Hello, and welcome to the X Financial fourth quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Victoria Yu. Please go ahead. Thank you, operator. Hello, everyone, and thank you for joining us today. The company's results were released earlier today and are available on the company's IR website at ir dot xiaoying dot group. On the call today from X Financial are Mr. Kan Li, President, and Mr. Frank Fuya Zheng, Chief Financial Officer. Mr. Li will give a brief overview of the company's business operations and highlights, followed by Mr. Zheng, who will go through the financials. They are all available to answer your questions during the Q&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 current market and operating conditions, and relate to events like involved, known and/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 risks and other risks, uncertainties, factors is included in the company's filing with the US Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required and allowed. It is now my pleasure to introduce Mr. Kan Li. Mr. Li, please go ahead. Hello, everyone. We are pleased to conclude the year with solid operational and financial results, emphasizing our commitment to a sustainable growth. In 2023, we facilitated and originated 43% more loans than 2022, and delivered a notable year-over-year growth in both revenue and profit. Total net revenue increased 35% on an annual basis, while income from operations increased 33%, and the net income improved by 46%. However, as we enter the second half of 2023, particularly in the fourth quarter, we experienced increased risk levels in asset quality. While we strengthened our risk control system and implemented various measures to manage delinquency rates, we also made a strategic decision to proactively reduce loan volumes in the fourth quarter, prioritizing profitability over sheer volume growth. During the fourth quarter of 2023, our total loan amount of facilitated and originated was RMB 26 billion, a 20% year-over-year increase, but an 11% quarter-over-quarter decline. Delinquency rates for non-interest due for 31-60 days, and 91-180 days were 1.57% and 3.12%, respectively, at the end of the quarter, compared with 1.02% and 1.93%, respectively, a year ago. Our team remains vigilant in monitoring asset dynamics and has taken further steps to mitigate risk by reducing our exposure to higher risk areas and adjusting our business approach to ensure sustainable profitability. We aim for continued gradual improvement over the course of 2024, and these measures have begun to have a positive impact on our risk indicators. For pro... For fiscal year 2024, our strategic approach will remain consistent and somewhat conservative, aligned with current market conditions in China. We believe the regulatory environment has become stable and the government is committed to promoting economic recovery. However, we recognize that challenges and uncertainties exist as the country undergoes a transformative shift in its economic growth model away from a rapid expansion of the past, and structural adjustments are imperative. All of this has far-reaching impacts on various sectors, including our target market. Despite these challenges, we remain committed to executing our strategy and prioritization profitable growth. Our commitment to delivering value to shareholders is unwavering, and we intended to pay dividends and when profitability and smooth operations allow. This overall approach reflects our decision to navigate in the evolving economic landscape while ensuring the sustainable success of our business and returning value to our shareholders. Now, I will turn the call to Frank, who will go through our financials. Thank you, Kan, and hello, everyone. We are pleased to deliver solid financial results in 2023. Total net revenue increased by 35% year over year to RMB 4.8 billion, and the net income rose by 46% to approximately RMB 1.2 billion.... In response to heightened asset quality risk in the first quarter, we proactively reduced loan volumes to satisfy profitability, resulting in a 15% sequential decline in total net revenue for the quarter. We recognized RMB 26 million and RMB 46 million of impairment losses on long-term investments related to our indirect investment in New Up Bank of Liaoning in 2022 and 2023 respectively, mainly due to depreciation in the market valuation of the Chinese banking sector. However, the banking loan portfolio and operation remain healthy, and we believe it continues to be a good investment for us. Looking ahead, we will not pursue pure loan volume growth at the expense of the profitability, which is always our strategic focus to ensure long-term growth and returns to the shareholders. We will continue to strengthen our risk management system to improve asset quality and balance our revenue and profitability growth. Now, I would like to brief some financial performance for Q4. Please note that all numbers stated are in CNY and are rounded up. Total net revenue increased by 25% to CNY 1,193 million, from CNY 956 million in the same period of 2022, primarily due to an increase in the total loan amount of facilitated and originated this quarter compared with the same period of 2022. Origination and servicing expenses increased by 28% to RMB 755 million, from RMB 589 million in the same period of 2022, primarily due to the increase in the commission fees and the collection expenses, resulting from the increase in total loan facilitation originated this quarter compared with the same period of 2022. Provision for loans receivable was RMB 99 million, compared with RMB 75 million in the same period of 2022, primarily due to an increase both in loan receivable held by the company as a result of increase in total loan facilitation originated this quarter, and in the estimated default rate compared with the same period of 2022. Income from operation was RMB 254 million, compared with RMB 274 million in the same period of 2022. Net income was RMB 189 million, compared with RMB 275 million in the same period of 2022. Non-GAAP adjusted net income was RMB 231 million, compared with RMB 278 million in the same period of 2022. For further financial information, please refer to the earnings release on our IR website. Regarding our share repurchase plan, in Q4, we repurchased approximately 36,000 ADS, for a total consideration of $143,000. Since the beginning of 2023, we had purchased an aggregate approximately 838,000 ADS, for a total consideration of $3.5 million. We have approximately $5.5 million remaining for the potential repurchase under our current plan. With respect to our dividends, our board has approved a semi-annual dividend policy. Under this policy, the determination to declare and pay such semi-annual dividends and the amount of dividends in any particular half year will be made at the discretion of the board and will be based upon the company operations and earnings, cash flow, financial condition, and other relevant factors that the board may deem appropriate. Within the semi-annual dividend policy, the board has approved the declaration and the payment of semi-annual dividend $0.17 per second half of 2023. Now, on our business outlook. For Q1 this year, we expect the total loan amount facilitated and originated to be between RMB 21 billion and RMB 22.5 billion. This concludes our prepared remarks, and we would like to open the call to questions. Operator, please? We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Boyd Hines with Equinox Capital. Please go ahead. Hi. I'd like to spend a few minutes, talking about some of the recent changes in regulation. I'm wondering how some of those changes will affect, you, as a smaller consumer financing company. Thanks. ... Can you tell us exactly which regulation that you are referring to? Yes, there are two that I'm speaking of. One is the requirement for a minimum registered capital of CNY 1 billion, or $139 million, and the other regulation is to have a major investor hold a stake of at least 50%. I'm just wondering how the company is going to be able to comply with those two regulations. Okay, I think I can take that question, because I... Oh, okay. Okay. Yeah. I can take this question first, because I received the Mr. Boyd Hines email and that one. First of all, we are not consumer financing company in China. We are so-called fintech company, so that particular regulation is not directly applied to us, actually applied to the, you know, consumer financing company. Those kind of companies usually owned by major banks. You know, they are exclusively mainly focused on issuing a consumer loan. As you know, see the article, they haven't come out with the detail in terms of the timeline, how to implement this. Mainly is because the one billion capital requirement, mostly, or they already met, already meet that requirement. But mainly is that about half, or about maybe over 10, you know, consumer financing company, do not, you know, haven't met the largest shareholder up to, you know, at least up to 50% ownership. That second requirement is, haven't been met. But once again, they haven't... not come up with a detail in terms of when they have to apply the second requirement, mainly as the article you sent to me. We are fintech company, so we are basically doing is, mainly is, acquire the, you know, the borrower, you know, through, mainly through, online or offline method. By forwarding those consumer, we also get some risk profile sent to the, you know, those potential demand, demand to the bank, also to the consumer institution also. So the banking also the financial consumer institution they both provide us funding for so-called loan portfolio. But those loan portfolio is legally under them, but not belong to us. So we do not, you know, because we don't have a, you know, except we have a small our own capital, about $1 billion in a capital small loan company, we can directly issue the loan. But because of funding limitation, we mainly source of funding is from the banks and the financial institution. So that one is do not because the Chinese monetary policy right now is very loose, and so we. That requirement do not affect us in terms of the lending, you know, available our funding, at that regardless, is no effect at all. So we don't see that will have any effect on us anytime soon. Kan, you wanna add on something? No, I think you got it. Mm-hmm. Okay. Thank you. I appreciate the detailed answer. Okay. That's all I have. Thanks. The next question comes from Mason Bourne with AWH Capital. Please go ahead. Hi, thanks for the questions. I have two. To start, could you talk about your growth outlook, and I know you gave guidance for Q1, but just how you're thinking about the opportunity to grow going forward, given kind of the pullback in, I guess, your aggressiveness on growth, given what's happening on the risk side of things? And then how that looks longer term, both, I guess, 2024 and beyond. Okay. I'll take this one. It's really difficult for me to give you a forecast for 2024 and beyond. Let's talk about 2024. I think over Q1 and then looking forward, it looks to us like the environment has been becoming from worse from the past situation to a little bit better one, but we still feel that the so-called better environment is not as good as the much better environment that for the first half of 2023. So in terms of growth, I think we will gradually go into the growth mode, but the growth rate will be slower than that of the last year. Okay, thanks. And then the second one, if I look at your dividend policy, it's good to see that you're returning some of the capital to shareholders, but if I look at peers. Some of them are returning substantially more as a percentage of net income is up to about 50% through buybacks and dividends combined, or another competitor announced a large special dividend this week. I was wondering how you think about your balance sheet, given where tangible book value is per share, and if you could do more on the dividend side of things? Thanks. Yes, yes, we actually, yes, we do. We do have a, you know, besides a dividend, you know, a payout, we are looking for, you know, other way to return the shareholder value. You know, right now, we have just issued the Q4 and the last year financial reports, and we will do, you know, 20-F at the end of next month. And, in May, we will have a, you know, for the first quarter financial reports, earnings call. After that, we are... We, we definitely this year looking for the way to have a you know you know have a more way to return the shareholder value. Our, our situation is a little bit different compared with our peer, because we are trading volume is very thin and almost now you know you you know that. And so we regular open window period, we just cannot buy much, you know, we, we are restricted by 25% of flow on on daily basis. We, we so we are looking for more way to you know to to return shareholder value. That, that, that's all I can say at this moment. Thank you. As a reminder, if you would like to ask a question, please press star, then one to be joined into the question queue. The next question comes from Matt Larson with Fincadia Capital. Please go ahead. Thanks for taking my questions. My question is just to kind of follow up the previous 2 people who've called in. Thanks for the dividend, because it puts you on the map and is returning some capital to shareholders. What I'm asking is kind of abstract. You know, your company trades at a multiple, which one would never see in certainly in the United States, and probably in not many parts of the world, of slightly above, you know, 1-1.5x earnings. The dividend will definitely draw in a few more investors. But, in the past, when people have brought up the subject of maybe going private or, you know, finding a way to get your share price higher, the answer was that that wasn't an option. So I'm kind of wondering, what is your plan? You know, a couple of your competitors do trade at 4 times earnings or so. They pay a similar dividend to what you are forecasting. So if you could get your multiple, you know, to a 4, that's, you know, at least a triple in your price, and it gets you to a level where I think, you know, your primary shareholders would be happier from a financial point of view, and also for any long-term investor. Your stock has been in an uptrend, so, which is contrary to what the stock indices out of the PRC have been in. So, one can't complain over the last six or eight months. But, is there a game plan to get better awareness of your company and the fact that you've had pretty stable earnings, you know, and a consistent earnings, so that more investors are aware of your stock? It's thinly traded, but that can work both ways. You know, if social media and other sites here in the United States became more aware of a company trading at 1.3x earnings with significant cash on the balance sheet, you know, it wouldn't, wouldn't take much to move the stock. Sorry, I'm rambling on here, but, you know, for investors to be frustrated with a stock trading one and change multiple, what, what game plan do you have? My suggestion is to get the word out there, and that would be more news releases and things like that. Sorry to take so long, but interested in what you have to say. Yeah, yeah. You know, you know, you know, we are, we are, as you know, we are, we are in kind of not that sexy industry. And also, we are among, definitely not among the, you know, leader of this, this industry. Like, you know, the leader is Ant Group, and, and that's so far, so well, you know, you know what I mean. And, in terms of, you know, whatever visibility for the sector and, for, for, for the whole thing, you know, you, you can, you can, you know, you can contribute a lot of factors. We, we, we not very much interesting to talk about it, but, but, but the main thing, I think everyone agree, those, those factor not in our control, like, like a U.S. relationship with, with, with China or something like that. So we believe, you know, SEC on board, we believe we should continue to do what is right, you know, mainly run our business as best we could and return the corresponding, you know, return shareholder value. I think over time it will play out, but definitely I don't know when. And regarding the privatization, I would say once again that it was kind of tricky because U.S. investors consider, you know, privatization is basically a value play, and you definitely have no obstacle to, you know, reshape and come back, you know, any time you want to to the market. But in China, it's different. If you don't believe me, just look at this big company, real estate company. They run the bigger, you know, in China, run the biggest mall, used to real estate company. They run, own, and run the biggest, you know, shopping mall in, in China, the one, you know, the Dalian Wanda Group. They used to list in Hong Kong, then somehow in like, 2015, 2016, they say the valuation is horrible. They go to privatization, and they want to relisting in, in, in the domestic A-share market, but they never got a permission, and they never get a chance come back to the Hong Kong market. You know, we are in the consumer sector also, you know. Chinese, there's a rule on the book, apply to, you know, definitely apply to us. So like anything, you have over 1 million consumer, we have to get approved from the Chinese government in order to list overseas, especially in the U.S. Hong Kong is a little bit of gray area because technically you can consider it a China territory. So if you delisting, you'll the relisting is not sure. That's all I want to say, you know, it's a well, I say it because we are subject to government approval, because we have more than 10 million, you know, the customer base. That's much more than that. So that is another something we can talk about, and we can have someone can give us kind of... There's no insurance policy for that. So if we delisting, we may, maybe we're never gonna list again. So that's why everyone do not want to do that. It's kind of a listing status is kind of a privilege in China. You know, in terms of the plans, I have a, you know, I have, I don't have a detailed plan, but I have a general plan. The first plan is get a stock at over $5, so the institutional investor can technically contact us. So if we have some period of time, say, like, more than half a year or year, so our stock is mainly over $5, we will, you know, probably rethink our PR policy. We are, you know, maybe I will be more on the road show, on the road, do whatever, you know, usually, you know, the stuff we do, and hope for the best result. That's the general plan. I hope I can answer your question. All right. Yeah, you did in a way. You're kind of trapped in your current listing because you can't go private, because then you've got no other exit strategy. But I guess, you know, I was looking for some sort of I don't know, illumination of the game plan, because your stock's been mired in a low multiple. You're not the only one there. I understand there's one or two fintech companies that trade less than one times earnings in Hong Kong. So it's just a sector that, people are concerned about regulation and things like that, but when you're trading your cash value, you know, just coming from the capital markets here in the United States, the, you know, we have options to, to handle that, I mean, like going private or merging. You know, what, what would prevent you from, selling to a partner who has, like a bank or somebody that has a significantly higher multiple, where it'd be very accretive to them to, buy a company of yours with, with your client base and your, your reach, with all your millions of, customers? But I'll, I'll leave that there just for you to consider. Thanks for your time. 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. Okay, thank you everyone for joining us on the call today. If you haven't got the chance to raise your questions, we will be pleased to answer them to follow-up contacts. We look forward to speaking with you again in the near future. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.