Lexin(US:LX)2020-06-04 20:13Financial Data and Key Metrics Changes - In Q1 2020, Lexin facilitated RMB34.1 billion in loans, a 69.5% increase year-on-year, exceeding the target of RMB32 billion [7] - Registered users reached 84.2 million, up 99.7%, marking a record high [7] - Outstanding loan balance increased to RMB58.5 billion, a 67.2% rise [8] - Q1 revenues were RMB2.5 billion, reflecting a 40.9% year-on-year growth [8] - The company reported a net loss of RMB678 million for Q1, attributed to provisions for potential pandemic impacts [8][9] Business Line Data and Key Metrics Changes - Lexin's online and offline consumption scenarios generated RMB10.5 billion in transactions, a 337% increase, with offline transactions alone reaching RMB9.3 billion, up 1239% [10] - Membership benefits program usage increased significantly, with a 63.5% repeat rate and substantial month-on-month growth in April [11] Market Data and Key Metrics Changes - The 90-day delinquency rate was reported at 2.57%, with improvements noted as the economy recovers [12] - The seven-day delinquency rate improved to 2.77%, returning to pre-pandemic levels [12] Company Strategy and Development Direction - The company is focusing on a new consumption platform strategy to drive user growth and revenue [10] - Lexin aims to exceed RMB38 billion in loan originations in Q2, a 46% increase from Q1, and is confident in achieving full-year guidance of RMB170 billion to RMB180 billion [13] - The company is exploring a potential Hong Kong listing as a response to U.S.-China tensions regarding ADRs [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of consumption and employment in China, indicating that the worst of the pandemic appears to be over [13] - The company is committed to maintaining asset quality and has adjusted its credit model accordingly [30] - Management anticipates a return to profitability in Q2 and expects to see continued growth in the second half of the year [13][19] Other Important Information - The adoption of the CECL accounting standard has led to higher provisions being recognized upfront, impacting short-term financials but not the underlying profitability [15][18] - The company has allocated RMB900 million to prepare for pandemic impacts, which contributed to the Q1 loss [8][19] Q&A Session Summary Question: Loan origination outlook and customer acquisition efforts - Management confirmed a target of RMB38 billion for Q2 loan originations, citing diversified customer acquisition channels and a strong existing customer base [28][29] Question: Details on additional provisions and vintage loss assumptions - The RMB900 million provision is a conservative measure due to the pandemic, with further details to be provided in the P&L [31] Question: ADR listing concerns amid U.S.-China tensions - Management is exploring a Hong Kong listing as a potential solution to address investor concerns regarding ADRs [33] Question: Customer acquisition strategy across different channels - Management highlighted the importance of both online and offline channels, with a focus on risk management and customer quality [36] Question: Business model and risk-sharing loans - The company clarified that the risk-sharing model with banks allows for lower capital requirements and is a strategic direction for growth [41][68] Question: Complexity of accounting policies and full-year outlook - Management acknowledged the complexity of accounting due to multiple loan categories and pledged to provide clearer guidance in the future [62]