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01/11 11:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows strong international growth, especially in the Philippines and Indonesia, with significant increases in transaction volumes and borrower base. The company's financial health is robust, with improved funding costs and a low leverage ratio. Despite regulatory challenges, the company is well-positioned for future growth. The Q&A highlights management's cautious optimism about risk stabilization and continued buyback efforts. Given the company's small market cap, these factors are likely to lead to a positive stock price reaction.
Total Revenue RMB 3.5 billion, up 6.4% year-over-year. Growth driven by robust international business expansion.
Net Profit RMB 641 million, up 2.7% year-over-year. Growth attributed to disciplined execution and international business performance.
Transaction Volume (International) 33% year-over-year increase. Growth driven by expansion in Indonesia and the Philippines.
Revenue (International) 37% year-over-year increase. Growth aligned with transaction volume increase.
International Borrower Base 3 million, up 114% year-over-year. Growth indicates untapped demand in Southeast Asia.
Transaction Volume (Philippines) RMB 1.6 billion, up 86% year-over-year. Growth despite typhoon-related seasonal softness.
Loan Balance (Philippines) RMB 897 million, up 101% year-over-year. Growth supported by e-commerce partnerships and institutional funding.
Transaction Volume (Indonesia) RMB 2.1 billion, up 14% year-over-year. Growth driven by stable regulatory environment and improved user quality.
Loan Balance (Indonesia) RMB 1.4 billion, up 21% year-over-year. Growth due to longer loan tenure and higher take rates.
Funding Cost Improved from 3.7% to 3.6% quarter-over-quarter. Improvement due to disciplined management and stable funding supply.
Cash and Short-term Investments RMB 7 billion. Indicates a healthy balance sheet.
Leverage Ratio 2.4x, historical low. Reflects strong financial health.
Provision Coverage Ratio 517%. Indicates prudent risk management.
AI-driven customer service upgrade: Introduced a new upgrade on customer service AI agent to more accurately identify customer intent and automate responses based on urgency. Enhanced AI agent completed over 1 million service interactions in the quarter.
International business growth: International business revenue grew 37% year-over-year, with transaction volume up 33%. International operations now represent 25% of total revenue, up from 19% a year earlier.
Expansion in Southeast Asia: Borrower base expanded to 3 million, up 114% year-over-year. Indonesia and the Philippines contributed significantly, with transaction volumes of RMB 2.1 billion and RMB 1.6 billion, respectively.
Risk management in China: Tightened credit standards and managed loan growth proactively in response to new consumer finance regulations. Funding costs improved slightly to 3.6%.
Operational efficiency in Southeast Asia: Upgraded user quality in Indonesia, leading to improved unit economics, longer loan tenure, and higher take rates. E-commerce partnerships in the Philippines grew to 36% of transaction volume, up from 20% a year ago.
Regulatory adaptation in China: Proactively adjusted operations to align with new consumer finance regulations effective October 1, 2025, leveraging 18 years of data and AI-driven risk assessment.
Shareholder returns: Repurchased USD 2.6 million in shares during Q3, with cumulative share repurchases reaching USD 437 million since 2018.
Dynamic regulatory backdrop in China: The new consumer finance regulation framework, effective October 1, 2025, has created transitional effects across the industry. The company anticipates short-term uncertainties over volume, revenue, and risk metrics due to the full implementation of these regulations in the fourth quarter.
Economic environment in China: The economy remains in moderate recovery mode with relatively mild domestic demand and a complex external environment. This softer environment, coupled with the early impact of the new regulation, poses challenges to business operations.
Typhoon-related seasonal softness in the Philippines: Typhoon season in the Philippines has led to a lower PMI and seasonal softness, impacting transaction volumes and economic activity in the region.
Macroeconomic conditions in Southeast Asia: Softness in the macroeconomic environment, including consumer confidence and external factors, has been observed in regions like Indonesia and the Philippines, potentially affecting growth.
Competitive pressures in customer acquisition: Customer acquisition has become more rational as competition for consumers has eased, but this still requires diligence in managing risks and maintaining operational efficiency.
China regulatory changes impact: The new consumer finance regulation framework effective October 1, 2025, is expected to create short-term uncertainties over volume, revenue, and risk metrics in Q4. The company is leveraging its 18 years of data and experience to adapt to these changes.
International business growth: The international segment is expected to continue its robust growth, with transaction volumes and borrower base expanding significantly. The company is replicating its proven playbook in high-growth economies like Southeast Asia.
Revenue guidance for 2025: The company expects full-year 2025 total revenue to be in the range of approximately RMB 13.1 billion to RMB 13.7 billion, representing year-over-year growth of approximately 0% to 5%.
Funding costs and liquidity: Funding costs have improved slightly, and liquidity is expected to remain stable. The company is maintaining close communication with funding partners to ensure a stable funding supply.
Operational strategy in Southeast Asia: The company is focusing on scaling its platform, improving user quality, and expanding partnerships in Southeast Asia. This includes increasing e-commerce partnerships and attracting new institutional bank partners.
Share Repurchase Program: In the third quarter, the company repurchased a total of approximately USD 2.6 million. As of September 30, 2025, the cumulative share repurchase amount reached approximately USD 437 million since 2018. The company further accelerated its buyback effort in October amid market price dislocation.
The earnings call shows strong international growth, especially in the Philippines and Indonesia, with significant increases in transaction volumes and borrower base. The company's financial health is robust, with improved funding costs and a low leverage ratio. Despite regulatory challenges, the company is well-positioned for future growth. The Q&A highlights management's cautious optimism about risk stabilization and continued buyback efforts. Given the company's small market cap, these factors are likely to lead to a positive stock price reaction.
The earnings call revealed strong financial metrics, including a 10% revenue increase and a 39% net profit rise. The company also announced a significant share repurchase program and a dividend increase, both positive for shareholder returns. Despite some economic uncertainties, management expressed confidence in international growth and provided optimistic guidance for 2025. The market cap suggests moderate sensitivity to these announcements, leading to an expected stock price movement in the positive range (2% to 8%).
The earnings call reveals strong financial performance, with a 39% YoY net profit increase and a 17% dividend hike. Despite macroeconomic uncertainties and regulatory challenges, the company maintains optimistic revenue guidance and international expansion plans. The Q&A highlights manageable regulatory impacts and stable loan demand, with potential growth in international markets. The approved share repurchase program and dividend increase further support shareholder value. Given the market cap of approximately $1.2 billion, these factors suggest a likely positive stock price movement of 2% to 8% over the next two weeks.
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