X Financial Price & Performance (XYF)

Followed by Mr. Zhen, who will review the financial results Afterwards, Mr. Li, Mr. Jin and Mr. Kaufman will be available to answer your questions. During the Q and A session. I remind you that this call may contain forward looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and involve knowing and unknown risks. [indiscernible] and other factors. These factors are difficult to predict and many are beyond the company's control. Which may cause actual results performance, or achievements to differ materially from those described in these statements. Further information on these and other risks can be found in our SEC filings. The company undertakes no obligation to update any forward looking statements as a result of new information future events, or otherwise. Except as required by law. It's now my pleasure to introduce [indiscernible] Thank you, Victoria, and hello, everyone. We are very pleased to conclude the year with outstanding operational and financial results in the fourth quarter. Total loan volumes exceeded our guidance with RMB 32 billion facilitated in Q4 amount a 24% year over year increase for the quarter. For the full year, total loan volumes reached RMB104.9 billion.

Reflecting a stable performance compared to 2023. This growth was fueled by disciplined underwriting, strengthened asset quality, positive macroeconomic tailwinds that supported borrower demand and lower funding costs. In the second half of twenty twenty four, China's government implemented monitor and fiscal stimulus measures aimed at stabilizing core economic sectors. Notably real estate, and enhancing market liquidity These policies lowered the funding costs and fostered a healthy borrower demand the personal finance market. As a result, we saw meaningful revenue and profitability growth. With Q4 net income more than doubling year over year. So, as a quality performance, Asset quality continues to strengthen significantly throughout the year, At the end of Q4, the delinquency rates were loans overdue by thirty one to sixty days. Improved to 1.17% from 1.557% a year ago. The ninety one to one hundred and eight days overdue delinquency rate declined to 2.48% from 3.12% last year. This improvement reflects the effective risk management practices and the discipline in underwriting standard. 2025 outlook and growth strategy Looking ahead into 2025, the Chinese government has reiterated the importance of the private sector as a key driver of economic innovation and sustainable growth. Recent regulatory guidance from the National Financial Regulatory Administration NFRA, further reinforces this guidance.

With policies aimed at expanding access to consumer credit lowering borrowing costs and supporting consumption driven economic growth. While this development created a more accommodative environment for financial institutions, Our primary focus remains on leveraging technology to enhance financial services [indiscernible] Through AI powered risk analytics automated underwriting models, and embedded Fintech solutions we continue to empower our financial institutional partners in optimizing loan origination credit risk management and borrower engagement. [indiscernible] can navigate this evolving regulatory landscape. With precision and agility. Accordingly, we expect total loan volumes to increase by approximately 30% for the full year of 2025. Supported by both organic demand and a more stable regulatory environment. Despite the Despite the usual seasonal impact of the Chinese New Year, we anticipate sequential growth in total loan volume in Q1 twenty twenty five as digital financial solutions become increasingly integral to expanding responsible credit access. While maintaining discipline in the risk management. Strategic AI investments, at X Financial we continue to expand our strategic investments in AI leveraging cutting edge models such as DeepSeek, Alibaba's Tongyee, 95% accuracy through sophisticated contextual analysis. And advanced image recognition technologies to identify early indicators of credit risk. Looking ahead, remain committed to further integral AI into our strategic decision making process.

Particularly in risk modeling and credit policy. To continue enhancing operational effectiveness and customer experience. With that, I will now pass the call to our CFO, Frank Zhen. Detail the financial results. Thank you, Tian. Good morning, everyone. We are pleased to report a strong financial results for the fourth quarter. The total net revenue increased 43% year over year to RMB1.7 billion The net income grew 104% year over year to RMB386 billion. [indiscernible] Throughout the year, our total top and bottom lines expanded quarter over quarter bringing full year total net revenue to a record 5.9 billion full year net income to RMB1.5 billion, Strong balance sheet capital returns. Our balance sheet remains strong. With total shareholder equity at year end increased by 19% year over year. Leveraging this solid financial foundation, we returned approximately US76 million to shareholders in 2024. Including US6.5 million dollars in cash dividends. US9.2 million dollars in our tender offer, and US50.3 million dollars invested in share repurchase. Dividend [indiscernible] Additionally, our Board of Directors has approved the declaration and payment of a semi annual dividend of US0.25 dollars per ADS. Reinforce our commitment to delivering shareholder value. Share repurchase program, In Q4, we repurchased repurchased 38,400,000.0 Class A ordinary share [indiscernible] 6,400,000.0 ADS.

For US49 million dollars For full year 2024, total repurchase reached 52,200,000.0 shares with 50,500,000.0 in ADS Pro. Amounting to US59.1 4,000,000 As of today, our previous U. S. $30,000,000 and $20,000,000 repurchase plans are fully utilized. We have U. S. 15,900,000.0 remaining at our US50 million dollars repurchase program. Effective through 06/30/2026. 2025 outlook. Looking ahead will remain [indiscernible] optimistic about our growth For the first quarter of twenty twenty five, we expect total loan amount facilitated and originally to be between RMB 33.5 billion. And RMB34.5 billion. This positions position us to achieve a full year total loan amount of facility and originally retained RMB 134.4 billion and RMB0.3 138,400,000,000.0. Closing remarks. As we progress to 2025, We remain confident in our strategic direction [indiscernible] by robust underwriting standards. Disciplined risk management, operational efficiency improvements, with a strong financial foundation disciplined capital allocation and the clear commitment to enhancing shareholder value we are well positioned for sustainable and profitable growth. Thank you for our shareholders, partners especially our dedicated employees. At X Financial. We appreciate your trust and support as we execute on our strategy and the driving long term value creation. We look forward to delivering continued growth and success in the quarter's ahead.

Okay. Operator, we can to the Q and A session now. Thank you. Will now begin the question and answer session. The first question comes from Ramsey Manor with Blackbird Capital. Please go ahead.

Hello. Congratulations guys on a great quarter and happy to be a shareholder. My question is during the fourth quarter, the company repurchased approximately 6,400,000.0 ADSs on December 16, However, the share count on the financial report as of December 31 does not fully reflect the reduction. So I'm not sure if this is an accounting discrepancy and if you could clarify that that would just be better for me. Thank you.

Hi. I'd be happy to answer your question. And since we bought last year back in the last quarter of twenty twenty four, But the share count calculation is based on the weighted average. So say you own that share in '24 among three hundred days, out of this three sixty five days. So that share count is still where we count for three hundred days. So that share count calculation is weighted average. That is is why you see to not see that big reduction in the year end. [indiscernible] [indiscernible] you will see that those share totally disappears on the share count. And I hope I answered that question.

Absolutely. Thank you. Yes.

The next question is from Mason Byrne with AWA Capital. Please go ahead.

Hi, thanks for taking the questions.

I guess just to start, it sounds like you have someone new who's joined the company is on the call. Could you talk about that a little bit please and his role?

Why don't we ask Noah to tell you himself? Yes. Noah, could you please answer that question by yourself?

Yes, sure. [indiscernible] thanks, Mason, for the question.

Yes, I'm excited to be here, and to officially join X Financial. I'd also like to thank the Victoria for the introduction and express appreciation to Ken and Frank for their entire leadership From my early conversations with the team, was deeply impressed with the strategic vision of the team. And the foundation they built. X Financial's sustained profitability and growth speak for themselves. And look forward to playing a role and strengthening that My focus is going to be on deepening our engagement with U. S. Capital markets. I'm sure Mason will be speaking to you in the near future. And enhancing investor relations driving strategic financial initiatives and I'll be working closely with the leadership team. Optimize the financial strategy and capital allocation and ensuring the continued delivering of long term value for shareholders. Great. Well, to the company. Had a couple more. Just to start, it sounds like pretty strong loan volume growth expected for 2025. You just talk about drivers behind that and how you expect that to impact profitability this year?

Sure. I'll take that question. The reason that we forecast a 30% increase in terms of the loan volume really is coming from the two strengths that we are we are creating in the past year. The first one is the way that we able to reaching better and more consumers customers by ourselves. This obviously has always been the key focus of our of our acquisition strategy. Second part is that during the also in 2024 and actually continue into 2025 that we are able to partner with more with more partners, more platforms that based on our track record they are more willing to cooperating with us So basically open a new acquisition channel for for the company. That's why combined with the two strengths that we foresee fairly good increase in our loan volume. Jason, did I answer your other question? If I'm missing some part, you repeat that? I will answer for you.

Yes, just the last part of it, I was asking, how you expect the loan volume growth to translate to profitability this year? There's any large items to think about? Right. No. Yes, will mention that even though that we don't give the forecast of the profitability, but as the for our company as a whole, that we always focus I think our number one focus always been the proper profit. So not guaranteeing anything, but we think that our profit will be increasing at the same pace as our bond. As our volume.

Mei Xing, if you're looking 2024 and our basically have a almost the same volume as '24 and '23. And just also a little bit down a few bidding or something like that. And we have hoped this increase, believe it's almost 300,000,000 on net income.

And the reason is mainly to by two factors. One is, if you remember back back in 02/2004 and the beginning of 02/2004, it's risk level for our sector, our industry is at the highest level. We are managers from risk level [indiscernible] [indiscernible] quarter by quarter basis always manage to to lower that risk. That's why we have a more profitable than originally much thought. Another big factor is is the funding cost. It's funding cost is down on yearly basis in '24 down more than 2%. And looking to 2025, the trend is more or less the same, the funding cost not going to lower but more or less remain in the low level as current as right now. And risk [indiscernible] effect profile also more or less remain the same. But also that visibility maybe maybe short, maybe one quarter or February, We cannot guarantee the full year but that's basically as the situation right now. So as that is the situation based on current situation, we are very comfortable confident in which very meaningful growth both in volume and the profitability in 2025. Thank you.

That's very helpful. Thank you. Last thing from me. Really appreciate the capital return to shareholders both through dividends and buybacks. You're still fairly low on the dividend even after the raise. As a portion of net income, but I know you're returning a lot through buyback activity. Just wondered how you think about capital allocation priorities going forward, whether you continue to expect more on the buyback or if you would maybe lean into the dividend more That's all. Thanks. Yes.

Mason, I thought you were that question. I'm ready for you. You see, when we introduced the dividend like [indiscernible] $0.70 annually and $0.34 a year At that time, our stock has been in mild around about $3.04 dollars range.

For several years. And so we pay like a zero $3.04 0 three $4 for less than $4 stock price. Basically, we try to tell all the investment, potential investor say, if you buy our stock, we pay you more than you can get from short term S. Treasuries. And we definitely don't know when the stock price will appreciate But in case of stock price, you will have a double gain and double sweep. Something like that. So but since last end of September, [indiscernible] Chinese government policy change, and the stock price basically from around $5 to up to $8 Then after there's major event happened, excited by Deep Sea. And the whole Chinese assets, especially technology [indiscernible] [indiscernible] at a time. It's just like suddenly for no particular reason besides Deep Sea, all the concern remain issue which have kept our Chinese stock at a very fixed low level and all being blown away. So I know So but that's what happened. So now based on this situation change, we want to give the stock [indiscernible] since last September, our stock is up almost more than 2%. We want to give them extra kick So which means we want put more weight on stock buyback less a little less dividend payout.

And you see in 2024, we in combination of both, we pay out the $76,000,000 And we are hope we can accomplish even more percentage. 34% is about [indiscernible] for 2024. And 2025, we hope we have a bigger payout combination of both, but more weight share buyback. And I think I think even though our stock has been appreciated 200% Our stock still is very, very cheap. I'll just give you one number. And you see twenty four hour earnings per share in U. S. Dollar is $4.83 and our stock is based right now at $0.30 13 something like that. And you can I challenge anyone who have [indiscernible] $4.05 dollars range earning per share, you'll find a much stock in The U? S. For all sector below at the 100 So we we believe our stock is still very have a long way to go. So we will have a more emphasize on share buyback [indiscernible] 2025. I hope I answered your question.

Thank you. That's great. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Victoria Yu for any closing remarks. Thank you, everyone, for joining us today. If you have additional questions, please reach out to our Investor Relations team directly We appreciate your interest and look forward to speaking with you again. Operator, back to you. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.