Jiayin Group Inc. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a quarterly filing; the supplied filing text does not provide separate Q4 financial results. Financial statements are prepared under U.S. GAAP. Amounts below are in RMB unless otherwise indicated.
Business context
Jiayin operates an online consumer-finance platform, principally in China, matching individual borrowers with institutional funding partners. It completed its transition away from individual-investor funding in April 2020; legacy P2P loan balances reached zero in November 2020. The company says it does not fund loans in mainland China with its own capital, though it lends directly to borrowers in overseas markets.
Key financial and operating metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net revenue | RMB1,780.5 million | RMB1,300.2 million |
| Operating income | RMB432.0 million | RMB302.1 million |
| Net income | RMB467.8 million | RMB250.1 million |
| Net cash from operating activities | RMB184.5 million | Net cash used: RMB35.5 million |
| Cash and cash equivalents at year-end | RMB182.6 million | RMB117.3 million |
| Total assets | RMB971.4 million | RMB525.4 million |
| Total liabilities | RMB945.7 million | RMB989.1 million |
| Shareholders’ equity (deficit) | RMB25.7 million | Deficit: RMB463.8 million |
- Revenue rose 36.9% year over year; net income increased 87.0%. Operating margin was 24.3% versus 23.2%; net margin was 26.3% versus 19.2%.
- Loan origination volume rose to RMB21.9 billion from RMB11.6 billion. The platform reported 3.4 million borrowings, 22 institutional funding partners, and RMB21.9 billion in investment volume.
- Loan facilitation revenue was RMB1,470.2 million, 82.6% of revenue, up from RMB943.1 million. Other revenue was RMB310.3 million. Post-origination revenue fell to zero after the legacy P2P balance ran off.
- Sales and marketing expense increased to RMB659.3 million from RMB375.1 million, or 37.0% of revenue. Allowance for receivables and contract assets decreased to RMB44.4 million from RMB77.3 million.
- Operating cash flow improved to RMB184.5 million, but accounts receivable and contract assets increased by RMB344.4 million, primarily reflecting uncollected service fees. Investing cash outflow was RMB126.2 million, including loans to related parties and the Bweenet acquisition; financing cash inflow was RMB9.9 million.
- Year-end cash and cash equivalents were RMB182.6 million, plus RMB2.0 million of restricted cash. Lease liabilities were RMB35.2 million. The filing does not report material conventional borrowings at year-end; total liabilities include substantial tax payables and amounts related to the Shanghai Caiyin disposal.
Material changes, outlook and unusual items
- Growth in loan facilitation and investor-referral fees drove the revenue increase. Operating expenses grew 35.1%, broadly in line with revenue, but marketing costs rose faster.
- Net income included a RMB138.0 million gain from derecognition of a payable associated with the Shanghai Caiyin disposal, compared with RMB117.0 million in 2020. This is a material non-operating item to distinguish from recurring performance.
- Jiayin acquired 95% of Shanghai Bweenet in 2021 for RMB95.0 million and agreed to sell that stake in December for RMB93.3 million; the disposal was described as subject to conditions and no gain or loss was recognized. Bweenet revenue and cost were included for part of the year.
- Management stated that existing cash and expected operating cash flows should cover anticipated working capital and capital spending for at least 12 months. No quantified revenue, earnings, or origination guidance was provided. The company intends to retain funds and does not expect to pay dividends in the foreseeable future.
- Management disclosed two material weaknesses in internal control over financial reporting: insufficient accounting and SEC-reporting expertise for complex transactions, and the absence of a formal group-wide risk assessment and internal-control framework. Management said remediation was underway; it did not conclude the weaknesses had been fully remedied.
- A securities class action relating to the IPO remained ongoing. In February 2022, the court denied the company’s motion to dismiss; the company filed an answer and notice of appeal. The company said it could not estimate a possible loss or range.
Principal risks and contingencies
- China structure and regulation: The Cayman holding company consolidates Jiayin Finance through contractual VIE arrangements, not equity ownership. Their enforceability has not been tested in court; adverse regulatory or legal action could disrupt operations or prevent consolidation.
- Consumer-finance rules: Rules on lending costs, bank outsourcing, guarantees, borrower data and platform operations continue to evolve. The company flags uncertainty over whether its cooperation model or guarantee-related commitments could trigger licensing or other restrictions.
- Funding, credit and collections: Business depends on institutional partners’ continued funding and borrower repayment. The filing reports a RMB5.73 billion loan balance subject to the company’s secondary-guarantee arrangements at year-end, although the fair value of guarantee liabilities was described as inconsequential and no compensation was paid in 2021.
- Liquidity and cash mobility: Cash is principally held and generated in RMB; currency conversion, dividend remittance, statutory reserves and restrictions on transfers between group entities may limit access to funds at the offshore parent.
- Data and cyber risk: The company processes personal and financial information and faces evolving PRC cybersecurity, data-security and privacy requirements, with potential fines, operational restrictions or service interruption.
- U.S. listing and audit: The 2021 statements were audited by New York-headquartered Marcum Bernstein & Pinchuk, which was not on the PCAOB’s December 2021 list of firms it could not inspect. The filing nevertheless notes uncertainty about access to China-related audit work papers and HFCAA delisting risk; Deloitte audited earlier years and was subject to the PCAOB determination.
- Other exposures: The company reports accumulated deficits of RMB794.8 million despite FY2021 profitability, a RMB63.7 million unrecognized tax benefit, and historical underpayments of employee benefits and tax withholding before March 2018. It says accruals were recorded for estimated underpayments and no demand had been received as of the filing date.
Most important facts for investors to verify
- Whether the RMB344.4 million increase in receivables and contract assets is collected, and how much is attributable to funding partners, related parties or variable-fee arrangements.
- Whether reported profit growth persists excluding the RMB138.0 million disposal-related gain and other non-recurring items.
- The terms, counterparties, recoverability and approval controls for related-party loans and service fees; year-end amounts due from related parties were RMB37.0 million, including a RMB16.1 million credit-loss allowance.
- The scope and enforcement of the RMB5.73 billion secondary-guarantee exposure, including back-to-back protection and any subsequent claims or payments.
- Progress in remediating internal-control weaknesses, and whether future filings report effective controls or identify additional deficiencies.
- Current status of the IPO class action, the proposed Bweenet disposal, and any required PRC licenses, filings or overseas-listing approvals.