According to Zhitong Finance APP, Jiayin Group (JFIN.US) recently released its Q3 2024 Earnings Reports, showing resilience in quarterly performance with transaction amounts reaching approximately 26.7 billion yuan, a year-on-year increase of about 10.3%, exceeding guidance expectations and setting a historical record. In the first three quarters, revenue was 4.397 billion yuan, a year-on-year growth of 13.74%, maintaining double-digit growth, with net income of 0.781 billion yuan and a net margin of 17.76%.

The company expects the transaction amount for loans in the fourth quarter of 2024 to reach no less than 25 billion yuan, based on this, the total transaction amount for loans for the year will exceed 98.2 billion yuan, with a year-on-year growth of over 11.5%.

In addition, on November 19, 2024, the company's Board of Directors approved and passed the revised dividend policy, completely replacing the existing dividend policy. According to the revised dividend policy, a cash dividend will be declared once per accounting year starting in 2025, with a total amount no less than 15% of the company's after-tax net income from the previous accounting year. Currently, the company's PE (TTM) is less than 2 times, and the dividend yield is as high as 15.8%.

The chairman of Jiayin Group, Yan Dinggui, stated in the earnings report that the strong growth in the transaction amount for loans and the resulting revenue reflects the company's strategic focus on innovation, risk management, and market diversification. In the future, the company will utilize technology to improve operational efficiency and borrower experience, seize new growth opportunities, and create long-term value for shareholders.

The transaction amount for loans has reached a record high, with new borrowing users increasing by over 70%.

In the second half of this year, the challenges brought by the macro economy are more severe than in the first half. To stimulate consumer and investment growth, the central bank initiated a "double drop" at the end of September, cutting both interest rates and reserve requirements. In October, a package of incremental fiscal policies was continuously implemented, especially increasing exchange policies in the consumer sector. Jiayin Group withstood the pressure in the third quarter, achieving a historical high in the transaction amount for loans under the influence of AI empowerment and deep cooperation with Institutions.

In terms of quarters, the loan amount facilitated in Q3 2024 was 26.7 billion yuan, achieving double-digit growth year-on-year once again, and continuing to increase quarter by quarter, a performance that has surpassed most peers. During this period, the company has reduced platform monetization rates through discounting and promotions, yet still demonstrated resilience, with revenue maintaining double-digit growth in the first three quarters. Looking at the longer term, the compound growth rate of revenue calculated for the first three quarters from 2021 to 2024 is 46.3%.

Data source: Company Earnings Reports.

As a bridge connecting Financial Institutions and borrowing users, Jiayin Group is committed to research-driven development, serving "both sides" users through deep investments in fintech and AI. On the institutional side, it continually expands cooperation boundaries, exploring diverse and innovative collaboration models, and jointly developing innovative products. As of September 30, Jiayin has established cooperative relationships with 70 diverse financial institutions, with another 2 in negotiation.

On the borrowing user side, the company focuses on deep operation customer acquisition models in vertical fields, enhancing self-operated customer acquisition capabilities, paying attention to user retention and long-term operational effects, and collaborating with leading online video, e-commerce, and life service platforms to explore different types of customer acquisition channels. During Q3, the company launched joint operation projects with partner institutions, collaborating with leading Internet platforms to successfully establish customer acquisition channels for multiple niche products.

Continuous efforts in multiple channels have yielded significant results. In Q3 2024, the number of new borrowers was approximately 0.826 million, a year-on-year increase of about 71.3%. By the end of the third quarter, the re-borrowing rate remained at 67.8%, with an average loan amount of 7,629 yuan. In recent years, the company has continuously expanded its user base among small and micro enterprises, driving an improvement in user structure through AI matching, increasing the proportion of high-quality users, and significantly reducing the bad debt rate for both the company and partner institutions. The improving quality of borrowing users enhances the long-term willingness for collaboration and overall cooperation stickiness with institutions, while also attracting cooperation opportunities from external institutions.

In Q4 2024, under a loose monetary and fiscal policy, consumer and investment demand is expected to recover, which is also beneficial for Jiayin Group's business development. The company platform has a large number of users, sufficient to absorb the release of loans resulting from interest rate cuts, and actual loan amounts in Q4 are expected to exceed guidance expectations. Moreover, while interest rate cuts may impact the company's profitability, the net margin remains high; in the first three quarters of this year, the ROE (annualized) remained as high as 36.5%.

Seizing the AI development window, continuous investment in research and development has been made.

The wave of AI applications is sweeping across various industries, and the financial industry is no exception. Jiayin Group seizes the development window of AI and achieves a balanced growth of "quantity" and "quality" under the principle of prudent operation, fully upgrades its intelligent model architecture, and takes the lead in launching AI products to empower Financial Institutions and users, gaining an advantage in industry transformation and development.

Jiayin Group's self-developed "Lingxi" AI Agent and "Fuxi" model platform significantly enhance modeling and deployment efficiency, earning recognition from partner institutions. In Q3 2024, the company continues to enhance efficiency using AI, launching its self-developed "Mingyi" automated machine learning (Auto ML, Automated Machine Learning) platform, fully upgrading and reconstructing the "Wenquxing" intelligent knowledge base platform, and by integrating AI large models, further creating a comprehensive and structured enterprise-level knowledge management system. The upgraded "Wenquxing" sees an overall search speed increase of 10 times, and the top 3 recall rate improves by 26%.

The company's multiple AI products have been successfully applied, empowering the effective operation of partner institutions and platform businesses. For example, the automated machine learning platform aids in automating machine learning workflows, widely used in scenarios such as smart risk control and customer marketing; the "Wenquxing" knowledge base platform is extensively applied in various business scenarios including customer service, marketing, human resources, office efficiency, and technical quality testing, achieving second-level search responses for over ten thousand pieces of knowledge.

In addition, through AI-driven iterations of risk control products, decisions become more scientific and prudent, continuously optimizing asset quality. In Q2 and Q3 2024, the overdue rate over the entire cycle continues to decline, with the overdue rate at 61 to 90 days being 0.55%, down 1.2 percentage points from Q2. Looking at the annual data from 2021 to 2024, the overdue rate over the entire cycle shows a downward trend, and as AI continues to penetrate, the level of risk control will further strengthen, bringing greater user stickiness to the company.

Data source: Company Earnings Reports.

In Q3 2024, the company's R&D expenses were 0.096 billion yuan, a year-on-year increase of 36.1%, with the R&D expense ratio rising to 6.64%, an increase of 1.83 percentage points year-on-year. In the first three quarters, the R&D expense ratio was 6.19%, up 0.94 percentage points year-on-year. Jiayin Group indicated that it will continue to rely on technological innovation as the engine for enterprise development, increasing R&D investment, and continually enhancing the depth and breadth of technology application to fully promote the company's intelligent operation.

Notably, Jiayin Group, leveraging its first-mover advantage in fintech and AI technology, continues to expand into overseas markets, accelerating its global market layout. In Q3 2024, the company saw rapid growth in new users in its overseas business, with the quarterly loan volume and new registered users from local business partners in the Indonesian market further increasing compared to Q2. Additionally, the company has strategically adjusted its operations in the Nigerian market to meet local market demands.

The future development prospects are optimistic and still have a high value-for-money ratio.

In addition to impressive performance, Jiayin Group also boasts healthy financials. As of September 2024, after deducting deferred guarantee income and potential guarantee liabilities, the company’s debt-to-asset ratio is only 25.6%, with no bank debt, while the company holds a cash balance of 0.74 billion yuan, an increase of 100% since the beginning of the year. A robust financial structure and ample cash flow provide assurance for the company's business and market expansion.

Analyzing the company's future prospects is primarily based on three aspects: first, the consumer and investment stimulation policies will continue until 2025, allowing the company to benefit fully as a leading third-party lending assistance platform; second, the company has a strong CNI Xiangmi Lake Fintech Index system and AI implementation capabilities, recognized by partner institutions, with the platform user structure continuously improving, further driving market share growth; third, overseas expansion is actively advancing, and performance is expected to release in the later period. Moreover, the company adheres to a long-termism approach, releasing ESG and consumer protection reports annually to achieve sustainable growth.

The company places great importance on shareholder returns by continuously enhancing shareholder confidence through stable dividends and buybacks. In June this year, the Board of Directors approved an extension of the share repurchase plan by 12 months, and in November, the revised dividend policy was passed. As of November 20, 2024, the company has repurchased approximately 3.5 million American Depository Shares for about 15 million USD, and in previous dividend distributions, the total payout ratio far exceeded the planned payout level.

In summary, Jiayin Group has strong performance. According to Q4 guidance, the total loan amount facilitated in 2024 will maintain double-digit growth, and in 2025, it will benefit from industry development opportunities brought by the easing policies. With robust CNI Xiangmi Lake Fintech Index and AI implementation capabilities, the company expects to gain a larger market share. Having doubled its market cap in two years, the company still possesses a high value-for-money ratio at its current undervalued state.