Pacific Booker Minerals Q4 2023 Earnings Call Transcript

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Provided by Quartr
March 28, 2024

There are 5 speakers on the call.

Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Jia Ing's 4th Quarter 2023 Earnings Conference Call. Currently, all participants are in 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.

Operator

If you have any objections, you may disconnect at this time. I would like to turn the call over to Mr. Sean Zhang from Investor Relations of Jiaying Group. Please proceed.

Speaker 1

Thank you, operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the Q4 and the full year of 2023. We released our earnings results earlier today. The press release is available on the company's website as well as from newswire services.

Speaker 1

On the call with me today are Mr. Yanjing Gui, Chief Executive Officer Mr. Fan Chun Lin, Chief Financial Officer and Ms. Shuy Yifeng, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward looking statements made under the Safe Harbor provisions of the U.

Speaker 1

S. Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.

Speaker 1

The company does not assume any obligation to update any forward looking statement, except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. With that, let me now turn the call over to our CEO, Mr. Yandeng Gui. Mr.

Speaker 1

Yan will deliver his remarks in Chinese and I will follow-up with corresponding English translations. Please go ahead, Mr. Yan. Hello, everyone. Thank you for joining our Q4 and full year 2023 earnings conference call.

Speaker 1

The year of 2023 was a pivotal year for our company with the changing macroeconomic landscape amplifying our challenges, but also opening up unique opportunities for group. We are thrilled to share that throughout the Q4 and the entire year, we firmly executed our strategic initiatives, achieving remarkable results on both financial and operational fronts. The execution of these strategies will form the core competitive edge for our company's future growth. Reflecting on 2023, the key words for China's macroeconomic theme were steady growth and structural adjustment. On the one hand, the recovery of this economy at the macro level faced extended timelines and increased difficulties due to the ongoing multi year impact of COVID and escalating geopolitical conflicts worldwide.

Speaker 1

Maintaining steady growth while strictly controlling potential risks became a critical consideration for policymakers. On the other hand, the importance of developing industries that are both strategic and emerging as well as stimulating domestic demand became even more pronounced. Adjusting the structure of economic development and focusing on transforming and upgrading the engines of growth emerged as primary discussions. Particularly from the Q4 onwards, new quality productive forces started to gain traction as a popular concept.

Speaker 2

In 2023,

Speaker 1

we kept a close watch on significant changes within the macroeconomic landscape, particularly in the financial and technology sectors. We remain focused on our core competencies of technological innovation and risk management. We did this while striving to enhance our company's market share and improve our position in operations, thereby successfully meeting our business objectives. In the Q4, the company's loan facilitation volume was RMB20.1 billion, an increase of 6.3% year over year. Meanwhile, the company's total loan facilitation volume for the full year reached RMB88.1 billion, an increase of 58.7% compared to 2022, surpassing the previously set target guidelines and achieving a new historical high in volume.

Speaker 1

In the Q4, the company achieved net revenue of RMB1.6 billion, an increase of 51.8 percent year over year. Annual net revenue reached RMB5.47 billion, an increase of 67.1 percent year over year, continuing healthy growth momentum. The recovery of the macro economy is closely linked to the support of credit services. And in 2023, the demand for consumer credit services in the Chinese market remain robust. Policies and measures such as the opinions of the General Office of the State Council on further unleashing the potential of consumer spending and promoting the sustained recovery of consumption, the National Development and Reform Commission's effort for restoring and expanding consumption and National Financial Regulatory Administration's notice on the financial support for recovery and expansion of consumption and state councils' initiatives to further facilitate the high quality development of inclusive finance, each contributed to the growth of the consumer credit service market.

Speaker 1

Additionally, new requirements were introduced at the national level to regulate financial institutions and enhance service quality. At the end of 2023, according to data from the People's Bank of China, the balance of various types of RMB loans from financial institutions amounted to RMB237.59 billion, an increase of 10.6% year over year. Through the year, RMB loans increased by RMB22.75 trillion and additional RMB1.31 trillion compared with the previous year. Against the backdrop of the continuously increasing market demand, we are continuing to focus on optimizing customer structure, pursuing sustainable growth in business scale. 2023 was the year of transformation for our company in terms of technological empowerment, especially in the development and application of artificial intelligence technology.

Speaker 1

In the Q3, our company officially changed its name to Jiaoying Technology, marking a strategic shift where technology took top priority. This move aligns with the train of applying AI in various business scenarios. AI technology has empowered us in areas like anti fraud monitoring, marketing, borrower acquisition models and intelligent quality inspection for customer service. These advancements have boosted our risk control capabilities, improved borrower acquisition efficiency and enhance customer satisfaction and compliance. In the Q4 of 2023, we combined large language models and AIGC technology to enhance our innovation and influence through automated high quality image and video content creation.

Speaker 1

Internally, we're developing intelligent office tools, leveraging open source large language models for better operational efficiency in the middle and back office. By the end of 2023, we had partnership with 71 Financial Institutions and we're in talks with an additional 36. Our collaboration with this institution covers operation, technology, risk management and customer rights protection, enhancing our market competitiveness. In the Q4, we welcomed 1 Internet bank, 2 Tier 1 city commercial banks and several private banks as partners diversifying our funding. This led to significant growth in our loan facilitation business throughout the year.

Speaker 1

We believe our expanding ecosystem of partners will be crucial for our long term growth. In the Q4 of 2023, the company continues efforts in managing risk fluctuations and expanding its borrower base. We understand the importance of optimizing customer's structure and ensure asset quality amid market changes. The delinquency rate for 61 to 90 days remained at 0.68% manageable overall. Going forward, Jiaying will maintain prudent and flexible risk control strategies.

Speaker 1

For new borrower acquisition, we pursued a stable strategy focusing on existing multi channel borrower acquisition metrics and achieved success in cost control. This led to an 11.9% reduction in Q4 2023 sales and marketing expense compared to the same period of last year. In borrower operations through refined management, we deeply explored the lifetime value of core assets. Our repeat borrowing rate reached 72.9% with average borrowing amount per borrowing of RMB944. The company's expansion into overseas market is progressing steadily.

Speaker 1

In Nigeria, we are mindful of the ongoing fluctuations in local exchange rates and market risks, which may pose challenges to further growth. We will continue to monitor the local business environment closely and make informed decisions accordingly. Meanwhile, in the promising pan African market like Tanzania, we are actively exploring expansion opportunities. Indonesia is also a key market of interest. By the end of 2023, Indonesian regulatory authorities have introduced new policies requiring lower rates and tighter market oversight.

Speaker 1

We are closely monitoring these developments and plan to support our partner to optimizing their asset structures and targeting high quality borrower segments. Additionally, we are keeping a close eye on Latin American market, including Mexico for potential business development opportunities. Throughout the Q4 and full year 2023, consumer rights protection remained a central focus for Jiayuan's development. We actively responded to the customer rights protection initiative, defending consumer rights with determination. Leveraging our digital technology advantages, we implemented lean operational strategies internally and established a robust consumer rights protection system.

Speaker 1

Externally, we continue to empower our business with technology, building a strong anti fraud firewall to foster a harmonious and a stable consumer environment. In the 2023 Consumer Rights Protection White Paper released in January, we detailed our achievements and deep industry insights.

Speaker 2

This included educating

Speaker 1

26,000,000 individuals on consumer protection and assisting 9,900 borrowers in need. The company's outstanding performance was recognized with the Best Financial Consumer Rights Protection Award at the Financial Compliance Annual Award Ceremony. Reflecting on 2023, we are pleased to report that we achieved high quality growth, demonstrating the effectiveness of our strategies. Currently, as industry regulation enters to a normalized stage, it is expected that the future industry environment will be more conductive to Jiayin's sustained development. We also made significant strides in technology enabled business operations and in expanding our overseas footprint.

Speaker 1

We are convinced that maintaining a focus on technological innovation as a cornerstone of our long term competitive strategy, Along with our commitment to expanding our business skill, optimizing our asset structure and rigorously managing risk will ensure our continued and stable growth in both Chinese and international markets. We are confident in our company's performance in 2024 setting a goal for total loan facilitation to be ranged from RMB93 1,000,000,000 to RMB98 1,000,000,000 for the year with RMB22 1,000,000,000 targeted for the Q1. Finally, I would like to talk about the company's efforts in boosting shareholders' returns. Over the past 9 months, we have distributed 2 cash dividends to shareholders, totaling USD0.8 per ADS. The total dividend amount reached USD42.7 million accounting for 25% of the company's net income after tax for the fiscal year of 2022.

Speaker 1

Going forward, we will continue to execute the company's dividend policy, which is to distribute dividends twice a year in cash with an annual total dividend not less than 15% of the previous year's net income after tax, subject to dividend conditions being met. Regarding our share repurchase program, as of now, the company had repurchased its ADS for approximately USD10.6 million and raised our current effective share repurchase program limit to $13,000,000 We look forward to reaffirming our commitment to creating value for shareholders and our confidence in company's long term growth prospects through these measures. With that, I will now turn the call over to our CFO, Mr. Fan Chun Lin. Please go ahead.

Speaker 2

Thank you, Mr. Yan, and hello, everyone, for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMB and no percentage changes refer to year over year comparisons unless otherwise noted. As Mr.

Speaker 2

Yan mentioned earlier, we carried our robust growth momentum over the past year to achieve new milestones in the Q4. Notably, our loan facilitation volume grew by 6.3% to RMB 20,100,000,000. Our net revenue was about RMB 1,600,000,000, up 51.8%. Moving on to costs. Facilitation and service expenses were RMB 837,200,000, representing an increase of RMB 329.1 percent from the same period of 2022, primarily due to increased loan facilitation volume and expenses related to financial guarantee services.

Speaker 2

Allowance for uncollectible receivables, counter assets, loans receivable and others was RMB43.8 million, representing an increase of 190.1% from the same period of 2022, primarily due to the increased balances arising from loan facilitation and the guarantee services. Sales and marketing expense was CNY 329,500,000, representing a decrease of 11.9 percent from the same period of 2022, primarily due to lower commission expenses. G and A expenses were CNY 65,200,000, representing an increase of 9.9 percent from the same period of 2022, primarily driven by an increase in employee costs. R and D expenses were CNY 92,900,000, representing an increase of 44.3 percent from the same period of 2022, primarily due to the higher employee compensation as a result of an increase in research and development department headcount. Consequently, our net income for the Q4 was RMB367,600,000, representing a decrease of 31.1 percent from RMB533,700,000 in the same period of 2022.

Speaker 2

Our basic and diluted net income per share was RMB 1.72 compared to RMB 2.49 in the Q4 of 2022. Basic and diluted net income per ADS was RMB 6.88 compared to RMB 9.97 in the Q4 of 2022. We ended this quarter with RMB 370.2 million in cash and cash equivalents compared to $180,300,000 at the end of the previous quarter. With that, we can open the call for questions. Mr.

Speaker 2

Xu, our Chief Risk Officer and I will answer your questions. Operator, please proceed.

Operator

Thank you. And the questions come from the line of Rong Hua from Jinyu Asset. Please ask your question.

Speaker 3

Hello, management. I'm Hua Rong from Jin Yu Asset. I have two questions. The first one is we have observed that the delinquency rates for periods of 1 to 30 days, 31 to 60 days, 61 to 90 days, 91 to 190 days and over 180 days are all higher than the level during the same period in 2022. Could you please share what matters the company intends to take in the future to keep delinquency rates low?

Speaker 3

And my second question is, I also have a question about the shareholder return. In 2023, the company initiated dividend distribution. What can we expect for the future dividend policy and payout ratio? Thank you.

Speaker 1

Hello, this is Hua. Thank you so much for focusing our delinquency rate as our investor. So just a call back from what Mr. Yanjun said, in 2023, the overall domestic economic environment still face multiple challenges and uncertainties. And one very certain thing is that the economic recovery speed is still very slow.

Speaker 1

And if you force our updates in the past several quarters, you will see that since the Q2 of 2023, we have already adjusted and faced the challenges to risk management given by economic cycles under this perception. Also under a prudent risk decision making mechanism, we have strengthened our research on this sensitivity of our borrower group to external environmental impacts, accelerated the adjustment and the adaptation of internal strategies and manage risk indicators throughout the whole life cycle of our borrowers. One thing I want to point out that in the post facilitation stage, we have enhanced the intelligence and experience of repayment, reminder and collection through technology and models, strengthen the application of mediation and legal collection at different stages and improve the optimization of risk indicators at each stage and all under the premise of enhancing borrower operation experience and protecting consumer rights. And those are our measures to the risk control measures under the economic cycle. Those are my answers to your first question.

Speaker 1

And I will give the give it to our CFO, Mr. Fan Chun Lin for your second question. Thank you, Ms. Hua. And yes, it's true that the rewards to our shareholders are very interesting.

Speaker 1

Just as Mr. Yan just said, based on our company's rapid development and robust management over the past few years, both operational and financial indicators have shown a continuous improvement trend. So our company's operating cash flow is relatively abundant and the metrics on the balance sheet are increasingly solid. Therefore, the company has been and will continue to reward our shareholders through share repurchase plans and dividend policies. It has been already 2 years since we just started our share repurchase plans.

Speaker 1

But the current stock trading price is around just 2, the P ratio is around just 2. Considering our company's fundamentals and strong profitability, our management believe that the stock price does not fully reflect the company's internal value, which means we are undervalued. So our Board of Directors just approved an additional $20,000,000 share repurchase plan on recently, raising the repurchase limit to $30,000,000 Over the past year, we have implemented 2 dividends totaling USD0.8 per ADS. If you calculate it based on our closing price yesterday, which is USD6.9 per ADS, the dividend yield exists 11.5%. So in the future, we will continue to our established dividend policy and rewarding our shareholders through regular dividends.

Speaker 1

Okay. Thank you, Harold.

Operator

Thank you. We are now going to proceed with our next question. And the questions come from the line of Ruxan Chen from HDFC. Please ask your question. Your line is open.

Speaker 4

Let me do the translation. The first question is, given the uncertainty in the current macroeconomic environment, could you please share what the positive and effective adjustment and improvements you have made in the customer acquisition channels and risk control? And also, does the company have a detailed plan for future developments based on these adjustments and the progress? And the second question is, we have noticed a significant decrease in the company's net income in the Q4 in 2023 and also a notable year over year increase in the accounts receivable. What are the primary factors and what's the company's projection for the net income this year?

Speaker 1

Okay. Mr. Chen, I will take your first question. So firstly, I would like to remind that in the past few years, the online credit industry has gone through a period of consolidation followed by a slowdown in the economic recovery of the external environment. During this period, we fully leverage its long accumulated data and users advantages.

Speaker 1

With the rapid development of a facilitation volume, the risk control indicators has also been satisfactory. So today as we consider the development of our business, we will place more emphasis on a sustainable long term development goal, continuously empowering our financial partners in both China and international markets with our technological capabilities. So we will prudently consider the healthy growth of the platform's facilitation volume under the premise of controllable risk. So in detail, firstly, in the term of borrower acquisition channels, we will focus on balancing the channel mix metrics, prioritizing the development of channels that mainly acquire high quality assets. Secondly, from the service and operational strategy perspective, we will enhance the management and retention of high quality borrowers, increasing the mining and application of borrower behavior data, thereby promoting the elevation of borrower quality and asset portfolios towards high quality borrower groups.

Speaker 1

So thirdly, in terms of risk strategy, we will continue to focus on the introduction and testing of market data products, systematically assess and monitor the impact of external environment risk on different borrower groups and strengthen the iteration and optimization of our models. Strategically, we will conduct differentiated management by different borrower group, implementing differentiated approval rates, differentiated pricing and differentiated credit limit management. So lastly, in the post facilitation aspect, as previously mentioned, the introduction of various strategies and methods aim to enhance the optimization of risk indicator at each stage. So all under the premise of strengthening borrower operation experience and protecting consumer rights. So those are my some ideas about your first question.

Speaker 1

And as the same, the second question we'll give to Mr. Fan Chun Lin. Okay. Thank you, Yuxuan, for your question. So for the Q4 of 2023, the net income was RMB368 1,000,000, which is a slight increase compared to RMB324 1,000,000 in the Q3 of 2023.

Speaker 1

However, there was a 31% decrease if you compare it to the RMB534 1,000,000 in the Q4 of 2022. And I think there are some main reasons. So firstly, the net margin in the Q4 of 2022 was exceptionally high, which is about 51%. So I think we have mentioned in the calls before that the primary reason was that several of our core operating entities officially obtained the high-tech enterprise qualification in the Q4 of 2022, which adjusted the applicable income tax rate to 15% and it is retroactive to 2021. Therefore, we made a one time financial adjustment for this tax benefit in the Q4 of 2022.

Speaker 1

If you exclude this one time adjustment and other nonrecruiting items, the net profit the net income for the Q4 of 2022 would be much lower. So in the detailed classification of our revenue of Q4 of 2023, the proportion of guarantee income was higher than in the Q4 of 2022. And the profit margin of this kind of business is lower than our facilitation and risk control services. So in the future, I think our listed company will continue to focus on the facilitation and risk control services and we will also reasonably control the balance of different business segments in our revenue proportion. So regarding the income statement figures, we are not going to provide any guidance today.

Speaker 1

But if you but we have already given a range for our facilitation volume this year, which is RMB 93,000,000,000 to RMB98,000,000,000. If you look at our net margin in certain quarters in the past has fluctuated due to some non recurring items. Annually, our net margins for the past 3 years, which is 2021 to 2023 were 26.3%, 36.1% and 23.7%, respectively. And also in the future, we will continue to operate steadily, maintain a stable take rate, increase investment in R and D and improve operational efficiency to keep the overall margin at a very healthy level. And yes, if you compare with the current receivables in the Q4 2023 to the Q4 20 22, there is a difference just as what you said.

Speaker 1

But if you compare the balance at the end of the Q4 compared with the end of the third quarter, the balance was roughly flat and a little bit decreased. So our company's balance sheet will continue to improve. All right. Thank you, Yixuan, for your question.

Operator

Thank you. Seeing no more questions now, I would like to return the call to Sean for closing remarks. Please go ahead.

Speaker 1

Okay. 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.

Operator

Thank you all again. This concludes the call. You may now disconnect. Thank you.

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Earnings Conference Call
Pacific Booker Minerals Q4 2023
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