In 1999, China's Internet set off the first wave of entrepreneurship. Tang Yue is also a part of this wave, but compared with Ma Yun, Li Yanhong, Zhou Lei, and Zhang Chaoyang, the name Tang Yue is slightly unfamiliar.
Tang Yue, who has been on Wall Street for 7 years, co-founded eLong.com, a platform that has been an important competitor of Ctrip for a long time.
In 2006, Tang Yue, who successfully brought eLong to the market, resigned as CEO and became an investor with peace of mind. However, 8 years later, in the face of the tide of Internet finance, he waded into the water again and founded today's Xiaoying Technology.
In the heyday of P2P, Xiaoying Technology was not the head, but it survived the shock of the industry's clearance, and to this day, Tang Yue still has 91.5% of the voting rights and firmly controls the company.
In the first half of this year, Xiaoying Technology achieved double growth in revenue and profit, and the growth rate was in double digits.
The decline in transactions does not hinder the making of money
Xwin Technology may be one of the few lending platforms that can maintain both revenue and profit growth.
In the downward cycle, active borrowers' risk awareness tends to be conservative, and their risk tolerance will also decline, and under this premise, the number of borrowers who win small has increased from 1.47 million to 1.64 million, an increase of 11%.
In the second quarter of this year, Xiaoying Technology's revenue was 1.37 billion yuan, a year-on-year increase of 12.5%. From the fourth quarter of 2022 to the present, Xiaoying has maintained double-digit growth in revenue.
The performance of net profit was even more impressive, with a net profit of 420 million yuan, a year-on-year increase of 13.4%. Xiaoying's revenue is less than half of Xinye Technology's, but its net profit has reached three-quarters of the latter. Compared with other platforms, the net profit of VCREDIT Jinke, Lexin, Xinye Technology, Jiayin Technology and Yiren Zhike fell by 60.2%, 53.2%, 15.6%, 15.7% and 6.1% respectively. It is enough to see that the net profit performance of Xiaoying Technology is very outstanding.
The outstanding performance of net profit boosted Xiaoying's net profit margin to 30.3%, which is a new high since the industry was cleared in 2019. Basically, it can be concluded that Xiaoying shows a counter-cyclical growth performance.
The increase in borrowers is in line with the characteristics of the current cycle, and at the same time, the decline in the size of borrowing is also in line with the characteristics of this cycle. In the second quarter, the total amount of loans facilitated and disbursed by Xiaoying was 22.7 billion, down 12% year-on-year.
However, contributing to the decline in loans did not affect the income growth of Xiaoying, which needs to be dismantled. Xiaoying's revenue composition includes loan facilitation service fees, post-loan service fees, financing income, and other income.
The new business increased the revenue of Xiaoying. Guarantee income has been increased since 2023, contributing 45.6 million in the quarter.
The downward cycle has reduced the ability to repay prepayment and increased the balance of loans, which has led to a significant increase in Xiaoying's main business. Loan facilitation is the main business, and the revenue of 730 million yuan increased by 2.3%, which is mainly due to the expected decline in the prepayment rate, and the reduction in prepayment will increase the interest rate, which will increase the income of small wins. The increase in average loan balances resulted in an increase in financing income to $350 million, up 28% year-on-year. The post-loan service fee was 150 million, a year-on-year increase of 10.2%, mainly due to the cumulative effect of the increase in the number of loans in previous quarters.
In terms of operating indicators, Xiaoying's data is bright, but the average loan balance has increased and the prepayment rate has decreased, which is an external manifestation of risk at this stage.
The bad debt rate has increased
Xiaoying's bad debt control is not ideal.
At the end of the second quarter, the delinquency rates for outstanding loans overdue for 31-60 days and 91-180 days were 1.29% and 4.38%, respectively. In a longitudinal comparison, all three figures have increased significantly in the last three quarters. The 30-60 day overdue rate has been higher than 1% for four consecutive quarters; The 90-180 day overdue rate has reached an all-time high.
In horizontal comparison, the 90+ overdue rate of Xinye Technology in the second quarter was 2.65%, which was much lower than that of Xiaoying Technology. The overdue rate of Lexin 30+ is less than 1%, and the overdue rate of 90+ is 3.7%, which is also lower than Xiaoying. VCREDIT has a higher 30-90 day overdue rate, but the 90+ overdue rate is 3.82%. Jiayin Technology's overdue rate of more than 180 days is 2.6%. In comparison, the overdue rate of Xiaoying Technology is relatively high.
The main product of Xiaoying Technology, the card loan, is aimed at young consumers, with a maximum credit of 50,000 yuan and a maximum of 12 installments, which is in line with the characteristics of small dispersion, and the risk is not big in theory, but it is obvious that the bad debt rate of Xiaoying Technology is not good.
In this context, Xiaoying said that the asset quality has improved, and it has decided to relax the strict control on loan volume, which is expected to gradually recover in the second half of the year. On a quarter-on-quarter perspective, loan volumes have increased this quarter compared to the first quarter. Xiaoying expects that it will further increase to between 26 billion and 27.5 billion in the third quarter, which will reach the average of last year.
It is worth noting that as of the end of 2023, Xiaoying has only 47 risk management personnel, which is the second smallest type of work, and the difficulty of risk control is obviously higher, and the cost may be greater.
In the second quarter, Xiaoying originated and serviced 420 million yuan, an increase of 19.1% year-on-year, mainly due to the cumulative effect of the increase in loan volume in previous quarters, resulting in an increase in collection fees. The provision for loans receivable was 95.9 million yuan, a significant increase of 73% year-on-year, mainly due to the increase in loans receivable held by the company.
This data indicates that with the increase in the amount of loans in the future, the cost control of Xiaoying may be under pressure when the scale of risk control personnel is not large, and the risk control of the platform also needs to be more cautious.
5 market breakthroughs
Xiaoying Technology said the focus remains on sustainable profitability. "We are committed to profitable growth while exploring ways to further enhance shareholder returns."
According to the equity point of view, Xiaoying's voting rights are concentrated in the hands of the management, and the equity is also controlled by the management, among them, Tang Yue holds 36.79% of the equity, improving shareholder returns, and the biggest beneficiary is undoubtedly Tang Yue.
Combined with the financial reports of recent years, it is not difficult for the loan industry to make a profit. Since it is only connected to the borrower, the platform does not need to pay large-scale interest costs for lending funds, so the major platforms have maintained stable profitability at present. From this point of view, Xwin Technology maintains a high degree of profitability certainty.
From the perspective of operation, the concept of Xiaoying is very different from other platforms. Xiaoying combines operating costs and expenses, so that in the financial statements, there are no items such as sales expenses, R&D expenses, etc., only origination and service expenses, borrower acquisition and marketing expenses, loan receivable provisions, and contingent secured liabilities.
Origination and service expenses are analogous to operating costs, and borrower acquisition and marketing expenses are analogous to sales expenses. In the second quarter, borrower acquisition and marketing expenses decreased by 2.6%, indicating that Xiaoying is compressing selling expenses. In fact, in the past two years, Xiaoying's marketing department may have existed in name only, and at the end of 2022 and 2023, Xiaoying Technology will only have 5 marketing department employees. In contrast, Yiren Zhike, Xinye Technology, etc., have the most sales personnel. Of course, it may also be related to organizational management, such as incorporating sales into the business, or directly using an outsourced team, for whatever reason, Xiaoying's focus on customer acquisition is difficult to compare with its competitors.
At the same time, loan platforms are generally seeking to expand overseas, and Xinye Technology directly lists its international business separately in its financial report, while Xiaoying Technology does not mention overseas business. There are few significant growth drivers in the business segments.
This series of signs shows that Xwin Technology does not have a plan to further expand its scale and invest in new businesses, and based on existing businesses, mining user value and rewarding shareholders is the main line of the company. As long as the risk is controlled, the company is in fact in the stage of lying and earning.