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| Statement |
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| But fourth quarter, we see improvements in net flow |
| One is that we do believe that there are good consumer finance opportunities to work through multiple channels to diversify our product offering into providing more smaller ticket, shorter-term loans that makes us to be more nimble in a dynamic environment, but also providing these capabilities to small business owners as well because small business owners sometimes act in the capacity of their company needs, which we cover under the Puhui business model |
| With the strong capital position and visibility into our business growth in the medium term, we are well positioned to further respond to our shareholders' consistent feedback to increase shareholder returns |
| We are confident that the strategic initiatives we have implemented from a solid foundation for longer control and profitability and believe that cumulative impact of our strategic upgrades will optimize and recalibrate our risk return profile to align with the prevailing macro environment in China |
| If you compare dividend versus buyback, we believe considering the situation we are in, dividend has several more advantages |
| Finally, over the past quarters, we have consistently heard our shareholders' request for us to improve investor returns and capital efficiency, considering the progress in business derisking and business model transformation as well as our outlook for the growth and capital requirements for the next several years, we believe we have the capability and now is the right time to return value to our shareholders through a special dividend and an estimated dividend size of approximately RMB 10 billion |
| With the completion of all the restructuring measures, we have seen gradual improvement of the flow rate in the first quarter of 2024 |
| To sum up, during the fourth quarter, with the completion of derisking initiative, the downsize of our business is under control and we have strong visibility of our businesses |
| And we believe with completion of all those resourcing measures, we see gradual improvements of flow rate in the coming quarters |
| Under our projected business scale, we believe we have a strong balance sheet to support the business operations, capital and liquidity requirements |
| So, we hope to unlock hidden value behind our cash on hand by increasing our shareholder value through this dividend |
| So, this is a reasonably good amount, I believe |
| We want to keep our flexibility for maybe a more positive market outlook, let's say, 12 to 24 months down the road |
| So we believe this provides more flexibility than buyback to our shareholders |
| All of these factors offer substantial backing for the company to navigate through the challenging macroeconomic environment and the transition period while providing foundations for us to continue rewarding back to our investors |
| So, 2023 is a profitable year for consumer finance |
| But I also noticed in your report, you also mentioned that you actually see improvement of the flow rate in first quarter or quarter-to-date |
| Accordingly, we have completed the reduction in our footprint and are focusing on higher-quality geographies with expected greater economic resilience |
| So after going through all that, we arrived at -- given our significant cash position, a view on what we could release today that gives us still a very substantial buffer going forward over the next couple of years |
| Our total expenses, excluding credit and asset impairment losses, finance costs and other losses decreased by 33.2% year-over-year to RMB 4.4 billion this quarter, as we continue to enhance operational efficiency |
| We recognize the high third-party reliance reduced our technical freedom, therefore, restarted negotiations with our funding partners at the end of 2022 and successfully completed transitioning to a 100% guarantee business model by the end of third quarter of 2023 |
| During the fourth quarter, our overall C-M3 increased to 1.2% from 1.1% in the prior quarter |
| While this strategic shift enables us to capture greater economic value, it has also increased our risk exposures |
| Our guaranteed subsidiary's leverage ratio was only 1.8x as compared to a maximum regulatory limit of 10x, and our consumer finance company capital adequacy ratio well stood at approximately 15.3%, well above the required 10.5% regulatory requirement |
| However, the upside we still need more time due to our prudent strategy and transformation of our business model |
| This move has transformed our portfolio mix and increased our risk-bearing as vintages run-off and the loans under the new model take shape |
| With successful completion of our 5 major derisking initiatives I mentioned, including 4 mix changes and 1 business model adjustments, we believe now the risk is under control and we have a clear visibility of our capital requirement for the coming next 2 to 3 years, 2, 3 years |
| So, I think our strategy here has been to provide the reward to make it meaningful to deliver it in a way that allows investors to make a choice on whether they want to take some cash or do they actually want to effectively double down with the company in taking shares to make that a meaningful number today |
| And then our stock has been traded at less than 0.2x PV and then we have been continuously requested by investors to enhance investment return |
| On a single account basis, new loans enabled on the 100% guarantee models are expected to realize lifetime profitability |
| Statement |
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| First, the broader macro environment remained challenging for SBOs |
| This was primarily due to a reduction in our Puhui business outstanding balance and temporary negative impact from our geographic and direct sales restructuring in the past quarter |
| During the fourth quarter of 2022, our performance remained under pressure from the complex macro environment and challenges faced by SBOs |
| However, with the change of macro environment, macro economic environment, such concentration drove a deterioration in both our operational and financial results in the past 18 months |
| First, our ability to deliver return to shareholders through buyback is quite limited because of low liquidity |
| As discussed previously, the high CGI premium charged by our business partners had negatively impacted our revenue and profit |
| During the fourth quarter, the economy environment remains complex and SBOs continue to come under pressure |
| As YS and Greg mentioned before, our performance was impacted by macroeconomic environment in which the small business-owned sector has been under pressure throughout the period |
| And also, you understand the old portfolio that we booked before 2023 is of worst quality |
| Fourth quarter revenue was RMB 6.9 billion, a decrease of 44.3% year-over-year |
| This was mainly due to subdued demand for high-quality loans from SBOs, coupled with our prudent strategy as we transit to the 100% guarantee model |
| Through strategic adjustments to 100% guarantee model and prioritizing higher-quality customer segments and better geographical regions, we sacrificed some of our business scale for backlog quality in the future |
| Because of our decline in new loan volume and the revenue we generate from new book cannot offset the decrease caused by all the group shrinkage |
| Furthermore, the SME business conditions index published by Cheung Kong Graduate School of Business declined from 49.9 in September to 47.8 in December |
| Our overall new loan sales were RMB 47 billion, representing a year-on-year decline of 39.6% |
| And my first question is by 4Q '23, the company has completed the transition into 100% guarantee model, but the bottom line was still under pressure |
| During the quarter, our technology platform based income was RMB 3 billion, representing a decrease of 29% |
| Meanwhile, although we expect loans under the 100% guarantee model will be lifetime profitable on a single account basis, it is important to highlight that loans under this model may record accounting loss in the first calendar year due to higher upfront provisions |
| Our net interest income was RMB 2.3 billion, a decrease of 47% and our guarantee income was RMB 886 million, a decrease of 47% |
| In the fourth quarter 2023, out total income was RMB 6.9 billion, decreasing by 44.3% |
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