Chinese fintech firm Qudian reports strong Q1 results; stock gains

Shares of Qudian (NYSE: QD) rose sharply early Monday after the China-based financial technology company reported stronger than expected revenues and profit for the first quarter of 2019. The management also reaffirmed the guidance for full-year adjusted earnings.

Net profit, excluding one-time charges and benefits, surged to RMB974.3 million ($145.2 million) or RMB3.27 per ADS ($0.49 per ADS) from RMB338.47 million or RMB1.02 per ADS in the first quarter of 2018. Unadjusted earnings nearly tripled to RMB3.19 per ADS ($0.48 per ADS).

There was a 22% jump in total revenues to RMB2.1 billion ($312.4 million) during the three-month period. The strong top-line growth can be attributed to the significantly higher loan facilitation income and an increase in financing income, which were partially offset by a decline in sales at the Dabai Auto business. Both earnings and revenues surpassed analysts’ forecast.

The top-line growth was driven by an increase in loan facilitation income and financing income

Loan facilitation income more than doubled to RMB644.4 million ($96 million) during the quarter, when the number of new active borrowers surged 16.6% year-over-year to 523,979, contributing about 18% of total active borrowers.

“Beyond income from our loan book business, our open-platform initiative showed encouraging developments in terms of revenue contribution and funding partnerships. As of end of the first quarter, we accumulatively referred over 136 thousand users to our open-platform partners for transaction referral service,” said Qudian’s CEO Min Luo.

For the whole of 2019, Qudian continues to expect adjusted profit to be above RMB3.5 billion, which represents a 37.3% annual increase.

Encouraged by the upbeat outlook, the management recently repurchased all of the remaining shares held by key shareholder Kunlun Group for $103.2 million and canceled more than 18 million ADS in an effort to boost earnings per share.

Qudian owes its initial success to the opening up of the online credit market in China, allowing companies to set up digital platforms for small consumer credit products. However, last year the sector came under stringent regulatory scrutiny, resulting in curbs on the companies.

Related: Sogou slips to loss in Q1; stock gains on revenue beat

Earlier this year, a prominent securities brokerage in China reaffirmed its hold rating on Qudian, with a price target of $8. The rating action is in line with the recommendations of the majority of the analysts covering the company.

Shares of the company moved up nearly 6% in the pre-market trading Monday following the earnings report, after closing the previous session lower. The stock has gained 55% since the beginning of the year.

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