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# 4. The Numbers: What Management Says vs. What the Balance Sheet Shows
# Income Statement (from earnings call transcripts)
|Metric|FY2024|FY2025|YoY|
|:-|:-|:-|:-|
|Revenue|RMB 5.80B|RMB 6.22B|\+7.3%|
|Net Income|RMB 1.06B|RMB 1.54B|\+44.8%|
|Net Margin|18.2%|24.6%|\+6.4pp|
|Facilitation Volume|\~RMB 101B|RMB 129B|\+28%|
**Superficially, this looks great.** Revenue up 7%, net income up 45%, margins expanding. This is the "value stock" thesis.
# Quarterly Trend (the real story)
|Q1 2025|Q2 2025|Q3 2025|Q4 2025|
|:-|:-|:-|:-|
|Revenue (RMB M)|1,776|1,886|1,470|1,090|
|QoQ Rev Growth|—|\+6.2%|**-22.1%**|**-25.8%**|
|Net Income (RMB M)|540|519|371|101|
|Net Margin|30.4%|27.5%|25.2%|**9.2%**|
|Facilitation Vol (RMB B)|35.6|37.1|32.2|24.2|
|90+ Day Delinquency|1.13%|1.12%|1.33%|**2.03%**|
|Non-GAAP Op Income (RMB M)|607|738|491|120|
**The quarterly trend is catastrophic.** Revenue fell 38% from Q2 peak to Q4. Net income collapsed 81%. Facilitation volume dropped 35%. Delinquency nearly doubled. Q1 2026 guidance is RMB 18.5-19.5B in facilitation volume — **another \~22% decline from Q4 2025.**
# Balance Sheet (Q4 2024 → Q4 2025)
|Line Item|Q4 2024|Q4 2025|Change|
|:-|:-|:-|:-|
|Cash|RMB 541M|**RMB 62M**|**-89%**|
|Receivables|RMB 3.49B|RMB 5.23B|\+50%|
|PP&E|RMB 97M|**RMB 1.36B**|**+1,297%**|
|Total Debt|RMB 52M|RMB 701M|\+1,255%|
|Total Assets|RMB 5.41B|RMB 8.76B|\+62%|
|Total Liabilities|RMB 2.28B|RMB 4.32B|\+89%|
|Equity|RMB 3.13B|RMB 4.43B|\+42%|
**The balance sheet tells a completely different story from the income statement.**
# 5. Red Flags — Ranked by Severity
# CRITICAL: Cash Evaporated Despite "Record" Profits
JFIN reported RMB 1.53B in net income for FY2025. Yet cash dropped from RMB 541M to RMB 62M — a decrease of RMB 479M. Where did the money go?
* **Capex: RMB 635M** — For a fintech platform, 10.2% capex/revenue is extreme. In FY2023, capex was only RMB 32M. In FY2024, it was RMB 739M. What exactly are they building that costs this much?
* **Investing cash outflow: RMB 1.95B** — This includes RMB 1.16B in "other investing activities" — a black box.
* **Net debt issuance: RMB 706M** — The company borrowed heavily while burning cash.
* **Shareholder returns: \~RMB 327M** — $41.1M dividends + $30.4M buybacks. Taking cash out of a company whose cash position is collapsing.
**Bottom line:** If you report RMB 1.53B in profit but your cash drops by RMB 479M, either (a) you're investing heavily for growth (the capex story), or (b) the profits aren't real. The PP&E explosion suggests (a) but the nature of the investments raises questions.
# CRITICAL: PP&E Exploded from RMB 97M to RMB 1.36B
A fintech company with 1,028 employees does not need RMB 1.36B in property, plant, and equipment. For comparison:
* FY2021: RMB 45M
* FY2022: RMB 47M
* FY2023: RMB 90M
* FY2024: RMB 97M
* **FY2025: RMB 1,358M**
This is 14x growth in one year. The company is either:
1. Capitalizing software development costs aggressively (shifting expenses from the income statement to the balance sheet to inflate profits)
2. Making genuine investments in data centers or other hard assets (unlikely at this scale for a loan-matching platform)
3. Using PPE as a vehicle to move cash somewhere — potentially to related parties
**The Q2 2025 transcript mentions "Fuxi model management platform" and "Tianlu R&D performance management platform" — these sound like capitalized software, not hard assets.** If R&D is being capitalized into PP&E, reported profits are overstated by exactly the amount of the capitalization.
# CRITICAL: Receivables Growing Faster Than Revenue
Receivables grew from RMB 3.49B to RMB 5.23B (+50%) while revenue grew only 7.3%. This means:
* **DSO (Days Sales Outstanding):** Each RMB of revenue is taking longer to collect
* Receivables / Revenue = 0.84x (FY2024: 0.60x)
* The company is booking revenue that hasn't been collected in cash — common in fintech, but the trend is deteriorating
Combined with rising delinquency rates, the quality of these receivables is highly suspect.
# HIGH: Cash/Current Liabilities = 0.017
JFIN has RMB 62M in cash against RMB 3.68B in current liabilities. That's 1.7 cents of cash for every dollar of short-term obligations. In FY2024, this ratio was 0.27. The company is **effectively insolvent on a cash basis** and depends entirely on:
* Collecting receivables (which are growing and deteriorating in quality)
* Rolling over short-term debt
* Access to institutional funding lines
# HIGH: 90+ Day Delinquency Doubled
From 1.13% (Q1 2025) to 2.03% (Q4 2025). The CRO attributed this to "new regulation implementation" and "industry-wide risk cycle." She said risk metrics improved \~25-30% from their management interventions.
But 2.03% at 90+ days is a **lagging indicator.** The loans delinquent at 90+ days in Q4 were originated months earlier. The QoQ trend (1.12% → 1.33% → 2.03%) shows acceleration, not stabilization.
# HIGH: Prior Material Weaknesses + Auditor Change
Marcum found material weaknesses in 2021 and 2022. These were "remediated" by the time Deloitte took over, but the fact pattern (material weakness → remediation → switch to Big 4) is a known pre-fraud pattern.
# MODERATE: New CRO Just Appointed
Dan Qi replaced Yifang Xu as Chief Risk Officer, effective June 1, 2026. Xu stays on the board. A CRO change when risk metrics are deteriorating is either (a) accountability for poor risk management, or (b) the outgoing CRO seeing something they don't want to sign off on. The "personal reasons" explanation and board retention suggests (a), but the timing is notable.
# MODERATE: Q4 2025 Revenue Recognition Changes
The Q4 2025 transcript mentions a RMB 20.1M "reversal of credit losses" — i.e., they wrote BACK prior loan-loss provisions, which boosted Q4 income. Without this reversal, Q4 would have been even worse. Reversing loan-loss provisions when delinquencies are rising is aggressive accounting.
# MODERATE: FMP Structured Data vs. Transcript Discrepancy
FMP's income statement for FY2025 shows revenue of RMB 866M (vs. RMB 6.22B from transcripts) and net income of RMB 214M (vs. RMB 1.54B). While this is likely an FMP data parsing issue (the company uses "net revenue" differently and FMP may not capture all line items correctly for Chinese fintech companies), the magnitude of the discrepancy (7x on revenue, 7x on net income) means external data users cannot verify the company's reported numbers through standard APIs.
# 6. The Bull Case (Why Someone Calls This a "Value Stock")
* **P/E of \~0.2x** (on management's numbers) — absurdly cheap
* **P/B of 0.08x** — trading at 8% of book value
* **5.2% dividend yield** (though sustainability is questionable)
* **Deloitte audit** — Big 4 auditor provides some assurance
* **Revenue still grew 7.3%** for the full year (even if Q4 was bad)
* **New regulations** could drive industry consolidation, benefiting survivors
* **International expansion** — Indonesia +187% volume growth, Mexico +105%
* **$50M remaining buyback authorization** — management buying stock signals confidence
The value thesis rests entirely on: (a) the reported numbers are real, and (b) the Q4 collapse is a temporary regulatory adjustment, not a structural decline. If both are true, this is the cheapest stock in the market.

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