Earnings Call Transcript - LU Q3 2023

Operator, Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Lufax Holding Limited Third Quarter 2023 Earnings Call. Please note this event is being recorded. Now I would like to hand the conference over to your speaker host today, Ms. Liu Xinyan, the Company's Head of Board Office and Capital Markets. Please go ahead, ma'am.

Liu Xinyan, Head of Board Office and Capital Markets

Thank you, operator. Hello, everyone, and welcome to our third quarter earnings conference call. Our quarterly financial and operating results were released by our newswire services earlier today and are currently available online. Today, you will hear from our Chairman and CEO, Mr. Y.S. Cho, who will provide an update of our latest business strategies, the macroeconomic trend, and the recent development of our business. Our Co-CEO, Mr. Greg Gibb, will then go through our third quarter results and provide more details on our business priorities. Afterwards, our CFO, Mr. David Choy, will offer a closer look into our financials before we open up the call for questions. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements. With that, I'm now pleased to turn over the call to Mr. Y.S. Cho, Chairman and CEO of Lufax. Y.S., please.

Y.S. Cho, Chairman and CEO

Thank you for joining today's call. While the macro economies have gradually recovered in the fourth quarter, the small business segments still face a complex landscape and need more time to recover. We continue to pursue virtual derisking and diversification, maintaining our asset quality with the goal of improving it overall for long-term, healthy, and sustainable growth. During the third quarter, while high-quality loan demand from SBOs remains weak, our customer finance business recorded a healthy growth, with new loan sales volume increasing by 15.3% sequentially and 48.5% from the same period last year. We are also taking steps to further diversify our operations by acquiring a virtual bank in Hong Kong. Let me now provide some updates from the third quarter. On the regulatory front, the state council released guidance on promoting high-quality development of inclusive finance. The guidance recognizes the value of non-bank institutions, such as guarantees, consumer finance, and small lending companies and encourages market participants to take steps to meet the financial needs of SBOs, as well as enhanced consumer protection. We believe the guidance and recent well-equipped developments will promote healthy development of the industry and better fit leading players that operate businesses in a compliant manner and with proper licenses. As for the macroeconomic conditions, recent data has shown that China's economy is gradually recovering. GDP in the third quarter increased by 4.9% from the same period last year, putting the economy on track to meet the annual growth target of 5%. During the third quarter, large enterprises demonstrated the strongest signs of recovery, while SMEs continued to face pressure from the broader macro situation. The SME Business Conditions Index published by the Hong Kong Graduate School of Business declined from 50.2 in June to 49.9 in September. The Small and Medium Enterprises Development Index published by the China Association of Small and Medium Enterprises was also below the critical threshold of 100 in the third quarter, indicating that the SBO segment will likely recover more slowly than the rest of the economy. Let's explore the impact of these factors on our business. Under the pressure from complex macroeconomic environments, derisking is crucial for the stability and sustainability of our business. In the third quarter, we continued our strategy of prioritizing asset quality over quantity. We have completed the strategy just a month, initiated at the beginning of the year, by reducing our footprint in less economically resilient regions with relatively higher risks and optimizing our direct sales force. We believe these difficult but necessary steps will establish the foundation for long-term sustainable growth. As high-quality demand for SBO loans remained weak, we continue to prioritize prudence in our strategic executions. New loan sales decreased slightly from RMB53.5 billion in the second quarter to RMB50.5 billion in this quarter. In terms of asset quality, risk performance of the order book, which is launched enabled for 2023, has stabilized. Meanwhile, all indicators suggest that the quality of new loans enabled in 2023 is in line with our expectations, although not yet recovered to pre-COVID levels. Next, let me show some strategic updates. We have completed our transition to being smoother under which our guarantee subsidiary provides 100% of our credit enhancement, as CGI premiums remain elevated due to the impairment losses suffered by CGI partners. At present, we have secured sufficient credit lines from our funding partners to support our 100% guarantee model for the remainder of 2023 and throughout 2024. We are able to make this shift in large part due to our strong capital position. At the end of the third quarter, the leverage ratio of our guarantee subsidiaries was only 1.6 times, well below the maximum regulatory limit of 10 times. Switching to our 100% guarantee model will play an important role in alleviating the impact of elevated CGI premiums, resulting in a 13% to 14% tax rate from a long-term perspective but exerting pressure on medium-term profitability as upfront projects are recorded for new business. Last quarter, we mentioned our strategy to grow our consumer finance business by leveraging the advantages of our consumer finance license and synergies with the Puhui business, and we continued to implement this strategy. During the third quarter, the new loan sales of our consumer finance business was RMB20.6 billion, representing 15.3% quarter-on-quarter and 48.5% year-over-year growth. The NPL of our consumer finance business decreased to 1.9% in the third quarter from 2.2% in the second quarter. The competitive advantages of our consumer finance business have made it an increasingly important part of our operations. Without a consumer financial license, we can operate this business in full compliance with regulations and benefit from lower funding costs enabled by the interbank money market. With SBO segments likely to face continuing challenges from the macro environment in the near term, the consumer finance business serves as a solid supplement to the Puhui business, enabling us to further mitigate risk and diversify product offerings. Together with our transition to the 100% guarantee model, we will be able to provide more comprehensive products to our target customers with a simpler and better customer experience. Now let’s turn to our new initiative we are undertaking to further diversify our business. Subject to approval from the Hong Kong Monetary Authority and OneConnect shareholders, we are acquiring 100% of the shares of Ping An OneConnect Bank or PAOB from OneConnect, at a cash consideration of 933 million Hong Kong dollars, representing 2.2% of our cash at bank as of the end of September. As one of the eight virtual banks in Hong Kong, PAOB is a fully licensed bank with a service scope similar to traditional banks but without physical operating branches. As of June 30, 2023, PAOB's loan balance was 1.8 billion Hong Kong dollars, and its capital adequacy ratio was 100%, which was substantially higher than relevant regulatory requirements. All of these loans were SME loans in Hong Kong, and a significant portion of the outstanding balance is backed by the Hong Kong government's SME financing guarantee scheme. We believe the business and higher customers of PAOB will align well with our existing operations, enabling us to leverage our operational experience and technological expertise in its business development. From a long-term perspective, the prospects of the Greater Bay Area also bring upside potentials via banking licenses. Overall, we took a number of steps in the third quarter to carry forward our efforts on derisking and diversification, including the completion of our transition into the 100% guarantee model, further developing our consumer finance business, and acquisition of the virtual bank in Hong Kong, aiming to create foundations for long-term sustainable growth. In the short term, as most of our strategic efforts on derisking had been concluded by the end of the third quarter, which pegged volume in new loan sales to be stabilized, we are on track to meet our new loan sales guidance for the full year 2023 to be in the range of RMB190 billion to RMB210 billion. I will now turn the call over to Greg for more details on our operating results.

Gregory Gibb, Co-CEO

Thank you, Y.S. I will now provide more details on our third quarter results and our operational focus for this year. Please note, the old book refers to unsecured loans enabled before January 1, 2023, and the new book refers to unsecured loans enabled afterwards. All figures are in renminbi unless otherwise stated. During the third quarter of 2023, our performance remained under pressure from the complex macro environment and challenges faced by SBOs. Total new loan sales during the third quarter were RMB50.5 billion, amongst which approximately 40% was contributed by the consumer finance business. Now let's dive into the detailed performance of the Puhui business and the consumer finance business. First, let's take a closer look at our Puhui business. During the third quarter, we enabled RMB29.9 billion of new loans under the Puhui brand. Despite the pressure on new loan sales, the productivity of our direct sales team further improved during the third quarter. Average productivity for our direct sales team rose by 25.4% quarter-over-quarter, continuing the positive trend we noted in the second quarter. 68% of new loans enabled during the third quarter came from our direct sales team compared to 61% in the second quarter. The overall pricing by balance of loans enabled under the Puhui business remained stable at 20%. We have not encountered any pressure to decrease prices, and we have the flexibility to adjust our prices to the extent commercially sensible. As we have completed the transition into the 100% guarantee model, we expect to improve our take rate by alleviating the negative impacts of elevated CGI premiums in the long term. Our profitability, however, will suffer in the medium term due to the impact of upfront provisions under the 100% guarantee model. Now let's look at the risk performance of the Puhui business during the third quarter. The risk bearing by balance of Puhui business at the end of the third quarter increased to 25.7% from 22.4% as of the end of the second quarter, mainly due to a greater portion of loans enabled under our 100% guarantee model. By the end of this year, we expect our total risk bearing including consumer finance to increase to above 40%. The C-M3 flow rate of the Puhui business increased from 1% at the end of June to 1.1% at the end of September, partially due to the 16.1% decrease in the outstanding loan balance of the Puhui business. Taking a closer look into the Puhui portfolio, the asset quality of our old book was stabilized as the amount of the old book decreased as a percentage of the total portfolio, and the absolute amount of the old book that would become overdue will continue to decrease. Although the C-M3 ratio remains at an elevated level. On the other hand, though not yet recovered to pre-COVID levels, asset quality on the new book is in line with our expectations, and we continue to operate with tighter credit standards that focus on higher quality demands from stronger SBOs based in economically resilient regions. In light of the macro environment, we plan to maintain our emphasis on quality over quantity for the foreseeable future. Now let's move on to our consumer finance business. Our consumer finance continued to record healthy growth during the third quarter. New loan sales in the third quarter amounted to RMB20.6 billion, increased by 15.3% sequentially and 48.5% from the same period last year. The total outstanding balance of consumer finance loans at the end of the third quarter was RMB36.1 billion, up 9.9% from the end of the second quarter and up 29.4% year-over-year. The NPL ratio of consumer finance business was 1.9% in the third quarter, as compared to 2.2% in the second quarter. Providing smaller ticket size, shorter tenure consumption loans helps to enhance our product line as well as diversify our business operations. In addition, with the increased amount of consumer finance loans as a percentage of new loan sales, the lower funding costs of the consumer finance business will help bring down our overall funding costs. We plan to continue our efforts to grow the consumer finance business, while the SBO segment remains under pressure. Due to the aforementioned factors, our total income decreased from RMB9.3 billion in the second quarter to RMB8.1 billion in the third quarter, mainly due to a decline in our outstanding loan balance and new loans enabled to SBOs. On the expense front, we maintain our emphasis on optimizing our operational efficiency, and decreased our operating expenses by 6.1% from the previous quarter and 31% from the same period last year. Credit impairment losses remained at RMB3 billion for the quarter, mainly due to the impairment losses arising from the old book. As a result, we recorded RMB131 million of net profit for the third quarter. As Y.S. mentioned earlier, we plan to acquire 100% of the equity interest of PAOB, to bring additional diversity to our business, subject to regulatory and OneConnect shareholder approvals; we hope to close the deal in the first half of 2024. Finally, we are pleased to announce that we have paid out the first half 2023 dividends in October with an aggregate amount of $89 million. We'd like to thank our shareholders for their continued support, and we'll continue to use our best efforts to deliver value to our shareholders. I will now turn the call over to David, our CFO, for more details on our financial performance.

David Choy, CFO

Thanks, Greg. I will now provide an outlook on our third quarter results. Please note that all numbers are in renminbi terms and all comparisons are on a year-over-year basis unless otherwise stated. In the third quarter of 2023, our total income was RMB8.1 billion, total expenses were at RMB7.7 billion, and net profit was RMB131 million. As Y.S. and Greg mentioned before, our performance was impacted by the macroeconomic situation affecting the SBO segment, of course, the negative growth in the loan balance. This resulted in a 39% decrease in our top line this quarter. During the third quarter, our technology platform-based income was RMB3.3 billion, representing a decrease of 51.2%. Our net interest income was RMB3.3 billion, a decrease of 28.4%, and our guarantee income was RMB941 million, a decrease of 49.5%. Furthermore, primarily due to the decline in the loan balance, guarantee income was RMB941 million compared with RMB1.9 billion a year ago. For our other income, which mainly includes account management fees, collections, and other value-added services charged to our credit enhancement partners as part of the retail credit enablement process, the amount was RMB291 million in the third quarter of 2023, compared to an other loss of RMB129 million in the same period of 2022. Turning to our expenses, we are committed to cost optimization for sustainable growth, whilst preserving our core capabilities. Our total expenses, excluding credit impairment losses, finance costs, and other expenses, decreased by 31.1% year-over-year to RMB4.7 billion this quarter as we continue to enhance our operational efficiency. In the third quarter, our total expenses decreased by 38.1% to RMB7.7 billion from RMB1.1 billion a year ago. This decrease was primarily due to decreases in sales and marketing expenses and credit impairment losses. Our total sales and marketing expenses, which mainly include expenses for borrowers and investor acquisition costs as well as general sales and marketing expenses, decreased by 43.7% to RMB2.3 billion in the third quarter. The decrease was mainly due to decreased acquisition costs as a result of the decrease in new loan sales and decrease in investor acquisition and retention expenses and impairment expenses from platform services attributable to the decreased transaction model. Our general and administrative expenses decreased by 15.6% to RMB500 million in the third quarter, mainly due to our expense control measures and decreases in taxes and surcharges. Our operations and subsidy expenses decreased by 7.6% to RMB1.5 billion in the third quarter, mainly due to our efforts in expense control, a decrease in loan balance, partially offset by an increase in resources we invested in collection services. Our credit impairment losses decreased by 24.1% to RMB3 billion in the third quarter, primarily due to the decrease in provision of loan receivables, as a result of the increased loan balance. Our finance costs increased by 86.9% to RMB40 million in the third quarter, from RMB306 million in the same period of 2022, mainly due to the increase of interest income from bank deposits, plus the decrease in interest costs resulting from our early repayment of our commercial paper and other U.S. dollar debt. As a result, net profit from the third quarter was RMB131 million, compared to the net profit of RMB1.4 billion in the same quarter of 2022. Meanwhile, our basic and diluted earnings per ADS during the third quarter were both RMB0.04 or $0.01. Turning now to our balance sheet, our balance sheet remains strong and solid as our cash at bank balance has increased since the end of our last fiscal year. As of September 31, 2023, we have a cash balance of RMB39.8 billion compared with RMB43.9 billion as of last year. And as of the end of September 2023, our guarantee subsidiaries leverage ratio was only 1.6 times compared to a maximum regulatory limit of 10 times. All of these factors have substantial backing for the company to navigate through the change in the macroeconomic landscape, maintain our resilience, and create options to deliver value to our shareholders in the future. That concludes our prepared remarks for today. Operator, we're now ready to take questions.

Operator, Operator

Today's first question comes from Emma Chu with BofA Securities. Please go ahead.

Emma Chu, Analyst

Thank you for giving me the opportunity to ask the first questions. Actually, I have two. The first one is about the loan demand and new loan pricing. So previously, you mentioned that you are on track to meet your full year loan goals and targets now. But we just want to get more details about the overall loan demand in the fourth quarter so far, including the SME loans and the consumer finance loan, and how it will impact your loan pricing for different loan products? And the second one is about the unit economics under the full guarantee model. So we understand that you have been progressing towards this model for a while, and we probably get some more data now. So could you please run us through that unit economics under this new model? Thank you.

Y.S. Cho, Chairman and CEO

Thank you for your question. We see that the macro economy is gradually recovering, but our major target segments are small business segments; they need more time. So as a result, loan demands, especially in expense segments, remain quite weak. Their confidence level we think hasn’t restored back to the previous level, so we see weak current demand. But the reality is, as we said in the previous announcement, we believe we’ll deliver this year's new loan sales guidance as planned. Now regarding APR, our overall APR level on the portfolio remains stable at around 20%. We do not see any further pressure to reduce our loan price via APR. In our continuous communication with regulators, we see that they are also gradually getting aware of that question that we simply arise again and again; otherwise, we cannot ensure the financial service coverage for the whole SBO segments. So we believe we have more flexibility in the future than before to adjust our pricing as necessary. And to your question about our unit economics on the full guarantee model. Now we have fully switched to a 100% sales guarantee model. It's a mix of our guarantee plus bank funding; we don't have CGI partners anymore. So as normal CGI premium paid, our take rate will be a lot higher than before to around 14%. Looking forward this year, we’ll continue to optimize while reducing our funding costs. But upfront costs primarily on the sales under the 100% guarantee model will affect our bottom line in the short term.

Operator, Operator

Thank you. And our next question today comes from Victor Chu with Morgan Stanley. Please go ahead.

Victor Chu, Analyst

Thank you. I’m Richard from Morgan Stanley, a question on the cost side. Given obviously, the loan size has been shrinking and the company had been optimizing in the loan size and client base in the risk environment? Are there any room to optimize the sales force? Because you know, at the moment, I guess, cost control is also a very important aspect that we can probably analyze and see the profitability of the business. Any thoughts on that? Thank you.

Y.S. Cho, Chairman and CEO

Okay, thanks for your question. By now, we have completed the adjustment of our sales team; we reduced our sales team especially in the regions where the local economy is not resilient, and we don't see much development potential. As a result, we have a lot fewer teams. But our plan has been completed, and now our focus is on retaining our remaining best-quality sales team, which is a lot better than before. The department has been continuously improving customization. Although we all know that we tightened underwriting policy very much from this year, we see the remaining direct team continuously improving. We understand that productivity enhancement is the best way to optimize our cost ratio. But also, we’ll continue our efforts to further optimize our funding and other operational costs.

Gregory Gibb, Co-CEO

So just Richard, Greg here. To add to Y.S.’s comment, if you look at the third quarter, operational expenses were down 6% quarter-on-quarter and down 31% year-on-year. So, actually starting in the fourth quarter last year, and then progressively up until about July and August this year, we went through quite substantial restructuring, and that restructuring included frontline, mid, and back office, so pretty far-reaching. As Y.S. said, I think given that we have made those adjustments and that we're starting to see improved productivity in the front line, the key now is really to capture the benefits from the ongoing change in the mix of our business. If you look at, for example, Y.S. mentioned funding costs, our funding costs, through the Puhui guarantee model, when we partner with banks and other trust companies, it's still raising around 5.5%, on average, but when you look at the consumer finance business, that funding cost is about 3.5% to 3.6%. And then if you look at the new business mix in the third quarter, where our consumer finance made up above 40% of all new business, you can see as that change in the mix of the business occurs, it creates an overall lower funding cost as well. So there's still more room we believe, in the current interest rate environment, here in China, to optimize funding costs on the guarantee model. We’ll be working through that with our bank partners. But the key now is to take advantage of the fact that the old book, which has really been the source of our challenges, has been shrinking and the new has been performing in line with expectations.

Operator, Operator

Thank you. Next question comes from Alex Ye with UBS. Please go ahead.

Alex Ye, Analyst

Good morning. Thanks for taking my questions. I have two questions. The first one is on asset quality. So, where are we in terms of the legacy as equity risk? Did the company see any early indicators that the asset quality on this part could actually improve? And what driver will be needed for that improvement? And second, regarding your PAOB, can you also share some color on that, including any initial thoughts on the future strategy on that bank? For example, what kind of growth prospects should we be expecting? How is it profitability now and when to expect it to breakeven? And also any color on the asset quality of SME loan book? Thank you.

Gregory Gibb, Co-CEO

Sure. On asset quality for the domestic Puhui branded SBO business, as we've highlighted, the C-M3 ratio, which is that lead indicator, still remains at an elevated level. So for Q3, it was at 1.1% versus about 1% in Q2. So it has remained at an elevated level. But if you factor in that this is a numerator-denominator issue when you met through the ratio, actually, the denominator has shrunk about 16%. If you look at just a quarter-on-quarter change. So if you were to factor that in, you would actually start to see gradual improvement. And we look through the overall book because that old business, written prior to 2023, is now approaching to be about half of the total portfolio, and that will continue to decline over the next 6 to 12 months. So the absolute loss that comes from the old book will continue to decline. And then what will drive these signals going forward is the portion of the overall portfolio which is coming from new business. The performance of that part is in line with our expectations. I think Y.S. has outlined that if you look at the quality of new business written since January 1 of this year, it is actually better than new business written in 2022 and 2021. It's not back to 2019 levels, but we would expect an improved quality because we are focusing on a higher quality customer base, narrowing our focus on the best credit quality groups. But we do see that it is generating a profitable outcome; we believe that the new business that we are doing today will be a positive contributor to the company in 2023 and beyond on a per-account basis. So we think the asset quality is still challenging, but gradually improving. One other indicator that we've seen recently is that the amount recoverable post indemnity, post 90 days, where it's been charged off, that recovery is gradually improving as well, this year and in the third quarter, so we believe that will bring some room going forward. So I don't think it's time to celebrate that everything has returned to normal, but we believe we probably have seen the worst, and we will see gradual improvement in overall quality going forward. In terms of PAOB, the digital virtual bank license in Hong Kong, we've actually, Lu Holdings has been looking at this market for some time, when the initial licenses were issued to eight of them back in 2019; we did consider at that point looking into it but then didn't pursue it for other reasons. Given the opportunity to fully acquire this license today at roughly about 1.2 to 1.3 times book value, we think it is actually quite a good medium-term growth option, a very affordable one for us. If you look at PAOB, in the context of the eight virtual banks in Hong Kong, by loan assets and total assets, it's roughly ranked third. And if you look at its relative profitability, it actually has the least losses of any player in the market and the focus of PAOB, while it's still relatively small, of about 1.8 billion Hong Kong dollars in outstanding loans, a majority of which are backed by the Hong Kong SME government guarantee program; it's quite low risk. If you look at the losses incurred last year, it was about 160 million Hong Kong dollars. We would expect losses this year to be in that range. We expect to grow the business in the context of Hong Kong, on the loan side, diversifying its products and acquisition channels a bit more, leveraging our experience in technology and risk management. We see opportunities for lending expansion into the Greater Bay area and exploring non-lending businesses as well. Ultimately, we believe that with investments in development, PAOB will become a profitable venture for us over the next two to three years. We think, overall, diversification strategies are the focus of Lu Holdings. The last two years have been about derisking to reduce exposure to the SBO segment while emphasizing high-quality customers.

Operator, Operator

Thank you. And our next question today comes from Yada Li with CICC. Please go ahead.

Yada Li, Analyst

Hello, management. Thanks for taking my questions. I have two questions for today. The first one is about our consumer finance segment. I was wondering how we shifted the strategic focus towards consumer finance. And looking forward, how much it will contribute to the whole loan book? And compared with the consumer finance peers, what are the unique advantages that we have to develop such business? The second one is that I notice you have almost RMB40 billion cash in the bank as of this quarter's end. Are management considering a share repurchase or a special dividend to deliver more value to shareholders? And that’s all. Thank you.

Gregory Gibb, Co-CEO

Sure. I'll take your first question on consumer finance. So I think we first have to define what consumer finance means for us. How does it add to what we have been doing for many years? So if you look at our traditional focus on the small business owner segment, over time, we've enabled lending to more than 6 million small business owners. As you know, those loans have always been granted in the form of to the individual, mostly for use in their businesses. So actually, we have quite a large installed base of customers that we have interacted with and continue to interact with. Now, most of the lending we have done traditionally has been larger ticket sizes of RMB200,000 to RMB300,000 and typically for a duration of two to three years. With our consumer finance license, we have an opportunity to provide a higher frequency service to customers that we have served for many years. We have the ability to understand those customers beyond some of their longer-term needs, particularly as they repay, over time, they may have shorter-term requirements as individuals as well. Those requirements could be in the form of their own personal consumption needs. So we have been developing a product set that serves these individuals. We've also been developing a product set, which allows us to partner with a number of other online platforms, so that we're reaching out into new customer segments. Today, the business is developing around half with the ability to serve small business owners and their individual needs. The other half is through partnerships that extend our reach to the customer base. We continue to invest in this business to generate more and more scenarios closely linked to customer consumption behavior. I think what's very important if you look at consumer finance in the context of Lu Holdings, is that it increases our frequency of interaction with those customers we serve. It also gives us a broader dataset to understand some of their needs and behaviors, which allows us to better judge their overall credit risk in their various needs. So it’s an opportunity to leverage what we have to also broaden who we serve, to do it with a broader set of products with shorter durations, which gives us more flexibility and adds data that we can use to assess customers more broadly. Today, as we said in the third quarter of total new loan sales enabled through the company, about 40% were for consumer finance, making up about 11% of the total outstanding to date. If you roll forward over the next 12 to 18 months, we expect that it will increasingly make up a larger part of our portfolio. So we are now low double digits in percentage of the portfolio and we believe that will continue to increase going forward. It is an important diversification initiative that also helps reinforce our overall position in terms of customers and risk. David, would you like to address the second question?

David Choy, CFO

Thanks, Greg. For your second question, yes, we have been exploring all the ways to deliver value to our shareholders since our listing. As you may be aware, we did some buybacks in previous years, and we continue to pay out dividends in recent years. We’ll continue to do so, of course. And as you may be aware, we just paid out the first half 2023 dividends in October with an amount of about $89 million. It's a relatively small amount compared to our cash position. After all, we won't exclude any means available to deliver value to our shareholders as a whole from the perspective of total shareholder returns. We will explore ways to preserve cash or deploy capital in a manner that supports sustainable growth in our business model, or to create options for future business model and growth. Thank you, Yada.

Liu Xinyan, Head of Board Office and Capital Markets

Sure. Thank you. This concludes today's call. Thank you for joining the conference call. If you have any more questions, please do not hesitate to contact the company's IR team. Thanks again.

Operator, Operator

Thank you. That concludes the call today. Thank you everyone for attending. And you may now disconnect.