Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Jiayin Group’s Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, we are recording today’s call. If you have any objection, you may disconnect at this time. I will now like to turn the call over to Mr. Shawn Zhang from Investor Relations of Jiayin Group. Please proceed.

Good day, everyone. Thank you all for joining us on today’s conference call to discuss Jiayin Group’s financial results for the fourth quarter and full year of 2022. We released the results earlier 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. Yan Dinggui, Chief Executive Officer; Mr. Fan Chunlin, Chief Financial Officer; and Ms. Xu Yifang, 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.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company’s actual results maybe materially different from the expectations expressed today. For the information regarding these and other risks and uncertainties is included in the company’s public filings with the SEC. The company does not assume any obligation to update any forward-looking statements, 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. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese and I will follow-up with corresponding to English translations. Please go ahead, Mr. Yan.

Hello, everyone. Thank you for joining our fourth quarter 2022 earnings conference call. 2022 has proven to be both challenging and opportunistic for our company. During the year, we faced the strictest quarantine lockdowns in China followed by the lifting of almost all COVID restrictions in December. Looking back on the last 3 years now, we witnessed the COVID outbreaks that disrupted businesses worldwide. Policy changes that reshaped China’s fintech industry and escalating geopolitical conflicts that further pressed the global economy. Despite these macroeconomic disruptions and increasing uncertainties worldwide, we are proud to report that our execution of our growth strategy remains steadfast. Throughout 2022, we maintained our focus on strengthening our core competencies of technology innovation and risk management. We also improved our innovation capabilities and efficiency in refining our operations to better meet the evolving market demands. As a result of our solid execution, we delivered growth in line with our expectations and rewarded our shareholders long-term support with a strong and satisfactory performance in 2022. As we expand, our top priority remains ensuring full compliance with regulatory requirements and we are actively collaborating with policymakers and partner institutions towards that goal. In response to the PBOC’s directive to stop direct data connections between Internet platforms and financial institutions, we have made significant progress and preparation. We are confident that we can work with our partner financial institutions to complete the system switchover within the required timeframe. Encouragingly, we are also seeing positive regulatory development underway to support the healthy growth of China’s Internet platform companies. For example, the CBIRC’s interim measures for the management of commercial bank Internet loans have officially endorsed and regulated partnerships between banks and Internet platforms like ours, providing a solid foundation for our operations. Additionally, regulatory authorities recently announced that ratification among…

Thank you, Mr. Yan, and hello, everyone, for joining our call today. I will now review our financial highlights for this quarter. Please note that all numbers will be in RMB, and percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr. Yan mentioned, we delivered a record growth in 2022 particularly in the fourth quarter, our loan origination volume grew by 249.2% to RMB18.9 billion as we refined our partnership operations and improved our funding efficiency. Our net revenue was RMB1.1 billion, up 186.4% driven by 149.2% increase in our revenue from our loan facilitation services. Other revenue grew significantly to RMB154.7 million from RMB7.1 million in the same period last year, mainly driven by incremental revenues from individual investor referral services and post facilitation services. Moving on to costs. Origination and servicing expenses were RMB195.1 million, up 130.1%, in line with our loan origination volume growth. Allowance for incredible receivables, contract assets, loans receivable and others reduced by 12.2% to RMB15.1 million, compared to RMB17.2 million in the same period last year. Sales and marketing expenses increased by 138.4% to RMB374 million, mainly reflecting higher borrower acquisition expenses. As a percentage of net revenue, SM expenses decreased to 35.5% from 42.6% in the same period last year. G&A expenses were RMB59.3 million, up 26.7% primarily driven by an increase in staff costs in the quarter. As a percentage of net revenue, G&A expenses reduced to 5.6% from 12.7% in the same period last year. R&D expenses were RMB64.4 million compared to RMB46.6 million in the same period last year. We recorded higher employee compensation and benefits as well as increased fees for professional services in the quarter as we prudently managed our expenses and grew our revenues at a much faster pace, we were able to further expand our property sale in the fourth quarter. Our net income for the fourth quarter increased to RMB533.7 million from RMB122.5 million in the same period last year. Our basic and diluted net income per share was RMB2.09 compared to RMB0.57 in the same period last year. Basic and diluted net income per ADS was RMB9.97. We ended this quarter with RMB291 million in cash and cash equivalents, up from RMB217.5 million as of September 30, 2022. As of December 31, 2022, we have repurchased approximately RMB1.5 million of our ADS for $3.5 million and our $10 million share repurchase plan we announced in June 2022. Before I wrap up, I will briefly review our full year financial highlights as well. In 2022, our loan volume grew by 153.4% to RMB55.5 billion while our net revenue increased by 83.7% to RMB3.3 billion. Net income grew by 152.3% to RMB1.2 billion while net margin expanded to 36.1%. Net income per ordinary share and per ADS were RMB5.48 and RMB21.92 respectively. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will answer questions. Operator, please proceed.

Thank you. [Operator Instructions] Our first question comes from the line of Ling Yao [ph] from Sunu Securities. Please go ahead. Your line is open.

And I will do the translation for myself. I’m Ling Yao from of Sunu Securities. My first question is about your first average dividend policy. Since you are buying back shares and paying dividends, does that means you don’t need that much cash. Would you be better off investing the cash to expand your borrower base and funding partnership network for stronger growth? Thank you.

[Foreign Language]

Okay. This is Shawn Zhang from the Investor Relations and I will do the corresponding translation in English. So thank you, Ling Yao for your question. And it is true that the company’s current condition of operation is sound and stable. Probably, you can see that our performance shows a very fast growth in this year. And our operational and financial indicators are significantly improved. And also, the company’s operational cash flow is nice and solid and our balance sheet is pretty strong. But at the same time, you can see that the PE ratio of our companies is still very low, which is below 2x, yes. So the management believes that the current price of our company’s ADS failed to reflect our inherent value or you may say that we are actually undervalued. In June 2022, the Board approved the 10 million repurchase plan. And in addition to that, our Board just approved our dividend policy in order to further protect the interest of our investors.

[Foreign Language]

Okay. So the – as you know that cash is king – the king nowadays. So the company will always consider the necessary cash reserves for our long-term development as our first priority. We made the $10 million repurchase plan and the dividend policy based on our precise cash flow measurement. The Board and the management have fully considered in the cash required for the company’s operations and strategic development – the strategic development and there is way enough room left after that.

[Foreign Language]

Okay. So Mr. Yan just gave out our yearly loan facilitation volume guidance of 2023 at a level of RMB70 billion which made it pretty clear that the company will keep a sustainable growth in the long run and the management is very confident to that. Thank you.

[Foreign language]

Okay. I will do the translation for Mr. Yan. So Mr. Yan just give out two probably two reasons. So the first reason is that we will definitely keep investing the new borrower acquisition – but we do have a plan for that. We all know that the new borrowers, if you compare with the repeat borrowers, there are more – usually more uncertainties. We really need to avoid some risk of – during this process. So, the second reason will be that we didn’t really meet our – the goal of 2023 at the probably based on the – our goal of 2022. And we can see that this is a goal made very carefully. So, the main reason is that we need to keep the asset quality at a very healthy level and to avoid probably some risk in it. So Mr. Yao, can you please provide the translation of your questions, please?

Sorry about that. Yes, sure. The translation for my question is, my second question is about the robust market demand throughout 2022 that CEO just mentioned. Are you expecting that to change in 2023? The outlook only reflects 36% loan facilitation volume growth in 2023 compared to your 153% loan facilitation volume growth in 2022. Why are you forecasting such a deceleration in the growth? Thanks.

Thank you for the translation. Yes.

Mr. Yao. This is Yifang Xu. I will just add on a little bit on your question to the answer to your question in addition to what Mr. Yan has provided so far. On your first part of your question, you asked about overall outlook. As just Mr. Yan has mentioned in his opening remarks, there are several factors pointing us towards. We will remain positive and healthy expectation throughout 2023. These couple of factors, including on the regulatory front, we are seeing positive developments as well as the official endorsement towards the partnerships between Internet platforms like us and financial institutions. This – while such improvement of warrants in financial institutions to pursue further interest or deepen their partnership with us, therefore, to guarantee our healthy funding sources going into 2023 and forward. Similarly, on the consumer demand side, we are seeing the growth on the consumer loans on the nationwide as well as the request and standing resource supplies from the partners, from the institutions that we are already in partner with. In addition to that, you have asked about our adjusted percentage growth rate in 2023. But let’s first go back looking at the absolute numbers, or looking at these numbers in absolute terms. In 2021, overall transactions is around RMB22 billion. In 2022, this number we just reported is RMB55.5 billion. So, with a little over RMB30 billion growth primarily coming from Jiayin has been in this market for over 10 years. We have harvested low-hanging fruits in 2022 by focusing on our repeated borrowers. We are focused on exploring and maximizing their potential – their borrowing needs and having their needs to match with competitive products offered through our platforms in partnership with our financial institutions. Going pretty much in the fourth quarter of 2022, we have changing gears into more of organic growth. As you probably have noticed, in Q4 2022, our total transaction is around RMB18 billion and our outlook for Q1 2023 is slightly improved to RMB19 billion. So, we are focusing on organic growth at this point by introducing and – introducing and higher quality – credit quality customers through a more competitive acquisition channels and bundled with more competitive product offerings through these channels to these new customers in helping that to grow our overall customer portfolios as well as to deliver a healthy risk factor – risk metrics. So with that, then you were looking at our growth in ‘23 outlook. It’s going to be from RMB55 billion to RMB70 billion so far. But as you can also notice that RMB70 billion is relatively conservative view by considering the seasonality change and slightly uncertainties in the second half of 2023 regarding to the overall landscape in this industry, we are pretty confident in developing such numbers, but we also have the flexibility adjusting upwards when the time we saw is comfortable to do so. Hope we answered your question, Mr. Yao.

Okay. Thank you.

Okay. So operator, I think we can move to the next participant who want to ask a question.

Thank you. One moment please. Your next question comes from the line of Sam Lee, who is an individual investor.

I will translate for myself as well. Thank you for taking my questions. My first question is that you have recorded a higher net margin in Q4 compared to some of your peers. Would you like to share some possible reasons for that? Thank you.

[Foreign Language]

Okay. So, this is Shawn Zhang, and I will do the translation in English. So, thank you, Sam for your question. So, from the perspective of our performance in the financial indicators, Q4 is an excellent quarter with very nice profitability. And it is true that if you are looking into the margin, it is probably slightly higher than our peers. So, in Q4, our operating margin reached nearly 33% and for the full year of 2021, it is about 36.1%. And I think there will be two reasons for that. The first reason is that the scale effect generated by our rapid growth in the performance. And the second reason is probably because our fixed cost is stable, and our funding cost is stable. And at the same time, it is going down as well. At the same time, it is also a result of our refining operation, so.

[Foreign Language]

Okay. So, the net margin is slightly higher. It is true. So, our net margin of Q4 reached more than 50% which was higher than the operational margin, mainly because of the impact of some extraordinary reasons. For example, some of our core entities for our businesses just obtained the qualification of high-tech enterprises, which benefit us that our applicable income tax rate is now adjusted to 15%. And as you know that it is – which can be traced back to 2021. And that will be one reason of that.

[Foreign language]

So, in the future we will further cut down the take rate of our platform and we will also increase our R&D investment and to improve our efficiency and maintain the overall operational margin at a healthy level.

[Foreign Language]

My second question is about the vintage curves. While the loan volume accelerated and grew significantly, you have managed to keep your risk performance at an industry-leading level. If your loan growth decelerates as you have forecasted, can we expect your vintage rates to improve even further in 2023? Thank you.

This is Yifang Xu. I am going to take on your questions. First of all, I will answer your question in English then will translate myself in Chinese. So, I – first of all, that I will continue to focus on improving our risk metrics throughout 2022 and forward, just as a – ESG and as a company focusing on the lending business, having a good control over our risk metrics and practice prudent risk management philosophy is intrinsic inside within our company’s philosophy and policy. However, I will not connect the growth rate and the loss rate in the way you presented. So, even we are – the growth rate has increased in 2023 from three-digit percentage growth rate to double-digit growth rate, we are still expecting a pretty significant growth from RMB55 billion to over RMB70 billion. And as we continue to grow our platform by over RMB20 billion or almost RMB20 billion throughout the course of 2023, our chief focus of the risk path is going to be primarily focus in two fronts. One from the new customer acquisitions, so as we continue to practice constraints on a number of new customers and new loan originations as part of our portfolio in our total new originations, we also want to focus on choosing the right acquisition channel mix and the product offering. So, both the decisions on acquisition channel mix and the product offerings are solely based on focus to improve our overall customer credit risk profiles. Going forward, as we have started probably over a year ago, we want to focus on improving our customers quite risk profiles and we will continue to do so by choosing acquisition channels that gave us a broader and greater access to better customers. Similarly, in the product offerings, we…

Thank you. No more questions from me.

Thank you. We have reached the end of the call. I will return the call back to Shawn for closing remarks. Please go ahead.

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.

This concludes today’s conference call. Thank you for participating. You may now disconnect.