Please note this event is being recorded. I would now like to turn the conference over to Ms. Jing Li. Please go ahead. Good morning and good evening, welcome to CNFinance Second Quarter 2021 Financial Results Conference Call. In today's call, our CEO, Mr. Zhai, will walk us through the operating results, followed by the financial results from our Vice President of the Capital Market Department, Jing Li. After that, we will have a Q&A section. Before we start, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," "project," "going forward," "outlook," and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict, and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties or factors is included in the company's filing with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under law. Now, please welcome our CEO, Mr. Zhai. [Non-English content] Thank you, operator, and thank you everyone for joining us in the conference call. On today's call, we will introduce the company's financial and operational results of second quarter and the first half of 2021, followed by a Q&A section. [Non-English content] The huge demand for home equity loans. In the second quarter, as China's GDP grew 7.9%, the vital business operations of over 80 million grassroots micro and small enterprises in China led to a huge demand for working capital. However, MSEs in China are usually scattered with small scale and a stable cash flow. These characters of MSEs make them difficult to meet the loan approval criteria at banks. Their demand for working capital cannot be satisfied by traditional financial institutions. In this market environment, we call ourselves the last mile courier to build a network of an inclusive financial system in China. In the past two years, we have offered loan services to over 40,000 MSEs in China. [Non-English content] On the other hand, home equity loan is still one of the best interest-bearing assets in the market, as we witness the consistent increase of property price in major cities since the second half of 2020. [Non-English content] Since the inception of collaboration model, we have built a national worldwide consisting of 60 branches in 40 cities. By collaborating with over 2,000 sales partners across China. With this network, we are able to establish a wide market coverage and serve MSE owners' financing needs in a timely manner. In the first half of 2021, we facilitated loans with a total amount of RMB 6.66 billion, representing a year-on-year growth of 118% from RMB 3.05 billion. The company's growth is back on the fast track. [Non-English content] The collaboration model has been well recognized by the market, as we kept refining the operation in the past two years. To secure sales partners' loyalty to our platform, we have been optimizing our service providers. [Non-English content] We have been consistently adding talent to our professional management team. We also offer training programs for our sales partners to help their team members gain deep understanding of the products and risk control criteria of the trust company partners, so that they could serve MSE owners efficiently. [Non-English content] Second, we optimize the data processing and storage of our online system to make it more efficient and visible to users. We help serve MSE owners in time and cut our own costs at the same time. The drastic increase in loan origination volume was the proof to the capacity and efficiency of our loan process system. Based on our internal assessment, our current system is capable to support an annual capability of RMB 30 billion-RMB 50 billion in the loan origination volume. [Non-English content] We delivered strong results in the past two quarters, but at the same time, we also noticed some challenges to our future growth, including. [Non-English content] Funding pressure. We are highly dependent on trust companies as funding partners. Since the beginning of 2021, the regulation on trust companies' loan products was tightened. As a result, trust companies reduced our funding quota. We also suffer from a subsequent rise of financing costs. Therefore, our loan origination will possibly be affected. [Non-English content] We have noticed the uncertainties of property price and liquidity due to the government policies in controlling property prices and impacts from the COVID-19 pandemic. In 2021, the government actively initiated measures to control property price, including announcing suggested prices to secondhand property in multiple cities, as well as tightened mortgages to slow down property transactions. The management believes that such uncertainties will negatively affect the loan origination volume and NPL disposal. [Non-English content] Under the collaboration model, their partners bear risks. However, due to the business structure agreed upon with the trust companies, we are the holder of subordinate units in the trust plan. As a result, we have to consolidate the assets on our financial statements. We seem like a company with heavy assets where our revenue is generated from interest spreads. The balance sheet cannot represent our true business model, which is in fact an asset-light loan origination platform. At the meantime, the look of the balance sheet is also constrained when we reach out to new funding partners. [Non-English content] In order to consistently grow our business and serve MSE owners in the changing market, we plan to further refine the current platform model and introduce a new asset-light service platform by taking the following measures. [Non-English content] Transferring all assets and risks to any investor with preferences in high risk and high return asset backed by property. Our company will focus on online and offline loan origination and post loan management service. [Non-English content] Collaborating with different types of funding partners to serve MSE owners with different credit ratings. Other than strengthening our collaboration with trust companies, we have proactively reached out to various financial institutions. We hope by introducing more diversified loan products, MSEs could enjoy the benefits of more affordable loans. We have signed collaboration agreements with commercial banks, including Everbright Bank, Blue Ocean Bank, and Huaxia Bank, with a possibility to issue ABS. We believe that creating a broadened financial channel will help us bring diversification of our loan products and offer more choices to MSE owners. {Non-English content] We will continue to improve our service to MSE owners. First, we will further expand our service network nationwide. The current network has 50 branches scattered across 40 cities, penetrating into markets and discovering the financing needs of MSE owners. Other than that, we will prioritize technology development to improve the loan measurement system capability in storing data, and to increase the efficiency in overall process to satisfying the financial needs of MSE owners. With the goal to reduce the operating costs of our company. {Non-English content] To achieve our mission of make finance more human, and follow the government's policy of developing an inclusive finance system, we will leverage our advantage gained from years of dedicated work in the industry, and build a service platform that is asset-light, turnover high and scale large. We will proactively work with funding partners to push out diversified loan products, consistently provide MSE owners with affordable, accessible, and efficient financial services. [Non-English content] At last, today, we announced our CFO, Mr. Ning Li, will step down from CFO position in November. I want to take the time to thank Mr. Li years of hard work. Mr. Li has served as our company's CFO since 2010. In the past 11 years, he made significant contribution in leading CNFinance to become a leading home equity loan service provider in China, and put dedicated work in transformation from a privately held company into a NYSE-listed company. On behalf all of us here in CNFinance, I would like to thank Mr. Ning Li for his leadership, dedication, and professionalism. I wish him best of luck with his future endeavors. We have already commenced the search for a new CFO. [Non-English content] With that, I would like to hand the call over to Ms. Jing Li, the Vice President of the Capital Market Department, who will walk you through the second quarter and first half financials. Thanks, Mr. Zhai. Thanks again to everyone joining us today. I will walk you through our second quarter and first half of 2021 financials. We believe our year-over-year comparison is the best way to review our performance. Unless otherwise stated, all percentage changes I'm going to give will be on that basis. Unless otherwise stated, all numbers I'm going to give will be in RMB. We'll go through the figures for the second quarter of 2021 first, and followed by that for the first half. As of June 13, 2021, total outstanding loan principal increased to RMB 11.6 billion compared to RMB 9.7 billion as of December 31, 2020. Total loan origination volume was RMB 3.8 billion, increased 103% from RMB 1.9 billion in the same period of 2020. Interest and financial service fee on loans was RMB 449 million, a slight decrease of 0.2%, primarily due to the combined effect of, A, increase of average daily outstanding loan principal, and C, lower interest rates on loans facilitated to comply with the rules and regulations issued by relevant PRC regulatory authorities. Interest expense was RMB 195 million compared to RMB 187 million, primarily due to the increase in the principals of borrowings from the trust companies. Collaboration costs for sales partners increased to RMB 107 million for the second quarter of 2021 compared to RMB 104 million in the second quarter of 2020, primarily due to the higher outstanding loan balance was originated under the new collaboration model. Provisions for the credit losses was RMB 15 million, a decrease of 74% from RMB 57 million in the same period of 2020. The decrease was mainly attributable to the combined effect of, A, the increase in outstanding loan principal under the collaboration model that was guaranteed by credit risk mitigation positions put up by the sales partner. B, lower probabilities differed under the current expected credit loss model, which take into account a more positive outlook for the Chinese economy in the second quarter of 2021 as compared to that in the same time of 2020 under the impact of COVID-19 pandemic. C, the company received recoveries in the quarter after it charged down loans that are 180 days past due to net realizable value. Total operating expenses were CNY 87 million, a decrease of 34%, compared with CNY 114 million in the same period of last year. Income tax expense was CNY 8 million, a decrease of 46% from the CNY 16 million in the same period of 2020. This is primarily due to the decrease in the amount of taxable income. Net income was CNY 61 million in this quarter, an increase of 159% from CNY 35 million in the same period of 2020. Now we are moving on to our financials to the first half of 2021. Total loan origination volume was CNY 6.7 billion, compared to CNY 3.1 billion in the same period of last year. Interest and financing service fees on loans was CNY 871 million, a decrease of 7%, primarily due to the combined effect of, A, increase of average daily outstanding loan principal, and B, lower interest rates of loans facilitated in an effort to comply with the rules and regulations issued by relevant PRC regulation authorities. Interest expenses was CNY 351 million, sorry, compared to CNY 388 million in the same period of 2020, primarily due to the decrease in principals of borrowings under guarantee and repurchase. Collaboration costs for sales partners increased to CNY 205 million for the first half of 2021 compared to CNY 198 million in the same period of 2020, primarily attributable to the increased loan balance under the collaboration model. The provision for credit losses was a recovery of CNY 3 million, while there was a provision of CNY 277 million in the same period of 2020. This is primarily due to the result of, one, the increase in outstanding loan principal under the collaboration model that was guaranteed by the credit risk mitigation position put up by the sales partner. B, lower probability of default under the current expected credit loss model, which takes into account more positive outlook for the Chinese economics in this year as compared with that in last year, the same period under the impact of COVID-19 pandemic. C, company received recovery in the first half of 2021 after it charged down the loans that are 180 days past due to net realizable value. Total operating expenses were CNY 182 million, a decrease of 16% compared to CNY 215 million in the same period of last year. Income tax expenses was CNY 38 million, an increase from CNY 1 million in the same period of 2020, primarily due to the fact that we recognized income before income tax expense for the first half of 2021 as compared to a loss before income tax expenses for the same period of 2020. Net income was CNY 151 million compared to a loss of CNY 41 million in the same period of 2020. As of June 13th, 2021. The company has cash and cash equivalents of CNY 1.6 billion, compared with CNY 2 billion as of December 31st, 2020. The actual delinquency rate for loan origination by the company decreased to 18.9% as of June 30, 2021, from 32.6% as of December 31st, 2020. The actual NPL rate for loan origination by the company decreased to 8.6% as of June 30, 2021, from 11.7% as of December 31st, 2020. With that, we are now like to open up the call for Q&A. Operator, please begin. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from William Gregozeski of Greenridge Global. Please go ahead. Hi. Congratulations on the big loan origination volume number. Are you seeing a continuation, or do you expect to see a continuation in that number or growth? Also, do you have the availability of funds to support that level of demand? Hi, Bill. Could you repeat your first question again? We kind of had a bad connection just now. Yeah. I just said you had huge loan origination volume growth. Do you see that continuing? Is that demand going to continue, and do you have the access to the capital to support that demand? Okay. [Non-English content] [Non-English content] I will take your questions. [Non-English content] Like CEO just mentioned in his remarks, as China's economy grows by a high speed, we continually to see the huge demand from the MSE owners for capital. We had a very established sales network, and our system is capable to support our loan facilitations. Like the CEO just mentioned in his remarks too, our system is capable to support the annually loan facilitation of CNY 30 billion-50 billion. We believe the huge demand from the MSE owners will continue and carry through. Our CEO have something to supplement. This year so far, we have seen huge demand for capital from MSE owners, and we think this will carry through to the remaining of the year. [Non-English content] The main challenge to us right now is that we are highly dependent on the trust companies to support our capital, our fundings. They are facing tightened regulations, so that our quota was kind of brought down by the trust companies. [Non-English content] We have taken many measures to reduce the effect of a tightened trust company fund. We will see that to be of our assistance not until Q4, the 4th quarter, or the 1st quarter in 2022. That's my answer to your question. Okay. You mentioned signing up the commercial banks, which seems like a great thing for you guys in the platform and getting that access to capital from that channel. How much availability do you have? I mean, are these trials or is it a good amount of capital you're going to have? What's the rate on that? [Non-English content] [Non-English content] We have already signed collaboration agreements with three commercial banks. [Non-English content] One being the Everbright Bank. [Non-English content] One being the Huaxia Bank. [Non-English content] There is a smaller one comparing to the last two mentioned, the Blue Ocean Bank. [Non-English content] The main advantage that brought up by collaborating with commercial banks is that we can cover MSE owners with different credit ratings. [Non-English content] The agreement deal is signed. Right now we are just trying to see if we are compatible in our collaborations and trying to see how the system is going. Yeah, that's my answer to your question. There hasn't been any large scale lending from the banks yet. It's just more in a test run. [Non-English content] Right. Yes, you are correct. Okay. Last question is, on previous calls you've talked about class A, class B and class C loan products you were going to roll out with different rate structures. Can you provide an update on those? [Non-English content] [Non-English content] That's our initial ambition. When we said we are trying to collaborate with commercial banks, is that we want to discover customers with different credit ratings. When we were solely collaborating with trust companies, the customer we could cover was mainly in our internal classification, the type B and type C customers. Based on our past experiences, we don't really see that they have too high a risk. By collaborating with the commercial banks, we are trying to cover the so-called type A customers. However, we are not sure at this moment if they are really going to be of higher quality than the customers we are serving now. Right now in China, the credit rating system isn't fully established, so we are not really fully sure of whether the type A customers are going to be better customers than B and C customers. [Non-English content] What we are hoping right now is that we could offer loan products with annual interest rates from 10% - 18%, so that we can cover more customers, more borrowers. That's my answer to your question. Okay, perfect. Thank you guys very much. [Non-English content] Thank you for your question. Once again, if you would like to ask a question, please press star then one. The next question comes from Neil Gagnon of Gagnon Securities. Please go ahead. Yes. Good afternoon. Can you give us your review on this quarter? How did it live up to your expectations, and what base does it set for your expectations for the second half? Thank you. [Non-English content] We are seeing sufficient huge demand for the whole year. [Non-English content] Based on our internal record, the application every month is well over RMB 2 billion. [Non-English content] However, we could only facilitate around RMB 1 billion every month. [Non-English content] There is a 50% gap in between the demand and supply. [Non-English content] Since last year we have seen a consistently increase of property price in China. The increase was even over 30% in some major cities in China. [Non-English content] Those two factors lead us to believe that there is going to be huge demand in the remaining of the year, in the second half of the year. [Non-English content] There are two considerations. Is to secure access to enough fundings. The second thing is that, starting from this June, we have seen tightened regulations on the property price as well. [Non-English content] We tend to be more conservative when doing businesses in those cities where the property price is considered to be too high. [Non-English content] After all, we are still very confident to reach our set goal from the beginning of the year to reach CNY 10 billion in outstanding loan principal by the end of the year. Actually, we have already reached that goal at the end of the second quarter. [Non-English content] We are working on refining our business at this moment. That's our priority. Thank you. Thank you for your question. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Jing Li for any closing remarks. This will conclude the conference call today. If you have any further questions, please reach us at ir@cashchina.cn. Thank you. The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.