Core Viewpoint - The article discusses the performance of FinVolution (NYSE: FINV) since the initiation of a long position, highlighting a total return of -11% during a challenging market period [1]. Group 1: Company Overview - FinVolution is a company focused on the consumer discretionary and financial services sectors in both the US and China [1]. - The investment strategy involves a long-biased and China-biased portfolio, with intentions to diversify globally [1]. Group 2: Analyst Background - The analyst has a background in commerce with high distinction from the University of Toronto, specializing in finance and economics [1]. - The analyst has 10 years of experience in investment banking and focuses on industry and company research [1].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $13.00, indicating a potential upside of 51.3% from the current price of $8.59 [1][11]. Core Insights - The company reported better-than-expected earnings, achieving a net profit of RMB 738 million in Q1 2024, which represents a year-on-year increase of 38.7% and a quarter-on-quarter increase of 8.4%, marking the highest quarterly profit since 2019 [6]. - The international business segment continues to grow, with a year-on-year increase of 36.4% in loan facilitation from international markets, contributing to 5.8% of total loan facilitation [6]. - The company aims to increase the proportion of international business revenue to 25% by 2025 and 50% by 2030 [6]. Financial Performance Summary - Revenue is projected to grow from RMB 12,547 million in 2023 to RMB 14,138 million in 2025, reflecting a compound annual growth rate (CAGR) of 8.2% [5][8]. - Net profit is expected to increase from RMB 2,341 million in 2023 to RMB 2,763 million in 2025, with a year-on-year growth rate of 15% anticipated for 2025 [5][8]. - The company's net take rate is projected to stabilize around 4.01% in 2025, with a slight decrease from previous estimates [9]. Business Metrics - The company facilitated loans totaling RMB 206.11 billion in 2024, with a year-on-year growth rate of 6.0% [8]. - The loan balance is expected to reach RMB 74.1 billion by Q1 2025, with a year-on-year growth of 13.5% [7]. - The 90-day overdue rate is projected to be 2.04% in Q1 2025, showing a slight improvement from previous quarters [7].

Investment Rating - The investment rating for the company is "Buy" with a target price of $12.00 [7][8]. Core Insights - The company's Q1 2025 performance showed a net profit of 750 million RMB, exceeding Bloomberg's expectation of 600 million RMB, with a year-on-year increase of 41.4% and a quarter-on-quarter increase of 9.7% [1][4]. - Loan quality has slightly improved, with the first-day overdue rate decreasing to 4.6% and the annualized net profit take rate increasing by 20 basis points to 4.1% [3][4]. - The company maintains a cautious operational approach, with a focus on improving loan quality and increasing the proportion of light capital business, which is expected to drive profit growth in the short term [1][2]. Summary by Sections Q1 2025 Performance - The company reported a net profit of 750 million RMB, which is better than expected, with a quarter-on-quarter increase of 9.7% and a year-on-year increase of 41.4% [1]. - The overdue rate decreased by 10 basis points to 4.6%, indicating improved loan quality [1][3]. - The total loan amount for Q1 2025 was 52.1 billion RMB, with a quarter-on-quarter increase of 8.4% [2]. Loan Quality and Capital Structure - The first-day overdue rate improved to 4.6%, and the 30-day repayment rate remained stable at 89% [3]. - The light capital business's balance proportion increased to 43.0%, which is expected to enhance profit margins due to the absence of income and provision mismatches [2][3]. Profit Forecast and Valuation - The profit forecasts for 2025, 2026, and 2027 have been adjusted to 3.22 billion RMB, 3.91 billion RMB, and 4.02 billion RMB respectively, reflecting a positive outlook [4][6]. - The target price remains at $12.00 based on DCF valuation methodology [4][12].

Financial Data and Key Metrics Changes - The company achieved a 10% year-over-year revenue growth, with a record-breaking quarterly net profit of RMB738 million, representing a 39% increase year-over-year and an 8% increase quarter-over-quarter [9][27] - The take rate in China increased from 3.3% to 3.4% sequentially, with a 10 basis point decline in funding costs [20][44] - Net revenue for the quarter reached RMB3.5 billion, marking a 10% increase year-over-year and a 1% increase sequentially [27] Business Line Data and Key Metrics Changes - International transaction volume grew by 36% year-over-year, while China's transaction volume grew by 7% [9] - The international business contributed 20.4% of total net revenue in the first quarter, up from 18.8% in the same period last year [11] - The outstanding loan balance in international markets rose to RMB1.9 billion, up 46% year-over-year [21] Market Data and Key Metrics Changes - China's GDP grew by 5.4% year-over-year, while retail sales rose by 5.9% in March [19] - In Indonesia, transaction volume reached RMB1.8 billion, up 10% year-over-year, while in The Philippines, transaction volume reached RMB1.2 billion, up 180% year-over-year [22][24] - The unique borrower base in international markets reached a record high of 1,700,000, marking a 106% year-over-year increase [22] Company Strategy and Development Direction - The company aims to have international business contribute 50% of total revenue by 2025 [11] - The strategic diversification initiatives in international markets are designed to mitigate single country risk [11] - The company is exploring the use of larger language models in risk assessment to improve operational efficiency [13] Management Comments on Operating Environment and Future Outlook - Management expressed a cautiously optimistic outlook despite ongoing macroeconomic uncertainties such as global trade tensions and evolving regulations in China's consumer finance sector [9] - The company remains confident in achieving its full-year revenue guidance of RMB14.4 billion to RMB15 billion, representing 10% to 15% growth year-over-year [29] - Management noted that the new regulations on loan facilitation in China are seen as a positive signal for the industry's healthy development [35] Other Important Information - The company facilitated RMB15 billion in financing for 442,000 small business owners, representing a 1510% increase [15] - The Board of Directors approved a dividend of US$0.27 per ADS, reflecting a 17% year-over-year increase [29] Q&A Session Summary Question: Impact of new regulations on loan facilitation in China - Management acknowledged the new regulations and viewed them as a positive signal for the industry's development, stating that the overall impact is manageable [33][35] Question: Impact of U.S. tariffs on consumption loan demand in Indonesia and the Philippines - Management noted that while trade tensions have introduced challenges, domestic demand remains strong, and they expect a rebound in Q2 [36][38] Question: Loan application demand trend in China and credit approval plans - Management reported steady loan application demand in April and May, with a slight decline in April followed by a rebound in May [41][42] Question: Drivers for improved take rate in the Chinese business - The take rate increased due to improved funding costs and extended loan tenure, with expectations for stability moving forward [44]

Financial Data and Key Metrics Changes - The company achieved a 10% year-over-year revenue growth, with a record-breaking quarterly net profit of RMB738 million, representing a 39% increase year-over-year and an 8% quarter-over-quarter increase [9][28]. - The take rate in China increased from 3.3% to 3.4% sequentially, with a 10 basis point decline in funding costs [21][45]. - Net revenue for the quarter reached RMB3.5 billion, marking a 10% increase year-over-year and a 1% increase sequentially [27]. Business Line Data and Key Metrics Changes - International transaction volume grew robustly, up 36% year-over-year, while China's transaction volume saw a slight 7% growth [9][11]. - The international business contributed 20.4% of total net revenue in the first quarter, up from 18.8% in the same period last year [11]. - The outstanding loan balance in international markets rose to RMB1.9 billion, up 46% year-over-year [22]. Market Data and Key Metrics Changes - China's GDP grew by 5.4% year-over-year, and retail sales rose by 5.9% in March [20]. - In Indonesia, transaction volume reached RMB1.8 billion, up 10% year-over-year, while in The Philippines, transaction volume reached RMB1.2 billion, up 180% year-over-year [25][22]. Company Strategy and Development Direction - The company aims to have international business contribute 50% of total revenue by 2025 [11]. - The strategic diversification initiatives in international markets are designed to mitigate single country risk [10]. - The company is exploring the use of larger language models in risk assessment to improve operational efficiency [13]. Management's Comments on Operating Environment and Future Outlook - Management maintains a cautiously optimistic outlook despite ongoing macroeconomic uncertainties such as global trade tensions and evolving regulations in China's consumer finance sector [9]. - The company expects to achieve its full-year revenue guidance of RMB14.4 billion to RMB15 billion, representing 10% to 15% growth year-over-year [30]. Other Important Information - The company facilitated RMB15 billion in financing for 442,000 small business owners, up 1510% year-over-year [15]. - The Board of Directors approved a dividend of US$0.27 per ADS, reflecting a 17% year-over-year increase [30]. Q&A Session Summary Question: Impact of new regulations on loan facilitation in China - Management noted that the new regulations are expected to promote healthy development in the industry and benefit leading platforms with strong risk management capabilities [34][36]. Question: Impact of U.S. tariffs on loan demand in Indonesia and the Philippines - Management observed that while trade tensions have introduced challenges, domestic demand remains strong, and they expect a rebound in Q2 [37][39]. Question: Loan application demand trend in China - Management reported steady loan application demand in April and May, with a slight decline in April followed by a rebound in May [42][44]. Question: Drivers for improved take rate in China - The improved take rate was driven by reduced funding costs and extended loan tenure, with expectations for stability moving forward [45][46]. Question: Updates on international expansion and revenue guidance - Management confirmed strong performance in international markets, with expectations for increased revenue contribution from these regions [51][52].

FinVolution Group I n v e s t o r P r e s e n t a t i o n May 2025 Disclaimer 2 Value Creation Through Long-termism Vision Be the Most Popular and Trusted Fintech Group Mission Better Finance, with Technology This presentation has been prepared by FinVolution Group (the "Company") pursuant to Section 5(d) of the U.S. Securities Act of 1933, as amended (the "Securities Act") solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instr ...

Core Insights - FinVolution Group reported strong financial results for the first quarter of 2025, with total transaction volume reaching RMB52.1 billion, a year-over-year increase of 7.9% [1][13] - The company's international transaction volume saw significant growth, reaching RMB3.0 billion, up 36.4% year-over-year [1][11] - Net revenue for the first quarter was RMB3,481.0 million, reflecting a 10.0% increase compared to the same period in 2024 [1][15] - The international business contributed RMB710.5 million to total revenue, representing 20.4% of net revenues, with a year-over-year growth of 19.5% [1][15] Financial Performance - Total outstanding loan balance increased to RMB74.1 billion, up 13.5% year-over-year [2][13] - The average loan size for the first quarter was RMB10,494, compared to RMB10,121 in the same period of 2024 [11] - The 90-day+ delinquency ratio stood at 2.04% as of March 31, 2025 [11] - Net profit for the first quarter was RMB737.6 million, a 38.7% increase from RMB532.0 million in the previous year [30][31] Operational Highlights - Cumulative registered users reached 216.2 million, with a 11.7% increase year-over-year [11] - The number of unique borrowers for the first quarter was 2.2 million, marking a 22.2% increase compared to the same period in 2024 [11] - The company added 1.2 million new borrowers in the first quarter, continuing a trend of surpassing one million new borrowers for three consecutive quarters [14] Business Outlook - The company maintains a full-year revenue guidance of approximately RMB14.4 billion to RMB15.0 billion, indicating a year-over-year growth of 10.0% to 15.0% [35] - The management expressed confidence in navigating global macro uncertainties while capitalizing on growth opportunities in both domestic and international markets [14][35]

Core Viewpoint - FinVolution Group, a leading fintech platform, is set to report its first quarter 2025 unaudited financial results on May 20, 2025, after U.S. market close, with a conference call scheduled for the same day at 8:30 PM ET [1]. Group 1: Earnings Call Details - The earnings conference call will be accessible via various dial-in numbers for participants in the United States, Canada, and internationally, with specific instructions to connect to the call for "FinVolution Group" [2]. - A live and archived webcast of the conference call will be available on the Company's investor relations website, with a replay accessible approximately one hour after the live call until May 27, 2025 [3]. Group 2: Company Overview - FinVolution Group is recognized as a leading fintech platform in China, Indonesia, and the Philippines, connecting young borrowers with financial institutions [4]. - Established in 2007, the Company is a pioneer in China's online consumer finance industry, leveraging innovative technologies in credit risk assessment, fraud detection, big data, and artificial intelligence [4]. - As of December 31, 2024, FinVolution Group had 208.3 million cumulative registered users across its operational regions [4].

Core Insights - FinVolution Group, a leading fintech platform in China, Indonesia, and the Philippines, filed its annual report on Form 20-F for the fiscal year ended December 31, 2024, with the SEC on April 18, 2025 [1]. Company Overview - FinVolution Group is recognized for connecting young borrowers with financial institutions and has been a pioneer in China's online consumer finance industry since its establishment in 2007 [3]. - The company has developed innovative technologies in credit risk assessment, fraud detection, big data, and artificial intelligence, leading to a highly automated loan transaction process that enhances user experience [3]. - As of December 31, 2024, FinVolution Group had 208.3 million cumulative registered users across its platforms in China, Indonesia, and the Philippines [3].

Currency Exchange Risk - Limited hedging options in China may increase exposure to foreign currency exchange risk, with no hedging transactions entered in 2024 [265] - Operations in overseas markets expose the company to currency exchange rate fluctuations, affecting financial results reported in Renminbi [266] - Governmental control over currency conversion may restrict the effective utilization of net revenues and impact the price of American Depositary Shares (ADSs) [267] - The PRC government may impose more restrictive foreign exchange policies, potentially limiting the ability to pay dividends in foreign currency [268] Compliance and Regulatory Risks - Non-compliance with employee benefit plan contributions may lead to penalties, affecting financial condition and operational results [269] - M&A Rules and PRC regulations complicate acquisitions by foreign investors, increasing time and complexity for growth through acquisitions [271] - Security review rules may delay or inhibit mergers and acquisitions that raise national security concerns, affecting business expansion [272] - PRC regulations on offshore investment activities may limit the ability of PRC subsidiaries to distribute profits or increase registered capital [273] - Non-compliance with registration requirements for employee stock incentive plans may result in fines and limit capital contributions to PRC subsidiaries [278] - The CSRC has established a new filing-based regime for overseas offerings, effective March 31, 2023, requiring PRC domestic companies to fulfill filing procedures [289] - The approval and filing with the CSRC may be required for offshore offerings, and delays or failures in obtaining such approvals could adversely affect the company's operations [287] - The company is subject to heightened scrutiny over acquisition transactions by PRC tax authorities, which may negatively impact future acquisitions [286] Taxation and Financial Implications - Classification as a PRC resident enterprise could lead to unfavorable tax consequences, including a 25% tax on global income [279] - The withholding tax rate on dividends paid by PRC subsidiaries to foreign investors is currently 10%, which may be reduced to 5% under certain conditions [281] - The PRC tax authorities have the discretion to adjust taxable capital gains based on the difference between fair value and cost of investment, potentially increasing income tax costs [286] - The company may face risks related to private equity financing transactions and offshore restructuring, which could lead to filing obligations or taxation under PRC regulations [285] Market and Trading Risks - The trading prices of the company's ADSs may be volatile due to factors beyond its control, including market performance of other Chinese companies listed in the U.S. [296] - The market price for the company's ADSs could decline if analysts do not maintain adequate research coverage or publish unfavorable reports [297] - Substantial future sales of ADSs could adversely affect the market price and impair the ability to raise capital through equity offerings [299] - Short selling techniques may drive down the market price of ADSs, creating negative market momentum [300] - The company may face short seller attacks, which could divert management's attention and impact business operations [301] Shareholder Rights and Corporate Governance - Holders of ADSs have limited voting rights and may not be able to attend general meetings or vote directly [302] - The depositary may give a discretionary proxy to vote Class A ordinary shares if holders do not provide voting instructions, potentially affecting shareholder interests [305] - Rights offerings may be limited for ADS holders, leading to potential dilution of holdings [309] - The depositary is not responsible for making distributions if it is illegal or impractical, which may lead to a decline in the value of ADSs [311] - Transfer of ADSs may be subject to limitations imposed by the depositary, affecting liquidity [312] - Shareholders may face difficulties in enforcing judgments against the company due to its incorporation in the Cayman Islands [313] - The rights of shareholders to inspect corporate records are limited under Cayman Islands law, complicating the ability to obtain necessary information [318] - The dual-class share structure results in Class B ordinary shares holding 94.2% of the company's aggregate voting power as of March 31, 2025, with one holder owning 65.9% [321] - The company's memorandum and articles of association contain provisions that could limit the ability of others to acquire control, potentially affecting share sale opportunities [322] - The significant concentration of share ownership may adversely affect the trading price of the company's ADSs due to perceived conflicts of interest [321] - The company is exempt from certain U.S. securities regulations as a foreign private issuer, resulting in less extensive and timely information disclosure [326] - The company is permitted to adopt corporate governance practices from its home country, which may afford less protection to shareholders compared to NYSE standards [328] - The company intends to publish quarterly results as press releases and file an annual report on Form 20-F within four months of the fiscal year-end [326] Share-Based Compensation - The company incurred RMB144.1 million (US$19.7 million) in share-based compensation expenses in 2024 related to share incentive awards [324] - As of March 31, 2025, there were 3,858,450 options and 76,153,295 restricted share units outstanding under the 2017 share incentive plan [323] - The company may continue to grant share incentive awards, potentially increasing share-based compensation expenses in the future [324] Audit and Inspection Risks - If the PCAOB cannot inspect auditors in mainland China and Hong Kong, the company's ADSs may be prohibited from trading in the U.S. under the HFCA Act [292] - The PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it cannot conduct inspections as of December 15, 2022 [293]