Financial Tech Solution Provider PINTEC Files for IPO on the NASDAQ

PINTEC, a China-based financial tech solution provider, has just filed to get listed on the NASDAQ.

Image: PINTEC

The company provides online financial solutions in point-of-sale financing, personal and business installment lending, wealth management, and insurance brokerage.

Revenues are primarily from lending solutions. In 2017, 74.8% of the revenues were from service fees from personal and business installment loans and 24.6% from point-of-sale installment loans.

As of March 2018, it had 179 business customers, mainly online services, and 81 financial partners, including conventional financial institutions and peer-to-peer platforms. High-profile customers include Ctrip, the leading online travel service, and VIP.com, the leading flash sales site.

Its first product was launched in June 2015. In 2016 and 2017, PINTEC solutions facilitated over 8.5 million and 21.3 million loan applications, respectively, and a total of RMB4.8 billion and RMB15.2 billion (US$2.4 billion) in loans, respectively.

In 2016 and 2017, the company recorded RMB54.9 million and RMB568.7 million (US$90.7 million) in total revenue, respectively, and RMB200.5 million and RMB84.9 million (US$13.5 million) in net loss, respectively.

It turned its first profit in the first quarter of this year.

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HK Online Lending Firm WeLab Files for IPO

WeLab Holdings Ltd., the Hong Kong-based online lending firm, has filed for an IPO on the Hong Kong Stock Exchange.

Founded in 2013, the company operates an online consumer credit business and also provides consumer lending technology solutions to other lenders.

Source: WeLab

WeLab facilitates online consumer loans through WeLend, one of the first online lenders in Hong Kong, and WoLaiDai (我来贷), a marketplace lending platform for the mainland China.

While the site for Hong Kong is a balance-sheet lender, the mainland operation is a marketplace lender that connects institutional investors and other funding partners with borrowers on the WoLaiDai platform.

WoLaiDai

The company has developed in-house pre-screening system and other risk management capabilities for WoLaiDai platform. Loan process takes about five minutes. WeDefend, its risk management and fraud detection system, analyzes some 2500 data points.

It takes about two weeks for WoLaiDai to add a funding partner onto its platform as it connects them through APIs instead of listing them directly on its site.

Funding partners include investors on peer-to-peer lending platforms, commercial banks, consumer finance companies and micro-loan companies in the mainland.

WoLaiDai had facilitated a total of 2.1 million loans and signed up 28 million registered users as of March 31, 2018. The repeat borrowing rate increased from 16.8% in 2015 to 55.3% in 2017.

The total loan originations were US$2 billion as of March 31, 2018. The average loan amount was US$1010 in 2017.

The average APR was 25.5%. M3 delinquency ratio is between 0.4% and 1.5%.

WeLend

The total loan originations on WeLend were US$292.6 million as of March 31, 2018. The average loan amount was US$11,251 in 2017.

The average APR is 24.7%. M3 delinquency ratio is between 0.1% and 0.2%.

The repeat borrowing rate increased from 25.7% in 2015 to 51.6% in 2017.

Financials

Revenue sources include interest and other fees from WeLend, loan facilitation and service fees generated from WoLaiDai and service fees from the business-facing offerings.

A majority of the revenues in 2017 was from the WoLaiDai platform. The company turned profitable in 2017.

The total assets were US$125 million, US$173 million and US$397 million in 2015, 2016 and 2017, respectively.

Source: WeLab

ChinaFintech – Meituan’s Finance Business

Meituan, the leading platform for local services, recorded RMB1.73 billion and RMB74 million in loan receivables in 2017 and 2016, respectively, according to its IPO filing.

After obtaining a license for small loans in November 2016, Meituan Xiaodai (美团小贷) began to provide businesses on its platform unsecured loans with terms ranging from 6 to 18 months. There were 5.5 million businesses on Meituan platform as of the end of 2017.

The company has also begun extending credit to users. Meituan Shenghuofei (美团生活费), unveiled earlier this year, is a short-term cash loan.

Revenue sources of its loan business include interest income from balance-sheet loans and facilitation fees from loans funded by banks and other financial institutions.

Meituan runs credit screenings using big data techniques and has implemented anti-fraud systems. It also provides guarantee services for certain borrowers to banks and other financial institutions.

Its small loan company took out a one-year term loan from China Merchants Bank in 2017 at an interest rate of 4.785% per annum.

Apart from the loan business, Meituan also owns payment service company Qiandaibao (钱袋宝), which holds a license for non-financial institutions to run online payment services, and a 28.5% stake in Jilin Yilian Bank (吉林亿联银行), a private bank opened in May 2017. The revenue from Qiandaibao since it was acquired by Meituan in August 2016 has been minimal and it has also contributed a minimal loss, according to the Meituan filing.

Used Car Sales Platform Uxin Files for US IPO

Used car sales platform Uxin (优信) has filed wih the SEC to raise up to US$500 million in a NASDAQ IPO.

Established in 2011, Uxin connects car buyers to individual sellers and dealers and provides financing options to both car buyers and dealers by working with third-party financial services providers.

Uxin’s major revenue sources are fees from used car sales and auto loans, with a minority from sales of salvage cars and new cars, and short-term dealer inventory financing. The company plans to discontinue its new car sales business after selling their remaining new car inventory. It hadn’t turned a profit as of March 2018.

The revenue from auto loans as a percentage of the total revenue increased to 48% in 2017, up from 38% in 2016.

Source: Uxin

In 2017 the total number of used car loan transactions and the total amount of used car loans facilitated increased 113.6% and 110.7%, respectively, from the previous year. The total outstanding principal balance of loans for new cars accounted for 8.4% of the total outstanding principal balance of auto loans as of March 2018.

The company claims its used car sales platforms for individual car owners and dealers have 41% and 42% market shares, respectively, citing research reports from iResearch. Its major local competitors include Guazi.com.

In 2017, 45% of the total transactions and 60% of the GMV were generated between individuals.

It had established more than 670 physical service centers in more than 270 Chinese cities as of March 2018.

ChinaFintech — Xiaomi’s Finance Business

Xiaomi Finance, the online finance arm of smart device maker Xiaomi, accounted for 0.7% of Xiaomi’s total revenue, or RMB802 million, and 0.2% of its pre-tax net loss, or RMB83.6 million in 2017, respectively, according to its IPO filing. The total assets of Xiaomi Finance accounted for 14.1% of Xiaomi’s total in 2017.

Update: Xiaomi Finance accounted for 0.9% and 0.22% of Xiaomi’s revenue and pre-tax profits, respectively, but 13.55% of its total assets as of March 31st, 2018, according to its prospectus filed withThe China Securities Regulatory Commission (CSRC).

Xiaomi is restructuring its finance business that its stake in Xiaomi Finance will decrease to 40% after it completes.

Since 2015 Xiaomi Finance has added products and services in supply chain financing, consumer lending, payments, distribution of retail investment products and insurance.

Xiaomi provides consumer loans through mobile apps including Xiaomi Loans, Xiaomi Finance and Xiaomi Wallet. The loan receivables were RMB101 million, RMB1.6 billion, RMB8.1 billion as of the end of 2015, 2016 and 2017, respectively.

The consumer loan offerings include installment payment plans for the purchases of Xiaomi hardware products. Xiaomi Finance paid RMB 400,000, RMB 200,000 and RMB3.3 million to Xiaomi for hardware products sold through it in 2015, 2016 and 2017, respectively.

Leveraging the user data collected mainly from Xiaomi devices, Xiaomi Finance has developed proprietary consumer credit assessment and risk management systems. MIUI, the custom Android system pre-loaded in all Xiaomi connected devices, had 190 million monthly active users as of March 2018, according to Xiaomi’s filing. Xiaomi and Xiaomi Finance will continue to share their data with each other after restructuring.

Beijing Xiaomi Electronic Software, an affiliate of Xiaomi, has a minor stake in XWbank, a direct bank established in late 2016.

For the online payment and settlement services provided by Xiaomi Finance, Xiaomi pays fees to it. The amount was RMB40.3 million, RMB43.9 million and RMB49.9 million in 2015, 2016 and 2017, respectively.

Xiaomi Finance pays Xiaomi for online marketing services and other support services. It paid RMB9.7 million, RMB1.8 million and RMB70.8 million in 2015, 2016 and 2017, respectively, for online marketing services to Xiaomi.

Smart Device Maker Xiaomi Files for Hong Kong IPO

Xiaomi Corp., a leading smart device and internet services provider, has filed today with the Hong Kong Stock Exchange.

Source: Company

Founded in April 2010, Xiaomi launched its first Android-based smartphone in 2011 and now also sells a wide variety of connected devices either developed in-house or by affiliated companies, ranging from healthcare wearables to smart speaker.

The gross margin for Xiaomi’s hardware products only increased to 8.7% in 2017 from 4.4% in 2016. MIUI, the custom Android system pre-loaded in all Xiaomi smart devices, enjoyed gross margins higher than 60% in the last three years.

The company plans to maintain its low-cost strategy for its hardware business, promising the net profit margin for the hardware sales would not exceed 5% in the future.

The average selling price of Xiaomi smartphones was 807 yuan, 880 yuan and 881 yuan (US$138) in 2015, 2016 and 2017, respectively.

Source: Company

Xiaomi has invested in more than 90 connected devices and accessory makers, including Huami which got listed on the NYSE earlier this year. The company let many of these startups use Xiaomi’s Mi brand.

The company claims that more than 100 million devices had been connected to its internet-of-things platform as of March 2018. Some 1.4 million Xiaomi users own more than five Xiaomi hardware products.

While totally dependent on online sales channels in the early years, the company has been establishing a network of physical stores, called Mi Home, since 2015.

The top five distributors for the company accounted for 30%, 27% and 32% of the company’s total revenue in 2015, 2016 and 2017, respectively.

Xiaomi products are now available in more than 70 countries and regions, with India being one of its most important foreign markets.

Source: Company

The MIUI operating system is an important revenue source for the company.

The default apps on MIUI are all customized versions such as Mi App Store, Mi Browser, Mi Music and Mi Video. MIUI generates revenues through a wide range of marketing offerings, such as search marketing on the Mi App Store and push notifications, and consumer-facing paid content or services, mainly third-party games.

The average revenue per user (ARPU) of MIUI was 29 yuan, 48.5 yuan and 58 yuan (US$9) in 2015, 2016 and 2017, respectively.

Source: Company

Launched in August 2010, MIUI had 190 million monthly active users (MAU) as of March 2018. Xiaomi users spent an average of 4.5 hours daily in March 2018. 38 apps on MIUI had over 10 million MAUs, with 18 having over 50 million MAUs.

Source: Company

Xiaomi Finance, which provides consumer loans and investment services to Xiaomi users, accounted for 0.7% of the total revenue and 0.2% of pre-tax net loss in 2017. Xiaomi is restructuring its finance business that its stake in Xiaomi Finance will decrease to 40% after it completes.

51 Credit Card Inc. files for HK IPO

51 Credit Card Inc. has recently filed for IPO in Hong Kong.

The company offers personal financial tracking and credit management apps, generating revenues from consumer loans and credit cards issued to its app users by the company or third-party financial institutions.

Consumer loans surpassed the credit card segment in revenue in 2015 and accounted for about 80% of the total revenue in the following two years. The company began turning operating profits in 2016.

Cumulative registered users of 51 Credit Card Manager, its flagship app released in 2012, reached 62 million in 2017, up from 27.5 million in 2015.

Source: Company (*Other revenues include interest income from loans extended by its small loan company and trust funding, and overdue charges.)

Consumer Lending

A majority of their individual investors and borrowers are users of the company’s financial tracking apps. Non-credit-card holders as a percentage of the total borrowers have increased from zero in 2015 to 35.5% in 2017.

The company charges borrowers a “credit facilitation and service fee”, which has become the primary revenue source for the company, and third-party loan offerings “loan referral service fees” based on the size of loans referred by 51 Credit Card, the number of applications or clicks.

Before the incorporation of a small loan company in early 2017, the vast majority of the company’s consumer loan capital was from investors of the peer-to-peer lending platform 51 Renpin, with the rest from institutional investors. In 2017, 77%, 20.3% and 2.7% of the loan capital was from 51 Renpin platform, institutional investors and its own small loan company, respectively.

Its lending platform uses in-house developed systems for credit scoring and pricing, and fraud detection. The consumer loan originations was RMB 815 million, RMB 10.3 billion and RMB 33.9 billion in 2015, 2016 and 2017, respectively.

Credit Card Issuance

Users can compare and apply for credit cards on 51 Credit Card platform where some 500,000, 1.2 million and 2.1 million credit cards were issued in 2015, 2016 and 2017, respectively. The company charges banks a “credit card technology service fee”.

It began issuing co-branded credit cards with banks in April 2017 and would issue more than 100,000 in the rest of the year.


51 Credit Card is expected to enter the insurance market soon as it acquired 95% of insurance broker Shenzhen Zhongrong in November 2017.