Chinese Micro-Lender Qudian Falls Following Disappointing Q4, CFO Departure

Shares of Chinese consumer credit company Qudian Inc – ADR QD are falling after the company reported fourth-quarter results that grossly disappointed and announced the resignation of its CFO.

For the fourth quarter, the company reported revenues of 1.93 billion yuan or $277.5 million, representing a 25.4% quarter-over-quarter decline but a 7.1% year-over-year advance.

The net income plunged 87% quarter-over-quarter and 83.3% year-over-year to 127.9 million yuan or $18.4 million, or 0.49 yuan or 7 cents per ADS. On a non-GAAP basis, quarterly net in come came in at 0.59 yuan or 8 cents per ADS.

Analysts estimated earnings per ADS of 0.72 yuan on revenues of 1.64 billion yuan.

The company withdrew its guidance in January, citing the tough regulatory and operating environment.

Why It's Important

"In the second half of 2019, the regulatory environment became increasingly stringent with the introduction of further restrictions on loan collection practices, data collection and usage, and marketing campaigns of fintech platforms, as well as the regulatory requirements for P2P lending platforms to orderly exit their P2P businesses," said Min Luo, CEO of Qudian.

This led to shrinkage of funding sources and a surge in delinquency rates. Qudian's delinquency rate rose to 13% at the end of the fourth quarter from around 10% at the end of the third quarter.

The company also said it's off to a challenging start in 2020, weighed down by the macroeconomic slowdown, regulatory developments and difficult operating environment.

Separately, the company announced the departure of its CFO Carl Yeung, effective March 18, due to personal reasons.

In pre-market trading Wednesday, Qudian shares were sliding 11.7% to $1.50.

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