Q4 2024 X Financial Earnings Call
Hello, and welcome to the X financial fourth quarter 2020 full earnings conference call. All participants will be in listen only mode should you need assistance. Please take another conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity.
Opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.
Victoria: Now like to turn the conference over to Victoria You. Please go ahead.
Victoria: Thank you operator, Hello, everyone and thank you for joining today's call. The company's financial results were released yesterday and now available for radiation So website at.
Speaker Change: I I talk Shelly and golf Dot com.
Speaker Change: Of course today from exponential Mr. Ken Kenny President and Mr. Frank <unk>, Chief Financial Officer. Additionally, we I can I ask you to two will come he's starting to walk Hoffman to our company paper.
Brett: Hey, Brett it's 20 years, while experiencing goes that's G. Capri tend to finish our transaction as well as a nice shot in the operational improvements is a global financial market.
Speaker Change: Before joining exponential she served as head of strategy financial planning and Atlanta.
Speaker Change: Intra continental exchange, where he played a key role in capital allocation and a global phase piece of strategy.
Speaker Change: Mr. Coffman will be responsible for leading our engagement with a U S capital markets and clothing, Investor Relations and strategy and I think in each case.
Tony: Maybe Tony will provide a.
Tony: A brief overview of our operations and business highlights.
Tony: Oh, the by Mr. Kim Hoe already to yourself in Asia right now.
Tony: After work he's torney, Mr King and Mr. Kaufman well be all available to answer your question do you ever have a Q&A session.
Tony: I remind you that this call may contain forward looking statements I'm just in the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Tony: So I can state laws.
Tony: Nice methods car racing expectation and evolve knowing and all of the Olympics and other factors.
Tony: These factors are difficult to predict.
Tony: And then you are beyond the company's comfortable which may cause.
Tony: Actual results performance or achievements to differ materially from those described in these statements.
Tony: Further information on these and other risks can be found E. R. S E C findings.
Tony: The company undertakes no obligation to update any forward looking statements as a result of new information future events or otherwise.
Tony: As required by law.
Ken: It's now my pleasure to introduce Mr. Ken <unk>.
Ken: Thank you Victoria and Hello, everyone.
Speaker Change: Im very pleased to conclude the year with outstanding operational and financial results in the fourth quarter total loan volume exceeded our guidance with RMB 32 billion subsidiary here in Q4 alone.
Speaker Change: Two 4% year over year increase for the quarter for the full year total volume reached RMB $104 9 billion, reflecting a stable performance compared to 2020.
Speaker Change: This growth was fueled by disciplined underwriting.
Speaker Change: Strengthened asset quality positive macroeconomic tailwind, that's supported a borrower demand and lower funding costs.
Speaker Change: In the second half of the 20th and therefore, Chinas government implemented a monetary and fiscal stimulus measures.
Stabilizing core economic sectors, notably real estate and enhancing market illiquidity.
Speaker Change: Policy is to lower the funding cost and the false or the sales of borrower demand in the personal finance market.
As a result, we saw meaningful revenue and profitability growth with Q4 net income more than doubling year over year.
Speaker Change: Asset quality performance.
Speaker Change: Asset quality continues to strengthen significantly through the throughout the year by the end.
Speaker Change: End of Q4, the delinquency rate for known as overdue by 31 to 60 days improved to one 7% from 155, 7% a year ago.
Speaker Change: <unk> 91 to 108 days overdue delinquency rate declined to two point to four 8% from $3 one 2% in the last year.
This improvement reflects reflect the effective risk management practices and the discipline and underwriting standards.
Speaker Change: Thank you for all the kind of growth strategy looking ahead into 2025, the Chinese government.
Speaker Change: Iterate the importance of the private sector is a key driver of economic innovation and sustainable growth.
Speaker Change: Recent regulatory guidance from the National financial regulator administration.
Speaker Change: Further reinforced it they've got sedan with the policies aimed at expanding access to consumer credit no early in borrowing costs and supporting consumption JV economics, okay.
Speaker Change: While this development is great as well.
Speaker Change: More common data environment for financial institutions, our primary focus remains on leveraging technology to enhance financial services.
Speaker Change: Simply airpower.
Speaker Change: <unk> power, our risk analytics automated underwriting model.
Speaker Change: <unk> Fintech solutions will continue to empower our financial institution partners in optimizing loan origination credit risk management and the borrower engagement, ensuring they can navigate this evolving regulatory landscape with precision.
Speaker Change: Yeah.
Speaker Change: Accordingly, we expect total volumes to increase by approximately 30% for the full year of 295.
Speaker Change: Supported by both organic demand and a more stable regulatory environment.
Speaker Change: Despite.
Speaker Change: Despite the usual seasonal impact of the Chinese new year, we anticipate sequential growth in total volume in Q1 2025.
Speaker Change: Digital financial solutions, becoming increasingly.
Speaker Change: Two expanding our responsible credit access.
Speaker Change: Maintaining discipline in our risk management.
Speaker Change: So I'd hate to carry our investment in it.
Speaker Change: X financial we are continuing to expand our strategic investments in AI, leveraging cutting rates models, such as the deep seek Alibaba Comaneci Hamlin and <unk> across our operations. We are now powers advanced customer service robot intelligent agent assistance.
Speaker Change: Targeted marketing campaigns, including AI generated a short videos full platform select tick tock, So Jim lines early stage collection efforts.
Speaker Change: You can see efficiency and customer engagement.
Speaker Change: You know something about development, we have implemented JV auto coding tool such as cursor consideration development and system optimization. Additionally, our multi model risk management system delivers over 90 of our accuracy so sophisticated contextual analysis.
Speaker Change: Imager reconciliation technologists to identify early indicators of credit risk.
Speaker Change: Looking ahead, we remain committed to further room to grow into our strategic decision, making process, particularly in risk modeling and the credit policy to continue enhancing operational effectiveness and customer experience.
Speaker Change: With that I will now pass the call to our CFO, Frank Vince for the sale of the financial results. Thank.
Speaker Change: Thank you Dan good morning, everyone.
Speaker Change: He used to report our strong financial results for the fourth quarter.
Speaker Change: Total net revenue increased 43% year over year to RMB, one 7 billion.
Speaker Change: Net income grew 104% year over year to RMB 386 billion.
Sorry.
Speaker Change: Sure.
Speaker Change: Our total top and bottom lines expanded quarter over quarter, bringing full year total net revenue to a record RMB five 9 billion.
Full year net income to RMB, one 5 billion.
Speaker Change: Strong balance sheet and capital returns.
Speaker Change: Our balance sheet remains strong with total shareholders equity.
Speaker Change: Increased by 19% year over year.
Speaker Change: Leveraging this solid financial foundation.
Speaker Change: With approximately 76 million to shareholders in 2024, including <unk>.
Speaker Change: U S $6 5 million in cash dividends.
U S $9 2 million our tender offer.
Lilly: And your life 53, Lilly if that's the issue with purchase.
Speaker Change: There was an announcement.
Speaker Change: Additionally, our board of directors has approved the declaration and payment of our semi annual dividend.
Speaker Change: Yes 25.
Speaker Change: Idiots reinforce our commitment to delivering shareholder value.
Speaker Change: Share repurchase program in Q4, we repurchased 38.4 million class a ordinary shares.
Speaker Change: Fixed.
Speaker Change: That's equivalent to $6 4 million. It is for U S 49 million for full year 'twenty 'twenty four totally purchase reached $52.
Speaker Change: 2 million shares.
Speaker Change: 15 point finally ABS pool.
Speaker Change: Amounting to USD 15 $9.4 million.
Speaker Change: I felt it today, our peers, you'll get $30 million in the U S 20 million repurchased plants are fully utilized we have U S.
Speaker Change: $15 9 million remaining under our U S 15 million repurchase program effective age through June 32026.
Speaker Change: [noise] funding funding outlook looking ahead, we remain open.
Speaker Change: Okay.
Speaker Change: About a gross credit to them.
Speaker Change: For the first quarter of 2025, we expect that total amount facilitated originally to be between RMB.
Speaker Change: So let me get to your point 5 billion and RMB $34 5 billion.
Speaker Change: This positions position us to achieve our full year total loan amount of facility.
Speaker Change: Between RMB.
Speaker Change: $134 4 billion and the RMB.
Speaker Change: 138 4 billion.
Speaker Change: For opening remarks.
Speaker Change: Progress.
Speaker Change: 2025.
Speaker Change: We remain confident in our strategic direction supported by robust underwriting standards.
Speaker Change: Disciplined this instrument.
Speaker Change: Operational efficiency improvements.
Speaker Change: Our strong financial foundation disciplined capital allocation and a clear commitment to enhancing shareholder value.
Speaker Change: We are well positioned for sustainable and profitable growth for all wish it for our shareholders partners and especially our dedicated employees and the X financial we appreciate it appreciate your trust and support as we execute on our strategy and driving long term value.
Speaker Change: Pollution.
Speaker Change: We look forward to delivering continued growth and success.
Speaker Change: In the quarters ahead.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: We can transfer to the Q&A session now.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session. Glasgow question. You May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: 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.
Unnamed Moderator: Our first question comes from Ramsey manner with Blackbird capital. Please go ahead.
Ramsey manner: Hello, Congratulations guys on a great quarter and happy to be a shareholder my.
Unnamed Moderator: My question is during the fourth quarter.
Unnamed Moderator: The company repurchased approximately 6.4.
Unnamed Moderator: A D S is on December 16th.
Unnamed Moderator: However, the share count on the financial report as of December 31st It does not fully reflect a reduction so I'm not sure. If this is an accounting discrepancy here. If you could clarify that that would be a better for me. Thank you.
Unnamed Moderator: Yeah.
Speaker Change: I'd be happy to answer your question.
Unnamed Moderator: So we bought back.
Unnamed Moderator: Back in the last quarter of 2024, but the share count.
Unnamed Moderator: Calculation is based on weight average so you know say you own back share in 'twenty four.
Unnamed Moderator: Among 300 days.
Unnamed Moderator: Although with the 365 days so that she had kind of still a you know will be accounted for 300 days.
Unnamed Moderator: Sure. It's on the calculation of the weighted average of that that isn't that is why you'll see that see that big reduction because it's up.
Unnamed Moderator: The way we average so.
Unnamed Moderator: You can quantify you will you will.
Unnamed Moderator: Are those yeah I totally get this appears on the share count I hope.
Unnamed Moderator: Absolutely. Thank you yes.
Nathan Burn: The next question is from Nathan burn with AWH capital. Please go ahead.
Nathan Burn: Hi, Thanks for taking the questions I guess just to start it sounds like you have someone new who joined the company is on the call could you just talk about that a little bit police in his role.
Nathan Burn: Well why don't we ask Noah who will tell you himself yeah no about.
Nathan Burn: So that's created by yourself.
Speaker Change: Yeah sure Yeah. Good morning, Yeah, good morning, and evening, everyone and thanks Nathan for the question.
Nathan Burn: Yeah, and I'm excited to be here.
Nathan Burn: We enjoy next financial.
Speaker Change: I'd also like to thank Victoria for the introduction and.
Nathan Burn: Expressed appreciation that Ken and Frank for their entire leadership.
Nathan Burn: From my early conversations with the team that is deeply impressed with the strategic vision.
Nathan Burn: The team and the foundation they built.
Nathan Burn: X financial sustained profitability and growth.
Nathan Burn: For themselves and I look for forward to playing a role and strengthening that my focus is going to be on deepening our engagement with U S capital markets I'm sure Mason.
Nathan Burn: I'll be speaking to you in the near future.
Nathan Burn: And enhancing investor relations driving strategic financial initiatives.
Nathan Burn: And I'll be working closely with the leadership team.
Nathan Burn: To optimize the financial strategy and capital allocation.
Nathan Burn: And ensuring the continued deliver.
Nathan Burn: A long term.
Nathan Burn: For shareholders.
Speaker Change: Great well welcome to the company I had a couple more.
Speaker Change: Just to start it sounds like pretty strong.
Speaker Change: Loan volume growth is expected for 2025 could you just talk about drivers behind that and how you expect that to impact profitability. This year.
Speaker Change: Oh sure Oh, I'll take that I'll take that question. The reason that <unk> forecast of a 30% increase in terms of the known volume really is coming from the two strengths.
Speaker Change: We are creating in the past here first of all and the way that we are able to reach you better and more consumers customers spy ourselves they thought.
Speaker Change: So that has always being the key focus of our of our acquisition strategy. The second the parties without doing though also in 2010 before and after the continue into 2025.
Speaker Change: We're able to partner with more with more partners and more.
Speaker Change: More platforms than.
Speaker Change: That are based on our track record they are more leaning to cooperating with us. So basically they opened a new acquisition channel for the company, that's why I come back and combine it with the two strengths.
We foresee a fairly good increase.
Speaker Change: Volume.
Ladies and did I answer your other question, but if they're making some products could you repeat that.
Speaker Change: I would also probably oh.
Oh, Yeah, just the last part of it I was asking are you extract alone volume growth to translate to profitability. This year.
Speaker Change: Oh large items to think about it Oh, yes, I'll mentioned that Oh, even though that if we don't we don't give you a forecast of the profitability, but as the for our company as a whole.
Speaker Change: So that it was always a focus.
Speaker Change: Thank all of our number our focus has always looking with a proper profit so not a guarantee of anything but we think that our profit that will be increasing.
Speaker Change: At the same pace as our as our volume.
Speaker Change: Macy's so you're looking in 'twenty.
Speaker Change: 'twenty 'twenty, four and Oh, well basically have a.
Speaker Change: Almost the same volume.
Speaker Change: Plentiful in 'twenty three.
Speaker Change: Also a little bit.
Speaker Change: Do you feel like something like that and we have helped US increase our equities is a almost a 300 million I E. A I'll get Oh net income.
Speaker Change:
Speaker Change: And the reason is it mainly just like to two factors one is the U S.
Speaker Change: If you remember back to 2004, and the beginning of the 2000 and for the rest of them will put all of our sector and industry is at the highest level we have.
Speaker Change: We are managing a fund.
Speaker Change: Uh huh.
Speaker Change: No that's the level.
Speaker Change: I'll call it by quarterly basis always manage to manage lower credit risk. That's that's why we highlight.
Speaker Change: More profitable again, Oh, they're getting much thought another big factor is the funding cost. It's the funding cost us at all on a yearly basis in 'twenty for like more than two 2%.
Speaker Change: And you know looking and looking to 2025 and.
Speaker Change: They try it.
Speaker Change: That's the thing finally, close probably not gonna lower but the more you know looming in the you know the low level.
Speaker Change: Right now and the fact.
Speaker Change: The risk of that profile also more or less what remains.
Speaker Change: But also you know that.
Speaker Change: Visibility, maybe maybe show us maybe at one quarter or two quarter.
Speaker Change: We cannot we cannot guarantee the full year, but that's basically it.
Speaker Change: As the situation right now so so as I said.
Speaker Change: Based on current situation.
Speaker Change: Yeah, very comfortable confident in reach.
Speaker Change: Which are very meaningful.
Speaker Change: You know both of those.
Speaker Change: Oh, well then the profitability in 2024.
Speaker Change: Yeah.
Speaker Change: That's very helpful. Thank you. The last thing for me are really appreciate the capital returned to shareholders, both through dividends and buybacks here still.
Speaker Change: Fairly low on the dividend even after the raise as a portion of net income, but I know you're returning a lot through our buyback activity.
Speaker Change: Wondering how you think about capital allocation priorities going forward, whether you continue.
Speaker Change: You should expect more on the buyback or if you would maybe lean into the dividend more.
Speaker Change: Okay. That's all thanks.
Speaker Change: Yeah.
Speaker Change: Makes it I I thought I'd throw you off that question for you.
Speaker Change:
You know what when we introduced the dividend like you know assemblies.
Speaker Change: If somebody says semi semi annually and 34.
Speaker Change: Yeah.
Speaker Change: Does that tie you know Oh, our stock has been.
Speaker Change: Around about three or $4 range for several years now and so you know and we pay like the 34 cents.
Speaker Change: We're supposed to ask for a vote less than $4 stock price based.
Speaker Change: Basically what we tried to tell you now put all the investor and potentially that's to say ill.
Speaker Change: They'll buy our stock when we pay you more than you can.
Speaker Change: Get some short term U S treasuries and we definitely don't know when the stock price are we appreciate that.
Speaker Change: I'll start by saying that you will have a double again and double suite something like that so that you know things are lost in the September.
Speaker Change: And as you know because Chinese.
Speaker Change: And then a policy change.
Speaker Change: Off price basically from a you know a five out of a loss.
Speaker Change: Without a true true true up to a dollar then after you know there is a.
Speaker Change: Event that happened you know.
Speaker Change: Excited by by Deep Sea and the whole Chinese Ah Ah.
Speaker Change: Assets, especially in technology.
Speaker Change: Oh, you know b.
We value.
Speaker Change: At a time just like that suddenly for no particular reason besides deep sea now all the pets Rene issue.
With that I'll.
Speaker Change: Chinese.
Speaker Change: Stop at a very low level.
Speaker Change: Oh, all being blow away. So I don't know you know.
Speaker Change: So, but that's what happened so so.
Speaker Change: Based on this as situations change we wanted to give the stock. Yes, you know things as you know last September all stuck up almost more than 2%. We wanted to give everybody an extra trip, so which means that we wound up.
Speaker Change: Put them all week.
Speaker Change: Stock buyback.
Speaker Change: That's a little less.
Speaker Change: It Oh dividend payout you'll see.
In 2024.
Speaker Change: A combination of both we pay off the 76 million U S and we all hope.
Speaker Change: Hope, we can accomplish even more percentage of 34% is up above.
Speaker Change: 30% of the payout for it come into earnings.
Speaker Change: Well, it's not as plentiful and quantify we hope we have a.
Speaker Change: A big the payout.
Speaker Change: Probably they show with both but more weight on share buyback and I think I think our even though our stock has appreciated 100% Oh stop still is.
Speaker Change: Cheap I just give me one number.
Speaker Change: You'll see Oh.
Speaker Change: 24 hour, earning per share in U S. Dollar for dollar at least resets and I'll stop is basically right now what he says Oh, a 13 to $13 something like that and you can I challenge anyone.
Speaker Change: Who who have Uh huh.
Speaker Change: $4 $5 range.
Speaker Change: <unk> per share you'll find out much loved when he found that much stock in.
Speaker Change: In the U S.
Speaker Change: The oil sector.
Speaker Change: That's a 100 or so so we we we believe our stock still.
Speaker Change: Very Ah you know have.
Speaker Change: I have a long way to go so we will have a more emphasize.
Speaker Change: Oh sure sure about that.
Speaker Change: 225, I hope I answered the question.
Speaker Change: That's great. Thank you.
Speaker Change: Again.
Speaker Change: Do you have a question please press star one.
Speaker Change: Yeah.
Victor: This concludes our question and answer session I would like to turn the conference back over to Victor.
Victor: Any closing remarks.
Victor: Thank you everyone for joining us today, if you have additional questions. Please reach out to our Investor Relations team can actually we appreciate your interest and no cut Florida.
Victor: And with you again, operator back to you.
Victor: Thank you.
Victor: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Victor: Okay.
Victor: Yeah.
Victor: [noise].