Jiayin Group Inc. (NASDAQ: JFIN) Fourth Quarter 2023 Earnings Call Transcript, March 28, 2024
Jiayin Group Inc. ne is among the top 30 most popular stocks among the hedging budget at the end of the third quarter (see main points here).
Operator: Hello, gentlemen, thank you for staying here and welcome to Jiayin Group’s fourth-quarter 2023 earnings convention. Currently, all participants are in listen-only mode. Later, we will conduct a Q&A consultation and orders will be fulfilled at that time. As a reminder, we’re recording today’s call. If you have any objections, you can log out at this time. I now give the floor to Mr. Shawn Zhang from Investor Relations of Jiayin Group. Continue.
Shawn Zhang: Thank you, operator. Hello everyone. Thank you all for joining us at today’s phone convention to discuss Jiayin Group’s currency effects for the fourth quarter and full year of 2023. We publish our effects today. A press release can be obtained from the company’s website as well as from the press services. I am joined today by Mr. Yan Dinggui, Director-General; M. Fan Chunlin, Chief Financial Officer, and Ms. Xu Yifang, Chief Risk Officer. Before proceeding, please note that today’s talk will include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent dangers and uncertainties; As such, the Company’s actual effects would likely differ materially from the expectations expressed today.
Further information related to these and other perils and uncertainties is included in the Company’s public filings with the SEC. The Company assumes no legal responsibility to update any forward-looking statements, unless required by applicable law. Note also that, unless otherwise stated, all figures discussed in the convention call are in Chinese renminbi. Having said that, let me turn the floor over to our Executive Director, Mr. Yan Dinggui. Mr. Yan will deliver his speech in Chinese and I will provide translations accordingly. In English. Go ahead, Mr. Yan.
Dinggui Yan: [translated from Chinese] Hello everyone. Thank you for participating in our fourth quarter and full year 2023 earnings convention. 2023 has been a pivotal year for our business with a transforming macroeconomic landscape that amplifies our challenging situations, but also opens up unique opportunities for our group. We are pleased to report that during the fourth quarter and full year, we steadfastly executed our strategic initiatives, achieving remarkable monetary and operating results. The execution of those methods will be the number one competitive merit for the long-term expansion of our company. Looking ahead to 2023, the keywords for China’s growth macroeconomic scenario were stable expansion and structural adjustment. On the one hand, the recovery of the economy at the macro point has been hampered by longer timeframes and more demanding situations due to the persistent multi-year effect of COVID and the escalation of geopolitical conflicts around the world.
Maintaining stable expansion while tightly controlling potential threats is a matter of great importance to policymakers. On the other hand, the importance of developing strategic and emerging industries, as well as stimulating domestic demand, has been even more pronounced. The fine-tuning of the [indistinguishable] progression design and the focus on transforming and modernizing the expansion engines emerged as the main debates. Especially from the fourth quarter onwards, the new high-quality productive forces began to gain ground as a popular concept. In 2023, we closely monitor significant progressions in the macroeconomic landscape, specifically in the monetary and generation sectors. We continue to focus primarily on our core competencies of technology innovation and threat management.
We did this while striving to increase our company’s market share and the accuracy of our operations, thus effectively achieving our business goals. In the fourth quarter, the company’s loan facilitation volume was RMB 20. 1 billion, a year-on-year increase of 6. 3%. At the same time, the company’s overall loan facilitation volume for the total year reached RMB 88. 1 billion, an increase of 58. 7% from 2022, exceeding targets set in the past and reaching a new all-time high in volume. In the fourth quarter, the company made a net profit of RMB 1. 6 billion, a year-on-year increase of 51. 8%. Annual net profit reached RMB 5. 47 billion, up 67. 1% year-on-year, providing healthy expansion momentum.
The macroeconomic recovery is strongly related to credit facilities, and in 2023, demand for credit facilities for customers in the Chinese market remained strong. Policies and measures such as the State Council’s General Directorate of the State Council’s revisions to unlock customers’ spending prospects and promote a sustainable recovery of intake, the National Development and Reform Commission’s efforts to repair and increase intake, and the National Financial Regulation Administration’s recommendation on funds for the recovery and expansion of intake and state council projects to facilitate even plus the high-quality progression of inclusive finance, each has contributed to the expansion of the market for customer credit facilities.
In addition, new requirements have been proposed at the national level to regulate monetary institutions and the quality of services. At the end of 2023, according to data from the People’s Bank of China, the balance of various types of RMB loans issued through monetary institutions stood at RMB 237. 59 trillion, a year-on-year increase of 10. 6%. During the year, RMB finish construction increased to RMB 22. 75 trillion, an increase of RMB 1. 31 trillion compared to last year. In the face of growing market demand, we continue to focus on optimizing the visitor structure, seeking sustainable expansion and commercial scale. 2023 has been a transformative year for our company in terms of technological empowerment, especially in the progression and application of synthetic intelligence technology.
In the third quarter, our company officially replaced its call to Jiayin Technology, commercializing a strategic shift where generation is the most sensible priority. This move aligns with the trend of applying AI in various business scenarios. The generation of AI has empowered us in spaces such as anti-fraud monitoring, marketing provider acquisition models, and intelligent inspection of the quality of service to visitors. These advancements have strengthened our threat control capabilities, increased the power of borrower acquisition, and improved visitor satisfaction and compliance. In the fourth quarter of 2023, we combined giant language models and AIGC generation for our innovation and influence through the automated creation of high-quality video content and symbols. Internally, we scale intelligent workforces that leverage giant open-source language models for greater operational power in the middle and downstream workplace.
At the end of 2023, we had partnerships with 71 monetary institutions and were in talks with 36 more. Our collaboration with these institutions encompasses operations, technology, threat control and coverage of all clients, improving our competitiveness in the market. In the fourth quarter, we welcomed an Internet bank, two Tier 1 municipal advertising banks, and several personal banks as partners, diversifying our funding. This led to a significant expansion in our year-round finishing facilitation business. Our developing partner ecosystem will be very important to our long-term growth. In the fourth quarter of 2023, the company continued its efforts to manage risk fluctuations and expand its borrower base. We understand the importance of optimizing client design and ensuring asset quality in the face of market changes. .
The delinquency rate from 61 to 90 days remained at 0. 68%, sometimes manageable. In the future, Jiayin will maintain prudent and flexible threat strategies. For the acquisition of new borrowers, we follow a solid strategy focused on the parameters of obtaining multiple existing loans. funnel borrowers and were a success in LING costs. This led to an 11. 9% relief in sales and marketing spending in the fourth quarter of 2023 compared to the same period last year. In borrower relationships, through subtle management, we have explored very well the lifetime price of core assets. Our repeated borrowing ratio reached 72. 9% with an average borrowing amount consistent with borrowing of RMB 9,944. The company’s expansion into overseas markets is progressing steadily. In Nigeria, we are aware of fluctuations in local exchange rates and market threats that can pose challenging situations for further growth.
We will continue to closely monitor the local business environment and make informed decisions accordingly. Meanwhile, in the promising pan-African market, such as Tanzania, we are actively exploring expansion opportunities. Indonesia is also a key market of interest. By the end of 2023, Indonesian regulators had introduced new policies that required lower fees and stricter market supervision. We are closely monitoring those developments and plan to help our spouse optimize their asset structures and target high-quality borrower segments. In addition, we are keeping a close eye on Latin American markets, adding Mexico, for conceivable opportunities for business progression. Throughout the fourth quarter and into 2023, the protection of customer rights remains a central focus of Jiayin’s progression.
We have actively responded to the initiative to protect customers’ rights, protecting customers’ rights with determination. Leveraging our benefits in virtual technology, we have implemented efficient operating methods internally and established a physically powerful formula to protect clients’ rights. Externally, we continue our business through technology, creating a strong anti-fraud firewall to foster a strong and harmonious customer environment. In the 2023 White Paper on the Protection of Consumer Rights published in January, we detailed our achievements and in-depth knowledge of the sector. This included educating 26 million people on customer protection and helping 9,900 borrowers in need. The company’s remarkable functionality was awarded the Best Financial Consumer Rights Protection Award at the annual Financial Compliance Awards ceremony.
Looking ahead to 2023, we are pleased to report that we have achieved high-quality expansion, demonstrating the effectiveness of our strategies. Currently, as trade regulation enters a standardization phase, the long-term business environment is expected to be more conducive to Jiayin’s sustainable progress. We have also made significant strides in our technology-based business operations and expanded our footprint. We are confident that by maintaining our focus on technological innovation as a cornerstone of our long-term competitive strategy, as well as our commitment to expanding our business, automating the allocation of our assets, and religiously managing risk, we will ensure our continued and robust expansion in any of the areas. ” Chinese and overseas markets.
We are confident in our company’s functionality in 2024, setting an overall loan facilitation target of between RMB 93 billion and RMB 98 billion for the year, with a target of RMB 22 billion for the first quarter. to communicate about the company’s efforts to generate shareholder returns. In the last nine months, we have distributed two cash dividends to shareholders totaling $0. 80 consistent with ADS. The total dividend amount is $42. 7 million, representing 25% of the company’s net profit after taxes for fiscal year 2022. Going forward, we will continue to enforce the company’s dividend policy, which is to distribute cash dividends twice a year. With an overall annual dividend of at least 15% of last year’s net after-tax income. , provided that dividend situations are met.
With respect to our percentage repurchase program, the Company has already repurchased its ADSs for approximately US$10. 6 million, and with our existing cash percentage repurchase program capped at US$13 million, we look forward to reaffirming our commitment to creating for our shareholders and our trust. on the company’s long-term expansion customers through those actions. With that, I will now hand it over to our CFO, Mr. Fan Chunlin. Please come in.
Chunlin Fan: Thank you, Mr. Yan, and hello everyone. Thank you for joining our call today. I’ll now review our monetary highlights for the quarter. Please note that all figures will be in renminbi and our percentage adjustments refer to year-over-year comparisons, unless otherwise noted. As Yan Como mentioned above, the [indistinguishable] expansion momentum during the previous year led to new milestones in the fourth quarter, adding that our loan facilitation volume increased by 6. 3% to RMB 20. 1 billion. Our net profit was approximately RMB 1. 6 billion, an increase of 51. 8%. In terms of costs, facilitation and service expenses amounted to RMB 857. 2 million, an increase of 329. 1% compared to the same period in 2022, mainly due to the increase in the volume of loan facilitation and similar expenses to monetary guarantee facilities.
The reserve for credit losses, counter-assets, loan receivables and other amounted to RMB 43. 8 million, an increase of 190. 1% compared to the same period in 2022, primarily due to the accumulation of balances arising from our loan and guarantee facilitation. services. Sales and marketing expenses amounted to RMB 329. 5 million, a reduction of 11. 9% compared to the same period in 2022, mainly due to reduced commission expenses. General and administrative expenses amounted to RMB 65. 2 million, an increase of 9. 9% compared to the same time in 2022, mainly due to an increase in worker body costs. Expenditure on R&D
As a result, our net profit for the fourth quarter amounted to RMB 367. 6 million, a reduction of 31. 1% compared to RMB 533. 7 million in the same period of 2022. Our fundamental and diluted net source of income consistent with a constant percentage of RMB 1. 72. compared to 2. 49 RMB in the fourth quarter of 2022. Basic and diluted net revenue source consistent with ADS RMB 6. 88 compared to RMB 9. 97 in the fourth quarter of 2022. We ended this quarter with RMB 370. 2 million in cash and cash equivalents compared to RMB 180. 3 million at the end of last quarter. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will be happy to answer your questions. According to our interlocutor, continue.
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Operator: Thank you. [Operator’s Instructions] Now let’s move on to our first question, and the questions come from the [indistinguishable] lineage of Jinyu Asset [ph]. Please ask your question.
Unknown Analyst: [Chinese spoken] Hi management, I’m [indistinguishable] from Jinyu Asset. I have two s. La first is that we observed that delinquency rates for the era of one to 30 days, 31 to 60 days, 61 to 90 days, 91 to 180 days, and more than 180 days are all higher than the point for the same era in 2022. Could you please calculate the percentage of measures the company intends to take in the long term to keep crime rates low?My timing is this: I also have a shareholder return of about the percentage. In 2023, the company announced the distribution of dividends. What can we expect from the long-term dividend policy and payout rate?Thank you.
Yinfang Xu: [translated from Chinese] Hello, Ms. Hua [ph]. Thank you very much for concentrating our delinquency rate as an investor. Just a reminder of what Mr. Yan: In 2023, the overall national economic environment was still facing multiple demanding and uncertain situations, and one thing is very certain is that the speed of the economic recovery is still very slow. If you’ve been following our updates over the past few quarters, notice that since the second quarter of 2023, we’ve already adjusted and dealt with the demanding threat control situations posed by economic cycles under this perception. In addition, as part of a prudent threat decision-making mechanism, we strengthened our studies on the sensitivity of our borrower organization to external environmental impacts, accelerated the adjustment and adaptation of internal strategies, and monitored threat signals throughout the lifecycle of our borrowers.
One thing I should highlight is that in the post-facilitation phase, we have advanced the intelligence and experience of payment reminder and collection through generation and models in the application of mediation and judicial recovery in other stages, and we have made progress in optimization. of threat indicators. Every step of the way, all with the purpose of improving the borrower’s operational experience and protecting consumers’ rights. These are our measures in the face of threats in the economic cycle. Those are my answers to your first question, and I’ll hand them over to our CFO, Mr. Fan Chunlin, for your second question.
Chunlin Fan: [translated from Chinese] Thank you, Ms. Hua. Yes, it is true that the praise for our shareholders is very interesting. As Mr. Yan just said, based on the immediate progression and control forged by our company over the past few years. Over the years, the operational and monetary signs have shown a trend of continuous improvement. Our company’s operating money is relatively strong and balance sheet metrics are tightening harder. That’s why the company has and will continue to praise its shareholders through percentage buyback plans and dividend policies. It’s been two years since we introduced our percentage buyback plans, however, the existing percentage value is only two years, the era is only two years.
Given the fundamentals of our business and its strong profitability, our control considers that the consistent percentage value does not fully reflect the company’s internal cost, which means we are undervalued. As a result, our Board of Directors recently approved a new U. S. plan. $20 million consistent with the percentage buyback plan, expanding the buyback amount. $30 million limit. Over the past year, we have implemented two dividends totaling US$0. 80 according to ADS. If you calculate it based on our final value yesterday, which is 6. 90 US dollars according to ADS, the dividend yield exceeds 11. 5%. We will continue to identify our long-term dividend policies and commend our consistency with shareholders with normal dividends. Thank you.
Operator: Thank you. Now we’ll move on to our next question. The questions come from HTSC’s Yuxuan Chen lineage. Feel free to ask your question, your line is open.
Yuxuan Chen: [Chinese spoken] The first question is, given the uncertainty in the existing macroeconomic environment, could you please share a percentage of what you’ve done in visitor attraction channels and threats?Does the company also have a detailed long-term plan?Progression based on those changes and advancements? Importantly, we detected a significant reduction in the company’s net source of revenue in the fourth quarter of 2023, as well as a notable year-over-year buildup in accounts receivable. Main points and what is the company’s expected net profit for this year?
Yinfang Xu: [translated from Chinese] Okay, Mr. Chen, I’ll answer your first question. First of all, I would like to recall that in recent years, the online credit sector has gone through an era of consolidation, followed by a slowdown in the economic recovery of the external environment. During this time, we have made full use of the long-accumulated knowledge and benefits for users. With a record increase in facilitation volume, threat control signals were also satisfactory. Today, as we look ahead to the progress of our business, we will place greater emphasis on a long-term sustainability goal, frequently equipping our monetary partners in China and overseas markets with our technological capabilities.
We will take with caution the healthy expansion of the platform’s facilitation volume under the assumption of a controllable threat. In detail, first of all in terms of borrower acquisition channels, we will concentrate on balancing channel metrics, prioritizing the progression of primarily winning channels. high-quality assets. Second, from a service and operational strategy perspective, we will improve the control and retention of high-quality borrowers, expanding the extraction and application of insights into borrower behavior, thereby promoting the elevation of borrower and asset quality. portfolios to teams of high-quality borrowers. Third, in terms of risk strategy, we will continue to focus on introducing and testing market knowledge products, systematically assessing and tracking the effect of external environmental threat on other borrower groups, and strategically strengthening the iteration and optimization of our models.
We will conduct an otheriad check across other borrower teams, implementing otheriated approval rates, otheriated pricing, and otheriated credit restriction check. Finally, in the post-facilitation aspect, as discussed above, the advent of various forms and ways to optimize the threat signatures at each stage, all with the goal of strengthening the operational experience of borrowers and protecting the rights of consumers. Those are some concepts about your first consultation and the second consultation, which we will give to Mr. Fan Chunlin.