X Financial (XYF) 31 Mar 232022 Q4 Earnings call transcript

Good day, and welcome to the X Financial Fourth Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Victoria Yu. Please go ahead.

Okay. operator. you, Thank thank and joining today. us Hello, you everyone, for earlier are at available The Company's the and released were website results on today Company's ir.xiaoyinggroup.com. IR

your Kan available business Frank will financials. call during Financial session. give Officer. Zheng, questions a the from who of Li, go to highlights will Mr. President; They the followed overview Company's Mr. On Mr. Li the and and Q&A are Zheng, Fuya today Mr. answer brief Chief operations all Financial through the are X by

remind unknown cause may other beyond and results, current which I management's Company's of contain of of statements known factors, to and relate to under statements. statements forward-looking may Reform you risks, are Securities performance Act difficult those achievements Such involve differ and which conditions the Private all on expectations the provisions events that harbor predict control, and uncertainties forward-looking materially are that this were which based XXXX. from of to current call in the market the Litigation many operating the or actual safe the Company's and and

these factors in Company's and forward-looking events otherwise, statements is with of information, other information result the new undertake Securities and except Company future law. Exchange or the to included U.S. does The update under any Further filings Commission. as not regarding obligation uncertainties, any as required a

introduce pleasure now is Li. Li, go to my Kan It Mr. please Mr. ahead.

everyone. Hello,

our our net end annual increasing the quarter quarter. loan and rapidly, in The basis. pleased and both first very solid total to exceeded XXXX quarterly facilitation are year the grew on another with We revenue of amount guidance,

in the throughout in high and achieved very XXXX levels. historically the year, amount maintained increase in midst Despite we've environment the asset challenging at our COVID-XX non-facilitation resurgence quality of a XX% the the

track of risk for resilience by and challenging that strong to are sustainable the right execution the continuous system. times business growth, model, our further we our This optimization on control of confirms and the thanks demonstrates our team especially during the

total QX, to approximately total X% loan reached RMB originated for full year quarter-over-quarter, XX XX our up and year-over-year In billion. billion, amount and bringing the our approximately loan XX% facilitated amount RMB

base we continue to and borrower technology-empowered stable, leveraging quality control remained our premium by Our asset and risk improve system. data-driven

days delinquency ago. all of year Our end past for XXXX rate X.XX% loans December for decreased as XX to due XX of to X.XX% outstanding from the a

them our our In addition, QX. partners and we have since with collaborations continued strengthen funding provided line institutional to by with credit

our operating further costs see opportunities improve optimizing funding efficiency. and to We

the shifted December strict the to and reopening With Company's end of of COVID back focus the year, has growth. in economical control stimulating policy last China

role sentiment. We QX, consumer seen far domestic important have believe driving and China's consumption an we that in year in this so will growth in recovery a economy play

In the to are addition, their receive further and derive medium-sized small- expected government business enterprises to more growth. support and from recovery

in All of rooted. will is finance overall our business personal the these China market benefit where factors

under rectification platform economy. side, business promote continue Ant and regulators will government's development the the basically Group according Bank, On the and platform have regulatory the the XX to healthy other companies and of guidance supervision, Central the completed to

compliance monitor environment will this overall quickly we we operations regulatory changes While and policy our year, always. will in and ensure the broadly any that be believe closely to stable adapt as

and cautiously our both bottom rapid our in for this year optimistic loan continued expansion the are expect we conclusion, top line. facilitation in amount and growth about and In outlook

who through the to turn call our financials. Frank, will Now will I go

Total year-over-year net XXX revenue Thank top million, you, in everyone. quarter-over-quarter. and Kan, year-over-year XX% X% RMB were up We line growth pleased hello, to and resume was QX.

year-over-year our quarter was to our our and line prospects basis. XX% reward XXXX, Net up also Despite XX% continued headwinds in income quarter-over-quarter. bottom and annual XXX both efforts our have the on and shareholders. macro confident We significantly for we quarterly million, in improved remain RMB

ordinary shareholder be XX as to share expanded XXXX, repurchase A and an which as shares in approximately certain or purchased program, year. during Through per shares accretive be we the XXX,XXX the a earnings total will canceled held in Class treasury million shares of XXXX will ADSs

revenue In a further -- accelerate environment environment growth will which value. line earnings gradual to improve and continue we share repurchase in will post-pandemic regulatory with shareholders' sizable top XXXX, we economic to stabilized growth. and regulatory program, our execute with recovery, enhance With expect line to

with Looking strategy ahead, a growth while strong sustainable shareholders, we remain capabilities. maintaining business to our execution proven to and fundamentals, value healthy returning committed

in Now performance financial I quarter. all fourth stated the note would like RMB numbers are and here up. some for to rounded Please that brief

by revenue period of the XXXX, increased increase facilitated total net XXX to XXX in RMB with Total XXXX. loan RMB million period of million this the quarter XX% to from same compared originated the amount due in primarily same and an

XXX from facilitated servicing RMB and from in with compared the quarter total in due the of this origination XXXX, and increase period in million originated increase amount the million fees to by XX% commission XXX loan increased resulting expenses an same same Our primarily of period XXXX. RMB to of

result same in held the quarter loan this total Provision the loan of in increase of as primarily by amount an period with receivable the due loans RMB a for period in the XXXX. Company increase XX facilitated XX was of same million receivables and with compared to RMB compared XXXX, originated million

XXX operations the of RMB Income XXX million with XXXX. the RMB million in period same compared was from

same period income was with RMB RMB Net million XXXX. in compared XXX million XXX of the

the million of in was compared XXXX. million income net adjusted RMB period same with XXX RMB XXX Non-GAAP

the refer on to earnings For information, our please financial website. release further

of to million November effective consideration total Class A increase $X plan for and QX, we approximately announced our In ADS repurchase to Regarding our million, authorized XXXX. an in million. Board our XXXX, of September share through shares we approximately $XX repurchase aggregate XX $XX repurchased share program XX,XXX ordinary a from million

business for Now our outlook.

and expect XX.X RMB be between t RMB we billion loan year, to XX.X originated this to QX For the billion. facilitated amount total

Now please. our would to like to this the compared questions. call and concludes remarks we open Operator,

Equinox today question [Boyd from Capital. come Heinz] of [Operator our will Instructions] first And

The first couple the of taking. at model? tell view Can about do business specifically your you about of regulators their regulation. have the is how capital-light is concerned questions of of look risk I'm us current what the just I your view state

to state regulation seems have right concern It how and you the at that -- loans book a now many are was on the feel general, with? in the that had. do that that, And of of How much just considered they in risk about you how be your country? you

question. your for difficult think for tell me one in guess. question. It's regulator This their business think terms Okay. I the I what I'll in Kan. of Thanks take model, really our But to that the thing is about the in quality terms in has of brand our been our competition, partners. is the several we model market for already years by that the funding of our business and and institutional recognized terms being in head,

regulator the no is us very thinking between has about So cooperation industry, and been partners the the matter smooth. our whole what

So that business is our a very good thing growth. for

portfolio because that In average if terms of really per our our is amount portfolio loan you closely, look at small. client risk, our

our that think important factor one risk. risk overall in risk And So one -- portfolio into really our the is of portfolio I doesn't risk. client most

management confident our has been fairly our in of terms risk So management skills.

portfolio. how effect on about not external are concerned bring shock negative the will our we So particularly

#X has being been management. that And a business said, that as focus always risk our loan

our spend management. us we lot been So terms capital, risk companies order in other have improve in of -- human terms of a investing to terms for of in -- we in our resources

This Frank. few is I'll on add a words.

that, for been to think direct we for doing Regarding influence regulators it your question, your not answer what I answer question. but a can to is has

consumer were money -- the the their whoever like First from so-called think they provide for I were of like are loans, perspective, loan all, stuff. responsible they the regulators directly bank for this for

so. last whole So thing the that's for the or year

class a in go me We're Jack -- of like Take pure to ago we, institution. big is because of in speech. Finance talk a had they not the a IPO Ant okay? mouth a financial and financial stopped before Ma because days that Ant to kind Financial example kind China day institution, Qidong of of few kind So

portfolio talk CNY at ever time. trillion X bigger period, But their about a business loan talk But about the which never issue. what the much the of do under like a They time about -- financial have much, the Financial, nobody they technology is risk you a do company, talk a is not Ant sky allowed. you at is portfolio over -- portfolio, which

do to business. to that have have a you So license

threshold. of they a up set Second all,

If you money, own at up you join XX%. do have the put capital, to least your the loan,

to finance even a So their big shrink business facilitate the last cannot size because this put Financial, capital much so years, the that's why has loan. dramatically been side a -- few Ant Financial for they of or Ant

effect the to area and regulate thinking. So that's what's There's emphasize. some

your do portfolio, to to have have You with quality to do of business, license your okay? loan nothing

Second one, with loan. the you have joint

should Important by for it. but the risk, best that with You not a money license provide banks That's everybody your still job issued you is the even important. for big with else. the manage manageable goes trillion and capability that as whatever for have the do the you. loan loan thinking low few show similar answer as should -- you time A be and a low is very system if dollars financial

helpful. very That's

And stands Is and to with you you're contact assume point. this fully your say? fair as that in close at those right I that of far as So is know, interpretation it. Financial X compliant now reasonably regulators

fair. it's Yes,

goal? your ceiling XX%? book terms in XX%, towards And of that loans much meeting are how Okay. current the of the the is of how above on Company loan progressing And

money not the We that making the don't as or also loan I area progress XXX% banks as as XX%. again, us defined of think last -- But the once the we this are that not structure -- year fact whoever are right great we have the that kind that's kind by to we they have so. within loan. provided And is -- but the or rather of been not loan for the current that long in for disclose information, issue rate

it. just are We to facilitate

not speaking, of okay strictly financial that. as those okay determined legally issue license are that regulated. It's help with us. rate to That's are with with loan loans, kind long as institutions we So they

way that's I your can question. best I answer the think

Okay.

that activity. Now economic normalized it is the of returning more appears a to period country

given you've in us, just So quarter, for remind sequentially first guidance fourth the quarter. can above loan that's the and you facilitation

of that a But QX, facilitation you loan for generally quarter, first is QX, is impacts, lower of of volume in terms in the speaking, terms period seasonal QX?

of half the the confident, all QX the we that year volume. if the of has actually normally XXXX we our grow you look will volume the from But that terms at higher to first see In XXX% continue but year, QX. the do to this about to think likely again, expectation And year's expect talking I that -- we are is last not way follow we trend. which forecast, year this that I'm

So quarterly be us. able facilitate see to growth we should amongst

Okay. Great.

slightly appears going to with in Your bit tax you fourth what little It your to was rate provide began on outlook a elevated is it that normalize quarter. XXXX. rate tax think us in you Can in the be XXXX? an

the cycle U.S. see -- the tax lower. reason and the XXXX, pay a months will But far have about lag you tax is reflect U.S. Chinese on. the actually so different The effect be tax because collection you effect the -- the will -- on eventually there's rate so time X Chinese what

little tax operations, entity this But give downward all And see operational for trend project we can't now, but the the we I like for in entities harder -- a you treatment going as will terms that, effective bit overall year, the XX%, just more our but of U.S. forecast because into you XXXX. -- tax to in follow favorable also apply will right -- China. those tax effective get a to down more trend. based rate because it's is -- rate our are entity, the all number

No, I on that was allowance statement. there I of that valuation show would in your some change impacted rate -- and income you think the the kind tax reported

last year? that XX% year going of say what about be it it's So to was instead to XX% to fair this

X expenses I line, somewhere XX% were Once is see XXX CNY tax item, called tax XXXX, a in for the think rate things. you'll yes, think I about tuning XXXX our effective is which item last which tax -- again, few think QX. There's income there's XX%. special And line, tax see, there's a I deferred million. to if tax think for I between allowance, the you XXXX

last we to some -- the so explained deferred That reason is -- the we couldn't because added be year, I last already for we that will year. use so tax reason, that benefits,

be should is. that So million, year, extra tax actually, rate That's the number that XXXX okay? minus last CNY XXX

Okay.

there XXXX. issue So valuation be not it that in appears that, present allowance? That that be change not correct? Is in -- specific will

Yes.

you dramatically on will corresponding you allowance to okay? if item. the the you If that deferred come corresponding balance tax see check find income That's down, the balance sheet, and -- the the the with statement number is is

Great.

question, others for Okay. I'll and to Last then back ask. queue drop in

You've I how do very say commendable aggressive just job I'm you you done your still do much that that. share have And I repurchase a on remaining left curious, on to just share -- wanted repurchase. have plan? that appreciate

million. $X About

we $X million million, little used so about left -- million. bit a we less million, far, little -- we a So used over $XX like the $X up from bit than a have $XX

it sounds was And like unusual kind Okay. of an situation. there

a I cash to wanted domestic do of who're shareholders you repurchase do part that for might looking mean You be to large his -- think you others, to of have had shares. able repurchase Is sell? the more that your cofounder that as Or ADS a still you receive plan?

Yes.

largest think convert He us second last to for I to want in the And don't he ADS. ordinary that. we back shares, even never his share speculate QX sold sold ordinary to The reason he shareholder, year. his

a may -- he is I'm But we private don't of but owned your share question, have also. we banks much check, on right Shenzhen of if largest be buy the the current not lot based shareholder to That a basis, daily volume the -- also also can in buyback sure -- we but reason, answer back. the we now individual the on I -- think

company buy volume. volume, [indiscernible] Even haven't we our last trading very almost that the because year, much back volume low no on

month months. little So X we firm a take that Kong X than months that the operational, to to or Hong set entity X make have up will more in

qualify, will and of correctly. hope of the remember issue in call we end May. I the the we And We entity or April for we that if receive to that sometime maybe the first -- Chinese change time, on to make earnings May, middle distribution dividend entity May a a can dividend finish entity in from hope will we in next

-- shareholders, we rely will to of we So to to want share this probably year. we still more value starting but dividend on instead have a return buyback,

operation purpose will enough money we keep for definitely, Now the first.

is mean, and that the you appreciate to incredible what I the been just I based you're not all in Look, No, Yes. efforts able have upon doing. do, the here you're this. valuation truly but only one

are There Chinese or that X same the are X U.S.-listed size. fintechs others, about

that base -- at size business do because attract The just willing have investors? challenge. your of you think, in trading all is You're challenge people invest not reflect, do That's of multiples now. I company doing. shareholders How do right international an you you been has capable your you what how don't institutional to your attract of

Yes.

So I do base? investor expand can think how you mean that you

we probably next I show But the starting of one second valuation, terms this But it's out, be half not -- can of is try do. something of be this of year. the in maybe year. do stabilize show half to industrial road second as you will Definitely, will year, think start alone. by As do issue, year. start addressed end environment this we'll I the will like road will it's point we company That's regulatory to in doing

best hope will we do we and try what best could luck. and do the the So for

of [Operator Capital. come Mason question from Instructions] next Our will Bourne AWH

of size last have sounds dovetail do to to off guy. your and Company as a would think some done And you're a potential well. be like the you it? of dividend be that And that. or executing peers do I as far dividend to quarterly just it that? on earnings Nice the I wanted it guess about see for the depending outlook would variable what your How planning that is

or through something a little that. do me most something bit stuff, a dividend Board like year will It's But this answer we a approval onetime at haven't for gone we like because one onetime premature year -- time like likely, once that. to

price under issue got volume, face I that guess in do come But tender a a the and something to or just ADS the could you're or at. on stock X say stock to I've your some about you book. with market what I the is maybe show offer X willing And more, valuation, buy about just could earnings ADS. up that on people we saying like you market what Okay. out even stock maybe and confidence And your think then the a hear X.Xx undervalued where an do somewhere Xx and that you we're that's the million you is price you in and say put million back this if get

Yes.

think place jump I the think not also, And into I'm to business out, the we run to our shareholder terms a just will including I not probably same guys familiar with I even that, share best timeframe not bit whatever first the in is for frank, as will I we little our whatever question. price this And think do return going jump price. guys, priority little how everything due the in we regarding time your should answered could, value. -- did we our don't else mechanism do last I point to be to that. To and the our time. the priority of achieve -- is bit into fall our

guess, that. the you get I are arbitrage the that people tender serve just where I looking purpose to stock. I get -- of Yes, can kind

it's the get above people current of spread, the you're doesn't running it X% even price, be without necessarily kind to but a substantially it into have volume that But up. stock necessarily So can X% bring if just or bid. a huge if you looking

I at something accretive to get maybe most like that levels. try opinion. just my But potentially you worth the it buyback in it's exploring seems

put I in Yes, consideration. the yes. definitely

just money talk R&D with do let one then try me turning first, not. can U.S. about As into time of my dollar to said before, the move I to that why in money -- maybe the we U.S. hand, from terms in or maybe -- not

I my deal valuation one don't But the on that. view that know will issue. you think solve

X.X% like issue I will the is it's that our valuation way, X.X%. industry PB from think of company like something improve, X.X% that. definitely maybe actually the or But specific, maybe not to

can money put that funds do why on can have bit a about a to Once based out there's consideration. They account, a focus achieve even we will under if it's let move into a their mutual out trouble $X own -- capital not? million big not of we little RMB news If $X first, they'll because money U.S. an if and that, U.S. actually done their So converting which the own thing. that, has China money be the news, control They're is we million, you see again, issue. in me make dollar in easy own overseas. move that the

do first. me let that So

money we having the consider, will Bank, Hong Kong in are We okay?

to Okay. kind is more And there? in listing on last the still anything -- trying Or of just is, Hong is Kong move separate currency? for me about this thing piece, there

market we -- Just far are terms move of we as from the Hong cap, Kong little currently, requirement. listing in a our

anytime be not soon. So issue that's going probably an to

for remarks. to closing the at would I And the to Victoria question-and-answer Yu conclude turn session. will we back conference time, like over this

for us on call everyone, Thank joining today. the you,

with pleased future. We you raise follow-up will to your got answer speaking them context. be you. questions, If in a forward through near the you haven't Thank the chance look again we to to

you attending has The We conference for today's presentation. now thank concluded.

now lines. may your disconnect You