2024-04-23 11:33Financial Data and Key Metrics Changes - In Q1 2024, total new loan sales decreased by 15.6% year-on-year to RMB48.1 billion, primarily due to weak demand from small business owners (SBOs) and a focus on prudent operations [8][14] - Revenue for Q1 2024 was RMB7 billion, a decrease of 30.9% year-over-year, attributed to lower new loan sales and outstanding loan balances, partially offset by an increased take rate [14][23] - The net loss for Q1 2024 was RMB830 million, compared to a net profit of RMB732 million in the same quarter of 2023, mainly due to increased tax associated with the special dividend [14][26] Business Line Data and Key Metrics Changes - New loan sales in the consumer finance business grew to RMB20.3 billion in Q1 2024, representing a 46% year-over-year increase, while new loan sales from the Puhui business decreased by 35.5% year-over-year [8][14] - The consumer finance segment accounted for 42% of total new loan sales in Q1 2024, up from approximately 24% in the same period last year [14][16] Market Data and Key Metrics Changes - The Purchasing Managers' Index (PMI) for manufacturing increased from 49 in December 2023 to 50.8 in March 2024, while the services PMI rose from 49.3 to 52 [6] - The SME development index was 89.3 for Q1 2024, showing minimal improvement from 89.1 in Q4 2023 and 89.3 in Q1 2023, indicating a slow recovery in the SBO segment [7] Company Strategy and Development Direction - The company completed five major de-risking and diversification actions, which have started to yield improvements in asset quality, although operational prudence remains critical for long-term growth [8][12] - The acquisition of Ping An OneConnect Bank was completed in early April 2024, aimed at leveraging strong licenses to expand service offerings and diversify the business [11] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in early risk indicators but emphasized the continued weakness in high-quality loan demand from SBOs, maintaining a focus on quality over quantity [6][12] - The company remains cautious about the sustainability of asset quality improvements and will continue to prioritize prudent operations [10][32] Other Important Information - A special dividend of USD 2.42 per ADS or USD 1.21 per ordinary share was announced, subject to shareholder approval at the AGM on May 30, 2024 [11] - The CFO, David Choy, will resign effective April 30, 2024, and Zhu Peiqing has been appointed as the new CFO [12] Q&A Session Summary Question: Update on special dividend progress and future shareholder returns - Management confirmed that the special dividend is subject to shareholder approval at the AGM and the long-term dividend policy remains unchanged at 20% to 40% of annual net profit [30][31] Question: Sustainability of asset quality improvement - Management acknowledged the improvement in asset quality but remains cautious about its sustainability, attributing improvements to de-risking efforts and a better quality portfolio [30][32] Question: Loan growth outlook for the rest of the year - Management indicated that while there has been early improvement, demand for high-quality loans remains subdued, and they will proceed with caution regarding loan volume expansion [34][35] Question: Unit economics and transition to 100% guarantee model - Management discussed the expected evolution of unit economics, noting that while new loans under the 100% guarantee model may incur initial losses, they are projected to be lifetime profitable [36][37] Question: Risk-bearing percentage outlook - Management stated that the risk-bearing percentage is expected to gradually increase as the new model is fully implemented, with 48.3% of total loan balance currently under the 100% guarantee model [40][41]