Qifu Technology, Inc

Q3 2022 Earnings Conference Call

11/14/2022

spk03: Ladies and gentlemen, thank you for standing by and welcome to the 360 Digitech Third Quarter 2022 Earnings Conference Call. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Ms. Mandy Dong, IR Director. Please go ahead, Mandy.
spk01: Thank you. Hello, everyone, and welcome to our third quarter 2022 earnings conference call.
spk02: Our results were issued earlier today and can be found on our IR website. Joining me today are Mr. Wu Haisheng, our CEO and Director, Mr. Alex Xu, our CFO and Director,
spk01: Before we begin the proposed remarks, I'd like to remind you of our state cover statement in our earnings press release, which also applies to this call. We may refer to forward-looking statements based on our current plans, estimates, and projections. Also, this call includes discussion of certain non-GAAP measures. Please refer to our earnings release for a conciliation between non-GAAP and GAAP-1. Last, unless otherwise stated, all figure mentions are in RMB. I will now turn the call over to our CEO, Mr. Wu Haisheng.
spk07: Hello, everyone. I am very happy to share with you the performance of our third quarter.
spk02: Hello, everyone. I am very happy to report another strong quarter.
spk07: First of all, I would like to share with you our views on the recent market environment.
spk01: First of all, let me share some recent developments in the market environment.
spk07: China's consumer finance industry has reached gears from rapid expansion to quality growth in the past two years.
spk01: Under a new regulatory framework, the industry has achieved substantial gains in preventing systematic risk, protecting consumer rights and benefits, driving compliance business operations, and promoting fair competition. This has created a healthy ecosystem for the development of the consumer finance market.
spk07: Over the past two years, The monitoring system has been gradually improved and the work is continuing to improve. The monitoring environment of the industry has been stabilized. As the chairman of the Financial Security Commission, Guo Shuqing, mentioned in the famous article published in the 20 Great Report of the Party, The commitment to financial innovation must be carried out under the premise of careful monitoring. The Internet platform Over the past two years, the industry regulatory framework gradually come into shape, and the rectification project of the platform economy continued to progress.
spk01: Currently, the regulatory landscape has settled down. In an article titled, Strengthening and Improving Modern Financial Supervision, published in the guidebook of the 20th National Congress of the Communist Party of China, Mr. Guo Shuqing, the chairman of CDIRC, said, financial innovation must be conducted under the premise of prudent supervision. we should impose normalized supervision on the financial business of the Internet platform companies and promote the healthy, sustainable development of the platform economy. This implies that the fintech industry enters into the stage of regular supervision. 今年以来受到公关经济和疫情防控等诸多因素的影响,
spk07: China's consumption and small and medium-sized modern markets, whether in terms of demand or risk, are facing many challenges. In the third quarter, compared to the second quarter, we see that the demand for modern goods has warmed up, and the risk is more than stable. The overall market environment is good. At the same time, financial institutions continue to demand high-quality assets,
spk01: Since the beginning of 2022, the macroeconomy and the COVID control have put pressure on China's consumer and SME credit markets in terms of market demand and asset quality. However, the market started to slowly improve in Q3. As we saw, credit demand began to gradually recover and asset quality became relatively more stable than Q2. Meanwhile, financial institutions' demand for high-quality assets continued to inject liquidity into the industry, boosting funding supply efficiency.
spk07: Now moving on to our operations. Given the macro environment with complexity and uncertainties,
spk01: We maintained a prudent operating strategy and leveraged technology to drive quality growth. Thanks to our practical, prudent, and risk management-first operating philosophy, our business demonstrated resilience and strength in several key areas, despite the macro headwinds.
spk07: First, we achieved solid progress in balancing growth with asset quality.
spk01: In Q3, total origination and facilitation volume was RMB 110.7 billion, up 13.13%, both year-on-year and Q1Q. Outstanding loan balance was RMB 160 billion, up 20.20%, year-on-year and 6% Q1Q.
spk07: As a leading brand for credit tax service in China,
spk01: our 360 jietiao brand became more and more well-known. As of the end of 2003, cumulative number of registered users exceeded 200 million for the first time. The cumulative number of users receiving credit lines and the conducted drawdown on credit was approximately 43 million and 26.3 million, respectively, up by 17.6%. and 12.8% year-over-year.
spk07: Since the
spk01: Q3 of 2021, we have proactively reduced pricing and optimized user structure in response to market and regulatory change. The decent progress in these areas effectively mitigate the negative impacts of the macro environment. As our existing loans gradually reach maturity, our average price decreased slightly from Q2. Our asset quality significantly improved A1 delinquency rate went down to 4.5% in Q3, from 4.9% in Q2. And it's still improving. The M1 collection rate increased to 86.4% in Q3, from 85.2% in Q2. At the same time as we are optimizing the class structure, we are also optimizing our
spk07: Q3. The average income and interest rate have reached 14,000 yuan respectively, and 8,000 yuan or more respectively. The growth has reached 19.3% and 39.8% respectively. The average period of interest has also increased to 12 months. Compared to last year, the same period increased by about a month. We believe that in the long term,
spk01: While upgrading customer base, we continue to optimize business operations on high-quality users to increase their lifetime value. Based on our experience, high-quality users are usually more stable in credit demand and repayment capability. Therefore, they generate more considerable long-term value for our business. In terms of key operating metrics, the average credit line per user and average ticket per drawdown in Q3 were more than RMB 14,000 and RMB 8,000, respectively, up by 19.3% and 39.8% year-on-year.
spk02: The average loan tenor also increased to 12 months in Q3.
spk01: roughly one month longer compared to the same period last year. We believe that an upgraded customer base will translate into enhanced operating efficiency and a more stable business performance in the long run.
spk07: In terms of customer service, as our customer base continues to grow, and as the movement towards high-quality customers continues to grow, our channel structure will also continue to improve. Accurate customer service and customer efficiency have been significantly improved. Q3 has increased the number of new customers to 1.71 million, which is 19% higher than before. At the same time, our marketing costs are basically the same as Q2. The cost of single customer service users has dropped by 15%. Q3, we use short videos, social media, search engines, video, delivery, and other scenarios. This makes the user experience more diverse. Through the upgrade of our RTA model, we have further accurately identified our target customers in the form of platform co-creation and so on, which has improved our customer quality and efficiency. After the upgrade, the smart real-time hair model has increased the recognition rate of all our devices to 90%. On the customer front, as we upgraded our customer mix and accumulated better know-how about our high quality users,
spk01: We optimized the structure of our customer acquisition channels. This greatly improved our capability and efficiency to acquire target users. In Q3, the number of new users with granted credit line increased to 1.71 million, up by 19.19% Q1Q, while our marketing expense remained almost flat compared to Q2. The acquisition cost per user with granted credit line declined by 15, 15% from Q2. Meanwhile, we further expanded and diversified the customer acquisition channels by working with different types of traffic channels, including short and long-form videos, social media, search engines, and food delivery, et cetera. In addition, we improved our ability to identify users especially high-quality users and enhance the efficiency of user acquisition by upgrading our RTA models and jointly developing models with these partner platforms. For instance, empowered by our upgraded RTA models, our ability to identify device improved to 90% in Q3. and our ability to identify high-quality users improved by more than 20% kill-on-kill. This greatly magnified the effectiveness of our online advertising. We also applied such capabilities to other channels such as app stores, which will further improve our efficiency in these channels as well.
spk07: On the other hand, and technology strategies. Our technology upgrade strategy is steadily advancing, and the share of real estate business continues to improve. As a technology-driven technology company, we are committed to innovation. With our security and data intelligence technology, we have deepened the financial industry, helped financial institutions build modern infrastructure, and provided financial institutions with Our financial technology products are constantly upgrading. We will develop the whole process of the modern business system according to the functions of productization and modularization, and create a mixed cloud model that supports the localization and deployment of legal financial services and localization. The new solution includes 20 days of rapid re-building and retailing of modern business, full coverage of online and offline scenarios, and features such as complete legalization of system deployment. Overall, we have formed As we continue to advance our tech upgrading strategy,
spk01: Our capital light and other tech solution business accounted for more portion in Q3. We are a tech-driven company empowered by innovation with cyber security in our DNA and a strong capability in big data intelligence. We help financial institutions establish their credit infrastructure and empower them in the full business operation flow with our big data analytics and tech solutions. In Q3, loan-ordinated and facilitated under the Capital Light model and the other tech solutions accounted for 58.4% of the total loan volume, up by 2.6 percentage points from Q2. As of the end of Q3, we accumulatively partnered with 58 financial institutions under the Capital Light model. We also refined and upgraded our FinTech SaaS product line. We transformed our end-to-end credit system into modularized products based on functionality. Additionally, we innovatively support a hybrid cloud model where financial cloud service and local deployment work side-by-side. featuring setup of retail credit infrastructure from scratch in 20 days, online and offline coverage, and system deployment in full compliance. Our new solutions offer small and medium-sized banks one-stop solutions of transforming and growing their retail credit business. Going forward, as we facilitate more transactions on our platform with stable asset quality in good track records, we will expand our collaboration with financial institutions in depth and breadth. This will further boost the percentage of our capital light and tech solution business in the total mix in the long run.
spk07: The financial institutions' demand for high-quality assets is very high. As the leading modern technology service platform, we have the advantage of size, data, and control, which helps us continuously optimize the structure of financial institutions and partners, improve the flexibility of capital supply, and reduce capital costs. Until Q3, we have established long-term cooperation relationships with 1.4 billion financial institutions. including 10 billion shareholder banks, as well as large-scale small and medium-sized commercial banks with more than 10 billion management levels. All financial institutions are relatively scattered in terms of capital. The cost of insurances continues to decline, with a decline of about 30 BP per share. Q3 reached 6.5%, and we estimate that it can stabilize at a relatively low level in the fourth quarter. Thirdly, our funding structure and funding cost both improved significantly. With AMPR liquidated in China's financial system this year, financial institutions
spk01: have strong demand for high-quality assets. As a leading credit tax service provider, our assets are in high demand given our strength in scale, data, and risk management. These allow us to optimize the mix of our funding partners, obtain more flexible funding options, and reduce funding costs. As of the end of Q3, we partnered with 141 financial institutions including more than 10 joint stock banks and the major rural and urban commercial banks with over RMB 1 trillion AUM, giving us highly diversified funding source. Our funding cost for credit-driven loans decreased by roughly 30 basis points sequentially to 6.5%, and we expect it to sustain at a low level in Q4. We issued RMB 2.7 billion of ABS in Q3 at an average funding cost of 5.0%. As we continue to optimize our customer mix, our funding advantage will bring out more. 整改工作已经接近到收尾阶段。
spk07: um um Fourthly, on the regulatory front, the recognition project of the platform economy has entered the ending phase. We maintain close communication with the regulators
spk01: as we implemented our rectification plan. At the end of Q3, we have completed most of the required rectification items and received positive feedback from regulators. For the credit agency reform, or Duan Zhi Lian in Chinese, we are implementing the transforming plans together with credit agency and our funding partners. In Q3, we facilitated the very first loan in the new credit rating system, namely Duan Zhilian, and received recognition from the regulator. We are now proactively implementing the plan.
spk07: Here, let me provide an update on our secondary listing in Hong Kong stock market. This morning, we submitted a post-hearing information pack
spk01: PHIP in short, to the website of the Hong Kong Stock Exchange. We have taken the interest of our current shareholder into full consideration in pursuing this listing. We believe that we will be able to optimize our investor structure and boost liquidity through the Hong Kong secondary listing.
spk07: While enhancing our operations, we always keep in mind our social responsibility. 专门复科的使命是通过科技创新为广大个人和家庭提供安全、快捷、普惠的金融科技服务,创造美好生活。 Our mission is to enable a better life for people by providing safe, convenient, and inclusive fintech service
spk01: to consumers and households through technology innovation. By empowering financial institutions through a suite of tech solutions powered by our AI and cloud computing, we help to improve the quality and efficiency of financial service. We extend FinTech service to consumers whose need is to be underserved or unmatched, while maintaining the high standard of risk management We aim to make financial services accessible to all in a more fair and efficient manner and to better serve the real economy.
spk07: We actively return to society and help the vulnerable communities. In order to promote rural revitalization, we work together to provide. In September, we donated 1 million yuan to Yunnan Luquan Yizhou Miaozhu Autonomous County to build the rural revitalization of Jingping Shifan Village project.
spk01: We bear in mind of our social responsibility by giving back to society and providing support to the disadvantaged as part of our efforts to drive rural revitalization and the common prosperity in China. In September this year, we donated RMB 1 million to Luquan Yi and Miao Autonomous County in Yunnan Province. The funds will be used to building the county into a demonstration model for rural revitalization
spk07: Looking back at the past three seasons this year, we have prepared ahead of time, using a profound management strategy to effectively deal with changes in the external environment. In the case of many unfavorable factors in the red light environment, with steady growth and continuous optimization of risk performance, we have demonstrated the resilience of our company's business. At present, we are steadily advancing our business indicators according to the planned plans for the beginning of the year. We are full of confidence in our goals for this year.
spk01: Looking back at the past three quarters, we navigate through a constantly changing market by preemptively planning and a prudent operating strategy. Despite multiple headwinds in the macro environment, we achieved solid growth and improved our risk performance, demonstrating the strong resilience of our business. Key metrics show that our business is on track and that we are confident we will meet our guidance for 2022.
spk07: Looking at the future, the global environment is still full of challenges. But from a long-term perspective, technology drives the financial spectrum, supports the actual economic development, and there is no change in the underlying logic of creating value for society. Whether from the perspective of borrowers or financial institutions, there are still a lot of unfulfilled needs in the market. We also believe that only companies that keep up with the risk and run steadily can go through the cycle.
spk01: 在市场回暖的时候示范出更多的增长潜力。 Going forward, despite the ongoing challenges in the macro environment, long-term themes remain unchanged. That is, promoting financial inclusiveness through technology to better support the real economy and create more value for society. There is still tremendous unmet demand for credit from both consumers and financial institutions. We believe based on our prudent approach to operations and risk management, our business can rise through the current business cycle and capitalize on the growing momentum once the market recovers.
spk07: Only under the prudent strategy, we can navigate the fluctuations and achieve steady and sustainable long-term prosperity.
spk01: Moving ahead, we will continue to generate value for our shareholders through our solid performance.
spk09: Okay, thank you, Haisheng. Good morning and good evening, everyone. Welcome to our third quarter earnings call. Before I start my regular update, let me first introduce a new member of our capital market team, Ms. Karen Ji Yun. Recently joined us as a senior director of capital market. She will be providing valuable insights, experience, and leadership to our capital market and IR team. With our upcoming listing in the Hong Kong Stock Exchange, we really look forward to having Karen and other team members offer better services to our shareholders and the broader investment community. As Haisheng discussed earlier, we delivered another solid quarter in changing micro environment. From July to September, demand for consumer credit through our platform grew sequentially each and every month, although the velocity and the magnitude of such improvement were modest. During the quarter, we continue to push for steady improvement in the overall asset quality by further engaging high quality new borrower base. Overall day one delinquency has been on a steady declining trend month after month so far in 2022 against a difficult micro trend early in the year. It was 4.5% for Q3 versus 4.9% in Q2 and further declined to 4.3% in October. The continued improvement in day one delinquency further validated our strategy, strategic focus on high quality user segment. 30-day collection rate also improved in Q3 and reached the best level in 2022. During the quarter, we resumed most standard collection activity to the pre-COVID lockdown level, which drove the improvement of the metrics. Once again, we see clear outperformance by new borrowers versus existing borrowers. Total net revenue for Q3 was $4.1 billion versus $4.2 billion in Q2 and $4.6 billion a year ago. Revenue from credit driven service, capital heavy, was $2.9 billion compared to $2.9 billion in Q2 and $2.6 billion a year ago. The year-on-year growth was mainly due to growth in unbalanced sheet loan volume, more than offsetting the negative impact from decline in average pricing of the loans. Capital heavy facilitation revenue take rates improved slightly versus Q2, mainly due to lower funding costs and the longer loan tenure. Revenue from platform service, Capital Light, was $1.2 billion, compared to $1.2 billion in Q2 and $2 billion a year ago. The year-on-year decline was mainly due to product mix change in platform services and decline of average pricing of Capital Light loan facilitation. During the quarter, Capital Light loan facilitation, ICE, and other technology solutions combined account for roughly 58% of total loan volume. Given the still changing microenvironment, we continue to increase the portion of loans processed through ICE and other technology solution to further mitigate potential risks. These solutions normally have different commercial terms compared to the regular Capital Light loan facilitation. In the long run, we will continue to pursue tech-driven business model while striking a balance between various forms of non-risk-bearing solutions based on microenvironment and operational conditions. During the quarter, average IRR prices of the loans we originated and or facilitated declined modestly to just below 22%. well within the 24% rate cap requirement. We expect pricing to be relatively stable for the coming quarters. Sales and marketing expenses increased by approximately 2% sequentially in Q3. The slower pace of increase reflect our continued effort to improve the efficiency or effectiveness of our user acquisition system. and drive cost efficiency. Please note, during the quarter, we added approximately 1.7 million new credit line users compared to approximately 1.4 million in Q2. Unit cost to acquire a new credit line user declined approximately 15% sequentially. As such, Average cost per dollar amount new credit line also declined by similar magnitude Q on Q. As always, we will continue to use lifecycle ROI and LTV as key metrics to determine the pace and scope of our user acquisition strategy to ensure the sustainability and profitability of our operations. Overall, risk profile of our loan portfolio continue to improve in Q3 due to the contributions from new loans from higher quality users. But impacts from micro uncertainty and the latest outbreak of COVID case across the nation were still somewhat visible. Although we continue to take a prudent approach in booking provisions against the potential credit loss, Re-evaluation of previous quarters provision yield sizable write-backs as micro condition improved queue on queue. Total new provisions across four different categories for loans originated and facilitated during the quarter was approximately 1.8 billion, while approximately 300 million previous provisions were written back. With strong operating results and increased contribution from capital light model, our leverage ratio, which is defined as risk-bearing loan balance divided by shareholders' equity, was at historical low of 3.8 times in Q3 compared to 4.3 times a year ago. We expect to see rather stable leverage ratio for the time being until capital light contribution grow beyond current range bond in the future. We generate approximately 1.6 billion cash from operations in Q3 compared to 1.1 billion in Q2. The significant sequential increase in operating cash flow was mainly driven by better working capital management. If you recall, last quarter, due to some COVID-related administrative procedure delays, we were unable to collect certain receivables in time. Those receivables were eventually settled in Q3, boosting our cash flow. Total cash and cash equivalents was $10.8 billion in Q3 compared to $11.4 billion in Q2. Non-restricted cash was approximately $7.2 billion in Q3 versus $7 billion in Q2. In the last couple of quarters, we took a more conservative approach to deploy our cash in day-to-day business, mainly due to micro uncertainty. Ideally, a significant portion of our cash would normally be allocated to support the security deposit with our institution partners or to fund unbalanced sheet lending in normal business course. Non-GAAP net profit was $1.04 billion. compared to 1.02 billion in Q2. As we continue to generate healthy cash flow from operations, we believe our current cash position is sufficient to support the growth of our business, to invest in key technologies, to satisfy potential regulatory requirements, and to return to our shareholders. In accordance with the dividend policy approved by our board last year, we declared another quarterly dividends of US dollar 16 cents per ADS for Q3. Finally, regarding our outlook for the fourth quarter, although we managed to deliver a solid operating and financial results so far this year in a very challenging micro environment, we still want to maintain a prudent approach to plan our business for the near term, particularly given the recent resurgence of COVID cases nationwide and the subsequent restrictive measures taken by local authorities. At this junction, we expect total loan volume for Q4 to be between RMB 102.5 billion and RMB 112.5 billion, representing year-on-year growth of 6% to 16%. As always, this forecast reflects the company's current and preliminary views. which is subject to material change. With that, I would like to conclude my prepared remarks. Operator, we can now take some questions.
spk03: Thank you. Ladies and gentlemen, if you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. For those who can speak Chinese, please kindly ask your question in Chinese first, followed by English translation. In addition, in order to have enough time to address everyone on the call, please keep it to one question and one follow-up and return to the queue if you have more questions. Once again, Please press 01 on your telephone keypad to ask your question. The first question comes from Chai-De Lee. Please go ahead.
spk08: The first one is about our fund structure. I see that from the perspective of the fund structure, we have disclosed the amount of business in the wind and air SaaS mode. I also want to ask about the growth trend in the future and the entire future comparison situation. At the same time, I also want to ask about our choice of Capital Live and the choice of the wind and air SaaS mode. What kind of different considerations are behind that? The second question is also to ask about from the customer side. In the case of a good growth of our entire new and new customers, Okay, then I will do the translation part. So the first one is about the loan structure of the origination volume So I noticed that we've disclosed the origination volume of the risk management SAS. And I was wondering if you could elaborate more about the growth trend and its contribution out of the total in the future and how we balance the contribution between the capital line and the risk management SAS when we cooperate with a new financial institution. This is the first one. And the second one is about the customer acquisition. I've noticed that cost control of sales and marketing expenses this quarter have been effective, and the average customer acquisition cost on the new users with credit lines has dropped a lot. So can you give us more color on what has been done differently on the customer acquisition strategy this quarter compared with before, and what is the trend in the future? Thanks.
spk07: Okay. Thank you, Yan. Let me answer two questions. I'd like to talk about the transformation of the green asset model. I'd like to talk about a few points. First, this is our company's long-term strategy. Over the past few years, we've been trying to upgrade and transform to a more greener model. From the initial capitalized model, In the middle, we started with the trust-based model, and then we went to the block-and-save model. We are actually still trying out more types of real estate models, including the general loan operation for financial institutions, and so on. These different models will be distributed according to the needs of different banks.
spk01: Okay, let me translate. Tech upgrading has always remained our long-term strategy for our company. In the recent years, we gradually advanced to more tech solutions, starting from Capital Light to ICE to RM SARS models. Recently, we are rolling out a hybrid new business model that provides both our leading credit tech system and the operation agent service. All of these tech services cater to customized needs of different financial institutions.
spk07: In this year, we are exploring different models together with various financial institutions
spk01: Going forward, as we serve more financial institution customers and transact more loan volumes under this new model, we can further hone our products, pursuing higher take-great models and serve more customers.
spk07: We have been working on the technology model for a long time. Not only can we improve the technology attributes of the company, but also improve our We also believe that this model will be able to open up a larger space for the company's growth, because the financial technology model with banks as the main body will open up more and better customers for our company, so that the company can open up a new space for growth.
spk01: This new tech model can not only boost our tech solution business portion and sustain our business sustainability, but also open additional markets for our long-term growth. 您的第二個問題是關於貨客。
spk07: The data of customers in the third quarter is very good. We think that on the one hand, it is because we started from last year, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range, in the process of moving to the 20-year-old price range,
spk01: The reason to our customer acquisition effectiveness is starting from the end of last year, we spent a lot of effort on upgrading our IT infrastructure for online customer acquisition, which started to build through recently.
spk07: On the other hand, we have also made some positive progress in the diversification of the channel. We are not only investing in the information stream, but also in the application store. in terms of model construction and calculation, including in the search engine, delivery, and in the deep cooperation of mobile phone manufacturers, we have made significant progress. Especially in the cooperation of game manufacturers, we have also caught up in Q3. A very popular game on WeChat is called Yang Le Ge Yang. We have caught up with this wave of traffic very clearly.
spk01: Moreover, we also further expand and diversified our customer acquisition channels. For example, we not only upgrade our online advertising channels, but also apply RTA model on app store channels. And also, we cooperate with a lot of traffic platforms, including the takeout platforms, app stores, et cetera. In addition, we pay close attention to the market. For example, this year, there is a very popular mobile game in Chinese, 羊了个羊 on WeChat. We closely watch the market, seize that opportunity to acquire our good quality customers.
spk07: As far as we know, we are the only credit tax firm that sees the traffic benefit of YangLiangYang game. um um
spk01: Overall, we'll continue to take the prudent business approach and prioritize that long-term lifetime value of customers in our operations. We not only just care about the short-term cost for a customer position, we expect good quality customers will bring down costs and create more value.
spk06: Okay, I'll just say thank you.
spk08: Okay, very clear. Thank you, Manager Cang.
spk09: Next operator.
spk03: Thank you. The next question comes from Hans Fan from CLSA. Please go ahead.
spk06: Hello. Thank you, Mr. Wang, for giving me the opportunity. I'm Zhang Haishuo from Zhongxin Liang. I'd like to ask two questions. The first one is about our listing plan. Because it's really new to see that we're the first online lender to go back to the Hong Kong stock market. I'd like to ask about our timetable. And then, will we have a plan in the future to turn it into the main market of Hong Kong stock? Because it's the 20th market now, right? So this is the first question. So I have two questions. This is Hans from CSA. The first one is regarding the Hong Kong listing plan. Congratulations to that, because this is the first online lender in ADR of China to go back to Hong Kong for re-listing. Just wondering about the details regarding timelines, and also, is there any plan to go for primary listing, because currently it's a secretary? Yeah, so that's the first question. The second one is more about APR. Currently, we are seeing in the past few quarters, our APR has been on a downtrend. But just wondering what's the outlook for APR if we consider the demand side and also regulatory direction and also our strategy.
spk07: Thank you very much.
spk09: Okay, sure. So for the Hong Kong listing timetable, As you know, we just released the PHIP this morning and basically our intention is to follow the normal procedure of the Hong Kong exchange to push for the final official prospectus release and then the marketing roadshow and then the listing. So that's our intention. In terms of exactly how many days or how long it will take, you can refer to some other cases. I believe the normal course in a regular basis is somewhere within two weeks time frame. So that's roughly. And secondly, it's more about the due primary listing in the future. That certainly is an area or the direction we're kind of looking at seriously because there are certain benefits to become a dual primary listing company in Hong Kong. But I guess first you need to finish the secondary listing, and then when you meet certain criteria, then you can apply for the dual primary. So it's kind of a step-by-step thing. We're just right now still trying to finish the first step. And somewhere down the road, when the condition is ready, we're pursuing the next one. 还说你来下一个吧。 好,欢迎APR。 APR我们在三季度比二季度相对略微有点下降。 主要原因还是因为我们的存量里面有一些过去相对较高的逐步到期。
spk07: In Q3, we see the overall pricing got lower a little bit compared to Q2. This is mainly due to our existing long
spk01: or gradually ran through the maturity. Going forward, as we see the loan mix from our new customers and the old customers are relatively stable, we've backed this pricing to remain relatively stable.
spk06: Thank you very much.
spk03: Thank you. The next question comes from Leon Gui from Daifu. Please go ahead.
spk05: Then can you give us a specific figure? That is, the loan that we issued in the third quarter, how much is it lower than 24? How much is the price of the new loan issued in the third quarter? Then the second question is about the demand for credit. Just now, Mr. Xu also talked about the demand for credit in the third quarter. It's going to go up a little bit in the second quarter. I would like to ask if we can see this rebound. What kind of industry is it? Hi, thanks management for taking my questions. This is Liang Qi from Daiwa. I have two questions regarding the results itself. The first question is regarding the loan pricing. Just want to know what exactly is the new loan pricing? for the loans granted throughout the third quarter this year. And the second question is regarding the loan demand. As Mr. Xu just mentioned, we've seen better loan demand in the third quarter compared with the second quarter. So in our view, what is the typical borrower profile that is demanding more new loans? Where does better loan demand come from? For example, which sectors or segments? Thanks a lot.
spk07: Yes, overall price in Q3 is a little bit lower than 22%. The second one is about the need for recovery. In the past, the customer group we faced was mainly consumer-oriented. Consumers are actually not particularly obvious in terms of industry attributes. Consumers are a universal need. What we see more of is probably the same as the epidemic. um in terms of the business nature actually consumer law is quite non-cyclical we we see this demand gradual recovery
spk01: It comes from the customers in the area that previously had hit by COVID.
spk09: Okay. I just want to probably add a little bit of color on that. So, Leon, to your question, really on the consumer side, we don't really particularly tracking uh... their professionals they you know uh... uh... kind of a categories and everything so that that's uh... that's not the kind of the focus point and then also that's uh... not kind of a data we can provide in terms of which professional getting better in terms of the improvement uh... but just like i shouldn't mentioned uh... if you can't you you sort of you can imagine that uh... you know for those areas that being locked down for example in shanghai during the you know, March, April, and May period, when the lockdown gets released, there certainly will be a pretty noticeable rebound, you know, in demand. So that's kind of driven, at least in part, driven this recovery in the third quarter. Okay. Thank you.
spk05: Okay. Thanks a lot. Understood. Thank you.
spk03: Thank you. The next question comes from Thomas Cheung from Jefferies. Please go ahead.
spk04: 晚上好,謝謝管理層介紹我的提問。 我的問題是第一個是關於行業的競爭格局的。 現在就是從行業來看,APL現在大家都是下潮下來了。 會不會就是對整個競爭格局後續會有一些變化呢? 我们看到了我们的ticket size 在Q3或者是往后几个季度会不会出现什么变化 然后第三个问题是关于我们Q4的那个guidance的 如果现在是基于现在的疫情的情况下呢 我们会觉得我们做这个low-end还是high-end的guidance, 应该怎么想,什么情况下会做这个low-end呢? 还是说我们会想到, 疫情还是会在未来一个半月出现一些比较大的变化。 Thanks management for taking my questions. My first question is about the competitive environment, given that the APR, is trending down for a lot of the fintech companies. I just want to get a sense about how we should think about the landscape in the future. And the second question is about the ticket size. Can management comment about the trend in recent quarters? And my third question is about the Q4 guidance. Given the pandemic situation is very dynamic, just want to get a sense about the high end and the low end of the guidance and how's the, under what scenario should we expect it to hit the low end? Should we expect the pandemic to worsen from the current situation? Thank you.
spk07: Okay, thank you, Thomas. I'll say it first, and then Alex will add to it. The first one is about the competition. I think the first aspect is From the perspective of supervision, since 14 platforms have been included in the supervision, the overall market structure has become more consistent with the requirements of these platform companies and the consistency itself has a more competitive performance. So these 14 platforms will have
spk01: First of all, from the point of regulatory, since the 429 in last year, we believe the 40 platforms that are summoned for this meeting are more competitive in compliance views in the future.
spk07: The first aspect is that everyone is still in different groups of customers. There is a slight difference, so it is not in the same group of customers that there is competition. In addition, this industry is a relatively large group of customers and a very large market. Secondly, if you look at the 14 platforms, we want to point out, number one, the credit market is a large market with multiple layers, different players.
spk01: may cross over across the different layers a little bit. Secondly, this is a vast market that we do not see that different players will compete directly head-to-head.
spk07: 第二个关于宏观不明朗情况下的这个TK赛, 我们如果对只是考虑宏观因素, 我们的TK赛将 um, um, um,
spk01: There are two factors when we consider TK sites. Number one factor, considering the macro environment, since we took the proof dental approach, that risk management strategy will not drive up our TK sites. Second point, as we are continuously upgrading our customer base this year, we are seeing the good customers can bring more value, create longer, long lifetime value and the larger TK sites.
spk07: As for our outlook for K4, there are several factors we take into consideration.
spk01: Number one, there are usually similarity in funding supply in Q4 due to the operation of banking industry. However, as everyone knows, there are sufficient staff in China financial system this year. We do not see this factor coming to effect this year. Second reason is the macro environment and the COVID. This one we think is the major concern for our guidance.
spk09: Sure. Thomas, I just want to add a little bit to your last question regarding the Q4 guidance. Basically, the guidance reflects our view of the current sort of micro condition. Obviously, you know, the Chinese market these days are very dynamic, given the COVID-related policy changing or pending changing. as well as a reaction by the local authority to those kind of new COVID policies, we heard different kind of messages. Some say that some certain local areas are more aggressive to kind of a reopening, where some others still maintain a kind of restrictive kind of stance there. So it's kind of a changing dynamic. But based on what we can see today, I think the guidance we provide in the Q4 is within a comfortable level. Then obviously if, say, for the second half of this quarter, things are getting better, then we'll probably see a better performance and vice versa. So that's only based on information we get today.
spk06: Thank you. Thank you.
spk03: Thank you very much. There's no more questions. Team management, back to you for the conclusion remarks.
spk09: Okay. Thank you again, everyone, to join us for this conference call. If you have any additional questions, please feel free to contact us offline. Thank you. Have a good day. Bye-bye.
spk03: Ladies and gentlemen, this concludes today's call. You may now disconnect.
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