• Total Net Revenue: RMB1.6 billion, up 13% year on year and 15% sequentially.
• Non-GAAP Adjusted Net Income: RMB434 million, up 6% year on year and sequentially.
• Total Loan Amount Originated: RMB28 billion, down 4% year on year, up 25% sequentially.
• Delinquency Rates: 31-60 days at 1.02%, 91-180 days at 3.22%.
• Origination and Servicing Expenses: RMB458 million, up 14% year on year.
• Borrower Acquisition and Marketing Expenses: RMB507 million, up 21% year on year.
• Income from Operations: RMB509 million, compared to RMB435 million in the same period of 2023.
• Net Income: RMB376 million, compared to RMB347 million in the same period of 2023.
• Share Repurchase: Approximately 282,000 ADS repurchased for USD1.3 million in Q3.
• Q4 Loan Volume Guidance: Expected to exceed RMB10 billion monthly.

• Warning! GuruFocus has detected 6 Warning Signs with LSE:ATG.

Release Date: November 27, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• X Financial (NYSE:XYF) reported a strong quarter with loan volume exceeding forecasts and a significant improvement in asset quality.
• Non-GAAP adjusted net income reached a record high, indicating robust financial performance.
• Total net revenue increased by 30% year-over-year, driven by growth in various revenue streams.
• The company raised its guidance, expecting monthly loan volume to exceed RMB10 billion in the fourth quarter.
• X Financial (NYSE:XYF) continues to execute its dividend policy and share repurchase program, reflecting a commitment to returning value to shareholders.

Negative Points

• Total loan amount of facilities and originated was down 4% year-over-year, despite a sequential increase.
• Origination and servicing expenses increased by 14%, primarily due to higher collection expenses.
• Borrower acquisition and marketing expenses rose by 21%, indicating increased costs in acquiring new borrowers.
• The company faces challenges with low trading volume, which affects its ability to execute share buybacks effectively.
• Despite strong financial performance, the stock is trading at a low valuation compared to peers, indicating potential market undervaluation.

Q & A Highlights

Q: Can you update us on the capital return program and the regulatory landscape? A: Fuya Zheng, CFO, explained that X Financial has two repurchase programs with about RMB50 million remaining. They are considering new purchase plans if current programs are insufficient. The company prefers share repurchases over dividends but will continue semi-annual dividend payouts. Kan Li, President, noted that the regulatory environment is stable, with no significant changes expected. The Chinese government's economic stimulus efforts are seen as beneficial for the industry.

Q: Given the strong results, would you consider increasing the dividend payout? A: Fuya Zheng, CFO, acknowledged the potential for higher dividends but emphasized the focus on share repurchases due to the stock's low valuation. The company aims to maintain a dividend yield above industry standards and will adjust as the stock price changes. They are committed to maximizing shareholder value through dividends and buybacks.

Q: How does the company plan to address the low trading volume of its stock? A: Fuya Zheng, CFO, mentioned that increasing trading volume is a priority. They plan to engage more during open periods and continue efforts to enhance shareholder value through buybacks and dividends. The company believes that the stock price will eventually reflect its true value.

Q: What are the expectations for loan volume growth in the coming quarters? A: Kan Li, President, stated that the company expects loan volumes to continue growing, supported by the favorable economic environment and improved asset quality. They have raised their guidance, anticipating monthly loan volumes to exceed RMB10 billion in the fourth quarter.

Q: How is the company managing risk in the current economic climate? A: Kan Li, President, highlighted that X Financial is optimizing its risk management system using advanced technology. The company has seen improvements in asset quality, with delinquency rates decreasing, and is adjusting loan volumes based on risk assessments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.