Lexin(US:LX)2021-11-11 07:56Financial Data and Key Metrics Changes - Loan origination increased by 15.6% year-on-year to RMB 255.9 billion, with 42.9% priced within 24%, up from 37.6% in the previous quarter [5][6] - Total operating revenue reached RMB 2.97 billion, down 5.9% year-on-year, while gross margins increased by 54% to RMB 1.5 billion, with gross margin percentage advancing by almost 20 percentage points year-over-year [6][7] - Net profit rose over 68% year-on-year to RMB 551 million, with a stable take rate of 3.5% quarter-over-quarter [7] Business Line Data and Key Metrics Changes - The company has shifted focus towards quality over scale, resulting in a measured slowdown in top-line metrics [6] - The average APR for September intake was 26.8%, down 1.4 percentage points from June, reflecting a move away from high APR borrowers [5] Market Data and Key Metrics Changes - The 90-day plus delinquency ratio remained unchanged at 1.85%, indicating stable asset quality despite regulatory changes [8][12] - Loan origination to small and micro business owners increased by 32% to RMB 5.2 billion [13] Company Strategy and Development Direction - The company is rebalancing its business structure in response to regulatory developments, focusing on reducing risk and improving efficiency [12] - The strategy includes enhancing the product and service model for Maiya, which saw GMV reach RMB 473 million in Q3, with offline contributions nearly doubling from previous quarters [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by regulatory changes but expressed confidence in maintaining profitability and operational efficiency [7][12] - The company plans to complete the transition to the 24% pricing policy by June next year, aiming to maintain a healthy take rate during this period [19][20] Other Important Information - The company is investing in technology upgrades and talent acquisition to enhance its operational capabilities and risk management [10][11] - G&A expenses decreased by 17% quarter-on-quarter, reflecting improved operational efficiency [12] Q&A Session Summary Question: Guidance on loan origination amount and outlook for Q4 - Management expects to maintain full-year guidance on loan originations, anticipating some temporary volatility due to regulatory adjustments [17] Question: Timing for pricing transition completion - The company targets to finish the transition by June next year, with a focus on minimizing the impact on take rate [19][20] Question: Asset quality outlook - Management noted that while short-term risk may experience volatility, long-term asset quality is expected to remain stable [21] Question: Data feed disconnection requirements - The company is actively working with credit bureaus to comply with new PBOC requirements, with minimal expected changes to cost structure [26][28] Question: Profit sharing model and funding costs - Profit sharing contributed 43.7% of overall GMV in Q3, while funding costs remained stable at 7.4% [29] Question: Maiya business model development - The company is focused on enhancing merchant value and improving transaction activities before scaling the Maiya business [32][34] Question: Long-term interest rate reduction plans - Management has not received guidance on reducing long-term interest rates below 24% and remains confident in maintaining profitability even if rates decrease [36][37]