Jiayin Shares Surge 6% on Two-digit Net Profits from Last Quarter

Jiayin jumped 6 percent Tuesday, and the chief executive officer said that investors in the U.S. could foresee the potential growth of Jiayin in an interview in May.

Belinda Zhou
    Jun 12, 2019 10:30 AM  PT
Jiayin Shares Surge 6% on Two-digit Net Profits from Last Quarter
author: Belinda Zhou   

Jiayin Group Inc. (Nasdaq: JFIN) reported a sequential net profit increase of 57 percent from the fourth quarter of 2018, sending the company's shares up 7.3% on Tuesday. Jiayin's stock closed at $11.20.

The Shanghai-based financing company reported a decline in revenue of $109 million, representing a decrease of 26 percent year-over-year, but saw a positive growth of 3 percent from the fourth quarter of 2018.

Negative factors, including a 8 percent year-over-year decline in loan origination volume and the increased cost on the incentive offered to investors drove Jiayin into the red.

The company suffered a 22 percent decrease in loan facilitation services, which is the company's main revenue generating segment. Jiayin's loan services account for 81 percent of its total revenue, according to the statement.

Positive signs supported Jiayin's growth, said the company's chief executive officer, Yan Dinggui. "The industry stabilized from regulatory uncertainty and we continued to deliver outstanding execution."

Jiayin's net profit jumped 57 percent in the first three months of 2019 to $37.9 million, or 19 cents per share from the previous quarter. However, Jiayin's net profit represents a 10 percent year-over-year decline from the corresponding period in 2018.

Jia's collection capability was enhanced due to its reduced allowance for uncollectible receivables and contract assets, which totaled $6.5 million, down 58 percent year over year. The decrease was primary due to the increased efforts in credit assessment and risk control, which enhanced the Company's collection capability.

"Our track record of profitable operation supported us to complete our initial public offering in May, a milestone for our company," Yan said.

Shares in Jiayin initially surged 54 percent above its offering price on its Nasdaq debut, raising $36.8 million for the company.

"The IPO combined with our profitable operations and improving risk management capabilities is generating greater confidence in Jiayin Group among both investors and borrowers," Yan added.

Founded in 2011, Jiayin runs a peer-to-peer lending marketplace, known as Niwodai www.niwodai.com, which connects borrowers to investors on its platform.

The past year has been challenging for the lending industry in China. Despite this, Jiayin reported strong financials in 2018.

"Under stricter regulation, weaker companies may be diminished. On the bright side, it's a great opportunity for Jiayin, which strongly holds a market share and is expanding globally," Yan said in an interview with CapitalWatch in May.

"With the large market size and the limited companies in a promising industry, I'm sure investors in the U.S. can foresee the potential growth of Jiayin," he added.

The company aims to make mid- to long-term loans accessible to those underserved by traditional financial institutions, using artificial intelligence-powered technology for streamlining the user experience.

Yan said the reason why Jiayin targeted mid to long-term loans was that in terms of liquidity and credit risk, the short-term loans had a higher possibility of default, which might further reduce the revenue. Yan added that mid to long-term loans were more likely to address their clients' needs.