Since the beginning of 2024, leading indicators such as PMI and social finance data have fluctuated under the macro environment. According to the latest disclosed data, the scale of new social financing in April was -198.7 billion yuan, a year-on-year decrease of 1.42 trillion yuan, of which residential loans and corporate loans dragged down significantly. In this environment, the business of fintech platforms has also been affected.
Observing the first quarter 2024 financial results recently disclosed by Xinye Technology (NYSE:FINV), we can also see clues from this. However, it has maintained a robust downward cycle in terms of operational capabilities. According to the financial report, in the first quarter of 2024, the loan volume facilitated by Xinye Technology was 48.3 billion yuan, a year-on-year increase of 11%. Among them, the mainland market reached 46.1 billion yuan, a year-on-year increase of 10.3%, and the overseas market reached 2.21 billion yuan, a year-on-year increase of 40.8%. Overseas business has become a veritable second growth curve.
Quarterly trading volume of Xinye Technology in domestic (billion RMB) and overseas markets (million RMB).
The profitability of Xinye Technology has been in a stable range, and the net profit growth rate has fluctuated due to the reversal of risk provisions due to the end of the epidemic risk in the first quarter of last year, resulting in a high base year-on-year. However, from the perspective of the extended cycle, from Q1 2022 to this quarter, its profitability has remained stable in the general environment.
Net profit performance of Xinye Technology in recent years (million RMB)
Because there are many macro uncertainties, some enterprises in the industry have shrunk significantly, and some companies have ignored risks and chose to move forward. From the overall performance of Xinye Technology and the performance of the internal and external markets, it can be seen that it may have a strategy of "focusing on me and flexibly adjusting", and it has not been entangled because of the macro environment, and continues to adhere to the existing strategy.
For example, in terms of asset quality improvement, the number of new borrowers has gradually slowed down since Xinye Technology put forward the strategy of "increasing the customer base and improving asset quality" in 2019. From more than 1 million new borrowers per quarter before the epidemic, it has now stabilized at about 300,000-400,000 per quarter. This shows that under weak macro conditions, its risk control and user's intentional screening. According to the data, in the first quarter of 2024, the proportion of its high-quality customers continued to increase to 87.3%, an increase of 2.4 percentage points from the previous quarter.
In addition, if we look at the proportion of trading volume by risk level, it is not difficult to find that the proportion of I-II high-quality assets has continued to increase to about 85% (Class I is the least risky loan, while Level VII has the highest risk level). Correspondingly, the average loan amount of Xinye Technology continued to increase to 10,121 yuan, an increase of 1,077 yuan over the previous quarter.
The performance of the ratio of I-VII rated assets of Xinye Technology
In addition, asset quality is tested by partners, and cost performance is also one of the observation angles. From the perspective of the mainland market, the cost of capital of Xinye Technology further decreased by 50 basis points quarter-on-quarter, the number of cooperative financial institutions increased to 102, the expansion of funding sources, and the company's strengthening of refined operations on the cost side to improve efficiency, the take rate in the first quarter increased from 2.9% in the previous quarter to 3.0%, showing an upward trend.
Of course, "self-oriented" should also take into account the risk performance under the macro influence. Since the fourth quarter of last year, the platform's 90-day overdue rate has started to increase slightly, rising to 2.45% in the first quarter of 2024, reflecting the volatility of asset quality in the third quarter of 2023. Therefore, it is necessary to pay more attention to the rising risks. However, another indicator, the first-pass rate, showed the lowest level in nearly two years from the end of 2023 to the first quarter, indicating that its latest risk level has begun to decrease.
Finally, from the perspective of business, the macroeconomic environment is one side that affects performance, and on the other hand, under the guidance of supervision, fintech platforms have also joined the tide of fee reduction and profit concession service entities. According to the first-quarter financial report, Xinye Technology has contributed to a total of 13 billion yuan in small and micro enterprise owner services, a year-on-year increase of 26%, indicating the value orientation of its business adjustment to serve the society.