Chinese Fintech Qudian Sees 300% Year over Year Increase


Anytime you see a 300%+ increase year over year on net income, you have to pay attention.  Such was the case with Chinese fintech Qudian, who has partnered with megafirm Alibaba on its microlending platform.  The potential audience for the firm’s high interest loans is enormous in China – more than 400 million people, which in context, is larger than the entire population of the US.  The firm did their IPO for the US market on October 18, launching at $24/per share.
(Cindy Taylor/Publisher)

“Chinese microlender Qudian Inc – ADR (NYSE: QD) reported third quarter results Monday, showing a 308 percent jump in revenues and a 322 percent increase in net income.

Total transactions in value terms rose 219 percent and the number of active borrowers climbed 174 percent to 2.7 million.

The Analyst 

Stifel analyst John Davis initiated Qudian with a Buy rating and $35 price target. The analyst said he views the risk/reward favorably.

The Thesis

Qudian has a “potentially massive growth opportunity,” as its 7.5 million active borrowers represent a fraction of the total addressable market of tech-savvy Chinese customers, estimated at nearly 400 million, Davis said in a Wednesday note.

The company’s partnership with Alibaba Group Holding Ltd (NYSE: BABA)’s Ant Financial/Alipay reduces its customer acquisition costs while also giving it access to millions of potential customers, Davis said.

The Chinese company is not without risks, the analyst said.

Further regulation of the online consumer finance industry in China could impact Qudian’s growth and profitability, according to Stifel. And any change or disruption in Qudian’s relationship with Ant/Alipay could significantly affect its business…”

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