Q4 2023 X Financial Earnings Call
Operator: Hello and welcome to the X Financial fourth quarter 2023 earnings conference call. All participants will be in a listen-only mode.
Hello, and welcome to the X financial fourth quarter 2023 earnings Conference call.
All participants will be in a listen only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and 1 on a touchtone phone.
Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
To ask a question you May press Star then one on a touchtone phone.
Operator: To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Victoria Yu. Please go ahead. Thank you, operator. Hello everyone, and thank you for joining us today.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Victoria You. Please go ahead.
Victoria You: Thank you operator, Hello, everyone and thank you for joining US today. The company's results were released earlier today and are available on the company's IR website, I I heard those showing doctorate.
Victoria Yu: The company's results were released earlier today and are available on the company's IR website at ir.xiaoying.group. On the call today from X Financial are Mr. Kan Li, President, and Mr. Frank Fuya Zheng, Chief Financial Officer. Mr. Li will give a brief overview of the company's business operations and highlights, followed by Mr. Zheng, who will go through the financials. They are all available to answer your questions during the Q&A session.
Victoria You: On the call today from exponential Army, Peter Kelly, President and Mr. Frank True, Yeah, Joe Chief Financial Officer.
Speaker Change: It's only they'll give a brief overview of the company basically its operations and highlights followed by Mr. Zhang who will go through the financials.
Speaker Change: We're all available to answer questions during the Q&A session.
Victoria Yu: I remind you that this call may contain forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding the lease and other risks, uncertainties, and factors is included in the company's filing with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required and allowed. It is now my pleasure to introduce Mr. Kan Li. Mr. Li, please go ahead.
Speaker Change: I remind you that this call may contain forward looking statements under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995, such statements are based on management's current expectations and current market and operating foundation I relate to me once life well known.
Speaker Change: Or unknown risks uncertainties and other factors all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results performance or achievements could differ materially from those in the forward looking statements.
Speaker Change: Information regarding these and other risks uncertainties or factors is.
Speaker Change: [noise] equaled eating the company's filing with the U S Securities and Exchange Commission. The company does not undertake any obligation to update any forward looking statements as a result of new information future events or otherwise except as required under law.
Mr. Kept: It is now my pleasure to introduce Mr. Kept me. It's only please go ahead.
Mr. Kept: Okay.
Kan Li: Hello, everyone. We are pleased to conclude the year with solid operational and financial results, emphasizing our commitment to a sustainable In 2023, we facilitated and originated 43% more loans than in 2022 and delivered notable year-over-year growth in both revenue and profit. Total net revenue increased 35% annually while income from operations increased 33% and net income improved by 46%. However, as we enter the second half of 2023, particularly in the fourth quarter, we experienced an increase in risk levels in asset quality. While we strengthened our risk control system and implemented various measures to manage delinquency rates, we also made a strategic decision to proactively reduce known volumes in the fourth quarter, prioritizing probability over share volume. During the fourth quarter of 2023, our total loan amount facilitated and originated was RMB 26 billion, a 20% year-over-year increase, but an 11% quarter-over-quarter decline. Diminishing rates for non-past due for 31 to 60 days and 91 to 180 days were 1.57% and 3.12%, respectively, at the end of the quarter compared with 1.02% and 1.93%, respectively, a year ago.
Kept me: Hello, everyone.
Kept me: We are pleased to conclude the year with solid operational and financial results.
Kept me: First I was in our commitment to herself tend to book.
Speaker Change: You couldn't do 20th suite.
Speaker Change: Sydney.
Speaker Change: You mentioned, maybe in the 43% of the more unknowns than compute.
Speaker Change: You can do to kind of deal or a notable year over year growth in both revenue and the project total net revenue increased 35% on annual basis income from operations increased 30.
Speaker Change: 43% and the net income improved by 46 person.
Speaker Change: However, as we enter the second half of 'twenty than do it for me, particularly in the fourth quarter, we experienced an increase of at least the levels after the quality.
Speaker Change: While we strengthen our risk control system and the implemented various measures to manage and do you think you'll do it. We've also made in the strategy strategic decision to proactively reduce no volume in the fourth quarter prioritization prioritizing quality partnering probability over sheer volume of growth.
Speaker Change: During the fourth quarter all of the countries in Q3, our total amount of the facility that I know originating was RMB 26 billion.
Speaker Change: The person that year over year increase R&D latham personal into quarter over quarter decline do.
Speaker Change: In England for Northern pass dues, so 212 or 30 to 60 days and the 91 to 180 days were 1.5% to 7% on the Threep one to one 2% respectively at the end of the quarter comparative with 1.0% to 2% and one 9%.
Speaker Change: Anybody who a year ago, our team remains vigilant in monitoring the dynamics and how its taking further steps to mitigate the risk by reducing our exposure to harvest area.
Kan Li: Our team remains vigilant in monitoring asset dynamics and has taken further steps to mitigate risk by reducing our exposure to higher risk areas and adjusting our business approach to ensure sustainable profitability. We aim for continued gradual improvement over the course of 2024. And these measures have begun to have a positive impact on our risk indicator. For fiscal year 2024, our strategic approach will remain consistent and somewhat conservative, in line with current market conditions in China. We believe the regulatory environment has become stable, and the government is committed to promoting economic recovery.
Speaker Change: Adjusting our business approach to ensure a sustainable profitability.
Speaker Change: And we will continue with the gradual improvement over the course opportunities than before and then there's some major ones have begun to have a positive impact on all our risk indicators.
Speaker Change: For full fiscal year 'twenty 'twenty four our strategic approach will remain consistent and are somewhat conservative on that.
Speaker Change: With current market conditions in China, who didn't even the regulatory environment has become stable and the government is committed to promoting economic recovery. However, we recognize the challenges and uncertainties exist, although country undergoes the transformative shifts.
Kan Li: However, we recognize that challenges and uncertainties exist as a country undergoes transformative changes in its economic growth model away from a rapid expansion of and Structural Adjustments and Impurities. All of this has far-reaching impacts on various sectors, including our target market. Despite these challenges, we remain committed to executing our strategy of prioritization, profit, and profitable growth. Our commitment to delivering value to shareholders is unwavering, and we intend to pay dividends when probability and smooth operations allow. This overall approach reflects our decision to navigate the evolving economic landscape while ensuring the sustainable success of our business and returning value to our shareholders. Now, I will turn the call over to Frank, who will go through our financial results. Thank you, Ken. Hello everyone.
Speaker Change: Monica growth model away from Iraq and expansion of the test.
Speaker Change: On the structural just adjustments unheard to all of them. These are the far reaching impacts on their sectors, including our target market.
Speaker Change: Despite these challenges we remain committed to it because the beauty of our strategy and prioritization proper profitable growth.
Speaker Change: Our commitment to delivering value to shareholders. He is unwavering and we intend to pay dividends in the wound probability most operations on Dol.
Speaker Change: Overall approach reflects our decision to navigating the evolving economic advantage scape, while ensuring a sustainable with the success of our business and returning value to our shareholders.
Speaker Change: Oh, we returned more coal to Frank who will go through our financials.
Frank True: Thank you, Ken and Hello, everyone. We are pleased to deliver solid financial results.
Fuya Zheng: We are pleased to deliver solid financial results in 2023. Total net revenue increased by 35% year-over-year to RMB4.8 billion, and net income rose by 46% to approximately RMB1.2 billion. In response to a heightened asset quality risk, in the first quarter, we proactively reduced loan volumes to satisfy probability, resulting in a 15% sequential decline in total net revenue for the quarter.
Frank True: 23, total net revenue increased by 35% year over year to RMB, four 8 billion and the net income rose by 46% to approximately.
Frank True: Mm one point too good at.
Speaker Change: In response to heightened asset quality with.
Speaker Change: Fourth quarter.
Speaker Change: Proactively reduced loan volumes to satisfy possibility.
Speaker Change: A 15% sequential decline in total net revenue for the quarter.
Fuya Zheng: We recognized IMB 26 million and IMB 46 million of impairment losses on long-term investments related to our indirect investment in New Up Bank of Liaoning in 2022 and 2023, respectively, mainly due to a depreciation in the market valuation of the Chinese banking sector. However, the bank's loan portfolio and operation remain healthy, and we believe it continues to be a good investment for us. Looking ahead, we will now pursue pure loan volume growth at the expense of the possibility, which is always our strategic priority. [inaudible] We will continue to strengthen our risk management system to improve asset quality and balance our revenue and profitability growth. Now I would like to briefly discuss some financial performance for the Q4. Please note that all numbers stated are in IMD and the round-up.
Speaker Change: We recognized 26 million and RMB 46 million of impairment losses on a long term investment related to our.
Speaker Change: Direct Congratulant you up bank.
Speaker Change: The Albion.
Speaker Change: 2022, and 2023, respectively.
Speaker Change: Only due to depreciation.
Speaker Change: The validation of the Chinese banking sector.
The banking loan portfolio and the operation.
Speaker Change: And we believe it continues to be a good investment for us.
Speaker Change: Looking ahead, we have no cause to Q, no volume growth and expense as a public entity.
Speaker Change: As always our strategic.
Speaker Change: Focus to ensure long term growth and it ties to the shareholders.
Speaker Change: We will continue to strengthen our risk management system between food quality and balance our revenue and the public when they take gross.
Speaker Change: Now I would like to at least seven financial performance.
Speaker Change: Q4. Please note that all numbers stated stated are in RMB.
Fuya Zheng: Total net revenue increased by 25% to RMB 1,193 million from RMB 956 million in the same period of 2022, primarily due to an increase in the total loan amount facilitated and originated this quarter compared with the same period of 2022. Origination and servicing expenses increased by 28% to RMB 755 million from RMB 589 million in the same period of 2022, primarily due to the increase in commission fees and collection expenses resulting from the increase in total loan amounts facilitated and originated this quarter compared with the same period of 2022.
Total net revenue increased by 25% to RMB 1190, 3 million from RMB 956 million in the same period of 2022, primarily due to an increase in the total amount of facility in Oregon.
Compared with the same Kevin 2022.
Origination and servicing expenses increased by 28% to RMB 155 million.
Speaker Change: The 589 million in the same period of 2022 primarily due to the increase in the commission fees and collection expenses.
Speaker Change: Hoping to start with the increase in total loan a bulk facility in Oregon.
Speaker Change: This quarter compared with the same period.
Speaker Change: 'twenty two.
Speaker Change: Provision for loan so the Super Bowl was RMB 99 billion compared with RMB 70 time be carried out 2022 I'm married be true.
Speaker Change: Increased both Super Bowl yelled at by the company as a result.
Fuya Zheng: Provision for loans receivable was RMB99 million compared with RMB75 million in the same period of 2022, mainly due to an increase both in loan receivable held by the company as a result of an increase in the total loan amount of the facility originated this quarter and in the estimated default rate compared with the same period of 2022. Income from operation was RMB254 million compared with RMB274 million in the same period of 2022. Net income was RMB189 million compared with RMB275 million in the same period of 2022.
Speaker Change: Increase in total amount of the facility.
Speaker Change: This quarter and in the estimated full rate compare with the MTA.
Speaker Change: It was all 2022.
Speaker Change: Coming from operation was RMB 264 million compared with RMB 274 million in the same period of 2022.
Speaker Change: Net income was RMB 189 million compared with RMB.
Speaker Change: Two.
Speaker Change: 275 million in the same period of 2022.
Speaker Change: non-GAAP adjusted net income was RMB 230 would mean can pick compared with RMB 278 million in the theory of 'twenty to 'twenty two.
Speaker Change: For the full for further financial information thinks of it go to the earnings release.
Speaker Change: All of our web.
Speaker Change: Website.
Speaker Change: Regarding our share repurchase but in Q4, we repurchased.
Speaker Change: Approximately.
Fuya Zheng: Non-GAAP adjusted net income of RMB 231 million compared with RMB 278 million in the same period of 2022. For further financial information, please refer to the earnings release on our RR website. Regarding our share repurchase plan, in Q4, we repurchased approximately 36,000 ADFs for a total consideration of US$143,000. Since the beginning of 2023, we have purchased an aggregate of approximately 838,000 ADFs for a total consideration of US$3.5 million.
Speaker Change: So the 6000 idiots for a total consideration of one.
Speaker Change: 100 <unk>.
Speaker Change: 40, 43000 since the beginning of 'twenty 'twenty history, we had purchased an aggregate approximately 848000 idiots for a total consideration of 3.5.
Speaker Change: We have a possibility to U S. Five point of time any remaining for the potential repurchase under our contract.
Speaker Change: With respect to our dividend our board has.
Speaker Change: Through our semi annual dividend policy under this policy.
Speaker Change: The combination will declare and pay such semi.
Annual dividends and the amount of dividend any particular coffee it will be made.
Speaker Change: Discretion of the board and they will be based upon the company operations and earnings cash flow financial condition and other relevant factors.
Fuya Zheng: We have approximately U.S. $5.5 million remaining for the potential repurchase under our current plan. With respect to our dividends, our board has approved a semi-annual dividend policy. Under this policy, the determination to declare and pay such semi-annual dividends and the amount of dividends in any particular half-year will be made at the discretion of the board and will be based upon the company's operations and earnings, cash flow, financial condition, and other relevant factors that the board may deem appropriate. The Board has approved the declaration and the payment of a Semi-Annual Dividend of US $0.17 per share for the second half of 2023.
The board May deem appropriate.
Speaker Change: We went into the semi annual dividend policy. The board has approved the declaration of payment.
Speaker Change: And you'll give it to you.
Speaker Change: The 17th that split second.
Speaker Change: Second half of 2023.
Speaker Change: Now all of our business outlook for Q1. This year, we expect the total amount of a facilitator and always you need it to be between RMB.
Speaker Change: 21 billion and RMB 22 5 billion.
Speaker Change: This concludes concludes our prepared remarks, and then we will.
Speaker Change: I'd like to open the call to questions operator please.
Speaker Change: We will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Yeah.
Speaker Change: The first question today comes from Boyd Hines with Equinox capital. Please go ahead.
Boyd Hines: Hi, I'd like to spend a few minutes talking about some of the recent changes in regulation I'm wondering how some of those changes will affect you.
Fuya Zheng: Now on our business outlook. For Q1 this year, we expect the total loan amount facilitated and originated to be between RMB and USD. 21 billion and the R&D 22.5 billion. This concludes our prepared remarks. And we would like to open the court questions. Operator, please. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
Boyd Hines: As a smaller consumer financing company.
Boyd Hines: <unk>.
Boyd Hines: Okay.
Boyd Hines: And King County, that's exactly which are recruiting that or you are referring to.
Boyd Hines: Ah, yes, there too that are I'm speaking up one is the requirement.
Boyd Hines: Four.
Boyd Hines: Our minimum registered capital of 1 billion.
Boyd Hines: 139 million U S dollars and the other regulation is to have a major investor hold a stake of at least 50%.
Speaker Change: Just wondering how the company is going to be able to comply with those two regulations.
Speaker Change: Okay, I think I'll take that question.
Speaker Change: Oh, Okay. Okay. Yeah, I can I can take this question for us to end up because I I I received the voice.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Boyd Hines with Equinox Capital. Please go ahead.
Speaker Change: Email and.
Speaker Change: Got that one.
Speaker Change: First of all we are not consumer financing company in China. We are so called Fintech company, so without that particular regulation.
Speaker Change: Directly tie to us actually applied to the you know consumer consumer financing company that those kind of companies usually oh.
Boyd Hines: I'd like to spend a few minutes talking about some recent changes in regulation. I'm wondering how some of those changes will affect you as a smaller consumer financing company. Can you tell us exactly which regulations that you are referring to? Yes, there are two that I'm speaking of.
Speaker Change: Bye.
Major banks.
Speaker Change: No that's exclusive mainly exclusively really focused.
Speaker Change: Focus focus on issuing a consumer consumer.
Speaker Change: As you you don't see the article they havent come out to the detail we can come with a tight timeline how to implement this mainly is because of it.
Fuya Zheng: One is the requirement for a minimum registered capital of $1 billion, or 139 million U.S. dollars, and the other regulation is to have a major investor hold a stake of at least 50 percent. I'm just wondering how the company is going to be able to comply with those two regulations. Okay, I think I'll take that question because I can take this question first and because I received the email and that one. First of all, we are not a consumer financing company in China. We are a so-called fintech company, so that particular regulation is not directly tied to us, but it is actually applied to the consumer financing company. Those kinds of companies are usually owned by major banks, and they are mainly exclusively focused on issuing consumer loans.
Speaker Change: The 1 billion capital requirement, mostly Oh, all day already met or didn't meet that requirement, but the mainly is about about harmful about maybe a consumer finance company.
Speaker Change: It's not a you know.
Speaker Change: I haven't met the largest share of hold up to at least up to 50% ownership that that I've got a second one kind of on that.
Speaker Change: But once again they haven't.
Speaker Change: Now come up with a detailed income with a when they have to apply it.
Speaker Change: Then secondly climate mainly.
Speaker Change: You did the article you send it to me.
Speaker Change: We I think tech companies. So we are basically doing is.
Speaker Change: Mainly is apply there.
Speaker Change: Uh huh.
Speaker Change: Baruah, so mainly through online or offline methods.
Fuya Zheng: As you can see in the article, they haven't come out with the details in terms of the timeline for how to implement this. Mainly it's because the $1 billion capital requirement is mostly, or they have already met, already met that requirement. But mainly, it's about half or maybe over 10 consumer financing companies do not have a minimum of the largest shareholder up to, you know, at least up to 50% ownership, that second requirement hasn't been met. But once again, they haven't, not come up with a detail in terms of when they have to apply the second second requirement, meaning, as you did in the article you sent to me, we are a fintech company, We mainly source our funding from banks and financial institutions. So that one, because of the Chinese monetary policy right now, it's very loose. And so that requirement does not affect us in terms of the lending, you know, available for our funding, and that regard has no effect at all.
Speaker Change: And the forward curve.
Speaker Change: Uh huh.
Speaker Change: We also get a sudden.
Speaker Change: The polls are sent through the you know those are potential.
Speaker Change: Potential demand.
Speaker Change: Amanda to the bank also to the consumer institution also so the banking Ah Ah also would affect consumer institution that they both provide funding for so called the loan portfolio, but that those loans are still a little is legal.
Speaker Change: And and the and the death, but do not belong to us so that.
Speaker Change: We are not you know because we don't have a you know except it will have a small oh, well our own capital of about $1 billion capital small loan company, we can't be electric issued alone, but because the funding limitation.
Speaker Change: We mainly.
Speaker Change: Mainly it's also a founding visits from the banks and the financial institution, So I wouldn't it's.
Speaker Change: No because of the Chinese.
Speaker Change: Monetary policy right now is very loose.
And so we that's a requirement that do not affect us income with the lending you know available funding.
Speaker Change: Now regardless, there's no effect at all so we don't we don't really we don't see that then how about any.
Kan Li: So we don't see that it will have any effect on us anytime soon. Ken, you want to add something? I know I think you're cutting, okay.
Speaker Change: Any effects on us anytime soon.
Speaker Change: Can you you want to add on something.
Boyd Hines: Thank you. I appreciate the detailed answer. That's all I have, thanks.
Speaker Change: Oh, no I think we've got it.
Okay.
Speaker Change: Thank you I appreciate the detailed answer.
Speaker Change: That's all kind of things.
Operator: The next question comes from Mason Bourne with AWH Capital. Please go ahead. Hi, thanks for the questions. I have two.
Speaker Change: The next question comes from Nathan born with AWH Capital. Please go ahead.
Nathan: [laughter] alright, thanks for the questions I have two to start could you talk about your growth outlook and I know you gave guidance for Q1, but just.
Mason Bourne: To start, could you talk about the growth outlook, and I know you gave guidance for Q1, but just how you're thinking about the opportunity to grow going forward given kind of the pullback and, I guess, your aggressiveness on growth, given what's happening on the risk side of things, and then how that looks longer term, both, I guess, 24 and beyond. Okay, I'll take this one. It's really difficult for me to give you a forecast for 2024 and beyond. But let's talk about 2024. I think in Q1 and looking forward, it looks to us that the environment has been getting worse, from a bad situation to a little bit better one. But we still feel that the so-called better environment is not as good as the much better environment for the first half of 2023. So in terms of growth, I think we will gradually go into a growth mode, but the growth rate will be slower than that of last year.
Nathan: How youre thinking about the opportunity to grow going forward given kind of the pull back.
Nathan: And I guess your aggressiveness on growth given what's happening on the risk side of things and then how that looks longer term, both 24 and beyond.
Speaker Change: Mhm, Okay I'll I'll take this one.
Speaker Change: It's it's really difficult for me to give you a full council somebody can do for them to be on and let's talk about some deep for them I think over although Q1 under them and looking forward.
Speaker Change: And it looks good.
Speaker Change: It looks to us like environment It has been.
Speaker Change: Becoming from worse from the situation to a degree the paid her one but we still feel that the so called the environment is not as good as about much better environment in that corridor first half all the countries in D. C. So in terms of ago, I think we will gradually coming into a growth mode.
Speaker Change: Probably closer it will be a slower on that and get out in the last year.
Fuya Zheng: Okay, thanks. And then the second one, if I look at your dividend policy, it's good to see that you're returning some capital to shareholders. But if I look at peers, some of them are returning substantially more as a percentage of net income is up to about 50%. [inaudible] How do you think about your balance sheet given where tangible book value is per share and if you could do more on the dividend side of things? Yes, yes, we actually we, Yes, we do.
Speaker Change: Okay. Thanks, and then the second one.
If I look at your dividend policy it's.
Speaker Change: Good to see that you're returning some capital to shareholders, but if I look at peers.
Speaker Change: Some of them are returning substantially more as a percentage of net income is up to about 50% through.
Speaker Change: Buybacks and dividends combined or another competitor announced a large special dividend. This week I was wondering.
Speaker Change: How are you thinking about your balance sheet, given where tangible book value per share and if you could do more on the dividend side of things. Thanks.
Speaker Change:
Speaker Change: Yes, Oh, yes, we actually we are we.
Fuya Zheng: We do have a, you know, decided given, you know, a payout, we are looking for, you know, other ways to return shareholder value. You know, right now, we have just issued the Q4 and last year's financial reports, and we were to be, you know, 20th by the end of next month.
Speaker Change: Yes, we do we do have a.
Speaker Change: Given the AR.
Speaker Change: Our payouts are we we are looking for.
Speaker Change: You know other way true true truly kind of shareholder value.
Speaker Change: You know right now is we we we have Oh, you know just issued a you know a lot.
Speaker Change: Q4 is the last year financial reports and we went to a 20-F.
Speaker Change: And then the next months.
Fuya Zheng: And in May, we will have a, you know, for the first quarter financial reports on the call. After that, we definitely this year are looking for a way to have a, you know, have a more way to return shareholder value. Our situation is a little bit different compared with our peers because we are trading volume is very thin. And almost now, you know that.
Speaker Change: And are they in May we will have a we will have a we will have a you know for the first quarter, our financial reports when they can call us. After the we are we definitely are looking for the way too high but you know Oh you know what.
Speaker Change: More way to return shareholder value.
Speaker Change: All this situation a little bit of difference compared with up here because we are trading volume is very thin and are almost now you know you you'll know that and so we are regularly.
Fuya Zheng: And so we have a regular open window period, we just cannot buy much, you know; we are restricted by 25% of flow on a daily basis. So we are looking for more ways to, you know, return shareholder value. That's all I can say at this moment.
Speaker Change: Our open window period, we just cannot buy a much no. We were I was struck by a 25% of the floor on a daily basis. What we so we are looking for more way too.
Speaker Change: Are you now.
Speaker Change: True to return shareholder value.
Speaker Change: All I can say at this moment.
Operator: Thank you. As a reminder, if you would like to ask a question, please press star then 1 to be added to the question queue. The next question comes from Matt Larson with Syncadia Capital Markets. Please go ahead.
Speaker Change: Thank you.
Speaker Change: As a reminder, if you would like to ask a question. Please press Star then one to be joined into the question queue.
Speaker Change: The next question comes from Matt Larson with <unk> capital markets. Please go ahead.
Matt Larson: Thanks for taking my questions. (Inaudible) My question is just to kind of follow up on the previous two people who've called in. Thanks for the dividend because it puts you on the map and is returning some capital to shareholders. What I'm asking is kind of abstract, you know; your company trades at a multiple, which one would never see. Certainly, in the United States and probably in not many parts of the world at slightly above one to one and a half times earnings, the dividend will definitely attract a few more investors.
Matt Larson: Oh, thanks for taking my questions.
Matt Larson: Mike.
Matt Larson: My question is just kind of follow up on the previous two.
Matt Larson: People who've called in.
Speaker Change: Uh huh.
Speaker Change: Thanks for the dividend because it puts you on the map.
Speaker Change: And as returning some capital to shareholders.
Speaker Change: What I'm asking is kind of abstract you know your company trades at a multiple which one would never see in.
Speaker Change: Certainly in United States, and probably not many parts of the world of slightly above one to one and a half times earnings the dividend will definitely.
Speaker Change: Drawing a few more investors.
Matt Larson: But in the past, when people have brought up the subject of maybe going private or, you know, finding a way to get your share price higher, the answer was that that wasn't an option. So I'm kind of wondering, what is your plan? A couple of your competitors trade at four times earnings or so, and they pay a similar dividend to what you are forecasting. So if you could get your multiple to a four, that's at least a triple in your price, and it gets you to a level where I think your primary shareholders would be happier from a financial point of view and also for any long-term investment in Stock Indices out of the PRC. So one can't complain over the last six or eight months, but is there a game plan?
Speaker Change: But in the past when people have brought up the subject of maybe going private or.
Speaker Change: You know finding a way to get your share price higher.
Speaker Change: Or was that that wasn't an option.
Speaker Change: And.
Speaker Change: And but.
So I'm kind of wondering what is your plan.
Speaker Change: If you're a couple of your competitors do trade at a four times earnings are so they pay a similar dividend or what you are forecasting.
Speaker Change: Forecasting so if you could get your multiple you know tool for that so you know at least a triple and your price and it gets you to a level, where I think you know your primary shareholders, we'd be happier from a financial point of view and also for any long.
Speaker Change: At your Investor.
Speaker Change: Your stock has been in an uptrend so.
Speaker Change: Which is contrary to what the.
Speaker Change: Oh, the stock indices out of the PRC have been in <unk>.
Speaker Change: So one can't complain over the last six or eight months.
Speaker Change: But is there a game plan.
Kan Li: to get better awareness of your company and the fact that you've had pretty stable earnings, you know, in a consistent earnings so that more investors are aware of your stock. It's thinly traded, but that can work both ways. You know, if social media and other sites here in the United States became more aware of a company trading at 1.3 times earnings with significant cash on the balance sheet, it wouldn't take much to move the stock. Sorry, I'm rambling on here.
Speaker Change: To get better awareness of your company.
Speaker Change: And the fact that you've got pretty stable earnings.
Speaker Change: You don't Wanna consistent earnings.
Speaker Change: Sure that more investors are aware of your stock is thinly traded but that can work both ways.
Speaker Change: You know, if social media or other sites.
Speaker Change: United States became more aware.
Speaker Change: A company trading at one three times earnings or with significant cash on the balance sheet.
Speaker Change: Uh huh.
Speaker Change: You know it wouldn't take much to move the stock sorry, I'm rambling on here, but you know.
Matt Larson: But, you know, for investors to be frustrated with a stock trading one and change multiple, what game plan do you have? My suggestion is to get the word out there. And that would be more news releases and things like that.
Speaker Change: For investors to be frustrated with our stock trading one in change multiple what would what game plan do you have Oh My my suggestion is to get the word out there and that would be more news releases and things like that.
Kan Li: Sorry to take so long, but I'm interested in what you have to say. Yeah, yeah, you know, you know, you know, we are, as you know, we are in kind of a not that sexy industry. And also, we are definitely among the leaders of this industry, like, you know, the leader is X Financial and so on. You know what I mean. And in terms of, you know, whatever visibility for the sector and for the whole thing, you can, you can, you can, you can. We know it's very interesting to talk about it.
Speaker Change: Sorry.
Speaker Change: It takes a long but interested in what you have to say.
Speaker Change: Yeah.
Speaker Change: Yeah, Yeah, you know US you know as you know well we are as you know we are we are in kind of a not.
Speaker Change: Sexy.
Speaker Change: Our industry also we have a mountain definitely in the amount of you know leader of this industry like a you know a bleeder is financial and and that's so plus a while.
Speaker Change: And the income to you.
Speaker Change: Whatever visibility for the sector and for a full for the whole thing you know you'd think you think you can contribute rather fast because we know it very much interesting to talk about it.
Kan Li: But the one thing I think everyone agrees is that those, those factors are not in our control, like, like a U.S. relationship with, with, China, something like that. So we, we believe, you know, things are on the upswing, we believe we should continue to do what is right, you know, mainly run our business as best we can and return the corresponding return, our, our, you know, return of shareholder value. I think that over time, it will play out.
Speaker Change: But the only thing I think everyone would agree those those factor.
Speaker Change: Now that you can all look at Chile, let likely U S relationship with is kind of something like that.
Speaker Change: So we believe you know.
Speaker Change: <unk> thinks onboard that we believe we should continue to like what is the right you know mainly rental business as best we could and do they tend to close down the return.
Speaker Change: You know the kind of shareholder value I think over time, it will play out, but definitely I don't know when and regarding.
Kan Li: But definitely, I don't know when. And regarding the privatization, I would say once again that it was kind of a tricky thing because [inaudible] But in China, it's different. If you don't believe me, just look at it, there's a big company, a real estate company, they run the biggest mall in China, use the real estate company, they own and run the biggest, you know, shopping mall in China, Wang Jianlin, you know, the learning company, they used to live in Hong Kong, that somehow, in 2015, 2016, they say the valuation is horrible, and they go to privatization. And they want to release it in the domestic market, but they never got permission, and they never get a chance to come back to the Hong Kong market.
Regarding the privatization I would say what is what is the debt that it was kind of a tricky to close up.
Speaker Change: Our U S English to.
Speaker Change: Consider you know privatization, it's it's you know.
Speaker Change: Basically the value play and you'll have definitely have a no obstacle to you know reshaped and and then to come back to you know any time you wanted to do list, but in China, There's a difference there.
Speaker Change: If you don't believe me just looked at it as a big company, a real estate company to run Linda.
Speaker Change: You can kind of run the biggest bull used to list the company they learn Oh.
Speaker Change: One the biggest shopping mall in China. The long generally you know the Bologna company they used to listing in Hong Kong, that's somehow in like the 2015 tons 16, they say the red oceans horrible they they'd go to prioritization and it and they wanted to really dig in and domestic the eight eight.
Speaker Change: A market, but it didn't never got the permission or did they never pet Delek has come back to that so the Hong Kong market. You know we are we are we are in the.
Kan Li: You know, we are in the, We are in the somehow in the consumer sector also, you know, Chinese. There's a rule, there's a rule on the book. [inaudible] We have to get approval from the Chinese government in order to list overseas, especially in the U.S. Hong Kong is a little bit of a grey area because, technically, the U.K. is considered China's territory.
Speaker Change: We are in the sum of all in the consumer sector also you know Chinese there's a rule.
Speaker Change: There's a little on the book.
Speaker Change: Applied to you know definitely apply to us and say that's not anything you'll have the older one building consumer.
Speaker Change: We have to.
Speaker Change: Get a pool from the Chinese government in order to lift the oversea, especially in the U S. Hong Kong and a little bit of Gray area, because technically that you picked them say that they try the territory.
Kan Li: So... If you come, if you're listening, you, you, you, you, you, you, you. The new listing is not sure. That's all I want to say, you know, you know, it's why I say it because we are subject to government approval, because we have more than Kan Li, X Financial, Fuya Zheng, Fuya Zheng, Kan Li, X Financial. We're never going to let you forget. So that's why everyone does not want to do that. It's kind of a listing status is kind of a privilege in China, you know. In terms of the plan, I don't have a detailed plan, but I have a general plan. The first step is to get a stock at over $5.
Speaker Change: So.
Speaker Change: If you come if you're listening.
Speaker Change: Yo Yo Yo Yo Yo Yo Yo.
Speaker Change: But really lifting is not sure. That's all I wanted to say you know you know, it's it's a well I'll say it because we are subject to.
Speaker Change: Two two government approval because of we have a model.
Speaker Change: Ken you.
Speaker Change: You know.
Speaker Change: You know the customer base, that's much more than what isn't that so so that there's another something we can talk about that we can have someone who can carry it was kind of here's another insurance policy for that so if we can be.
Speaker Change: Maybe.
Speaker Change: We're never going to lift again.
Speaker Change: So that's why that's what everyone to no longer do that.
Speaker Change: Kind of a lifting status is kind of a privilege in China.
Speaker Change:
Speaker Change:
Speaker Change: You know me.
Speaker Change: You can come with a plan I have you know I haven't I don't have a detailed plan, but I have a general plant. The first client is get a stock Oh. The five dollar. So so they skewed institutional investor technical contacted us. So if we have a certain period of time say like a.
Kan Li: So the institutional investor can technically contact us. So if we have a certain period of time, say like more than half a year or a year, so our stock is mainly over $5, we will, you know, probably rethink our PR policy. We are, you know, maybe I will be more on the road show, on the road, do whatever, you know, usually, you know, the stuff we do, and hopeful for the best result. That's the general plan. I hope I can answer your question. Alright, yeah, you did in a way. You're kind of trapped in your current listing.
More than happy all year, so almost all of us.
Mainly oldest flat dollar we will you know a public REIT leasing call a PR policy. We are you know maybe I will be more on the road show.
Speaker Change: Well.
Speaker Change: So whatever you know mutually.
Speaker Change: Stuff that we do.
Speaker Change: Hopefully hopeful for the best result that that's that's the general plan.
Speaker Change: I hope I can answer your question.
Speaker Change: Alright.
You did do that in a way your kind of trapped.
Matt Larson: Because you can't go private because then you've got no other exit strategy. But I guess, You know, I was looking for some sort of, I don't know, illumination of the game plan because your stock's been mired in a low multiple. You're not the only one.
Speaker Change: In your current listing.
Speaker Change: Because you can't go private because then you've got no other exit strategy, but.
Speaker Change: Oh I guess.
Speaker Change: You know I was looking for some sort of.
Speaker Change:
Speaker Change: I don't know illumination of the game plan because your stock's been mired in a low multiple you're not the only one.
Matt Larson: I understand there are one or two fintech companies that trade less than one-time earnings in Hong Kong. So it's just a sector where people are concerned about regulation and things like that. But when you're trading near cash value, you know, just coming from the capital markets here in the United States, we have options to handle that, like going private or merging. What would prevent you from doing that? Selling to a partner who has, like, a bank or something that has a significantly higher multiple where it'd be very accretive to them, to buy a company of yours with your client base and your reach with all your millions of customers.
Speaker Change: There are I understand there was one or two.
Speaker Change: Fintech companies that trade less than one times earnings in Hong Kong. So it's just a sector that people were concerned about regulation and things like that but when you're trading your cash value.
Speaker Change:
Speaker Change: But you know just coming from the capital markets here in the United States.
Speaker Change: You know we have options to handle.
Handle that I mean, like going private or merging Oh, you know what would prevent you from.
Speaker Change:
Speaker Change: Selling to a partner who has like a bank or somebody that has a significantly higher multiple where it would be very accretive to them.
Speaker Change: To buy a company of yours with with your client base in your <unk>.
Speaker Change: You reach with all your millions of customers.
Matt Larson: But I'll leave that there for you to consider. Thanks for your time. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Victoria Yu for any closing remarks. Okay, thank you everyone for joining us on the call today. If you haven't got the chance to raise your questions, we will be pleased to answer them through follow-up contacts. We look forward to speaking with you again in the near future. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: But I'll leave that there just for you to consider thanks for your time.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Victoria, you for any closing remarks.
Victoria You: Okay. Thank you everyone for Johnny I found the car today, if you haven't got the chance to raise your questions maybe you'll be pleased to answer them to fill up contacts we look forward to speaking with you again in the near future. Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].