Chailease Holding Company Ltd
TWSE:5871
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
121
195.5
|
| Price Target |
|
We'll email you a reminder when the closing price reaches TWD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Chailease Holding Company Ltd
Earnings Call Analysis
Q2-2024 Analysis
Chailease Holding Company Ltd
In the second quarter of 2024, consolidated revenue totaled TWD 25.7 billion, marking a 3% increase from the previous quarter. This growth was attributed to better business volume and increased solar income. For the first six months of 2024, the consolidated net profit reached TWD 12.2 billion, with earnings per share at TWD 7.08. However, there was a decrease in net profit growth driven by less tax rebates in China this year and more impairment losses.
Taiwan remains the largest contributor within the company, holding 56% of the group’s total credit portfolio and contributing 48% to net profit. The loan portfolio in Taiwan reached TWD 455 billion, showing a 6% year-over-year increase. China contributed 45% to net profit, although the profit from China decreased due to reduced tax rebates. The ASEAN region contributed 5% to net profit, maintaining stable portfolio growth.
The overall asset quality has been stable, but there are regional variations. Taiwan's delinquency ratio decreased from 2.8% to 2.7%, reflecting reduced new delinquencies. Conversely, China and ASEAN saw an increase in delinquency ratios due to weak macro conditions, but these remained within historical averages. The consolidated delinquency ratio rose slightly to 3.5%. Notably, proactive measures such as enhancing collection efforts in China are underway to mitigate risks.
The cost-to-income ratio improved slightly to 27% for the first half of 2024, expected to stay at this efficient level. The asset-to-equity ratio increased marginally from 5.6x to 5.8x. The consolidated return on assets (ROA) was 2.6% annualized, slightly up from 2.5% in the first quarter. Return on equity (ROE) stood at 17%, up from 16% in the first quarter, excluding preferred shares.
For Taiwan, solar assets saw significant growth, reaching TWD 56.2 billion, an increase of 12% year-over-year. Revenues from Taiwan also grew due to the rise in solar income. In China, the loan portfolio grew by 7% year-over-year, but net profit declined by 12% due to more impairment losses and lower tax rebates. For the ASEAN region, Malaysia was the main growth driver, but overall regional profit decreased by 26% due to higher impairment losses.
The company maintains a stable outlook for the cost-to-income ratio and expects the current efficient level to continue throughout the year. Despite the mixed macroeconomic conditions, management has not altered the growth targets, expecting business volumes and profitability to remain stable if macroeconomic conditions don’t worsen. In China, anticipation of further tax rebates totaling TWD 330 million to TWD 340 million for the full year remains unchanged, with most already received in the first half.
Investors should note the company's strong regional diversity, with steady growth in key markets like Taiwan and strategic management of delinquency ratios across regions. The proactive approach in China with early involvement of legal teams in collections reflects a robust risk management strategy. However, the macroeconomic uncertainties and the impact on different regions’ performance should be closely monitored.
You don't have any saved screeners yet
Welcome to the Chailease Second Quarter 2024 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. For your information, a webcast replay will be available within an hour after the conference is finished.
And now I would like to turn the call over to Kimberly Lian, Project Manager of the Chailease Holdings. Ms. Lian, please go ahead.
Thank you. Hi, everyone. Thank you for joining us today for our second quarter 2024 results conference call. With me this afternoon is Mrs. Sharon Fan, Head of IR, and she will open to your questions in Q&A section.
The presentation I'm giving today will be available for download on our official website at www.chaileaseholding.com.tw. And as a reminder, please refer to the disclaimer in Slide 2 regarding forward-looking statements. Our actual result may differ from such statements.
Today's agenda including management highlights for the second quarter 2024 followed by the consolidated performance review and segment review for our major operations, Taiwan, China and ASEAN.
Now let's begin the presentation by turning to Slide 4. Highlights for an overview of our second quarter 2024. Overall business momentum and revenue growth continued. This slide summary table here shows the credit portfolio growth for the second quarter. On a year-over-year basis, Taiwan, China and ASEAN's loan portfolio grew 6%, 7% and 5%, respectively.
On the consolidated level, we achieved 7% year-over-year credit portfolio increase. As for the first half credit portfolio, year-to-date growth, Taiwan increased 2%. China increased 1% given R&D figures. ASEAN increased 1% and 2% growth on the consolidated basis. So far, the company did not change our growth target for this year. However, we will continue to monitor the overall economic development of -- and keep the investors updated.
Second highlight is our asset quality. Overall, asset quality are still under control with new delinquent formation stabilized. This quarter, we see Taiwan delinquency ratio decreased from 2.8% to 2.7% with new delinquent formation decreasing.
Delinquency ratio for China and ASEAN both increased in the second quarter. However, this is more related to the current weak macro situation. And the current delinquency ratio is still maintained within the historical average range. Right now, the consolidated delinquency ratio is 3.5%.
Moving to Slide 6. Consolidated credit portfolio reached TWD 814 billion at second quarter end 2024 with 7% year-over-year growth and 2% increase for the first half at each of our main operations -- at each of our main operation business momentum and revenue growth continued.
The next slide, Slide 7. Slide 7 shows you the trend of consolidated average loan yield and cost of funds for the past 3 years. In the second quarter, we see a little increase of funding costs mainly reflected in the interest rate rising in March in Taiwan this year. And for Taiwan yield, we see decreasing in yield for the second quarter due to some product mix change in Taiwan. We will discuss the change of each operating regions in the next section.
Slide 8 on the left-hand side. The consolidated revenue for the first 6 months of 2024 reached TWD 50.7 billion, representing 7% growth compared to the same period of last year, as overall business momentum and revenue growth continued. On the right-hand side, second quarter 2024 consolidated revenue totaled TWD 25.7 billion, grew 3% compared to the previous quarter. We see business volume better in the second quarter than previous quarter, and this also included more solar income in the second quarter.
Moving on to Slide 9. On the left-hand side, the consolidated net profit for the first 6 months of 2024 totaled TWD 12.2 billion, and earnings per share was TWD 7.08. The decrease in net profit growth was mainly driven by less tax rebate in China this year and more impairment losses were booked.
For tax rebate in China in the first half of this year, RMB 210 million were booked this year compared to RMB 410 million booked last year.
On the right-hand side, second quarter consolidated profit was up 10% quarter-over-quarter as China recognized more tax rebate compared to the first quarter.
Turning to Slide 10. The slide shows you the credit portfolio mix and the product contribution in terms of our operating regions. On the left-hand side, we can see Taiwan credit portfolio still account for more than half, which is 56% of group total credit portfolio.
China is 30% and ASEAN maintained at 14% at first quarter -- second quarter end of 2024. On the right-hand side, Taiwan net profit contribution accounts for 48%, and China was 45%. Profit contribution from China was decreased compared to last year, and this is due to more tax rebate for China last year. ASEAN contributed 5% to the consolidated net profit.
Moving on to Slide 11. The chart on the left-hand side, this year, cost-to-income ratio slightly increased -- slightly improved to 27% for the first 6 months of 2024 compared to 28% last year. We expect the cost-to-income ratio may maintain at this efficient level for this year. The chart on the right-hand side, asset to equity slightly increased from 5.6x to 5.8x for the quarter.
Slide 12. The consolidated ROA on the annualized basis was 2.6% for the first half of 2024. The ROA improved a little bit in the second quarter compared to 2.5% in the first quarter due to increase in profit in the second quarter.
Same for the consolidated ROE. On the right-hand side, ROE was 17% for the first half of this year, also improved a little from the first quarter 16%. The calculation for ROE excludes preferred share.
Next slide, Slide 13. The consolidated delinquency ratio on the right-hand side at second quarter end was increased to 3.5% from 3.4% in prior quarters. There is no specific concentration in any specific industry, but more related towards the overall weak macro situation.
Moving to the right-hand side. Allowance to loan portfolio ratio was slightly up 0.1 percentage point to 2.5% to cope with the current situation.
Moving on to the segment review. Let's look at our operating performance region by region. On Slide 15. Taiwan's loan portfolio reached TWD 455 billion at second quarter end of 2024, representing 6% year-over-year increase and 2% growth for the first half. Taiwan's business momentum continued this quarter. Major growth driver for this year are from the new disbursement for big corporate financing and also lending in micro-business.
Slide 16. This slide shows the change of Taiwan solar asset. Taiwan solar net asset reached TWD 56.2 billion at second quarter-end 2024, representing 12% year-over-year increase and 5% growth rate for the first half.
Next slide, Slide 17. This page represents trend of our Taiwan loan yield and funding costs. The increase in funding costs reflect the interest rate hike in Taiwan in March and also the slightly decrease in loan yield for the second quarter 2024 was mainly reflecting the change in product mix in Taiwan, as our relatively high-yield product, secondhand car financing business grew slower this year.
Moving on to Slide 18. Revenue for our Taiwan operation for the first 6 months of 2024 reached TWD 27.4 billion, representing 9% year-over-year growth. The solar revenue accounts 13% of Taiwan's revenue for the second quarter.
For the quarter-over-quarter comparison on the right-hand side, second quarter revenue was up 4% quarter-over-quarter due to higher solar income because of the more sunshine in the second quarter.
Next slide, Slide 19. Taiwan's profit for the first 6 months of 2024 decreased by 4% compared with the same period last year, mainly due to slightly higher impairment losses. The second quarter Taiwan's net profit was up 11% quarter-over-quarter, reflecting the sequential increase in business volume with cost-to-income ratio remain efficient.
Slide 20, on the left-hand side. Taiwan delinquency ratio at second quarter 2024 was down 0.1 percentage point to 2.7% for the quarter. We see more stabilization for the asset quality with new delinquent formation decreasing this quarter.
On the right-hand side, recovery from delinquency and write-off amount was more for the second quarter.
Next slide, Slide 21. Allowance to loan portfolio for Taiwan slightly increased 0.1 percentage and reached 1.9% this quarter, which is more related to the general provision for new business.
Let's start China operation on Slide 22. China credit portfolio reached RMB 54 billion at first quarter end 2024, which grew by 7% year-over-year and 1% increase year-to-date. As mentioned earlier, we maintained our China loan portfolio growth target for 2024.
For China, we see second quarter business continue to build up, but not accelerating due to the current weak economic situation.
Turning to Slide 23. This page shows the loan yield and cost of fund trends for our China operations. We managed to maintain stable spread over the quarters. We see cost of funding has been continued lower for this quarter due to the cut of the loan prime rate.
Next slide, Slide 24. China's revenue for the first 6 months of 2024 total TWD 16.4 billion, year-over-year increased 6%. On the right-hand side, second quarter revenue was up 1% quarter-over-quarter shows business momentum continue to build up for China.
Slide 25. China for first 6 months of 2024 net profit reached TWD 6.26 billion, year-over-year decreased 12% due to more impairment losses and less tax repay were booked this year compared to the same period of last year.
For tax rebate, the difference between first half of this year and the same period of last year is RMB 200 million, which is last year RMB 410 million versus RMB 210 million this year, so the difference is RMB 200 million.
On the right-hand side, China's second quarter 2024 net profit was up 22% sequentially, as RMB 170 million tax rebate were recognized for the quarter compared to only RMB 28 million in the first quarter.
Turning to next slide, Slide 26. On the left-hand side, China delinquency ratio at the second quarter was up 0.1 percentage point to 4.1%, reflecting the impact and uncertainty of the current macro situation. On the right-hand side, recovery from delinquency amount increased for the quarter compared to prior few quarters.
Slide 27. China's allowance to portfolio ratio for the second quarter 2024 was 3%, same ratio as previous quarter, with allowance amount increased a little from previous quarters.
Moving to ASEAN on Slide 28. Total credit portfolio at second quarter end of 2024 reached TWD 115 billion, up 5% year-over-year and 1% for the first half. For the first half of this year, Malaysia is considered the main growth driver for ASEAN.
Slide 29. The left-hand side, ASEAN's revenue for second quarter 2024 totaled TWD 6.74 billion, grew 4% compared to the same period last year, which is pretty in line with our portfolio growth. On the right-hand side, ASEAN's second quarter revenue was also up 2% sequentially.
Moving to the Slide 30. ASEAN's first 6 months 2024 net profit reached TWD 935 million, decreased by 26% due to more impairment losses were booked compared to last year. On the right-hand side, ASEAN's second quarter 2024 net profit was up 2% sequentially. This shows the same trend as portfolio growth.
Slide 31. On the left-hand side, ASEAN delinquency ratio at second quarter increased 0.4 percentage point to 4.9%. Among the ASEAN countries, we have been paying more attention to Thailand asset quality because its macro situation is still recovering very slow; therefore, causing its delinquency ratio to continue to rise. On the right-hand side, ASEAN's allowance to portfolio ratio for the second quarter 2024 increased to 3.6% from 3.5%, reflecting the increase of the delinquency amount.
And this brings us to the end of my presentation for today. Thank you for your time and listening. Now I would like to turn the call back to the operator to open Q&A session.
[Operator Instructions] And our first question is coming from Gurpreet Sahi, Goldman Sachs.
I have a few. First is on the growth front. Can we check if the 10% growth rate target is still intact and where do we see the growth accelerating to achieve that 10%?
Basically, right now, the management want to maintain our full year target maintained. Usually, we can have a better second half from our historical experience. So although we are currently a bit behind of the full year target, but still, we want to -- we don't want to change the target as of now. Yes.
Okay. And then second question is on this delinquency in ASEAN. So we say Thailand. So this 40 basis points uplift or, let's say, if we compare versus on a Y-o-Y basis, nearly 100 basis points. Can you break out how much is led by Thailand and how much by Malaysia or some other region?
Basically, the delinquency ratio for the ASEAN operating subsidiary actually is only higher with an increasing trend for this quarter. For the other actually already showed some improvement -- a little bit improvement like our Asia and Vietnam, the delinquency ratio actually decreased from the previous quarter. But Thailand still some similar trend, so I think this is -- that our challenges, we need to manage our Thailand asset quality is the first priority for now.
Quick follow-up to that. So Thailand and -- sorry, the Malaysia and Vietnam Q-on-Q, but is it a trend, like is it lower Y-o-Y also or Y-o-Y, they are up a lot?
Currently, Malaysia delinquency ratio is about 1.5% versus last year, it's about 2-point-something percent.
Okay. Understood. And then final question is on the spread. So March rate hike, and I think this was flagged somewhere in the call during the first quarter that the rate hike by the Central Bank of Taiwan will raise funding cost and will lower the spread for Taiwan in the second quarter, but what we did not kind of understand is that it will be so much and also the car financing lower on the asset yield. But then it was quite a bit of contraction in this quarter. So going forward, third quarter, fourth quarter, what can we say around the spread in Taiwan?
I think actually, the contraction of the Taiwan spread, I think the majority is driven by the product mix change. As you sum from the second half of the last year, our portion of our used car financing business was impacted by this market disturbance. So we actually slowed down the part of the business and that happened to be a little bit higher yield product, so I think this is a cumulative impact. So it's more because of the product mix change.
So from here, can we say that spread can be pretty much flatlined in Taiwan or there is more to come from the same...
No for rate hike from central bank, yes, I think we expect the spread should be maintained similar level going forward.
So the mix would not be negative? Like are we growing the used car financing still more than the overall growth rate in Taiwan, like 6%, 7%?
I think the new business volume has been like shrink to quite low level in that part of the city.
Next one, Alex Leung, UBS.
If I may, I also go through my questions one by one. First one is on the Chinese call management mentioned that the focus now is on strengthening the collection efforts on China. So -- and then they mentioned you are now getting your legal team to involve once delinquent loan get delinquent for 3 days versus 30 days in the past. So I'm wondering when was that new policy implemented?
Yes. Our collection profit players also play a very important role to control our overall credit cost. So we didn't change our definition of the delinquencies still like 30 days overdue of the monthly pay. However, we ask our legal team to involve the collection process earlier.
Therefore, we hope that we can improve the recovery. So that -- I think that the major message our CEO wants to deliver in the earnings call. So we didn't change the delinquency ratio -- delinquency definition.
Yes, I guess, I want to ask when did you put in place that new policy? It was May, April or something?
It's a gradual process. We do the monthly review regularly, and we will try to implement any remedy action that will help our operating performance, yes.
Okay. So is it fair to say Q2, that has helped somewhat in your Q2 collection rebound?
Yes. I think this is also one of the action that we can take to improve the overall like asset quality.
Okay. Great. And then second question is, you previously mentioned that you're expecting TWD 330 million, TWD 340 million of tax repaid for the full year this year in China, so now that around TWD 210 million has been received, so do you have a sense of when do you expect to receive the rest?
I think we still have -- majority of the tax rebate usually will be received and booked for the first 2 quarters of the year. And going forward, for the next -- third quarter, fourth quarter, probably we still have some small amount of the tax rebate to be received. However -- so it's -- the following tax rebate to be received won't be as significant as for the first 2 quarters.
Okay. So just to confirm that previous guidance of TWD 330 million, TWD 340 million for full year has not changed, right?
Yes. Unchanged.
Okay. And probably last question, just to confirm, U.S. rate cuts have any impact to your current spread whatsoever, because I might remember previously, you sort of guided that the U.S. rate movement is sort of neutral. Is that right?
Rate cut, you mean?
Yes, the upcoming U.S. rate cuts, does that have any impact to your Taiwan spread?
From our experience, actually, Taiwan CBC, it's not always followed the U.S. like interest rate cut over hike. So we will see.
I mean just -- if we just focus on the U.S. part, because you have 20% of your loan book in U.S.
I think for -- almost all our U.S. denominated business is we're charging floating rate. So it won't impact our spread.
Next question, Michael Zhang, Citi.
I just have a few questions on the spread. I just want to have a follow-up question on the Taiwan spread because you mentioned that the decline in loan yield was mainly driven by the change in product mix. Could you give us a sense of like how has your used cars business portfolio balance has changed in the past 2 quarters? And what is the current -- what's the current average yield on that used car portfolio?
Okay. We have several lines of the auto financing-related business. And overall, probably accounts for 15% to 20% of the Taiwan book. However, within that 15% to 20%, it's only 20% out of that is related to this used car financing, which was impacted by the recent year of the market turbulence.
And that part, I think, for this year, we haven't grown the portfolio for that BAU. So basically, we just maintained or slightly decreased. As our CEO mentioned in the Mandarin call, probably we kind of have a more defensive strategy for that part of the business. We -- although the asset quality already managed to acquire satisfactory level. So we just maintain current portfolio to be gradually retired over the quarters.
Okay. So if we expect that portfolio to not grow as much, should we expect the average loan yield on that Taiwan portfolio is still going to go down quarter-over-quarter and the coming quarters or like is there any other offsetting factors?
In terms of the impact to our overall Taiwan average branded spread level, I don't think it will continue to have any negative -- significant negative impact because that part of the BAU start to have some trouble starting from the second half of last year. It has been over a year. So I think right now, just already reached to a very stabilized situation.
Got it. And my second question on the China spread. We are assuming that funding costs continue to improve and if we assume no further LPR cars in China, is our funding cost -- well, our funding cost maintain at this level or there could be more funding that will get repriced lower?
Yes. If the LPR continue to trend down, we will enjoy the benefit, lower our funding cost.
Okay. And just if the LPR doesn't move, right, if it is unchanged, do we still have more room to reduce our funding costs? Is it reprice on a quarterly or monthly basis or is it more on annual basis?
Because most of our funding cost rely on the bank borrowing, which is linked to the LPR, so if there's an LPR rate cut, we will benefit from that. However, there is some time lag because not all the bank credit line like renew at exactly the same day or same month, same quarter. So it will have some lagging effect.
However, because the LPR cut anyway, it's not a very big scale, so yes, from the average point of view, I think just have some -- a little bit benefit, not too much.
Got it. And just on your comments on the loan growth, you still maintain that 10% loan growth target and given that you -- probably you are facing some headwinds in the first half, like how would you think about the trade-offs between volume and margin? So would you sacrifice a little bit margin to achieve that loan growth target?
No, management philosophy is that we will always put our stable spread as the first priority. So we still want to -- because it's already well calculated in terms of our credit cost, the operating cost, funding costs, et cetera. So we still want to maintain our current spread level as the first priority. And the business volume still, I think should be mainly relied on the recovery, more meaningful recovery of the macroeconomy.
Okay. And just my final question is on the weightage on the China asset quality. Could you maybe give us some color around the what you are seeing on the ground for China asset quality in July and August? Are you -- is it similar situation?
Okay. As you can see from the most current quarter result and also for our July number 2, also, the delinquency ratio has been maintained very stable, similar level. And going forward, probably we expect probably well around this level until the end of the year until we see more obvious or significant macroeconomy acceleration.
Next question Edwin Liu, CLSA.
Just 2 small questions from me. Firstly, I see that the fee and commission income in the second quarter of this year is down 5% quarter-on-quarter and 13% year-on-year, just to get some color why it declined and is it more driven by Taiwan or China?
The second question, very quickly, the impairment loss of TWD 9 billion in the first half of 2024, could you give us a split by Taiwan and China? Maybe a split in the second quarter would be great.
Okay. To answer your first question, I think the fees and commission, they are 2 major factors that decrease. One is related to our Taiwan, the used car financing, we charge higher fees. So that -- and for the first 2 quarters of this year that part of the business actually didn't grow too much.
So Y-o-Y, the commission and fees decrease. That's for Taiwan part. The other is more related to the China pricing mix. As you know, our pricing for the traditional equipment leasing include 2 parts. One is the upfront fee, usually around 2% to 3% of the total all-in price.
And starting from, I think, last year, we already tried to give our frontline sales team a little bit more flexibility about the quotation of the price. So the fee part actually decreased, but however, the all-in price, we try to maintain. So you can see we are still able to maintain overall the pricing. However, the fee part decreased, probably decreased from 2% to 3% to 1% to 2%, yes. But the overall pricing didn't change. That's for the fee and the commission.
And the impairment loss, just as you can see, we are -- because of the increase of the delinquency ratio, so actually, we said assign more individual like provision and general provision across the region.
[Operator Instructions] Next we'll have Anupam Mathur, Goldman Sachs for questions.
I also had a couple of questions. Firstly, on Taiwan asset quality, we have seen a good trend of lower-end information in this quarter. So do we expect this delinquency trend to continue to go down and NPL formation to remain low? How do we see...
Can I answer your first question first? Regarding the Taiwan delinquency ratio, although we see slightly improvement for this quarter compared to previous quarter, I think we can -- it's a little bit too early to say whether overall Taiwan delinquency ratio will continue to trend down for the following quarters. However, we are more sure about that the used car financing business, the delinquency ratio already improved a lot compared to the past couple of quarters, that part is for sure.
And for the other, like our traditional equipment leasing or some micro-business financing, I think still need to continue to monitor whether the local economy can continue to maintain the healthy level or even get some improvement. So yes, I think it's a little bit too early to say what will be for the next quarter, but at least, I think it should be at least maintained.
Okay. So we are expecting stable asset quality at least in Taiwan?
Yes. Yes.
And for ASEAN, what is our expectation? Of course, we have seen a big jump, so should we expect similar kind of deterioration in the -- like going forward also or any stabilization we are seeing on the high line specifically?
I think because our Thailand operations still dominate our overall ASEAN in terms of the portfolio size, still accounts for like 60% comes from Thailand. So currently, Thailand didn't perform well, mainly due to the weak macro. And in Thailand, we are more doing the vehicle financing, which is more related to the macroeconomy performance.
So I think we need to at least manage our asset quality first. So -- but for the rest of the ASEAN like Malaysia, showing some very promising improvement trend in terms of growth or the delinquency ratio; and Cambodia, although still quite small in our ASEAN portfolio, but still performing quite good and also Vietnam also showing some improvement just because currently, the Thailand still dominate. So yes, that's the reason.
Do we expect further deterioration in Thailand or like what is your expectation?
I think we need to continue to see whether Thailand macro can -- showing some improvement trend for the next 2 quarters for this year, yes. We already slowed down the growth for Thailand.
Understood. And lastly, on China, like previously, it was mentioned that we have involved our legal team and collection overdue 5 days versus 30 days, so -- but if you look at 2Q '24, the new delinquency formation still inched up slightly, although only slightly, but it was still higher than 1Q, so again, to that question, when did we implement this title standard? And when could we see stabilization of at least new delinquent formation?
I think the early involvement of our collection teams for those are overdue cases, not necessarily delinquent because our delinquency definition is still like 30 days overdue were booked as a delinquent case. However, management currently try to do some operational enhancement to ask our legal department, the collection team to make some early involvement of those overdue cases. So hopefully, they will have some help to the overall asset quality management that, I think, that's the main purpose.
But I'm saying, have we started seeing in, say, 0 to 30 days lower, trend stabilizing? Because of course, I mean, first, they need to be overdue, and it seems like we have tightened overdue. So in the early bucket, are we seeing any improvement or things continue to remain soft, like...
Because we just start to implement this kind of exercise in the recent months and we will see what's the result. But at least, I think at least, we can, hopefully, to improve the recovery rate or yes, sometimes probably for some marginal cases, and it can improve some of the delinquency. And yes, that's more for the operational enhancement.
Got it. Okay. And sorry, maybe just one more. Like we mentioned, the fee rate has come down for the China business. So is it like we are seeing more competition and pricing pressure? And the overall interest plus fees is coming down for us in China?
Because the macro is still weak and for the frontline sales team, of course, pricing wise, it will be helped to let them have some flexibility to make our pricing more competitive in the market. So it's not because the competition issue, it's more we want to optimize the price and the volume.
[Operator Instructions] Okay. Ms. Lian, there are currently no questions at this point.
Okay. Jason, we can end the call. Thank you.
And ladies and gentlemen, we thank you for your participation in Chailease conference. You may now disconnect. Thank you, and goodbye.