China Fintech Newsletter – Oct.23-29

Shouqian Ma (“money collection code”), the QR code payment service for small physical stores or individuals of Ant Financial, have signed up 33 million customers in the eight months since its launch in February.

While previously businesses too small to justify barcode/QR code scanning devices had to use their personal Alipay accounts that charge fees for withdrawals above a certain amount, Shouqian Ma doesn’t charge a fee until March 2021.

Ant Financial announced last week plans to extend 1 trillion yuan of loans to Shouqian Ma customers over the next three years. The service extends business loans through MyBank, the online direct bank affiliated to Ant Financial, and Net 30 credit for orders on, the online wholesale marketplace of Alibaba. The more payments they collect through Alipay the better terms they can get, according to Ant Financial. (Source in CN)

Other services available for Shouqian Ma customers include Ant Check Later, a line of credit for Alipay payment users, and Yulibao (or Yunshangbao), a money market fund. More recently it added a sales data analytics service.

Tianhong Yu’ebao Money Market Fund saw third-quarter growth in assets under management declined to 9%, compared with 40% and 25% in the previous two quarters, respectively, and 96% in the same quarter last year. (Document in CN)

The slowed growth in the last two quarters is believed to be mainly due to the lowering of the investment cap. The fund lowered the cap from one million yuan to 250,000 yuan in May and further to 100,000 yuan in August, reportedly due to regulatory pressures. Another cause may be the addition of a new channel for third-party investment products on Yu’ebao homepage in June.

The fund’s assets reached 1.56 trillion yuan as of the end of the quarter, with bank deposits, bonds and reverse repos accounting for 87.1%, 7.9%, and 4.9%, respectively. The total income generated in the quarter was 15.3 billion yuan.

Yulibao, or Yunshangbao, another money fund managed by Tianhong that’s only available for business customers of Ant Financial, increased over 100% quarter-over-quarter in assets to 104.5 billion yuan at the end of the third quarter, with 780 million yuan in total income. (Document in CN)

The total transaction volume of consumer loans through online marketplace lending platforms in September was estimated to be 36 billion yuan, accounting for 15% of the total online consumer lending volume, according to estimations by 01Caijing, a local finance news outlet.

Top 20 sites have a combined 50% market share. The top five platforms measured by consumer loan volume are PPDAI, Yirendai, PPmoney, Hengyirong and Jimu. (Source)

An earlier report by WDZJ, a media outlet focused on online lending, estimated the total volume of online consumer lending in September was 30 billion yuan, accounting for 13% of the total online lending volume. WDZJ estimated the total number of online lending sites that offered consumer credit was 258, accounting for 13% of the total. The top five in terms of transaction volume, according to WDZJ data, are PPDAI, 51RP, Xiaoying, PPmoney and Niwodai. (Source)

The total number of online auto financing platforms decreased to 541 in September, down from 769 a year ago, according to 01Caijing. (Source)

There were a total of 76 online lenders focused on agriculture lending in September, accounting for 5% of the total online lenders (1554). (Source)

Didi, the leading ride-hailing service, and Ant Financial acquired 3.14% and 16.15%, respectively, of payment technology company Gaoyang Jiexun (19Pay) at a valuation of 820.3 million yuan.


Online Marketing Firm iClick Files for US IPO

image credit: iClick

iClick Interactive Asia Group, China-based online marketing solutions and services provider, has filed plans for IPO.

The company provides marketers with a self-service system and managed services through an account management team. It claims its consumer data-based marketing solutions “analyzed approximately 665.4 million active profiled users with 19 attributes on average for each such profile” in the 30 days leading up to August 31, 2017.

Data are collected from channels including its own proprietary tracking tools, marketers, publishers, ad exchanges, and other third-party partners. “These user profiles, which are updated and refined on a continuous basis, typically include information on a user’s attributes, such as his or her demographics, geographic location, device preference, spending history, personal interest and other online or offline behavioral pattern”, according to its filing.

iClick covered approximately 74,000 mobile apps and 2.3 million websites in the 30 days leading up to August 31, 2017.

Gross billing from mobile audience solutions represented 23.2%, 47.6% and 60.9% of its total gross billing in 2015, 2016 and the six months of 2017, respectively.

The gross billing from direct marketer clients as a percentage was over 70% and 60% of the total in the two years prior to 2017 and in the six months of 2017, respectively, with the rest from marketing agency clients.

Its revenues are primarily from clients’ marketing spend with their marketing services and a minority from incentives from the publisher under its sales agency arrangement. The company generated US$65 million, US$95 million and US$55.7 million in net revenues, with a net loss of US$39.7 million, US$27 million and US$22 million, in 2015, 2016 and the first half of 2017, respectively.

Chinese Consumer Lender Hexindai Files Plans for US IPO

Chinese consumer lending firm Hexindai Inc. has filed for a US IPO to raise up to US$80 million., targeting at the relatively well-off, extends medium-sized loans ranging from RMB20,000 to RMB140,000. 80% of the total transaction volume from March 2016 to June 2017 fell in this range.

Though positioned as an online lender, it’s been primarily dependent on the lending chain of Hexin Group, majority-owned by the founder and CEO of Hexindai Inc., for customer acquisition. Over 90% of the borrowers of had been referred from the physical branches of Hexin Group as of June 2017 since its inception in March 2014, according to the filing. Hexin Group claims to have 144 branches in 103 Chinese cities as of June 2017.

Hexindai Inc. doesn’t pay any fees to Hexin Group for such referrals, but borrowers acquired by the latter pay both separately.

As of June 2017, it had had 110,156 investors and 56,230 borrowers on its platform.

Source: Hexindai Inc.
Source: Hexindai Inc.


Chinese Finance Search Platform Jianpu (Rong360) Files for US IPO

Jianpu Technology, the directory and search service of online finance company Rong360has filed a US IPO of up to US$200 million.

Jianpu operates an online platform where users can search for financial products, compare terms and conditions, and apply for loans or purchase personal investment products. Research results of loans or credit cards are not only based on the user’s needs but also his or her credit profile, according to its filing.

It also provides users a credit management tool and educational content. Jianpu claimed to have 63.6 million monthly active users in the first half of 2017, up from 34.8 million a year ago.

More than two thousand financial products providers, including both conventional financial institutions and the newly emerged digital finance companies, listed more than 100,000 products on Jianpu platform as of June 2017.

Apart from helping them acquire customers, Jianpu also offers third-party businesses custom data, big data-based risk management solutions, and other related services.

The company’s revenues are primarily generated from referral fees from loan products (on a cost-per-action basis) and credit cards (on a cost-per-success basis). Other revenue sources include display and performance-based marketing and risk management solutions.

Source: Jianpu Technology

Source: Jianpu Technology

The company hasn’t turned a profit yet. It recorded an operating loss of US$6.5 million on revenue of US$58 million in the first half of 2017.

Incorporated in 2011, the company launched the loan search service in 2012, credit card section in 2013, wealth management products section in 2014, big data risk management solutions in 2015 and Gold Cloud, the online transaction system, in 2016. Jianpu is a newly established subsidiary of Rong360 which also operates an online consumer lending platform. The credit offerings provided by Rong360 are also available on Jianpu. Jianpu will continue to be run under the “Rong360” brand.

Chinese Online Marketplace Lender PPDAI Files for US IPO

Online lending platform has filed for an IPO on the NYSE to raise up to US$350 million.

Founded in 2007, was one of the first online lending platforms in China. As of June 2017, it had 48 million registered users, 6.9 million unique borrowers, and 202,000 investors.

Over 80% and 90% of loans were initiated through its mobile apps in 2016 and the first half of 2017, respectively. Its borrowers are primarily acquired online.

With its in-house developed credit risk assessment and investor-borrower matching algorithms, approximately 75% and 93% of the total number of loans got funded within 24 hours in 2016 and the first half of 2017, respectively. 77% of the total number of loans were funded within two hours in the first half of 2017.

Source: PPDAI Filing

The platform generated US$255.9 million in net revenues, with a net profit of US$154.7 million, in the first half of 2017. The total outstanding balance of loans increased from RMB607.4 million (US$89.6 million) at the end of 2014 to RMB20.6 billion (US$3 billion) as of June 2017.

It’ll be the fourth Chinese online lending platforms to get listed in the US if the IPO succeeds. After Yirendai’s IPO in late 2015, China Rapid Finance and Qudian launched theirs earlier this year.

Online Consumer Lender Qudian Files for US IPO

Source: Qudian (Click to enlarge)

Chinese online consumer lender Qudian has filed for an IPO on the NYSE.

Qudian provides merchandize credit products which allow consumers to take out installment loans for online purchases and small cash credit products. The merchandize credit products also receive sales commission fees apart from financing income.

Almost all of the transactions facilitated on Qudian are through mobile. Borrowers can apply for credit on Qudian mobile apps and partnering mobile services, and receive approval as soon as a few seconds, according to Qudian.

The company uses borrowers’ behavioral data generated on its own online platform, apart from data and credit analyses from third-party partners, to determine credit terms.

The strategic partnership with Ant Financial, the finance tech company affiliated to Alibaba, that allows Qudian products accessible through Alipay, the payment and financial services platform of Ant Financial, has significantly contributed to Qudian’s growth, according to the company. Zhima Credit, or Sesame Credit, the online credit scoring service developed by Ant Financial, provides Qudian with credit analysis information of prospective borrowers.

In the six months ended June 30, 2017, the company facilitated RMB38 billion (US$5.6 billion) in transactions to 7 million active borrowers, generating RMB1833 million (US$270 million) in total revenues and RMB1166 million (US$172 million) in operating profit.

Average monthly active users were 26 million as of June 2017. It registered 3 million new users in the first half of this year. The company was founded in April 2014.


Baidu’s iQIYI Discloses Financials

Source: Baidu

iQIYI, the online video streaming service majority-owned by Baidu, recorded US$1.6 billion (RMB 11 billion) in total revenue in 2016, an 113% increase from the previous year, according to Baidu 2016 annual report.

A majority of the total revenue was from advertising; an increasing portion was from premium subscriptions and sub-licensing of licensed contents.

Content costs, the biggest contributor to the increase in total costs and expenses, increased 122% and 136% in 2016 and 2015, respectively.

Baidu acquired a controlling stake in iQIYI in 2012 and later merged it with video service PPS which was acquired by the former in 2013. iQIYI’s major competitors are Youku-Tudou, acquired by Alibaba Group in late 2015, and Tencent Video.

iQIYI issued US$1.53 billion convertible notes in January 2017, among which US$300 million was purchased by Baidu.