View:
September 28, 2018
Dinggui Yan
Chief Executive Officer
Jiayin Group Inc.
26th Floor, Building No. 1, Youyou Century Plaza
428 South Yanggao Road
Pudong New Area, Shanghai 200122
People's Republic of China
Re: Jiayin Group Inc.
Amendment No. 1 to
Draft Registration Statement on Form F-1
Submitted September 14, 2018
CIK No. 0001743102
Dear Mr. Yan:
We have reviewed your amended draft registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form F-1
Dividend Policy, page 70
1. We note that you paid a cash dividend of RMB 400 million to your
shareholders in March
2018. Disclose why you elected to pay a cash dividend considering your
net deficit of
RMB 1.9 billion at December 31, 2017 and RMB 1.8 billion at June 30,
2018.
Dinggui Yan
FirstName LastNameDinggui Yan
Jiayin Group Inc.
Comapany 28, 2018
September NameJiayin Group Inc.
September 28, 2018 Page 2
Page 2
FirstName LastName
Investor Assurance Program, page 101
2. We note your response to comment 12. Please revise to disclose in
tabular format, the
outstanding principal balance of loans covered, the liability from the
investor assurance
program, the restricted cash available to pay these liabilities and
the weighted average
remaining term for each of the fiscal and interim periods.
3. You state that default payments to investors can only be made from the
investor assurance
program when there are sufficient funds available, and that your
obligation under the
investor assurance program to make payments is limited to the amount
of the restricted
cash at any point in time and you are obliged to compensate investors
once the restricted
cash balance is replenished again from contributions of future
borrowers. Considering the
significant unfunded investor assurance program liability as of fiscal
year December 31,
2016 and 2017 and as of the interim June 30, 2018 period, revise your
disclosure to
discuss in specific detail how you expect to fund the liabilities
given your liquidity levels
and the expected related timetable of repayments
Results of Operations
Provision for assets and liabilities from investor assurance program, page 106
4. We note that the provision for assets and liabilities from the
investor assurance program of
RMB 164,373 increased to 9.9% of total revenue for the six months
ending June 30, 2018
from RMB 42,463 and 1.9% of total revenue for the year ended December
31, 2017.
Please provide us with information on how the significant increase in
the provision was
determined during the six month period ending June 30, 2018 in light
of the significant
level of remaining liabilities from the investor assurance program as
well as the changes
in credit quality and the impact on delinquency rate trends.
Secondary Loan Market, page 130
5. You state that the total investment volume in your secondary loan
market as a percentage
of your loan origination volume was 84.5% in 2016, 97.2% in 2017 and
84% for the six
months ending June 30, 2018. Please revise the disclosures to discuss
the factors driving
the level of investment activity in the secondary loan market.
Evolvement of our product mix , page 134
6. Please revise to define net profit margin and indicate how the margin
impacted your
operating results for the periods presented. In addition, please
revise to disclose the net
profit margin for the six month period ending June 30, 2018.
Credit Assessment Model, page 139
7. We note your response to comment 20 and that based on the evolution of
your scorecard
module you are unable to disclose internal credit scores for all
periods presented. Please
Dinggui Yan
FirstName LastNameDinggui Yan
Jiayin Group Inc.
Comapany 28, 2018
September NameJiayin Group Inc.
September 28, 2018 Page 3
Page 3
FirstName LastName
revise your disclosures to provide a discussion of the credit metrics
utilized in your
business operations during the periods prior to the implementation of
the revised
scorecard module.
Investor Assurance Program by Partnering with Class B Investors, page 141
8. You state that for the investor assurance programs launched in July
2018 you do not
assume any liabilities to repay Class A or Class B investors, even if
the balance of the
fund and the proceeds received by the Class B investors are not
sufficient to fully
compensate all Class A investors for such loans. Please revise to
disclose why you are a
party to the multilateral loan contract between the borrower, Class A
investor(s) and Class
B investor.
Notes to the Consolidated Financial Statements
Note 2. Summary of Significant Accounting Polies
(d) Fair Value , page F-13
9. You state that assets from the investor assurance program are recorded
at cost. Reconcile
this with your disclosure on page F-16 which states that assets from
the investor assurance
program are measured at fair value.
(k) Investor Assurance Program, page F-14
10. You state that under the investor assurance program you set aside a
certain percentage of
service fees into designated restricted cash accounts to cover, on a
portfolio basis, the
principal and interest of defaulted loans, payable on a first-loss
basis up to the balance of
the investor assurance program. Clarify when investors may make a
claim for defaulted
principal and interest payments against the fund (e.g. after first
missed payment).
11. You state that your obligation under the investor assurance program to
make payments is
limited to the amount of restricted cash and future contributions.
Revise to disclose here
and in your Subsequent Events footnote for the period ending June 30,
2018, that you
intend to use your own working capital to fund the risk assurance
program after April 28,
2018 when the balance of the investor assurance fund is depleted, to
be consistent with
your disclosures on page F-41.
Incentives to Investors, page F-20
12. We note your response to comment 25. Please revise to disclose the
amount of incentives
provided to investors for the period ending June 30, 2018.
(o) Revenue Recognition
After adoption of ASU 2014-09, "Revenue from Contracts with Customers" (Topic
606), page F-
21
13. We note that you retrospectively adopted ASC 606; Revenue from
Contract with
Dinggui Yan
FirstName LastNameDinggui Yan
Jiayin Group Inc.
Comapany 28, 2018
September NameJiayin Group Inc.
September 28, 2018 Page 4
Page 4
FirstName LastName
Customers. Please address the following:
Clarify if there were any changes to the underlying contract terms
between you, the
borrower and the investor in conjunction with your adoption of ASC
606; and
Disclose when loan facilitation, post-origination and other
service fees are due based
on the underlying contract terms.
14. You state that in accordance with ASC 606, service fees related to
your Automated
Investment Tool represent fees paid by the investors when the actual
rate of return
exceeds the expected rate of return stated in the investment program
agreement, estimated
based on historical experience of returns on similar investment
products and current trends
and recognized on a straight-line basis over the term of the
investment period only when it
becomes probable that a significant reversal in the amount of
cumulative revenue will not
occur. Please address the following:
Disclose how you define investment and subscription periods and
the relation of each
to the other;
Tell us in greater detail how these fees are calculated and are
recognized as revenue
during the investment period;
Tell us if you estimate the entire amount of the fees on day 1 and
if and when the
estimate is updated to reflect the actual performance of the
underlying loan;
Provide us with the data to support the use of historical
experience of returns on
similar investment products and current trends and timing of
revenue recognition;
Tell us how you considered the guidance in ASC 606-10-32-12 in
concluding that it is
probable that a significant reversal in the amount of cumulative
revenue will not occur
and when and how often this determination is made;
Tell us how you determine the actual rate of return exceeds the
expected rate of return,
including how you factor in actual loss rates on the underlying
loans; and
Disclose the weighted average investment period.
(o) Revenue Recognition
Contract assets, net , page F-23
15. Please revise to address the following:
Revise to disclose a separate rollforward of activity for your
contract assets
and accounts receivable by service type for the periods presented;
Revise to disclose a separate rollforward of activity of the
movements of the allowance
for uncollectible contract assets and accounts receivable by
service type for the periods
presented;
Revise to disclose separately an aging of the contract assets and
accounts receivable by
Dinggui Yan
FirstName LastNameDinggui Yan
Jiayin Group Inc.
Comapany 28, 2018
September NameJiayin Group Inc.
Page 5
September 28, 2018 Page 5
FirstName LastName
service type for the periods presented; and
Enhance your write-off policy to explain the time frame in which a
settlement is
typically reached and the factors you consider in determining when
an account is no
longer collectible.
(y) Recent Accounting Pronouncement
Recently Adopted Accounting Guidance, page F-27
16. You state that the new revenue standard adjustment upon the
adoption of ASC 606 is
due to the fact that in accordance with ASC 606 you recognize
revenue when you
satisfy the performance obligation by transferring the promised
service to customers.
And that revenue loan facilitation services are now recognized at
the time a loan is
originated between the investor and the borrower and the principal
loan balance is
transferred to the borrower, at which time the facilitation
service is considered
complete. You also state that in accordance with ASC 605, since
transaction fees were
collected in monthly installments, contingent upon the borrower's
payment and the
borrower had the right to early terminate, revenue was not
recognized until the
contingency was resolved. Assuming that the underlying contract
terms related to
revenues in 2016 and 2017 have not changed, tell us how you
satisfied the provisions
of ASC 606-10-25-30(a) in concluding that despite the contingency
related to payment
and early termination, you now have the right to payment;
Tell us why, prior to February 2018, under the terms of both your
previous contracts
and current contracts, you were willing to forego unpaid loan
facilitation service fees
despite the completion of the related services; and
Tell us what the net revenue adjustments were by service type,
upon the adoption of
ASC 606.
Note 5. Liabilities from Investor Assurance Program, page F-32
17. Please revise to provide a rollfoward of activity in the restricted
cash account for the
periods presented.
18. Please revise to disaggregate net payouts based on the underlying
vintage of the related
original liability for each of the periods presented.
19. Please revise the table to separately disclose gross payouts and
recoveries separately for
the periods presented.
Note 10. Related Party Transactions, page F-39
20. We note that amounts due from related parties of RMB 517,685 were
acquired in
connection with the acquisition of Niwodai Finance for which the
underlying loans
are due by the end of 2018. Considering that the amounts due are 20%
of your total
assets, please enhance your disclosure to discuss how you assess the
likelihood of
Dinggui Yan
Jiayin Group Inc.
September 28, 2018
Page 6
collection, including the results of your assessments for the periods
presented.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
(f) Revenue Recognition , page F-53
21. In regard to the accounts receivable and contract assets, net, please
address the following:
Tell us the factors considered which resulted in the write-off of
"other online standard
loan products" of RMB 60,245 for the six month period ending June 30,
2018; and
Disclose why you expect to recognize unsatisfied post-origination
services as of June
30, 2018 over three years considering your product term of twelve
months, and in the
past of up to eighteen months as disclosed on page 88.
You may contact Michelle Miller at 202-551-3368 or Marc Thomas at
202-551-3452 if
you have questions regarding comments on the financial statements and related
matters. Please
contact David Gessert at 202-551-2326 or Pam Long at 202-551-3765 with any
other questions.
Sincerely,
FirstName LastNameDinggui Yan
Division of
Corporation Finance
Comapany NameJiayin Group Inc.
Office of Financial
Services
September 28, 2018 Page 6
cc: Meng Ding, Esq.
FirstName LastName