Jiayin Group(JFIN) - 2024 Q4 - Annual Report

Financial Performance - The consolidated VIE had accumulated deficits of RMB965 million, RMB636 million, and RMB614 million (US$84 million) as of December 31, 2022, 2023, and 2024, respectively [47]. - Cash dividends received from PRC subsidiaries were nil, RMB157.7 million, and RMB303.7 million (US$41.6 million) for the years 2022, 2023, and 2024, respectively [50]. - As of the date of the report, dividends of RMB461.4 million (US$63.2 million) have been made to the Parent by its subsidiaries [52]. - Jiayin Technology paid a cash dividend of RMB400 million to its shareholders in March 2018 before entering into the Contractual Arrangements [53]. - The company reported a net income of RMB 1,056,468 for the year ended December 31, 2024, a decrease from RMB 1,297,576 in 2023, indicating a decline of about 18.6$13.8 billion) in 2024 [114]. Regulatory Environment - The PRC companies can only pay dividends out of retained earnings, which are determined according to PRC accounting standards [56]. - The company does not anticipate needing approvals from the CAC or other PRC government authorities for future offerings of securities to foreign investors [68]. - The CSRC has implemented new regulations requiring domestic enterprises to complete filing procedures for future offerings within three business days after closing [69]. - There is uncertainty regarding the approval process from the CSRC and CAC, which may significantly impact the ability to offer securities and could adversely affect financial conditions [71]. - The likelihood of being subject to cybersecurity review by the CAC is considered low, as the company and its consolidated VIE are not recognized as critical information infrastructure operators [72]. - Regulatory changes could impose additional compliance requirements, potentially hindering the ability to offer securities and affecting financial results [76]. - The company operates through a VIE structure, which may face scrutiny under PRC laws, impacting the enforceability of contractual arrangements and financial performance [77]. - The company is subject to PRC regulations that limit interest rates; loans exceeding 36% per annum are invalid, and those between 24% and 36% are valid but not enforceable in court [126]. - The company must comply with stringent data protection regulations, which could incur additional costs and impact operations if not adhered to [174][175]. Operational Risks - The company faces risks related to compliance with PRC regulations, which could result in severe penalties or affect the enforceability of its contractual arrangements [90]. - The company must maintain and increase the number of borrowers and loan volume to ensure business sustainability [90]. - The company is subject to credit cycles and risks associated with the deterioration of borrowers' credit profiles [90]. - The company may face challenges in securing funding from institutional partners on acceptable terms, impacting its financial condition [90]. - Negative publicity regarding the online consumer finance industry could adversely affect the company's business and results [90]. - The company relies on proprietary credit assessment models, and any flaws in these models could materially impact its reputation and market share [91]. - The company has obligations to verify borrower information and detect fraud; failure to meet these obligations could lead to liabilities and reputational harm [91]. - The company faces competition from various online consumer finance platforms and traditional financial institutions, which may have more resources and better adaptability to market changes [152]. - The company may struggle to protect its intellectual property rights, which are critical to its competitive position [199]. Financial Position - As of December 31, 2024, total assets amounted to RMB 5,409,893, a significant increase from RMB 5,644,766 as of December 31, 2023 [63][65]. - Total liabilities as of December 31, 2024, were RMB 2,282,279, up from RMB 3,264,305 as of December 31, 2023, showing a reduction in liabilities [63][65]. - Cash and cash equivalents decreased to RMB 540,523 as of December 31, 2024, from RMB 370,193 as of December 31, 2023, indicating a decline of approximately 45.9% [63][65]. - The company’s total operating costs and expenses for the year ended December 31, 2024, were RMB 4,553,017, compared to RMB 4,134,403 in 2023, representing an increase of about 10.1% [66][66]. - The total net assets as of December 31, 2024, were RMB 3,127,614, a slight decrease from RMB 2,380,461 as of December 31, 2023 [63][65]. Strategic Initiatives - The company is exploring opportunities in international markets, including increased investments in Indonesia since establishing an office there in 2019 [111]. - The company has adjusted its cooperation model with institutional funding partners to comply with Circular 141, which imposes restrictions on third-party fees and outsourcing core businesses [101][102]. - The company has entered into collaboration agreements with two licensed credit reporting institutions to ensure compliance with credit reporting regulations [106]. - The company has incurred significant expenses related to brand promotion and borrower acquisition efforts, which may not yield immediate revenue increases [158]. - The company purchased commercial property in Shanghai, approximately 43,500 square meters, for a total cash consideration of approximately RMB1.35 billion (US$184.9 million) to serve as its new headquarters [192]. Technology and Cybersecurity - The company continuously updates its fraud detection technology, but significant increases in fraudulent activities could lead to regulatory intervention and litigation [148]. - The company's risk management system may not be adequate, potentially damaging its reputation and business operations [149]. - The company’s operations depend on the performance of internet infrastructure and telecommunications networks in China, which are under state control [195]. - The company is subject to stringent reporting obligations under the Cyber Security Law of the PRC, which may adversely impact its business and results of operations [179]. - The reliance on complex software systems poses risks of undetected errors that could harm user experience and data protection [198]. Market Conditions - Broader macroeconomic factors, including interest rates and unemployment, can deter borrowers and affect loan facilitation volumes [134]. - Economic conditions in China are sensitive to both domestic policies and global economic factors, which may affect the company's operations [135]. - The company cannot guarantee that demand for consumer loans will remain stable, and any reduction in demand or increase in default rates could negatively impact growth and revenue [136]. - Rising costs of telecommunications and Internet services could adversely affect the company's results of operations [197].