Hello ladies and gentlemen and thank you for standing by for Hexindai’s Third Quarter Fiscal Year 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. As a reminder, today’s conference call is being recorded. I would now like to turn the meeting over to your host for today’s call to Miss. Daisy Wang, Investor Relations Director. Please proceed, Daisy.

Thank you, operator. Hello investors, analysts and colleagues thank you for joining us today. Our earnings release was distributed earlier today and is available on our IR website at ir.hexindai.com. On the call today from Hexindai are Mr. Xinming Zhou, our CEO and Mr. Johnson Zhang, our CFO. Mr. Zhou will review business operations and company highlights followed by Mr. Zhang, who will discuss financials and guidance. They will be available to answer your questions during the Q&A session that follows. Before we begin, I’d like to remind you that this conference call may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates, potential, continue, ongoing, targets, guidance and similar statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: the Company’s goals and strategies, its future business development, financial condition and results of operations, the expected growth of the credit industry, and marketplace lending in particular, in China; the demand for and market acceptance of its marketplace’s products and services, its ability to attract and retain borrowers and investors on its marketplace, its relationships with its strategic cooperation partners, competition in its industry, and relevant government policies and regulations relating to the corporate structure, business and industry. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this call is current as of the date of this call, and the Company does not undertake any obligation to update such information, except as required under applicable law. It is now my pleasure to introduce our CEO, Mr. Xinming Zhou. Please go ahead, Mr. Zhou.

Thank you, Daisy, and thank you, everyone for joining our call today. While the quarter remained challenging for us and the entire P2P sector, we have begun to see the environment improve as regulations are clarified and financially weaker and fraudulent [ph] firms are gradually weeded out. As we have said before, a clear and definitive regulatory environment will have a positive impact on the industry and allow it to grow sustainably over the long term. The industry began to recover as the market regains its footing following a turbulent period. Net revenue during the quarter was US$1.9 million, while total loans facilitated was US$29.1 million. While our top line continued to feel the impact from market turbulence, we have begun to see things improve sequentially following the cost cutting initiatives we put in place during the quarter and a re-shifting our focus from loan transfer products back to new loan products as the market rebuilds. Our net loss narrowed sequentially as a result. Meanwhile, the proportion of new loans facilitated to total investment amount increased to 30.4% during the quarter compared to 15.4% last quarter. We continue to work on completing everything in the notice for a regulatory compliance inspection campaign issued in August 2018 which lays out three key steps for platform self-examination and correction. We were among the first P2P platforms to begin the inspection process and are actively working to complete it as soon as possible. We completed step 2 with the Beijing Internet Finance Industry Association late last year, which included an on-site inspection. Hexindai was one of the only firms directly inspected by the Beijing Internet Finance Industry Association in step 2 which is an indication of our leading position and contributions in regulatory compliance. We have now completed two of the three key…

Thank you, Mr. Zhou. Hello, everyone. Thank you for joining our earnings conference call today. I’m pleased with our performance in this turbulent market environment where were able to generate net revenue of US$1.9 million, exceeding our guidance for the quarter. With the industry continuing to face significant headwinds throughout the quarter, we continued to focus our attention towards maintaining full regulatory compliance and improving operational efficiency. We diversified and expanded our funding sources during the quarter by partnering with Kunming Aotou and Bohai International Trust, which will leverage our advanced technology and extensive experience in operating consumer lending business. We are also cooperating with Phoenix Intelligent Credit to assist them in acquiring qualified borrowers and facilitate loans. As our initiatives to improve operational efficiency take hold, operating expenses decreased by 38% or US$8 million sequentially, while our net loss narrowed by 45% or US$7.8 million compared with last quarter. Total volume of loans facilitated were impacted by investors lack of confidence in the industry following a large spike in the number of problematic platforms in China that collapsed. As a result, loans facilitated decreased by 92% year-over-year to RMB0.2 billion, or US$29.1 million. Borrower demand on our platform remains high though. Once the market evens out and investor confidence in our platform returns, we will be ready to service them and benefit from the enormous growth potential across the retail financial services sector. As we further diversify our funding sources towards institutions, we expect to see a recovery which I believe will validate our business model and reflects our solid financials and healthy profitability. Net revenue was US$1.9 million, a decrease of 95% from the same period last year. The decrease was primarily due to the significant decrease in the volume of credit loans facilitated through our marketplace, which…

[Operator Instructions] We have the first question from the line of Josh Vogel from Sidoti & Company. Please go ahead.

Thank you. Good morning, good evening everyone. I have three questions if I may. We have seen you take some good steps to diversify your platform whether it's with credit sharing, the online loan service, loan referrals. I am curious whether there are other products or services that you plan to add to the mix? And if so, do you have a timeline around that?

We are still focusing on our medium sized consumer loans and will extend our product lines. We will extend our loan size to the smaller sized and shorter duration both compared to our traditional loan services.

Okay. Thank you. You mentioned in your prepared remarks that in step three of the regulatory process there maybe additional final checks by higher government regulators. Is that -- do you think that is definitely going to materialize? And maybe if you can just give some commentary of what you believe the timing around the completion of step three will be?

There is no official announcement by when will be that third step. But according to the expectation by the consulting firm most of analysts believe that the third step will be occurred on March, that means, next month there would be the third step.

Okay. Thank you. And then question on the microlending business. I believe you're fully invested there now. Are there any plans to increase the amount that you can lend with regard to the microlending business?

No. We will keep our loan balance for the microlending business on the cap of RMB500 million.

Okay. Thank you. And in could you just speak one more in. And I’m sorry. Do you know when the trading window opens with regard to potentially making share repurchases?

I mean this would be, after this conference call, two trading days according to the regulation.

Okay. Thank you.

We have the next question from the line of Kaplan Leng from Essence Securities. Please go ahead.

Okay. Thanks for taking my questions. And I have two questions. The first question is could management provide more color on the outlook for 2019 in terms of loan volume growth and borrower and lender growth? Thanks.

Hello, Kaplan. I think you mean outlook for the 2019 means our next fiscal year. We will provide the outlook or guidance at the end of our -- this fiscal year end. Our fiscal year end is March 31, and I think we will provide you the guidance for the next full fiscal year in our next conference call.

Thanks. And my second question is; could you share with us your mergers and acquisitions strategy? And what specific areas are your strategic investment focus in the near future?

We will continue seeking the investment opportunity in the online lending business. For example, we have already invested in Indonesian online lending platform. And we also have announced that we invested in Phoenix Intelligent for minority shareholder. We are also seeking out M&A opportunities in emerging markets such as Southeast Asia where we see similar market environments and user demographics. Our acquisitions of a 20% equity stake in Indonesian online lending platform Musketeer late last year was our first step in this regard. We are still in early stage of assessing overseas opportunities and we will continue to look for other opportunities. Thank you.

Thanks for that information. That was really helpful. Thank you.

Thank you.

[Operator Instructions] We have the next question from the line Josh Vogel from Sidoti & Company. Pleases go ahead.

One more question if I may. The number of borrowers on your platform are understandably down, some of this a result of you implementing stricter credit scoring standards. Can we assume that this will be the new norm, the new normal for you and the industry? Or once the regulatory period is in the past and only the compliant platforms remain like yours, you may start to loosen those scoring standards?

Thank you, Josh. I think the decrease of borrower is temporary. On our platform, the demand from the borrower side is still strong. And the decrease of the borrower number is the most because of we have decreased our pass-through rate for implementing the more strictly risk control standard on the turbulent market environment. And the second reason is investor on our platform have preferred to transfer their existing loans other than facilitated new loans. But we believe that after this temporary environment, our borrower number will recover as well as our loan volume will be increased in the future.

Great. Thank you for taking my questions.

Thank you.

As there are no further questions, I would like to hand the conference back to our presenters for today.

Okay. Thank you again for joining us this evening. We believe for the P2P industry, borrower demand is the key growth driver and market indicator. Being short on capital is really a temporarily problem, as the business potential is defined by demand. We remain confident in the solid business foundation. We have built and believe we will gradually attract investors to return. We believe investors are not going to wait for the final registration deadline before making their choice of platform and will instead assess a short list of the top platforms with trustworthy brands. We believe that these platforms on the short list will benefit from the industry rectification process. Again, I am confident in our strategy and our ability to execute and look forward to updating you next quarter on the progress we have made.

Thank you ladies and gentlemen. In closing, on behalf of the entire Hexindai management team, we’d like to thank you for your interest and participation in today’s call. If you require any further information or have any interest in visiting us in China, please let us know. Thank you for joining us today. This concludes the call.

Ladies and gentlemen, that does conclude the conference for today. Thank you for participating. You may all disconnect now.