Yixin Group Limited (2858) Earnings Call Transcript & Summary

Hello, everyone. Welcome to Yixin Group 2026 Interim Results Presentation. [Operator Instructions] The meeting is for individual investors only. The audio and transcript of this meeting are for internal use by participants and shall not be publicly released. Yixin Group has not authorized any media to republish content from this meeting. Unauthorized reproduction or redistribution constitutes infringement, Yixin Group reserve right to pursue legal liabilities and should be no losses nor liabilities arising from such unauthorized reposting. Market risk exist entail caution investors are reminded to exercise prudence when making investment decisions. Now please allow me to introduce the company's management present at this interim results presentation, they are Mr. Zhang Xuan, Chairman and Chief Executive Officer; Mr. Gao Zhi, President; Mr. Yang Xiaoguang, Chief Financial Officer; and Mr. Jia Zhifeng, Chief Technology Officer. This meeting will consist of 2 parts. First, management will walk you through the 2026 half year operating results. This will be followed by a Q&A session. You are welcome to ask questions. Firstly, let's welcome Mr. Zhang Xuan, Chairman of the company for his opening remarks. Over to you, Mr. Zhang.

Distinguished investors and shareholders, I'm Zhang Xuan, the Chairman of our group. You are very welcome to participate in this interim result conference. Thank you so much for your support. There are several parts of our conference today. First, I will introduce the overview of the company, also the development of the industry. Later on, our CFO will introduce the highlights and then our CTO will introduce our core competitiveness in technology and also the progress of AI. Later on, our CFO, Yang Xiaoguang will walk through our H1 2026 financial performance and overseas business development. Finally, we'll open the floor for a Q&A session. Let's first focus on the fundamentals of Yixin. As an AI-driven fintech platform, Yixin has established a dual-driven business model, encompassing both new and used car financing anchored by our strategic focus on technology-led financial innovation. On the asset side, we partner with over 43,000 dealers across all premises in Mainland China, including [indiscernible]. On the funding side, we collaborate with over 100 financial institutions, including banks, trust and financial leasing company. We maintain deep collaboration with our major shareholder, Tencent, particularly in cutting-edge fields such as big data, AI and cloud computing. Our industry-leading risk management system ensures the security of our managed assets. These comprehensive competitive advantages form a robust moat for the company's long-term development. Notably driven by our deepening expertise in auto finance, cumulative auto financing transaction volume surpassed RMB 500 billion by June 2026, once again underscoring Yixin's leading market position. Regarding AI's empowerment, the group closely followed industry trends and completed the evolution of its AI architecture from model-driven to system-driven in the first half of 2026, further deepening AI's transformative impact across the entire auto finance value chain. Now we'll examine the broader industry landscape. In the first half of 2026, the continuation of the trading subsidy policy provided some support for both incremental purchase and replacement demand. However, the overall market demand under pressure. According to China Association of Automobile Manufacturers, new passenger vehicle sales reached 12.72 million units in the first half, down 6% year-on-year. Per the China Automobile Dealers Association, used passenger vehicle transaction volume reached 7.45 million units in the first half, down 1.5% year-on-year. The NEV sector also faced periodic headwinds. Data from China Passenger Cars Association showed NEV passenger vehicle sales decreased by 14% year-on-year in the first half 2026. Conversely, we observed a positive development as policy supports NEVs remained steadfast with measures promoting green consumption and supporting NEV penetration into rural markets rolled out in the first half. Policy of emphasis curbing irrational invotion style competition and bolstering financial support for the auto market. We remain confident in the bright and expansive future of the industry. Now I will give floor to Mr. Gao, who will detail our specific business development in the first half.

[ I'm the CFO ]. I'm Gao Zhi. In the first half of 2026, despite a complex external environment, Yixin's maintained stable growth in both revenue and profit with business scale advancing steadily. Key operational highlights include steady core business expansion, capturing structural growth opportunities. In the first half of 2026, the total auto financing transaction volume reached RMB 27 billion in the first half 2026, up 13% year-on-year. Used car financing remained robust at RMB 19.9 billion, up 9% year-on-year, while the new car segment showed marginal recovery with financing of RMB 17.1 billion, up 18% year-on-year. Our fintech business sustained its high growth momentum, facilitating RMB 27.2 billion in financing in first half of 2026, up 72% year-on-year. In terms of technology empowerment, as of the end of June 2026, 45 agents were deployed across frontline business processes, enabling 90% of autonomous process delivery. International business transaction volume reached $150 million, securing leading positions in both Singapore and Malaysia. And I will elaborate on specific business dynamics, starting with our core business, auto financing services. In the first half 2026, the total auto financing transaction volume reached 428,000 units, up 18% year-on-year. For new cars, transaction volume reached 155,000 units with financing amounts totaling RMB 17.09 billion, following the prohibition of irrational practices like excessive commissions, high interest, high rebate as the market became more standardized, further highlighting the advantages of leading platforms. We deepened OEM partnerships, establishing dedicated task forces to expand our network concurrently, joint product innovation yield a pilot launch of a new residual value product with leading manufacturers. We also upgrade our systems, including streamlined processes and simplified application sales further enhanced the service precision and efficiency. The used car transaction volume hit 273,000 units with financing amount reached RMB 19.9 billion, up 9% year-on-year. This growth stems from our proactive expansion into long-tail customer segment and the deeper utilization of existing channel values for new energy vehicles. New energy vehicle financing maintained notable growth with financing amount jumping 37% year-on-year to RMB 13.8 billion for NEV financing for new car constitutes approximately 64% of total new car financing in the first half 2026. Rapid growth in the new energy vehicle park also propelled the used NEV market with used car transactions now accounting for 21% of Yixin's total NEV business volume. Now I will introduce fintech business. Since our official launch in 2022, this segment has scaled rapidly, evidencing strong market and the client recognition of this model. Transaction volume hit RMB 26.3 billion in the first half, up 91% year-on-year. Revenue reached RMB 3 billion, up 60% year-on-year. We have this dual-driven model. The pure tech model, combined with the traffic plus tech model offers clients flexible cooperation options tailored to their specific needs. We've also gained industry recognition NEV penetration within our fintech new car business reached approximately 69%. The company also pioneered the deployment of agentic LLMs coupled with harness governance architecture in the auto finance sector. We also deepened ecosystem collaboration. Our fintech business covers diverse partners, including banks, financial leasing companies and OEMs, both partnerships, breadth and depth expanded with 5 new projects launched in the first half, bringing cumulative partners to 81. Throughout our fintech evolution, we maintained a sharp focus on high-quality clients and deepened collaborations yielding notably stunning results. We have core client base steadily expanded from 64 in the first half in 2025 to 81 in the first half of 2026. Revenue contribution from core clients remained stable. This demonstrates our success in deepening relationships with existing clients and validates our scale-driven cost advantages enabled by the data flywheel effect. Pure tech resolution is also our core. Our risk control models deployed at leading OEMs effectively screen high-quality customers and mitigate fraud risk. In the first half of 2026, this model facilitated really good results. The overall facilitated financing amounted to RMB 2.47 billion, up 391% year-on-year. Beyond transaction matching, we leverage Yixin's channel and data advantages to empower partner banks such as state-owned mega banks and city commercial banks by precisely identifying potential customers and providing integrated product and risk management support. This model elevated overall business value, facilitating RMB 23.84 billion in financing in the first half of 2026, up approximately 51% year-on-year. Overall, the scale effects within Yixin's fintech segment are accelerating. Looking ahead, we will deepen scenario-based applications using frontier technologies to deliver comprehensive tech empowerment to institutional partners across our auto finance ecosystem. Now I will give hand over to our CTO, Mr. Jia, to discuss our core competitive advantages and AI advancement.

I am Jia Zhifeng. I will introduce our AI and technology. A cornerstone of our competitive advantage lies in our omni scenarios end-to-end integrated risk control framework by deploying AI throughout the pre-mid and post-financing stages, we achieved both precise risk management and operational efficiency gains. Built upon our proprietary Yixin series models, we have established a comprehensive model matrix spanning the entire auto finance life cycle modular products tailored to specific stages, including Yixin's Smart approval, [indiscernible] Risk and Smart Asset Management have been rolled out. We employ a dual offline-online acquisition engine AI segment leads by intent and prioritize users from diverse channels during prescreening multimodel, large models to enable dynamic front-end monitoring effectively identifying and intercepting high risk applicants to ensure source quality. Leveraging our proprietary credit scoring system, element being [indiscernible], we integrate traditional machine learning with AI to both precise algorithms. Combined with our vast data assets, we conduct a multidimensional analysis of credit histories and risk traits to enable accurate borrower plus vehicle assessments and optimal financial solution matching. At our Shanghai Asset Center, we implement full life cycle management inference large model powers our AI asset management brain transcending traditional vintage-based management prescribes optimal strategies for assets at different stages and status. Concurrently, our proprietary asset auction platform maximize recovery value. AI empowerment yields tangible outcomes in critical decision scenarios through risk management assessment and asset management, which is 100% optimal financial solution matching the auto approval rate reached 58% in the first half 2026. This holistic risk control framework safeguards asset quality while laying a solid foundation for sustainable business growth. Dear investors, I'd like to elaborate on why Yixin's AI can not only operate but thrive sustainably in the financial sector. This is underpinned by the formidable technical moat we have built. First, auto finance is intrinsically a classic human-centric long horizon agent problem. It's far from a one-time or one-shot interaction. It involves a deep fulfillment process spanning 1 to 2 weeks, requires integrating multi-model interactions, voice text to accurately capture user stays over extended periods and dynamically advance conversions. This imposes stringent demands on system memory and continuous decision-making, a threshold mostly -- most lightweight AI applications cannot cross. Addressing this pain point, Yixin built a full stack technology stack rather than merely singular model capabilities, while many peers with AI light integration, we've completed systemic foundational framework infrastructure forming our primary moat. Reviewing our evolution in 2025, we built auto finance industry's first agentic LLM solving the capability threshold in 2026. Our focus shifted to upgrading harness engineering. We recognize that models are merely an entry ticket. The true barrier lies in the harness system it determines whether AI capabilities can be safely, compliantly and sustainably translated into business outcomes within complex long horizon, high interaction scenarios. On the right is the core of our full stack capabilities, the 3-tier harness engineering system, which serves as a critical enabler for agent deployment versus human. Human are ultimate arbiter of risk control and business boundaries, real-time intervention authority must be retained at critical nodes. Agentic harness layer is the intelligent core, leveraging our proprietary motion and intent recognition models alongside agentic models. We deeply manage home horizon user profiles and order contracts to dynamically formulate progression strategies. Concurrently, we enforce strict circuit breakers should hallucinations or compliance violations occur. The system switches to human agent pathways within milliseconds. These compliance requirements specific to the financial verticals are difficult for generic solutions to replicate. These constitute our deepest mode beyond Yixin's unique decade-plus repository of vertical domain knowledge, long horizon decision data, the real-world feedback, we established self-improvement mechanisms at both agent and model layers. This creates a flywheel effect of our system -- making the system genuinely smarter with use. And the semantic -- and the schematic in the lower left illustrates the practical form of human AI collaboration. IM and voice agents handle high-frequency interactions with seamless AI human reaching client experience, these as a seamless and this deep capability is Yixin's replaceable and irreplicable core competence. Having explained the underlying harness engineering, you're likely most concerned about its real-world performance. This page presents to you AI operational scorecard for end-to-end auto finance deployment as of the end June. As mentioned, auto finance is a typical high-value long horizon, multi-path complex business transaction size range from tens of thousands to hundreds of thousands of RMB process spans to 20 days, averaging over 15 decision nodes involving potentially tens of thousands of decision paths and over 60 required documentations every stage from telesales, prescreening and application intake to risk control, contract signing and a loan disbursement, relied heavily on dedicated personnel now powered by the 3-tier hardening system. The first 5 course stages are fully managed by agents. The sales -- telesales handle initial outbound calls and intent screening, rescreening manages client onboarding and data acquisition application intake dynamically collect documents via multi-turn dialogues, risk control, compute optimal solutions in real time among thousands of paths and signing precisely guides the founding parity workflows. Data validates the efficacy of our first capabilities. Currently, the average lead to deal cycles optimized to 3 days, AI independently follows up with clients for up to 2.66 days with a single interaction lasting up to 81 turns and exchanging over 400,000, not only our contextual management capabilities in long horizon scenarios, but also demonstrated deep integration of agents into business workflows. In contrast, most off-the-shelf AI assistants require human intervention after a few dialogue turns failing to support such complex long cycle tasks. Operational data in the lower right marks the activation of our data flywheel and self- improvement mechanism. As of June 30, 2026, 45 agents are operational, processing 230,000 tasks daily with a daily token consumption of 360 million. Overall efficiency improved by 45.4%, meaning manual handling time per lead was nearly half to more critically, agent autonomous delivery rate reached 90% by end Q2, up from 65% at end Q1, a 25 percentage point increase in 1 quarter exemplifies the accelerating flywheel speed. This iteration velocity grounded in the real business scenario forms our dynamic mode in contrast many industry AI projects freeze post deployment, lacking our capacity for continuous evolution. Finally, to summarize AI's value. For Yixin, AI is not a cost center, but an efficiency driver and a moat builder. It simultaneously boosts conversions and human efficiency while transforming our decade-plus accumulation of scenario data into an irreplicable system capabilities. This is a result of our AI strategy in the first half and our strongest assurance facing future competition. I will now hand over to Mr. Yang to detail our international business and the financial performance.

Thank you very much. I'm Yang Xiaoguang. Good morning. I'm going to update you on our international business in the first half. The group progressed steadily achieving milestones in both deepening existing markets and expanding into new ones. Now we can see in the reporting period, we have already achieved approximately USD 150 million in financing in Singapore. This group solidified its position among the top local nonbank auto finance providers, leveraging our dealer channels to export intelligence platform. The banking partnership, we expanded market presence and ecosystem synergy by June -- end of June export covered nearly 1,100 local dealers with deepening local bank collaborations. Cementing our industrial chain advantages in Malaysia launched in Q4 2025, Yixin ranked among the top 3 nonbank auto finance providers within just 3 months. In the first half of 2026, average monthly transaction volume exceeded 1,000 units with cumulative loan volume surpassing USD 58.64 million. Regarding new market expansion, we completed preliminary preparations for the Thailand market in first half and plan to commence operations by year-end. This market is really a huge one for us, and this marks the entry of our international layout into a multiregional synergistic development phase. We will continue deepening our presence in Southeast Asia, consolidating our Singapore and Malaysia operations while actively evaluating and advancing layouts in new markets like Indonesia to enhance our contribution of international business and group growth. We'll delve into specific financial performance now. We see key financial highlights for H1 are as follows: Operating revenue grew steadily by 13% year-on-year to RMB 6.18 billion. Gross margin expanded to 65% with a substantial gross profit growth, and this is related to the optimization of cost. We also see the commission cost and the overall capital cost have been optimized a lot. We also see overall profitability strengthened with an adjusted net profit reached RMB 850 million in the first half 2026, up 31% year-on-year. This is a very good result in such a complex landscape. Our SaaS revenue, which is our fintech revenue, sustained rapid growth, contributing 48% of the total revenue with a growth of 60%. Now I will elaborate on key financial metrics. First, let's break down our revenue structure. Our SaaS business, the fintech business with the overall revenue of RMB 2.9 billion, one of the biggest channel of our revenue. We think this part of business will take half of our overall revenue. The platform business was an overall 15% growth year-on-year, accounting for 80% of our total revenue. This is incomparable to our self-proprietary business. Our self-proprietary business has some 7% year-on-year growth, primarily driven by growth in the finance lease assets during period. Now let's delve into the gross profit and its drivers. For proprietary business, the net interest spread on leased assets widened marginally year-on-year in the first half of 2026. We see the average cost down 40 bps. I think such reduction, such optimization will keep expanding in the foreseeable future. For our platform business, the net service fee rate on platform facilitated financing rose further in H1 2026, driven by the policy restricting high interest, high rebate practices. We see such practice gradually restricted, reducing commission expenses. We also see further value extraction from our existing business metrics, increasing the proportion of used car long tail and high-yield clients. We see -- the gross margin reached 55% in the first half and gross profit surging 38% year-on-year to nearly RMB 4 billion. And we see operating expense ratio was 22.6%, up 2.5 percentage points year-on-year, mainly reflecting heightened investment in human capital, software and hardware for AI and overseas expansion. We also see due to a complex external environment and deeper coverage of long-tail population, the 90 more days delinquency rate stood at 1.92% in H1 2026. We see the adequate coverage for nonperforming assets with a provision coverage ratio reaching 222%, up 7 percentage points year-on-year. Now we will introduce our profit. We see increased profit in the reporting period. The IFRS net profit goes up to RMB 704 million. After adjusting for certain noncash expenses, the non-IFRS net profit amounted to RMB 851 million. In summary, we achieved solid results in H1 despite a sluggish macro environment and a volatile markets. We will continue striving in the second half to deliver a strong full year performance. Now we will introduce the financing capacity. On the funding side, we prioritize secure and stable funding resources while employing multiple strategies to drive down financing costs. There are several key funding highlights. As of the end of June 2026, we partnered with over 100 financial institutions. We have over 70 investors in our banks and securitized products, including more than 10 foreign institutional investors such as Sumitomo Mitsui Banking Corporation and JPMorgan Chase. We are not reliant on a single channel or a single institution. This is conducive to the stability of our funding. Our standardized products maintained strong market reception with cumulative issuances exceeding RMB 77.6 billion, high-quality auto assets remain scarce in the market. By the end of June 2026, we had issued 95 tranches of ABS and ABN products. Recent structured products achieved a minimum coupon rates as low as 2%. This is a historic low. Beyond credit bonds like private placement notes, PPN and a super short-term commercial paper SCP, we advanced funding diversification. In March 2026, the group completed the drawdown of its inaugural offshore syndicated loan, attracting active participants from 9 renowned domestic international banks providing robust support for business operations, we're going to attract more such users and clients. Regarding liquidity, Yixin maintains stringent internal liquidity management standards. As of June 2026, cash and cash equivalents stood at approximately RMB 4.68 billion, edging up from the prior year period. The debt-to-asset ratio was 69.5% as of the end of June, marginally higher year-on-year, but remaining within a healthy range. Finally, I'd like to report on our vintage delinquency performance, continuous investments in channel management, risk modeling and asset management, coupled with operational optimizations underpin our overall stable asset quality. We utilized the vintage loan origination cohort framework to illustrate DPD 30-plus days past due over 30 trends across customer tiers, enabling observation of asset quality evolution over time. Tier 1 upmarket customers exhibit excellent delinquency performance with recent vintages, demonstrating notably -- a notable stability. Tier 2 prime market customers, DPD 30-plus levels here are moderately higher than Tier 1. Critically, vintage curves across years show fundamentally stable trajectories without obvious steep upward spikes. In our Tier 3 near prime customers, the slope of DPD 30 days increase over loan age is steeper here, aligned with normal risk tiering characteristics across vintage comparisons show a slight elevation in 2025 curve. However, its overall trajectory remained largely within our expectations, primarily attributable to significant external economic volatility and further customer base deepening. Overall risk remains contained without signs of spiraling out of control. The DPD 30 days more trends, whether analyzed across risk tiers or compared horizontally across entity aligns with our expectations. These affirms constant execution of our strategy in customer segmentation, risk modeling and post loan management underpinning stable asset quality. Looking ahead, we'll continue leveraging frontier technologies like AI to refine our risk management framework, ensuring sustainable and healthy business development. That's the end for the presentation. Thank you very much.

[Operator Instructions] Now we will invite investor with phone number ending 2795.

I'm Vicky Wei from Citibank. First of all, congratulations on really strong performance. So the question is about our gross profit margin. We see it's quite a really strong growth with the commission reduction. You just talked about the industry factors. They're really helpful. Could the company give us an outlook at this stage, the decline in commission levels, how much room is there? And now in the regulatory environment is getting stricter and the macro environment is not particularly good, what is our strategy? And how do we think about the guidance for the profit in this year and next year?

Thank you very much for your question. Let me answer your question. First is about the gross profit margin. I think the commission will be further optimized as the industry becomes healthier, as our influence keeps expanding, we think the optimization of commission will be continued. This is a mid- to long-term prospect. In terms of the profit outlook, so far, we think the overall growth is 20% for the whole year of 2026, but we also pay close attention to external market and policies as well as their impact on our industry. I think, first of all, we will make sure the company is safe, compliant. On the basis of this, we will strive for more profit for our shareholders. In terms of business, we will firmly utilize our core advantages, especially in terms of technology, as our CTO just mentioned. We will lay out these technologies in every business of ours. We will try our best to combine AI and agent capabilities to the fullest. At the same time, starting from the second half of the year, we will have a more comprehensive observation of the entire industry, and we will gradually see the results of a technology export. We think this is from the perspective of our company strategy. We shifted our focus from cash business, loan business then to financial services. Now with years of an accumulation and a strong tech team, we trained good agents for our industry. The agents use will serve our company first by reducing costs and improving efficiency. Then these agents of ours will gradually be exported to other industries. We will follow this strategic map. And our business will become more and more technology-driven. In terms of the gross profit, we will see more gross profit out of our technology use. We will also give you a clearer picture of our product and service categories. We will see our traditional business. We will also see more new business. There are emerging novel businesses to expect, and this is exactly what we will do in the future. Thank you.

Now let's welcome the investors with the phone number ending in 9805 to ask your question.