Q3 2023 Yiren Digital Ltd Earnings Call

Yeah.

We reviewed our new corporate position it has been a I N. The petrodollar degree than that Angel and lifestyle services platform that is anchored by three key pillars.

Angel services insurance and consumption of lifestyle services.

This quarter, we have started utilizing AI assisted marketing tool.

Inquiries, our advertising targeting accuracy.

Cheap greater social media and visibility.

We are also in progress of upgrading our chat box to assist it in early.

Every state already stages of the loan collection process.

Let's get into this quarter's business update.

Right.

On financial services.

Third quarter of 123 total loan volume was RMB 9.8 billion.

Representing a 56% increase year over year.

The total number of borrowers in the quarter increased to 63% from prior year.

One 2 million.

U R E L Y E. P. P continue to increase for the sixth consecutive quarter by 23% from prior quarter.

$2 9 million.

And then the number of average transactions per user maintained stable at three times.

Thank you hi, user stickiness and activities.

In terms of user distribution well you got what approximately 30% first time borrowers.

Remaining 70% I repeat borrowers.

Yeah.

Borrower acquisition.

Continuing to explore new acquisition channels as well as optimize.

They shouldn't matter to attract high quality new customers.

During this quarter, we experimented with utilizing our wechat.

Okay.

If you would.

Each.

He didn't know late we initiated a collaboration with selected media partners to fine tune our acquisition model.

The equity is ease of use their coffee and tea.

By utilizing AI assisted pocketing tubes. These new initiatives resulted in loans facilitated to new borrowers inquiries being by 49% this quarter from prior quarter.

Our international expansion efforts.

Have you experienced significant growth in the Philippines market.

Third quarter results, showing a remarkable increase of.

172% compared to the previous quarter.

We have also achieved a notable improvement in risk management as we continue to try and fine tune our risk models tailored for the local market.

To continue to pursue growth in international markets and are excited about this.

We're arguing as a substantial driver for future growth.

In companion rapid growth over the past few quarters with total G M B.

Could this quarter, increasing 42% from Florida.

M B 563 million.

Number of active users. This quarter also includes the 22% from prior quarter to 2.96 million.

The growth in our consumption and lifestyle services segment has also created synergies with our financial services segment with active user well Theres female 18, and inquiries been lumpy Matt.

Resulting in a mutually agreed enforced to loop in our equaled two stuff.

They all are in all of our insurance brokerage business.

Gross premiums reached RMB, one point for BD.

Well there are plenty of 'twenty three.

43% year over year, and 7% quarter over quarter.

Significantly ahead of industry average.

Second quarter was the peak well first year premiums due to the timing of the new pricing regulation Kaki and future profit records at 3%.

Breaking down this quarter, 62% of total premiums.

I attribute it to life insurance premiums.

Property insurance premiums okay.

For the remaining 38%.

Highlighted on acquire of course cost.

The.

And trustees and driving growth.

It's around three key areas.

Innovation.

And its development and the Digitization.

A very important and keep your eyes watch is aging the quality and productivity.

I'm happy to note that with the establishment of our elite agent team.

We have seen a notable 39% quarter over quarter increase in life insurance policy premiums, surpassing RMB 3 million per policy as well as a 16% quarter over quarter increase in high margin property insurance policies.

Property insurance, we continue to see it continue world in overseas, how scrap some policies with total premiums for this product recommend increasing 19% quarter over quarter.

Product innovation I'm very excited to announce that we have a lineup of novo and pay their life insurance policies scheduled for release in the fourth quarter.

Including a product, but can you get them they define what you inherited.

I'll share more details and initial reads out during our next quarter's call.

I will now pass it to not who will go through the financials for this quarter.

Okay I'm hanging on the hollow al one on this chart, our only focus on our key financial highlights. Please.

Once annually and that stuff, we'll find out detailed in the so called the I'm trying to get some good thing our total Daniel it shouldn't be one five C. E liquids engine 50 states. Besides English yeah, Oh, Yeah, I'm, saying I don't know it without unhelpful.

Total loan facilities are called her H M B nine months eight eating.

And then second is Tucson, well, Oh, I'm, sorry, Yeah I'm sorry.

Well I was watching plenty there shouldn't be a one 4 billion that's that doesn't have a bunch of states. It sounds like year over year and there's some signs of increased plants I always called her why haven't you my knowledge lifeboat segment silly.

Yeah, I think the 200 and if they can find meeting focused culture.

Watching to sound it year over year, that's a decrease of 30% chunk, probably okay. The cosmo all causing wiley with magnesium, you'll know plenty of which country beyond that do you think Japan all the total planned that the industrial contracts compared to the 17% is affecting the council.

Oh, no no combinations like <unk> compliant yourself, what's the appointment and there. She was mainly a result of price change was in fact, what happened I cant see how captain's seat, sometimes don't like them sell outside Asia.

Yeah policy might be caught out certain continents, it's partially in Jordan.

On consumption and the last thing I'm sorry.

The total Tam W. What's it called no there shouldn't be a 553 meeting includes smoking still to sign some funny content on the.

One site south of marking an increase that's what do you think you stand it yeah Oh yeah.

100, and that you think meaning mainly due to our in place market actually I think one of them.

As such and if you're one of the paths equally stunning keep assigned yeah, Oh, Yeah sure. The India 59 meetings I think that how you like them I am just happy English across our company Anja now and it's always house inquiries from time to time, but yeah, Oh, yeah. So N V 200, and unless you find meeting maybe in July then I E.

I'm, just I feel like Paul, but he needs for our insurance book I E band aid equates to 30% year over year to 90, it's lucky strike pitch default Feeney I said, Tom changed your life operating efficiency allows them a pump or I think I'm done.

But what's the N b a T cell meeting fuzzy contacts, but mainly it's stable and about 9% of loans or synergy.

Also a bunch of mine. It continues to be you are still on pace to be 554, meaning its contract in place a 105 finally get agenda about 600, and it's working fine now.

Well I'll tell you shouldn't use a culture and an increase of 88 to sandstorm Flavia yet on the balance sheet I'll buy anything they need strong wasn't towards attached and detached Clifton off maybe a five point swap eating by the end of this call okay.

It's called the Dupont. So many of you I saw that you pay back on shelf bernacki, not having as much heat and sounds good.

And that's something I assume that you're trying to find my keep flying less balance well all of Xiaomi attrition slow Glenn when they seem confident that you can find them as part of our company its business and that's also a patch.

Based on our seismic I'll call a good news and the market condition, it's kind of Alexandria tended to actually allow them you just cant beat you won't be as full time keep eating sadangi spoke I'm not beating its nightclubs in mind they come to the knee stable, that's just like Ocado and cleaner.

That change and that doesn't mean, we won't do it all close to my I'll teacher now we can open up for questions. Thank you.

Thank you.

If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press star two if you will on a speakerphone. Please pick up your handset to ask a question.

The first question comes from the line of Matthew Larson with CNS idea. Please go ahead.

Good evening, Thanks for taking my call. Okay, I missed most of the conference call, but I read the.

Report.

Another great quarter, I mean, it's a really unprecedented in this sort of a financial returns you show on a quarterly basis.

Your stock has gone up pretty sharply in the last few days in advance.

This call.

But what are your plans to try and get a higher level of stock price because.

Based on your run rate your.

You're trading at less than one times earnings, which as you know in my 41 year career pretty much unprecedented.

<unk> you have.

Probably at least three times the cash on the balance sheet that the value of your company is.

And that's also unprecedented your company also used to be worth $50 a share like a few years ago, so down into two or $3 range is and it is unusual but you know you're a Chinese stock from the PRC and people are distrustful.

So with that being said.

What plans do you have to broaden out.

Investor.

Ooh awareness of your company you know because this stock should be $10 minimum not too.

And can you help me with that.

Thank you Oh, yeah.

[noise] provide a yeah, a nice pick vaccines.

No and I had the colleagues I've gotten a yeah, a b mall and Oh. So first of all thank you for your yeah.

Yeah.

Remarks recognition.

Ah I think are one is that.

As a nation, we are keep buying back our shares and now we see that volume has gone up and that enables us to buy more shares. So we will continue to do that.

As we can and so Oh, that's one I hope there is a you know reinforcing our partnership the look you know our stock price goes up the more room for buybacks.

I'm sure there are more room for buybacks along so this is one.

Secondly, a quite interestingly.

Yeah.

The interaction with the.

Our investors and other interested parties on.

On the same issue.

So there are some interesting suggestions, which I found to be quite.

Yeah, intriguing and I, probably didn't make much sense, okay, a lot to get your thoughts.

Yeah not to be clear, we attracted a lots at our institution no interest, but now yeah. Today are the interest is more at the retail level.

So if we keep doing the institution no communication.

Lee or solely on.

That Oh, it's.

It's not good enough yeah, we missed a big chunk of our yeah.

The interest so we're thinking yeah quite proactively.

Proactively.

Yeah to do more like the retail side.

On many occasions, yeah and that's.

There's good work to be done on that front.

Frank well are continuing to do a good.

I'd say, our communication with our infusion no investors that in the year.

Yeah.

Other interested parties.

Yeah more visibility.

Like we had.

I enjoy good business is getting a yeah, a better and better.

He says he is.

There are clear and our prospects are great. So there'll be more and more institution no yeah coming back.

While the retail side, yeah, it's something we will spend a lot of time Oh, yeah. So that's a.

A point I'd like to make.

Yeah, and the fundamentally we will continue to do great business Yeah My.

Yeah, our firm belief is that if we continue to believe there yeah things really got back to work.

Alright.

That's all sounds good I know your share buyback is restricted by the volume and how many shares have you bought back. This year you were growing by $20 million worth, but that's pretty tough to do.

With the volume as Sean can you tell me how much you bought back so far.

Yeah, I'm not nave.

Number four please though I'll go into more detail.

Yeah, I thought I imagine in my script by the so called or are they and what how Kimberly I'll couch or five by $5 million or so.

I'll take that actually by the end of this month.

Sometimes it's a mountain seven meetings are U S dollars to pull from a I'll take it back and well continue to manage the shelf Bagley that'd be audio question limitation I keep tons of money down there.

Gotcha, I'm, sorry, I said I'd missed the first portion of the conference call. It took me a while to.

To get on but.

Alright, $7 million, which is this is.

Fine.

Well have you thought about just tendering.

No like at four Bucks for like a 25% of the shares I mean, and this is part of a second question.

Why don't you just take it private okay are you know.

You have the money on the balance sheet.

You make more money than the whole market capitalization of the company I mean, you're trading at less than one times earnings which is.

You know.

Really.

It's very unusual Ah why do you Wanna be a public company I'm just taken private.

Pay a premium to people you know.

Hi, Buck, Okay, and people will be happy to get out of you. If you could spend less and the cash on your balance sheet. So how does that or have you ever been approached by a third party who would like to.

<unk> participated in a buyout.

Yeah, we certainly see the math, but as I explained in previous calls.

So is there clear.

Our.

G.

Ah go global.

It could become a global.

Bean pack leader and so maintaining these yeah.

Do you see the company position Gamestop.

<unk> got a lot of upside yeah to do like a growing global yeah. So and also we believe a yeah a the.

The market will recognize with the pro.

For them it yeah consistent with.

Performance.

So are you, saying that having a a U S listed stock has certain.

Prestige attached to it so.

You would rather be a publicly traded company because you think of the long run it will benefit you.

Yeah, putting banco like though we can do like Oh acquisition, Yeah and globally, we can reward our our employees and partners globally.

Globally with the stock Oh, yeah. So it's very strategic we have this yeah because this.

Platform.

Alright, but I it would make sense to pay people in stock when your stock is still undervalued you might as well take cash did you have plenty of cash so if you're gonna rewards will have a lot of the field.

Dash.

Okay, Okay very well.

Alright, listen you're not the only firm that I'm. The only company. That's in your space I like your company because you've you broadened out your business model to include insurance and things like that.

But other companies that are strictly a lending platforms like our Q F I N or S. I M. B, you know fin evolution, which reported last night.

Another company reports Tomorrow, which is X financial.

I'm familiar with all of these companies because I work at Morgan Stanley and we underwrote you guys. We were part of the initial public offering back in 2016 and 2015.

So a very familiar with your companies.

And I've just been frustrated that I haven't gotten.

I haven't made as much money as I'd like to because I've had to be patient.

But.

I'll just leave it there I mean, there's nothing else to say your stock should be worth a lot more as you're buying as many shares as the volume a little while that's all I can ask when.

When does the window open for you to buy more shares I mean do you volumes spiked. The last couple of days when you give your buy more shares after this earnings call.

Yeah once the window opens up.

Yeah.

Uh huh.

Yeah.

You'll go all in when does the window open up Sir.

Okay I'll answer a question.

Yeah exactly the date.

Yeah Yeah.

Yeah, not all companies at the conference call and there really is I mean, our content and now they might not need that window is open all right.

Ah Okay last question.

You know some of your competitors do pay a dividend.

Quito, which is Q up by and is the symbol X Y S. A N F. I N V paid dividends, which not only returned to some of your huge cash position to reach a shareholders.

But it makes shareholders.

I'm more comfortable.

Ooh dealing with a company from a C or C that pays dividends because if you pay dividends then the money you have is actually there. So have you considered that.

We have thought about that at the NASDAQ we did it a like a while ago for a while and.

So there are different schools of thoughts and and so people would say that you know.

What you just said is one school and some people say that.

Which I tend to agree more.

Is that are you know.

Once you pay dividend you'd be a category of pain.

Pain companies as opposed to a high growth company and if you are how well the company, which are we are so our we have like a high growth high quality people with the opportunities for our cash and so we should belong to.

That category and so I yeah.

They believe that we are as we showed a high.

Well, great high quality growth.

David.

Well, so oh, yeah, so I understand yay dividends.

The in terms of returning money to our investors. So we do a buyback aggressively and that's another way of returning to alternatives.

Way of returning.

January can value.

Wow.

Yeah.

I mean, the buybacks are good except for the stock price really hasn't moved yeah. Let me just give you some advice there the four or five companies that came public a five or six years ago that were.

No peer to peer lenders like you used to be but there isn't the same.

Same business space really that you all are that pay dividends, okay. One as Finn volution I'm sure you're familiar with them they trade at four and a half times earnings and they pay a dividend alright, a 4% and then if you look at our Q F I N, which.

Which is Cui, who Ah Ah Ah.

I you know Cui flu I'm, sorry, Morgan Stanley follows them from a research point of view I mean, it's got a $3 billion market cap, but they pay a dividend also and that trades at five times earnings.

Just paying a dividend.

Who could increase your stock market price to earnings multiple three or four or five times. So your stock could go up literally four or five times. If you just pay a small dividend.

So you might want to think about that because if you pay a dividend.

Certain investors will invest because they liked the dividend, but it also gives them comfort that all of this cash that you have on your balance sheet is actually there because you can't pay dividends unless you have money alright. So you paid it kind of proves to them.

That.

That you're at a very very very good financial position from a balance sheet point of view is is valid.

So your stock could go up two or three times just by paying a dividend. So that's my advice.

Thank you no good.

Yeah.

Yeah.

Very well thank you for your time.

Yeah.

Thank you.

Linda to all the participants that do them up that Star then one to ask a question.

But it minded to all the participants that'd be my star one to ask a question.

Last time, a reminder to all the participants that do my star one to ask a question.

This concludes our conference for today. Thank you for your participation you may now disconnect.

Thank you all.

Yes.

Yeah.

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