X Financial (NYSE: XYF)

X Financial Inc., or XYF, is a leading online personal finance company based in China. Established in 2014 and controlled by Mr. Yue (Justin) Tang, the company specializes in facilitating loans to prime borrowers who are underserved by traditional financial institutions. X Financial's operations are driven by its proprietary big data-driven technology, which enables it to establish strategic partnerships with financial institutions and manage borrower risk effectively.

The company's main business activities involve providing differentiated loan products, such as Xiaoying Credit Loan, Xiaoying Card Loan, and Xiaoying Preferred Loan, among others. These unsecured loan products cater to the financing needs of prime borrowers, who typically are young consumers in the early stages of their careers with insufficient credit lines from traditional credit card issuers. The flagship product, Xiaoying Credit Loan, combines small credit lines and attractive APRs, making it popular among prime borrowers in China.

X Financial generates revenue primarily through service fees and interest income. Service fees are charged indirectly through financial institutional cooperators or directly from certain institutional funding partners. Financing income is derived from the interest earned on loans facilitated through the Consolidated Trusts and Partnerships.

The company's competitive advantages stem from its proprietary risk management system, WinSAFE, and its strategic partnerships with financial institutions. WinSAFE builds risk profiles of prospective borrowers using data from credit information providers and social and behavioral data from internet and mobile platforms. This enables X Financial to achieve a strategic balance between borrower expansion and asset quality control. The company's ability to attract a diversified and low-cost funding base has enabled it to maintain a strong financial position.

X Financial's customers include both individual and corporate investors. As of December 31, 2023, X Financial facilitated loans to 4,495,997 active borrowers, with a total loan amount of RMB105,557 million. The company's outstanding loan balance as of December 31, 2023, was RMB48,847 million.

In the online personal finance industry, X Financial faces competition from other online lending platforms and traditional financial institutions. However, its strategic partnerships with financial institutions and its proprietary risk management system have enabled it to maintain a competitive edge in the market.

X Financial's product line includes Xiaoying Card Loan, which is attractive to prime borrowers looking for a combination of small credit line and attractive APR. The company's advanced credit analytics enable it to deliver a superior user experience through a user-friendly loan application process, efficient credit decision, and speedy remittance, thereby expanding its borrower base. X Financial advertises its loan products and loan facilitation services through online channels, such as its website, mobile application, and cooperation with search engines, app stores, third-party apps, and WeChat self-media public accounts.