Yiren Digital: Dividend Policy And Financial Guidance Draw Attention

seekingalpha09-28

Yiren Digital declared a semi-annual dividend for the first time in five years as part of its new dividend policy.YRD anticipates that it can sustain a low-teens percentage top-line expansion for its ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nYiren Digital: Dividend Policy And Financial Guidance Draw Attention\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-28 02:46 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4723829-yiren-digital-dividend-policy-and-financial-guidance-draw-attention><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Yiren Digital declared a semi-annual dividend for the first time in five years as part of its new dividend policy.YRD anticipates that it can sustain a low-teens percentage top-line expansion for its ...</p>\n\n<a href=\"https://seekingalpha.com/article/4723829-yiren-digital-dividend-policy-and-financial-guidance-draw-attention\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"YRD","symbol_name":"宜人智科","start_time":0,"source_url":"https://seekingalpha.com/article/4723829-yiren-digital-dividend-policy-and-financial-guidance-draw-attention","article_id":"2470817053","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2151372613/image_2151372613.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2470817053","pubTimestamp":1727462801,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Yiren Digital declared a semi-annual dividend for the first time in five years as part of its new dividend policy.YRD anticipates that it can sustain a low-teens percentage top-line expansion for its ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"YRD":"宜人智科","BK4166":"消费信贷"},"translate_title":"宜人数码：分红政策和财务指引引关注","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"YRD":0.9},"content_text":"Yiren Digital declared a semi-annual dividend for the first time in five years as part of its new dividend policy.YRD anticipates that it can sustain a low-teens percentage top-line expansion for its upcoming quarterly results.I retain a Buy rating for Yiren Digital after analyzing the stock's future shareholder capital return and the company's financial outlook.   Jian Fan/iStock via Getty ImagesMy investment rating for Yiren Digital Ltd. (NYSE:YRD) stock is a Buy. YRD has resumed dividend payments with a new dividend policy outlining semi-annual distributions, and the company could possibly complete its share buyback program by end-2024 with its current pace of repurchases. Yiren Digital's guidance points to the company delivering a low-teens percentage top-line growth rate and reasonably good profitability for the next set of quarterly results. I think that YRD's guidance is achievable, considering the company's recent management commentary and the latest market developments. I reviewed YRD's financial performance for the first quarter of this year with the earlier June 24, 2024, article. Potential Dividend And Buyback Yields Are Appealing Yiren Digital shared its stance on dividends and share repurchases at the Deutsche Bank's (DB) ADR Virtual Investor Conference (transcript sourced from S&P Capital IQ) on September 24, 2024. YRD's latest management commentary has favorable read-throughs for the company's shareholder capital return outlook. YRD emphasized at DB's recent investor event that \"we will continue to do\" buybacks and dividends \"in the future.\" The company also stressed at Deutsche Bank's investment conference that it has \"a plan to improve our treasury management\" for \"the second half of 2024.\" The return of excess capital to shareholders is typically deemed to be a key treasury management tool for companies. I highlighted in my prior June 24, 2024 write-up that Yiren Digital's \"potential catalyst is the re-initiation of dividends\", and this has been realized in the previous month. In its Q2 2024 earnings release published on August 20, 2024, YRD announced the \"payment of $0.20 per American depositary share\" or ADS for the 1H 2024 financial period as its new \"semi-annual dividend policy.\" It is worth noting that Yiren Digital had omitted dividend payments for five years (2019-2023) prior to re-initiating dividend distributions this year. Yiren Digital's potential forward dividend yield is an enticing 8.3%, assuming that the company continues with its semi-annual dividend distributions of $0.2 per ADS going forward. YRD's actual dividend yield for the future might be even higher, taking into account the company's modest dividend payout ratio. Yiren Digital's dividend policy is to distribute a minimum 10% of its earnings as dividends on a semi-annual basis, and the company's actual 1H 2024 dividend payout ratio was slightly higher at 14%. According to fund manager Fidelity's research, Chinese companies' mean dividend payout ratio for the last five years was around 30%. It won't be far-fetched to expect YRD to raise its dividend payout ratio in time to come. On the other hand, YRD spent $6.1 million on share buybacks in the first half of the current year, and the company has $6.5 million remaining from its share repurchase plan authorization. The company could potentially complete its share buyback plan by the end of this year, if it continues with its current pace of share repurchases ($6 million per semi-annual period). This will translate into a potential FY 2024 buyback yield of 3.0% for Yiren Digital. In summary, Yiren Digital has indicated at the recent investor conference that the company will continue to return excess capital to shareholders. YRD's potential shareholder yield for the current fiscal year or FY 2024 might be in the low-teens percentage (8.3%+3.0%) range. Financial Outlook Is Favorable YRD had guided for a top line of \"between RMB 1.4 billion to RMB 1.5 billion\" and \"a healthy net profit margin\" for Q3 2024 as per the company's Q2 2024 earnings release disclosures. Yiren Digital's revenue is expected to grow by +11% YoY to RMB 1,450 million in the third quarter of 2024 based on the mid-point of its guidance. As a reference, YRD's actual top line expanded by +13% YoY in Q2 2024. In other words, the company anticipates that it can maintain a low-teens YoY top-line growth for Q3 2024. At the recent September 24, 2024 Deutsche Bank ADR Virtual Investor Conference, YRD mentioned that \"we expect the growth\" in \"the number of borrowers and loan facilitated\" will \"continue\" in 2H 2024. The loans facilitated and the number of borrowers for Yiren Digital rose strongly by +59% YoY and +47% YoY to RMB 12.9 billion and 1.49 million, respectively for Q2 2024 as disclosed in its earnings presentation slides. As such, YRD should be able to maintain its revenue growth momentum in Q3 2024 with the company expecting that the upward trend in borrowers and loan facilitation will be sustained. Also, South China Morning Post reported on September 25, 2024 that the local government in Shanghai \"will dole out 500 million yuan worth of consumption vouchers.\" This has raised expectations that China will roll out further measures to encourage consumption in the country, which could drive up demand for Yiren Digital's consumer loans and boost its revenue growth prospects. Separately, a September 25, 2024 Seeking Alpha News article highlighted that \"People’s Bank of China lowered its medium-term lending facility rate by 30 basis points to 2%.\" This latest development might have a positive impact on YRD's future profitability. Yiren Digital indicated at DB's late-September 2024 investor event that its \"profit margin\" could be enhanced because it can potentially \"get a lower cost (of funding) from our bank partners\" in light of China's latest rate cut. At the company's earlier Q2 2024 earnings briefing on August 20, YRD disclosed that its funding cost decreased by -0.82 percentage points on a sequential basis in the most recent quarter, and it guided that its funding cost will decline further in the third quarter. At the DB investor conference, Yiren Digital emphasized that the company is focused on \"higher interest rate borrower groups than banks\", so the expected decrease in funding cost is likely to outweigh any potential decline in its lending rate against the backdrop of rate cuts. As a reference, YRD's Q2 2024 net margin was an excellent 27.4%. To sum things up, I think that YRD has the potential to deliver a decent earnings growth rate of at least 10% YoY going forward based on assumptions of a low-teens top-line expansion and net margin improvement driven by a lower funding cost. Variant View Under certain bear-case scenarios, Yiren Digital might become a less attractive investment. One scenario sees YRD cutting its dividend payout ratio to the minimum 10% as per its policy and allocating less excess capital to buybacks. Another scenario sees the company failing to meet its Q3 revenue growth guidance as a result of weaker-than-expected consumer loan demand. Bottom Line  The market currently values Yiren Digital at trailing price-to-sales, P/B and P/E multiples of 0.56 times, 0.34 times, and 1.52 times respectively, according to S&P Capital IQ. In my opinion, YRD's undemanding valuations haven't priced in the company's favorable financial and capital return outlook. As such, I maintain my Buy rating for Yiren Digital.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2470817053"}