Jiayin Group Inc (JFIN) 2022 Q3 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Jiayin Group's Third Quarter 2022 Earnings Conference Call. (Operator Instructions) 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. Shawn Zhang from Investor Relations of Jiayin Group. Please proceed.

Good day, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the third quarter of 2022. We released the results earlier today. The press release is available on the company's website as well as from newswire services.

On the call with me today are Mr. Yan Dinggui, Chief Executive Officer; Mr. Fan Chunlin, Chief Financial Officer; and Ms. Xu Yifang, 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. Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other 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 statements, except as required under applicable law.

Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi.

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

(foreign language)

[Interpreted] Hello, everyone, thank you for joining our third quarter 2022 earnings conference call.

(foreign language)

[Interpreted] We delivered another outstanding quarter with strong financial and operational results. Our loan origination volume grew by approximately 123.5% to RMB 14.9 billion in the third quarter, making it the second consecutive quarter with over 100% year-over-year growth. Our net revenue increased by approximately 55% year-over-year in the third quarter to reach RMB 894 million.

Our margin profile also continued to improve as we further refine our cost structure and optimize our operating efficiency resulting in consistent margin improvements.

(foreign language)

[Interpreted] Our exemplary third quarter performance attached to our commitment towards strengthening our partnership network, refining our risk management strategies, strengthening our technology capabilities and accelerating our global business expansion.

(foreign language)

[Interpreted] In the third quarter, expanding and strengthening partnerships with licensed financial institutions remain our top business priority. Under the current macroeconomic conditions, we focused on reassessing the need of financial institutions and building long-term partnerships to safeguard our funding sources and optimize our funding structure.

As of September 30, 2022, we have 4 partnerships with 46 financial institutions, and we are currently in discussion with another 60. Notably, national financial institutions in our partnership network still contributed to the majority of our total loan origination volume in the third quarter.

(foreign language)

[Interpreted] In addition to strengthening partnerships, since earlier this year, we began collaborating with partner financial institutions to provide them with technology-enabled services for their in-house operations. We offered them access to our intelligent platform and automated solutions under our new collaboration model for partner institutions.

Currently, we have empowered 3 financial institutions to digitize their in-house business from front management, risk management, intelligent marketing, customer services to other operation processes. We are now interfacing with another 3 financial institutions and actively negotiating with 6 more institutions to bolster the development of this new collaboration model.

(foreign language)

[Interpreted] On the borrower front, we continue to invest in online marketing programs to streamline our borrower acquisition efforts. Meanwhile, our focus remains on optimizing the structure of our borrower base as we expanded. We are categorizing our borrowers based on their creative profiles, risk assessment and borrowing behavior. The categorization enabled us to streamline our resource allocation towards premium borrowers and build a foundation for the future launch of more customized services and targeted borrower operation initiatives.

In the third quarter, our average borrowing amount per borrowing reached RMB 10,158, increasing 58.1% year-over-year. Moreover, despite adding new borrowers in the quarter, our repeat borrowing rate still maintained at a healthy level, above 60%.

(foreign language)

[Interpreted] We also remain committed to strengthening our core technology capabilities in the quarter. We successfully launched our Tai Hao AI modeling platform and Mingcha, anti-fraud system as part of our ongoing efforts in proactively recalibrating risk control strategy and addressing the COVID-induced asset quality pressure.

Our 61- to 90-day delinquency rate remained relatively stable in the quarter, reflecting our outstanding risk control capabilities under the volatile macro environment.

(foreign language)

[Interpreted] Moving on to our global expansion. We are increasing our investments in Indonesia to explore more business opportunities in the local market. We also substantially expanded the scale of our loan origination and revenue generation in Nigeria.

Going forward, we will continue to focus on improving the profitability of our Nigerian operations, developing innovative partnership models as well as accelerating our product development and penetration in the local market.

(foreign language)

[Interpreted] Finally, I want to mention our recent efforts in the corporate social responsibility. Last year, we established the Jiayin Charity Special Found with the Shanghai Soong Ching Ling Foundation to raise social awareness of youth mental health and provide mental health support to the younger generation.

In the third quarter, our Jiayin Charity Special Found organized the [let] children small charity fundraising event on [Tencent] Charity platform, where we help fund 10,000 mental care service packages for the youth. Looking ahead, we are planning to invest in more charitable initiatives to better leverage our unique strength and fulfill our social responsibility.

(foreign language)

[Interpreted] In addition, the repeated COVID resurgence and the consequent control measures have had a negative impact on small business owners this quarter. As such, government agencies have unrolled a series of new regulations to help fulfill the pressing funding needs of small businesses.

Following the government's call, we also continue our efforts in supporting small and micro businesses during the quarter by expanding our services for small and micro business owners who have long been underserved.

By the end of September, our specialized loan program has served approximately 361,500 small business owners in 31 provincial level regions across China. On a sequential basis, we have expanded the geographical coverage of this loan program will substantially boosted the number of small business owners we served.

(foreign language)

[Interpreted] In summary, our efforts and accomplishments in the quarter have put us in a solid position to maximize our opportunities in the future. Despite the increasing uncertainties in the global economy, we believe that the underlying fundamentals of the fintech sector remains strong. We have proven our capabilities to develop leading financing service offerings, intelligent financing solutions and compelling value propositions. We are confident that we will continue to empower our partner financial institutions, serve our broad borrower base and generate sustainable value for our shareholders in the long term.

(foreign language)

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

Thank you, Mr. Yan, and thank you, everyone, for joining our call today. I will now review our financial highlights for the quarter. Unless stated otherwise, all numbers quoted are in RMB and the percentage changes refer to year-over-year comparisons.

As Mr. Yan mentioned, we delivered another quarter of robust financial performance. Our loan origination volume grew by 123.5% to RMB 14.9 billion as we expanded and strengthened our collaboration with institutional funding partners. Our net revenue was RMB 894.3 million, up 55%, driven by a 47.7% increase in our revenue from loan facilitation services.

Our revenue take rate decreased slightly in the quarter as we adapted to evolving market dynamics and the regulatory changes. Other revenue more than doubled to RMB 101.4 million, mainly driven by incremental revenues from individual investor referral services.

Moving on to costs. Origination and servicing expenses were RMB 148.4 million, up 68.1% in line with our loan origination volume growth. Allowance for receivables and contract assets reduced moderately by 4.8% to RMB 5.9 million, mainly as a result of the ongoing restructuring of our overseas business during the quarter.

Sales and marketing expenses increased by 36.6% to RMB 323.6 million, reflecting higher borrower acquisition expenses in the quarter as we continue to invest in our online marketing programs.

G&A expenses were RMB 51.4 million, up 13.5% primarily driven by expenditures in compensation and related benefits in the quarter. R&D expenses were RMB 56.4 million, up 52%. We recorded higher employee compensation and benefits as well as increased fees for professional services in the quarter.

Our ability to carefully manage our expenses refine our cost structure and improve our operating efficiencies while growing our business enabled us to further enhance our profit margins in the quarter.

Our net income increased significantly by 98.8% to RMB 248.1 million from RMB 124.8 million in the same period of last year. Our net profit margin also expanded to 27.7% from 21.6% in the same period of last year. We ended this quarter with RMB 217.5 million in cash and cash equivalents, up from RMB 213.9 million as of June 30, 2022.

As of September 30, 2022, we have deployed approximately USD 2.1 million to repurchase approximately 0.9 million American depository shares under the share repurchase plan we initiated since June 13, 2022.

Moving to our guidance. Given our better-than-expected performance in the first 9 months of the year, we now further revised our full year 2022 loan origination volume outlook to RMB 50 billion, which compares to the original RMB 36 billion we provided in the first quarter and updated RMB 43 billion we announced last quarter.

With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will answer questions. Operator, please go ahead.

(Operator Instructions) Your first question is from the line of Sam Lee, an Investor.

My first question is regarding the really strong growth, especially in the past few quarters. What are some of the key drivers for the growth? And how long do you expect to sustain a high double-digit growth going forward?

Sam, this is Yifang. I'm going to take your question. So your question is about our key drivers for strong growth. In my opinion, they were primarily coming from 3 fronts. The first is coming from our laser focus on strengthening and expanding our partnership with the licensed financial institutions. As Mr. Yan mentioned earlier, we have established over 46 -- served over 46 financial institutions with a deepened and broader network, the demand for our loans has been driven up as a result.

The second are coming from our vast customer base. Since the start of the Jiayin Group, we have always served over 12 million customers in terms of the loan needs and we continue to drive higher growth on our overall customer base. But the second -- the last but the most important it's really the technology -- technological capabilities and the expertise built over the years, focusing on data-driven credit strategy and operational strategies.

With such capabilities that will allow us to keep into our customer base and to properly to assess their cost lending needs and be able to driving up our overall loan growth. So your question is about how long we'll be able to keep the growth?

Of course, we like to see that as long as possible. But as we all know, in terms of the absolute loan growth, we would be really focusing on making sure the growth is healthy, sustainable and forward-looking, especially relative to overall economic outlook, legislation framework as well as our market outlook. So that we're trying to balance both our growth and all the risk as well. So I hope that answers your question.

And we have no more questions at this time. I'll return the call back to Shawn 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.

Thank you. This does conclude the conference for today. Thank you for participating, and you may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call]