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spk05: Good day ladies and gentlemen. Thank you for standing by and welcome to GIN Group fourth quarter and full year of 2020 earnings conference call. Currently all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. 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 Ms. Julia Chan, Managing Director of the Blue Shirt Group Asia. Ms. Chan, please proceed.
spk03: Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiang Ying Group's financial results for the fourth quarter and the fourth year of 2020. We released the results early 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. Yanjing Gui, Chief Executive Officer, Mr. Shirley Bai, and Mr. Shilin Chen, Core Chief Financial Officer, and Mr. Shi Yifang, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provision of the U.S. Private Security Litigation Reform Act of 1995. forward-looking statement involves inherent risks and uncertainties. As such, the company's actual result may be materially different from the expectation expressed today. Further information regarding these and other risks and uncertainties is included in the company's proprietary filing with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under capable law. Also, please note that unless otherwise stated, All figures noted during the conference call are in Chinese R&B. With that, let me now turn the call over to our CEO, Mr. Yan Jinggui. Mr. Yan will speak in Chinese, and then our core CFO, Shidi Bai, will translate his remarks to English. Go ahead, Mr. Yan.
spk07: Hello, everyone. I am Yan Jinggui, CEO of Shidi Bai.
spk06: Hello, everyone.
spk01: Thank you for joining our fourth quarter and four-year 2020 earnings conference call. 2020 was an unusual but special year for us. Despite the economic uncertainties created by the pandemic and every evolving regulatory environment, we achieved significant progress in our business transformation. Most importantly, we completed the shift our funding sources from individuals to institutional funding partners. In November 2020, we cleared all of the P2P balance. We did this in part by creating a seamless process that simplifies institutional onboarding and by enhancing our platform to enable faster integration and better scalability. The number of our founding partners increased steadily to 25, and another 45 institutions are now in discussions and preparation. It was remarkable to accomplish this business transformation amidst the challenges and uncertainties caused by the pandemic.
spk07: This business transformation enabled us to further optimize our cost structure and improve operating efficiency.
spk01: With a sophisticated risk management platform and a laser-like focus on driving our business transformation and improving our operating efficiency, we were able to generate better than expected results in the fourth quarter. In Q4, our net income grew by 259% year-over-year to RMB 81.1 million. Our loan origination volume increased 6.5% year-over-year to RMB 3.1 billion. The repeat borrower rate reached 70.4%. These solid results demonstrate our ability to execute. With the P2P balanced ground, a scalable platform, superior risk management, and favorable economic recovery, our focus for 2021 will be to resume growth by further investing in technology and improving our services. 首先,我们将利用专业化技术和流程向其他地区进行扩张。
spk07: First, we will leverage our technology and process expertise to expand into other geographics.
spk01: Our international expansion into Mexico and Indonesia are growing rapidly, and we intend to target the countries in Africa next. We believe that our advanced risk management system, AI-based consumer behavior analytics, and operational experience can be easily utilized in other markets besides China.
spk07: For example, the U.S. government and the U.S. government are taking advantage of the opportunity. For example, the U.S. government and the U.S. government are taking advantage of the opportunity. For example, the U.S. government and the U.S. government are taking advantage Although the assets and digital assets based on the blockchain are developing smoothly, we still need to adopt a more efficient and conservative strategy to deal with the uncertainty of supervision. To seize this opportunity, on April 5, we announced the acquisition of BV. The company is engaged in the design of the chip developed by encrypted currency, and provides the mining industry as a management service. BV is not a cryptocurrency. As the saying goes, we are not digging gold in the gold rush, but we are selling real estate, and we will manage it as an independent business department until we can determine its products and services, and we will develop it with our core business. We do plan to integrate financial and administrative management systems to reduce the burden of intellectual property. We are excited about this opportunity and will share information in the next quarter's financial report.
spk01: Second, as a leading finance technology company, we never lose sight of future opportunities. We are prudently increasing our exposure to different economic aspects of an increasingly digital world. For example, Bitcoin is rapidly gaining acceptance due to the participation of a broad coalition of corporations, institutional investors, and retail investors. micro, grayscale, PayPal, millions of global users can buy, sell, and hold cryptocurrencies to purchase goods. While blockchain-based and digital assets are developing rapidly, regulatory uncertainty warrants a more prudent and conservative approach. To pursue this opportunity, on April 5, we announced the acquisition of Bionet, which engages in the design of chips for cryptocurrency mining, such as semiconductor chips, mining hardware, and the management of mining farms and ports. BillNet doesn't directly mine cryptocurrencies. As they say, in a gold rush, you want to sell the picks and the shovels. BillNet will be managed as a separate business unit until we can identify product and services synergies with our core business. We do have a plan to consolidate the finance and general administrative functions to streamline the supporting functions. We are excited about this opportunity and will share more on our next call.
spk07: With that, I will now turn the call over to our concept phone, Celia Chen. Celia, please go ahead.
spk02: Thank you, Mr. Yen and Shelley, and thank you, everyone, for joining our call today. As Mr. Yen just mentioned, we generated encouraging results in the fourth quarter. We continued to operate conservatively and achieved outstanding bottom-line growth. In Q4, our net income reached 81.1 million RMB, up 258.8% year-over-year. The results fully reflect our relentless efforts to optimize our cost of structure and improve our operating efficiency. We also remained prudent in our operations with increased emphasis on risk management and credit assessments. We continued to focus on serving higher quality repeat borrowers. You can see this in our repeated borrowing rate, which was 70.4% in Q4, versus 65% in the same period of 2019. For the full year 2020, our repeat borrower rate reached 75.3% compared with repeat borrowing rate of 48% in 2019. The increase of repeat borrowing rate improved our credit record profile and ensured the quality of loan performance. We remain dedicated to controlling platform credit risk with our improved credit scoring system and advanced technology capabilities. Now, let me go through our financial highlights for the quarter. Before I go into details, please note that all numbers presented are in RMB and are for the fourth quarter of 2020, unless stated otherwise. All percentage changes are on a year-over-year basis. unless otherwise specified. Detailed analysis is contained in our earning press release, which is available on our earnings release as well as our IR website. In the interest of time, I will not walk through each item line by line on this call. I will just highlight some of the key points here. Loan origination volume was 3.1 billion RMB, up 6.5%. This was impressive, considering the state of our business transition and the unfavorable market conditions caused by the pandemic and the regulatory uncertainty. Net revenue was 340.3 million RMB, down 3.5%. The decrease was primarily due to the lower outstanding loan balance. Revenue from loan presentation services was 291.3 million RMB, up 5.3% in line with the growth of our loan origination volume. With the clearance of P2P balance less than November, we are glad to see resumed growth with high-quality borrowers and stable institutional funding sources. Notably, other revenue grew by 66.3%, reaching 45.4 million RMB The increase was primarily due to overseas business development. Moving on to cost, we continue to optimize our cost structure to further improve operating efficiency. This effort is reflected in our greatly reduced operating expenses. In Q4, total operating expenses were 287.4 million RMB, down 24.6% from 381.3 million RMB last year. Origination and servicing expenses were 64.9 million RMB, down 17.1%, primarily due to reduced collection costs. We no longer provide this service under our new business model. Allowance for uncollectible receivables and contract assets was 20.3 million RMB, down 63.8% from 56 million RMB in the same period of 2019. The decrease was primarily due to two factors. First, the overall decrease in loan origination volume, and the second, lower credit risk under the new business model. was 42.9 million RMB, down 43.5% primarily due to last year's basic compensation expense being allocated to GMA expenses. R&D expenses was 41.9 million RMB, up 8.5%. This was mainly due to higher salaries and personnel-related expenses allocated to research and development. as we continue to increase investment into technology development. Sales and marketing expenses were down 11.3% to 117.5 million RMB, while we are still focusing on higher quality borrowers, which enabled us to effectively reduce the sales and marketing expense. This quarter, we had a gain of 117 million RMB which was due to the waived contingent consideration payable related to the disposal of Shanghai Caiyin. To be conservative, we also booked a 32.6 million RMB loss provision related to a short-term investment. The loss was primarily due to the estimated loss related to the convertible notes issued by Cornerstone Management Inc., held by the company. We achieved attractive profitability through tight cost control and improved operating efficiency. We posted a net income of 81.1 million RMB, up 258.8%. Now, let me quickly provide some key financial metrics for the full year 2020. Revenue was 1,300.2 million RMB, down 41.7%. The decrease was primarily due to decrease the loan ordination volume and the shift to institutional funding partners. We remained vigilant on cost control to sustain margins and improve our operational efficiency. Total operating cost was $998.1 million RMB compared with 1,695.5 million RMB last year. Looking at the balance sheet, as of December 31, 2020, we had cash in the equivalent of 117.3 million RMB, compared with 122.1 million RMB as of December 31, 2019. Our sufficient cash balance positions us favorably in the current environment and gives us a significant flexibility to make future investments. Last, as Mr. Yen just mentioned, on April 1st, we entered into a framework acquisition agreement with Shanghai GreenNet and its shareholders for an aggregate consideration of 95 million RMB. Giant Finance will own 95% of the equity of Shanghai Green Net upon closing. We expect that the investment in Shanghai Green Net will provide more business opportunities and benefit both sides and facilitate our future growth. Moving to our guidance, given the recovery of Chinese economy and a fast-growing consumer finance market, We expect our long origination volume in Q1 2021 will be between 30% to 40% growth year over year. With that, we can open the call for questions. Mr. Yen, our Chief Risk Officer, Ms. Xu, and I will answer questions. Operator, please go ahead.
spk05: Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star followed by 1 on your telephone, and please wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Once again, press star followed by 1 to ask a question. We have a question from the line of Andrew Scott from .
spk08: Good morning and thank you for taking my questions and congrats on the strong quarter. My first question is about the successful expansions into Mexico and Indonesia. I want to congratulate you on the hard work you've done there. Can you kind of provide the outlook for the expansion in 2021 and maybe the vision for the company growing in international markets over the next couple of years?
spk00: Hi, Andrew. Thank you for the question. This is Yifan Xu. I'm going to take on that question. So far, we are not yet close to providing guidance on our financial outlooks for expansions in those two markets. But I want to further confirm international expansion is a key component of Jiayin's overall growth strategy. As you have noticed before, with years of proven track record in managing risk, so we would like to further extend our sophisticated risk management capabilities towards our national markets. So far, we are gathering our cloud-based technological capabilities and to facilitate online learning, online micro, long ordination and management in a range of markets. Mexico is one of our leading markets in the markets that we are playing now. So far we are glad to report that we are one of the leading players, we're one of the leading players in Mexico market. We have started to see more of our peers from Chinese market are starting to enter the market. But so far, we are definitely taking a leading position there. Comparatively, in Indonesia market, as we have reported about a year ago, over a year ago, that we are in a trial period of operating online lending license in Indonesia market where we remain in that position. We're hopefully looking for more progress on that front. So far, as our status as a trial, still operating under trial mode, we are expecting our overall volume to take off as soon as we acquire our full license.
spk08: Great, thank you. That was very helpful. Thank you. I have a follow-up here on... Unrelated. So it looks like sales and marketing expenses was a little bit higher in the quarter than it has been across 2020. So I was just wondering if there's anything you guys were doing differently to attract new borrowers or if that was just extra noise in the quarter.
spk00: I will speak to This is Yifan again. I will speak to our approach to acquire new customers. And Celia is going to speak to the magnitude of the shift of that change on that metric. In 2020, we are still operating in a way just to acquire new customers online, primarily through partnering with other internet platforms, as well as acquiring customers through information feeds channels. And we believe those two channels are still going to be our main customer acquisition channels. In terms of the metric numbers, I will give that to Celia.
spk02: Okay. So in terms of the customer acquisition costs, I would like to anchor Yifan's answer because it's like we are – take a lot of initiatives to lower our acquisition costs. Like we could build models with our channels and we try to improve the efficiency and also to acquire the customer in a more economically way. So I think the sales and the marketing expenses will be in line with our long volumes growth. in the 2021. And although this will really depend on the, we will wait and see what the result will be at the end of the year, where the things will end up at. Yeah. But I think basically we're in line with our long volumes. Yeah.
spk08: Great. Thanks. That was very helpful. And one last question, if I may. Just want to say congrats on the improved credit quality and increase in repeat borrowers. I was just wondering if there is a target number for the percentage you guys are looking for repeat borrowers versus new borrowers in the long term as you guys try to balance growth and strong credit quality.
spk00: Sure. This is again. I'm going to take on that question. We do have long-term risk levels that we are seeking to hold, as well as we are improving our overall credit profiles of our customers. But in regards to the percentage of our repeated borrowers portion of our overall business, we are going to play it as flexible, just to gear towards our growth needs. In 2020, that we're expecting much higher growth relative to our 20... In 2021, we're expecting a higher growth relative to our 2020 long-generation volume. It's likely, as you can see in the Q1, we're seeing 25% to 40% of growth. We're expecting somewhat high growth in the rest of the year. As we are working on to... to improve our way of interacting with our existing customers by providing better product experience and more likely to shifting towards how we interact with the customers to really gain tractions on how our repeated customers proportion of our warnings. In the same time, compared to 2020, we're seeking a much higher growth on our new customers. as part of our overall growth strategy. But overall, on top of that, on top of our overall volume growth, we're still holding a high bar on our risk levels.
spk08: Thank you very much. Once again, congrats on the quarter, and that's all for me.
spk05: Once again, ladies and gentlemen, hit a star followed by one to ask a question. We have no further questions at this moment. I would like to hand the conference back to our host. Please take over, ma'am.
spk02: 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.
spk05: Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all.
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