Good day ladies and gentlemen, thank you for standing by, and welcome to the Jiayin Group fourth 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. If you have any objections, you may disconnect at this time. I will now turn the call over to Mr. Shawn Zhang from Investor Relations of Jiayin Group. Please proceed.

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 fourth quarter and full year of 2023. We released our earnings results earlier today. A press release is available on the company’s website as well as on 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 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. 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. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese and I will follow up with corresponding English translations. Please go ahead, Mr. Yan.

[translated from Chinese] Hello everyone. Thank you for joining our fourth quarter and full year 2023 earnings conference call. 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 our group. We are thrilled to share that throughout the fourth quarter 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, key words for China’s macroeconomic state were steady growth and structural adjustment. On the one hand, the recovery of the 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. Maintaining steady growth while strictly controlling potential risks became a critical consideration for policy makers. 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 [indiscernible] development and focusing on transforming and upgrading the engines of growth emerged as primary discussions. Particularly from the fourth quarter onwards, new quality productive forces started to gain traction as a popular concept. In 2023, 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 precision in operations, thereby successfully meeting our business objectives. In the fourth quarter, the company’s loan facilitation volume was RMB 20.1 billion, an increase of 6.3% year-over-year. Meanwhile, the company’s total loan facilitation volume for…

Thank you, Mr. Yan, and hello everyone. Thank you for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in renminbi and our percentage changes refer to year-over-year comparisons unless otherwise noted. As Mr. Yan mentioned earlier, [indiscernible] growth momentum over the past year to achieve new milestones in the fourth quarter, notably our loan facilitation volume grew by 6.3% to RMB 20.1 billion. Our net revenue was about RMB $1.6 billion, up 51.8%. Moving onto costs, facilitation and servicing expenses were RMB 857.2 million, representing an increase of 329.1% from the same period of 2022, primarily due to increased loan facilitation volume and expenses related to financial guarantee services. Allowance for uncollectible receivables, contra-assets, loan receivables, and others was RMB 43.8 million, representing an increase of 190.1% from the same period of 2022, primarily due to the increased balances arising from our loan facilitation and guarantee services. Sales and marketing expense was RMB 329.5 million, representing a decrease of 11.9% from the same period of 2022 primarily due to lower commission expenses. G&A expenses were RMB 65.2 million, representing an increase of 9.9% from the same period of 2022, primarily driven by an increase in employee costs. R&D expenses were RMB 92.9 million, representing an increase of 44.3% from the same period of 2022 primarily due to higher employee compensation as a result of an increase in research and development department headcount. Consequently, our net income for the fourth quarter was RMB 367.6 million, representing a decrease of 31.1% from RMB 533.7 million in the same period of 2022. Our basic and diluted net income per share was RMB 1.72 compared to RMB 2.49 in the fourth quarter of 2022. Basic and diluted net income per ADS was RMB 6.88 compared to RMB 9.97 in the fourth quarter of 2022. We ended this quarter with RMB 370.2 million in cash and cash equivalents compared to RMB 180.3 million at the end of the previous quarter. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer and I will answer your questions. Operator, please proceed.

Thank you. [Operator instructions] We are now going to proceed with our first question, and the questions come from the line of [indiscernible] from Jinyu Asset [ph]. Please ask your question.

[Chinese spoken] Hello management, I’m [indiscernible] from Jinyu Asset. I have two questions. The first one is we have observed that the delinquency rates for the period of one to 30 days, 31 to 60 days, 61 to 90 days, 91 to 180 days, and over 180 days are all higher than the level during the same period in 2022. Could you please share what measures the company intends to take in the future to keep delinquency rates low? My second question is--I also have a question about the shareholder returns. In 2023, the company initiated dividend distribution. What can we expect for the future dividend policy and payout ratio? Thank you.

[translated from Chinese] Hello Ms. Hua [ph]. Thank you so much for focusing our delinquency rate as our investor. Just a callback from what Mr. Yan just said, in 2023 the overall domestic economic environment still faced multiple challenges and uncertainties, and one very certain thing is that the economic recovery speed is still very slow. If you followed our updates in the past several quarters, you would see that since the second quarter 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 the sensitivity of our borrower group to external environmental impacts, accelerated the adjustment and adaptation of internal strategies, and managed 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 collections through technology and models within the application of mediation and legal collection at different stages, and improved the optimization of risk indicators at each stage, all under the premise of enhancing borrower operation experience and protecting consumer rights. Those are our measures to--the risk control measures under the economic cycle. Those are my answers to your first question, and I will give it to our CFO, Mr. Fan Chunlin for your second question.

[translated from Chinese] Thank you Ms. Hua. Yes, it’s true that the rewards to our shareholders are very interesting. 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. 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 two years since we just started our share repurchase plans, but the current stock trading price is around just two--the period is around just two. Considering our company’s fundamentals and strong profitability, our management believes 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 US $20 million share repurchase plan recently, raising the repurchase limit to US $30 million. Over the past year, we have implemented two dividends totaling US $0.80 per ADS. If you calculate it based on our closing price yesterday, which is US $6.90 per ADS, the dividend yield exceeds 11.5%, so in the future we will continue to establish our dividend policy and reward our shareholders through regular dividends. Thank you.

Thank you. We are now going to proceed with our next question. The questions come from the line of Yuxuan Chen from HTSC. Please ask your question, your line is open.

[Chinese spoken] The first question is, given there is uncertainty in the current macroeconomic environment, could you please share what [indiscernible] you have made in the customer acquisition channels and the risk control, and also does the company have a detailed plan for future development based on these adjustments and the progress? The second question is we have noticed a significant decrease in the company’s net income in the fourth quarter of 2023 and also a notable year-over-year increase in accounts receivable. What are the primary factors, and what’s the company’s projection for net income this year?

[translated from Chinese] Okay Mr. Chen, I will take your first question. 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 leveraged its long accumulated data and users advantages. With record development of facilitation volume, the risk control indicators have also been satisfactory. 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. We will prudently consider the healthy growth of the platform’s facilitation volume under the premise of controllable risk. In detail, firstly in terms of borrower acquisition channels, we will focus on balancing the channel metrics, prioritizing the development of channels that mainly acquire high quality assets. Secondly, from a 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. 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 groups, implementing differentiated approval rates, differentiated pricing and differentiated credit limit management. Lastly, in the post facilitation aspect, as previously mentioned, the introduction of various strategies and methods aimed to enhance the optimization of risk indicators at each stage, so all under the premise of strengthening borrower operation experience and protecting consumer rights. Those are some ideas about your first question, and the second question, we’ll give to Mr. Fan Chunlin.

[translated from Chinese] Thank you, Yuxuan, for your question. For the fourth quarter of 2023, the net income was RMB 368 million, which is a slight increase compared to RMB 324 million in the third quarter of 2023. However, there was a 31% decrease if you compare to the RMB 534 million in the fourth quarter of 2022, and I think there are some main reasons. Firstly, the net margin in the fourth quarter 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 obviously obtained the high tech enterprise qualification in the fourth quarter 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 fourth quarter of 2022. If you exclude this one-time adjustment and other non-recurring items, the net profit--the net income for the fourth quarter of 2022 would be much lower. In the detailed classification of our revenue for the fourth quarter of 2023, the proportion of guarantee income was higher than in the fourth quarter of 2022. 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 proportions. Regarding the income statement figures, we are not going to provide any guidance today; but if you--but we have already given a range for our facilitation volume this year, which is RMB 93 billion to RMB 98 billion. If you look at our net margin in certain quarters in the past, it has fluctuated due to some non-recurring items. Our net margins for the past three years, which is 2021 to 2023, were 26.3%, 36.1%, and 23.7% respectively. In the future, we will continue to operate steadily, maintain a stable take rate, increase investment in R&D, and improve operational efficiency to keep the overall margin at a very healthy level. If you compare with accounts receivables in the Q4 2023 to the Q4 2022, there is a difference, just as you said, but if you compare the balance at the end of the fourth quarter compared with the end of the third quarter, the balance was roughly flat and a little bit decreased. Our company’s balance sheet will continue to increase. Thank you, Yuxuan for your questions.

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

Okay, thank you Operator, and thank you all for participating on today’s call. Thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

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