China Fintech – Ant Financial: All Major Business Lines are Profitable

All three major business lines of Ant Financial, including consumer credit, SME loans, and personal investment products, are profitable, said Alibaba management on the latest earnings call.

Ant Financial shared a total of more than RMB4.9 billion to Alibaba in 2017. According to the profit sharing system where Ant Financial shares 37.5% of pre-tax profits to Alibaba, the total pre-tax profits Ant Financial earned in 2017 is more than RMB13 billion.

Alibaba is taking a 33% equity stake in Ant Financial that will terminate profit sharing.

Alipay

Daily active users of Alipay more than doubled year-on-year in the fourth quarter of 2017The total number of users was 520 million in 2017, up from 450 million a year ago. (link in Chinese)

Mobile payment transactions as a percentage of the total increased to 82%, compared with 65% and 71% in 2015 and 2016, respectively, according to Alipay 2017 annual report. (link in Chinese) The ratio was higher than 90% in 11 provincial regions (out of a total of 30+), most in less-developed areas. In the previous year, only Tibet saw the ratio higher than 90%.

Alipay transactions from outside of mainland China increased 306% year-over-year. The payment service has been adopted by merchants in 36 foreign countries and overseas regions.

Souqianma (收钱码), the QR code payment service for small-and-micro businesses launched in February 2017, had signed up over 40 million customers as of the end of 2017.

More than 40 million Alipay users ever made payments for hotel stays or rental services through the deposit exemption program provided by Zhima Credit, the credit scoring service of Ant Financial. The program had had about 2600 merchants offering more than 20 categories of rental and leasing services as of December 2017, according to Li Congshan, vice president of Zhima Credit. (link in Chinese)

Public transport services, buses, subways or boats, in more than 30 Chinese cities have begun accepting Alipay. More than 200 million users ever used the City Service, which provides more than 100 services in healthcare, public and private transport, and public sector.

Consumer Credit

Users of Ant Credit Pay (花呗, formerly Ant Check Later), a revolving line of credit available to Alipay users, spent RMB700 per month on average as of November 2017. The average personal loan of Ant Cash Now (借呗), a personal cash loan product, was for about RMB3000, with ARPs of 14.6% on average. Both saw the delinquency rate below 1% in the last three years since their launch, according to Ant Financial. (link in Chinese)

86% of the Ant Credit Pay users were Post-80s and Post-90s, people born between 1980 and 1999, as of November 2017. The credit limits for these young users were between RMB1000 to RMB1600 and the average monthly spending was RMB349, generally spent on online shopping, mobile top-up, purchases at convenience stores or restaurants, and bike rentals. (link in Chinese)

The total ABS issuance of the two small loan companies behind the two consumer loan products in 2017 were RMB159.5 billion and RMB132.6 billion, respectively, up from RMB47.8 billion and RMB16.5 billion in 2016, respectively. (via China Securitization Analytics)

Ant Financial announced in December 2017 to increase the total registered capital of the two companies to RMB12 billion, up from RMB3.8 billion. (In China a company’s borrowing quota is pegged to the amount of the registered capital.)

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China Tech Newsletter – May 5, 2015

Leshi Internet Information & Technology Corp. (300104.SZ), or LeTV, announced late last evening that its stake in LeTV Sports Culture Develop (Beijing) Co., Ltd., which provides sports streaming service and other sports-related products, would be lowered to below 15% after introducing strategic investors.

Bloomberg reported yesterday that LeTV Sports had raised more than US$100 million at a valuation of about US$450 million. This round of financing is reportedly led by Wanda Group or a venture capital firm affiliated to it.

LeTV announced today the “smart” bicycle under development would be launched in July.


It’s been a year since the launch of Zhao Cai Bao, the online marketplace for financial products and services of Alibaba’s finance arm. The total sales through the platform have reached RMB107 billion (about US$17b). The platform’s main target audiences are individuals and SMEs.


eDaijia, on-demand chauffeur service, announced that it has raised US$100 million in Series D round of funding at a valuation of US$800 million. This round was led by Warburg Pincus and participated by Matrix Partners China and Lightspeed China Partners.

Some 75,000 drivers, who have passed a test and received training from eDaijia, in about 130 Chinese cities have signed up, according to the company.


Used car marketplace Che101 has raised US$10 million in Series A funding led by Super Capital and joined by Lightspeed China Partners.

Established in 2013 and starting from providing dealers with used car information packages, Che101 began selling used cars directly to consumers from early this year. Its services currently are only available in two cities, Beijing and Chengdu. The company plans to expand to 20 cities by year end.


Online fresh produce supplier Fields has sold 54.5% stake to Sun Art Retail Group Ltd. (06808.HK). Fields was established in 2009 in Shanghai and raised US$5 million Series A funding led by Clearvue Partners in 2013.

Other notable fresh produce sites in China include TootooYummy77 (funded by Amazon), Benlai and SFbest (established by logistics giant S.F. Express).


Chinese online advertising network Panshi, or Adyun, claimed to have raised US$200 million in Series B round of funding led by NewMargin Ventures and joined by JD Capital, WI Harper, Refine Capital and Fang Fund. Panshi received a Series A funding of US$20 million from NewMargin Ventures in 2010, according to previous media reports.