2023-11-17 05:14Financial Data and Key Metrics Changes - Total loan facilitation and origination volume reached RMB 123.1 billion, up approximately 11% year-over-year [5] - Non-GAAP net income for the quarter increased by approximately 14% year-over-year [5] - Total net revenue for Q3 was RMB 4.3 billion, compared to RMB 3.9 billion in Q2 and RMB 4.1 billion a year ago [19] - Non-GAAP net profit was RMB 1.18 billion in Q3, compared to RMB 1.15 billion in Q2 [23] - Cash from operations was approximately RMB 1.2 billion in Q3, down from RMB 1.8 billion in Q2 [24] Business Line Data and Key Metrics Changes - Revenue from credit-driven services was RMB 3.1 billion in Q3, compared to RMB 2.8 billion in Q2 [19] - Revenue from platform services was RMB 1.2 billion in Q3, compared to RMB 1.1 billion in Q2 [20] - Capital-light loan facilitation accounted for roughly 56% of total loan volume in Q3, down from approximately 58% in the prior quarter [20] Market Data and Key Metrics Changes - Day 1 delinquency increased to 4.6% in Q3 from 4.2% in Q2, reflecting borrowers' negative sentiment due to macro uncertainties [17] - The 30-day collection rate was 86.7% in Q3, down from 87.2% in Q2 [18] Company Strategy and Development Direction - The company is diversifying customer acquisition channels and refining operations to drive high-quality growth and improve profitability [4] - A partnership with a leading short-form video platform was established to enhance customer acquisition [7] - The company is focusing on optimizing resource allocation across customer acquisition, products, risk management, and asset distribution [6] Management's Comments on Operating Environment and Future Outlook - The macroeconomic recovery in China has softened, leading to weaker-than-expected demand for consumer credit [4] - Management is confident in the long-term growth potential of the broadly defined SME segment, driven by accurate user identification and differentiated operations [12] - The company expects Q4 total loan volume to be between RMB 116 billion and RMB 126 billion, representing year-on-year growth of 15% to 17% [26] Other Important Information - The company has implemented a loyalty program to enhance user engagement, resulting in a double-digit increase in loan drawdown rates [10] - The effective tax rate for Q3 was over 22%, primarily due to additional withholding tax provisions [23] - The company has initiated a share buyback program, repurchasing approximately $80 million worth of ADS [25] Q&A Session Summary Question: What is the current credit demand trend, especially from the SME client base? - Management observed a slight downward trend in credit demand entering Q4, with the broadly defined SME segment showing slightly better demand than the consumer sector [29][30] Question: What is the outlook for asset quality and the reasons for fluctuations in Q3? - Fluctuations in asset quality were mainly due to macroeconomic factors and seasonal liquidity issues, with expectations for improvement in early next year [37] Question: What is the company's strategy regarding funding costs? - The company reported a decline in funding costs by 20 basis points in Q3 and plans to continue optimizing its funding structure [33][34] Question: Will the company continue its share buyback program? - The company confirmed it will continue executing the current buyback program and will review future cash deployment strategies after its completion [42][43] Question: How does the company view the profitability of capital-light versus capital-heavy loans? - Both capital-heavy and capital-light models generate a roughly 3% net take rate, with a focus on balancing profitability and the long-term health of the loan portfolio [47][48]