.6% from 12.7% in the same period last year. R&D expenses were $64.4 million.

compared to 46.6 million in the same period last year. We recorded a high employee compensations and benefits, as well as increased fees for professional services in the quarter.

As we prudently managed our expenses and grew our revenues at a much faster pace, we were able to further expand our profit scale in the fourth quarter. Our net income for the fourth quarter increased to $533.7 million from $122.5 million in the same period last year. Our basic and diluted net income per share was RMB 2.49.

compared to RMB 0.57 in the same period last year. Basic and diluted net income per ADF was RMB 9.97. We ended this quarter with 291 million in cash and cash equivalents, up from 217.5 million as of September 30, 2022.

As of December 31, 2022, we have repurchased approximately 1.5 million of our ADSes for US dollar 3.5 million and our US dollar 10 million share repurchase plan were announced in June 2022.

Before I wrap up, I will briefly review our four-year financial highlights as well. In 2022, our loan volume grew by 153.4% to $55.5 billion, while our net revenue increased by 83.7% to $3.3 billion. Our net income grew by 152.3% to $1.2 billion.

while net margin expanded to 36.1%. Net income per ordinary share and per ADS were RMB 5.48 and RMB 21.92 respectively. With that, we can open the call for questions. Mr. Xu, our Chief of Staff and I will answer your questions.

Operator, please proceed. Thank you. If you wish to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. If you prefer to ask your questions in Chinese, please repeat your question in English immediately after the convenience for everyone on the call. Please stand by while we compile the Q&A roster. We will take our first question.

Our first question comes from the line of Lin Yao from Sifu Securities. Please go ahead. Your line is open. Hello everyone. I'm Lin Yao from Sifu Securities.

And I would do the translation for myself. I'm Ling Yao from Passport Security. My first question is about your first ever dividend policy. Since you are buying back shares and paying dividends, does that mean you don't need that much cash? Would you be better off investing the cash to expand your borrower base and funding partnership networks for stronger growth? Thanks.

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Okay, this is Sean Zhang from the investor relations and I'll do the corresponding translations in English. So, thank you, Lingyao, for your question. It is true that the company's current condition of operation is sound and stable.

Probably you can see that our performance shows a very fast growth in these years. And our operational and financial indicators are significantly improved. And also the company's operational cash flow is nice and solid. And our balance sheet is pretty strong. But at the same time, you can see that the PE ratio of our companies is still very low, which is...

below two times. So the management believes that the current price of our company's ADS failed to reflect our inherent value, or you may say that we are actually undervalued. In June 2022, the board approved the 10 million repurchase plan, and in addition to that, our board just approved our dividend policy in order to further protect the interests of our investors.

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The company is the first priority. We are the first to make the most of the money and we will continue to make the most of it. Okay. So as you know, cash is the king nowadays. So the company will always consider the necessary cash reserves for our long-term development as our first priority. We made the $10 million repurchase plan and the dividend policy

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more uncertainties, we really need to avoid some risk during this process. So the second reason will be that we didn't really...

made the goal of 2023 as probably based on our goal of 2022. And we can see that this is a goal made very carefully. So the main reason is that we need to keep the asset quality at a very healthy level and to avoid probably some risk.

So, Mr. Yau, can you please provide the translation of your questions, please?

Sorry about that. Yes, sure. Yes, sure. My translation for my question is my second question is about the robust market demand throughout 2022 that CEO just mentioned. I expecting that to change in 2023. Your outlook only reflects on 26% long facilitation volume growth in 2020.

I'll just add on a little bit on your question, to the answers to your question, in addition to what Mr. Yen has provided so far. On your first part of the question, you asked about overall outlook. As just Mr. Yen has mentioned in his opening remarks, there were several factors pointing us towards we will remain a positive and healthy expectation throughout 2023.

These couple factors, including on the regulatory fronts, we're seeing positive developments as well as the official endorsement towards the partnerships between internet platforms like us and financial institutions. This, while such improvements warrant financial institutions to pursue further interests or deepen their partnership with us, therefore to guarantee our healthy funding sources going into 2023 and forward.

Similarly, on the consumer demand side, we are seeing the growth on the consumer loans on the nationwide as well as the requests and funding resource supplies from the partners from the institutions that we already partner with.

In addition to that, you asked about adjusted percentage growth rate in 2023. But let's first go back looking at the absolute numbers, looking at these numbers in absolute terms. In 2021, overall transactions is around 22 billion. In 2022, this number we just reported is 55.

So with a little over 30 billion growth, primarily coming from China has been in this market for over 10 years. We have harvested low-hanging fruits in 2022 by focusing on our repeated followers. We focused on exploring and maximizing their following needs and having their needs to match with. You may not have career opportunities, you may not even work in house building, the market only shelf number one option, take the opportunity to build all loans to make and work your minutes

competitive products offered through our platforms in partnership with our financial institutions. Going pretty much in the fourth quarter of 2022, we have changing gears into more of an organic growth. As you probably have noticed, in Q4 2022, our total transactions are around $18 billion, and our outlook for Q1 2013 has slightly improved to $19 billion.

So we are focusing on organic growth at this point by introducing and higher quality, credit quality customers to more competitive acquisition channels and more competitive product offerings to these channels to these new customers.

in helping that to grow our overall customer portfolios, as well as to deliver a healthy risk, the risk metrics. So with that, then you're looking at our growth in 23 outlook, it's going to be from 55 billion to 70 billion so far.

But as you can also notice, that assembly building is relative to conservative view by considering the seasonality change. And slightly answering this in the second half of 2023, regarding to the overall landscape in this industry, we are pretty confident in delivering such numbers. We also have the flexibility of adjusting upwards when the time we feel is comfortable to do so.

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I hope this answers your question. Thank you. Okay, so operator, I think we can move to the next participant who wants to ask a question. Of course. Thank you. One moment, please. Your next question comes from the line of Sam Lee, who is an individual investor. Please go ahead. Your line is open.

I will translate for myself as well. Thank you for taking my question. My first question is that you have recorded a high net margin Q4 compared to some of your peers. Would you like to share some possible reasons for that? Thank you.

I will translate for myself as well. Thank you for taking my question. My first question is that you have recorded a higher net margin in Q4 compared to some of your peers. Would you like to share some possible reasons for that? Thank you. Thank you.

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Okay, so this is Sean Zhang and I will do the translation in English. So thank you Sam for your question. So from the perspective of our performance in the financial indicators, Q4 is an excellent quarter with very nice profitability. It is true that if you look into the margin, it is probably slightly higher than our peers. So in Q4, our operating margin reached...

nearly 33%. And for the full year of 2021, it is about 36.1%. And I think there will be two reasons for that. The first reason is that the scale effect generated by our rapid growth in the performance.

And the second reason is probably because our fixed cost is stable and our funding cost is stable and at the same time it is going down as well.

At the same time, it is also a result of our refining operation. So... In the attom of biblical Hi everyone, good evening. In this Welcome To View channel, I hope you all are having a ?bomb- downturn at home. Maybe the company will=(?) But really, again, we will continue to do part of the fingerigation process in the long term. Because theobs Agents will continue to Frenc, InshaAllah.

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Okay, so the net margin is slightly higher. It is true. So our net margin of Q4 reached more than 50%, which was higher than the operational margin. Mainly because of the impact of some extraordinary reasons. For example, some of our core entities for our businesses

just obtained the qualification of high tech enterprises, which benefit us that our applicable income tax rate is now adjusted to 15%. And as you know that it is, which can be traced back to 2021. And that will be one reason of that. Thank you.

and the platform will be in the future. We will further cut down the tick rate of our platform. We will also increase our R&D investment and the market will be in the future. We will also increase our R&D investment to improve our efficiency.

And maintain the overall operational marchin at a healthy level. So when open that out, go F I M going, content that well, they are. No one is are going, you see it. She say: what do we without going through the TL? oun and I' working quite and is going through some home and part, So that is are other shaping. We were going through the tweve aroundountainance and I come on going through, or you see that that you, when you have father question.

I think it's important to remember that the most important things are the risk and the risk of the risk. Thank you. My second question is about the vintage curves. While the long volume accelerated and grew significantly, you have managed to keep your risk performance at an industry-leading level. If your long growth decelerates as you have forecasted, you have Era Constant

Can we expect your vintage rates to improve even further in 2023? Thank you. This is Yifang Xu. I'm going to take on your questions. First I want to answer your question in English, then I will transfer myself in Chinese. So, first of all, I will continue to focus on improving our risk metrics throughout 2023 and forward. Just as a company focusing on the lending business, having a good control over our risk metrics and practice prudent risk management.

philosophy is intrinsically inside within our company's philosophy and policy. However, I will not connect the growth rate and the loss rate in the way you presented. So even though we are, the growth rate has increased in 2023, our economy is Bill PLAN for everybody,... We leverage that byShooting relates itself to fact and knowledge, and self-creen all the technical benefits of this stormed distances

From 3 digits percentage growth rate to double digit growth rate, we're still expecting significant growth from 55 billion to over 70 billion. As we continue to grow our platform by over 20 billion, almost 20 billion in the, throughout the course of 2023, our key focus of the risk factors are going to be primarily focusing on two fronts. One's from the new customer acquisitions.

So as we continue to practice constraints on number of new customers and the new launch nations as part of a portfolio in our total launch nations, we also want to focus on choosing the right acquisition channel mix and the product offerings.

So both the decisions or acquisition channel mix and the product offerings are based, are solely based on focus to improve our overall.

the customer credit risk profiles. Going forward, as we have started probably over a year ago, we want to focus on improving our customers' credit risk profiles, and we'll continue to do so by choosing our precision channels that gave us a broader and greater access to better customers. Similarly, in the product offerings, we want to make sure that our customers are not getting too far away from the customer credit risk profiles. We want to make sure that our customers are getting the credit risk profiles that they need to be able to get to the right place. We want to make sure that our customers are getting the credit risk profiles

We are going to match the product specifically to the loan interest rates from our financial institution partners with the lower interest rates products to our new customers in order to attract the right customer segment to our platforms. So that's on our new customer acquisition side, how we are going to continue to drive over 20 billion overall growth and still continue to improve upon our industry rates. So now that we've paid the customer borrowers, our focus will be enhancing the customer level of modeling and decision.

in addition to what you see the typical on the low level risk decision models and the decision frameworks. So that allows us to really focus on the high value customers, making sure that we are extending our credits to them without over extending, over expanding their risk appetite. you

So in addition to the modeling focus, we will be also exploring external third-party data along with our internal customer behavioral data and through focusing such data mining on water and water.

complex, complicated customer level data will allow us to improve upon all the models over the entire lifecycle of the customers. So next I'm going to translate my answers in Chinese.

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Thank you. No more questions from you. Thank you. We've reached the end of the call. I will return the call back to Sean for closing the call on the frequency rolling mark.

Q4 2022 Jiayin Group Inc Earnings Call

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