XYF Stock Price Increases Over 10% Pre-Market: Why It Happened

By Amit Chowdhry ● Aug 10, 2021
  • The stock price of X Financial (NYSE: XYF) increased by over 10% pre-market. This is why it happened.

The stock price of X Financial (NYSE: XYF) increased by over 10% pre-market. Investors are responding positively to X Financial announcing its unaudited financial results for the second quarter ended June 30, 2021.

Q2 2021 Financial Highlights

— Total net revenue in the second quarter of 2021 was RMB932.4 million (US$144.4 million), representing an increase of 140.4% from RMB387.9 million in the same period of 2020.

— Income from operations in the second quarter of 2021 was RMB337.7 million (US$52.3 million), compared with loss from operations of RMB341.5 million in the same period of 2020.

— Net income attributable to X Financial shareholders in the second quarter of 2021 was RMB223.2 million (US$34.6 million), compared with net loss attributable to X Financial shareholders of RMB343.7 million in the same period of 2020.

— Non-GAAP adjusted net income attributable to X Financial shareholders in the second quarter of 2021 was RMB241.9 million (US$37.5 million), compared with Non-GAAP adjusted net loss attributable to X Financial shareholders of RMB325.9 million in the same period of 2020.

— Net income per basic and diluted American depositary share in the second quarter of 2021 was RMB4.02 (US$0.62) and RMB3.96 (US$0.61), compared with net loss per basic and diluted ADS of RMB6.42 and RMB6.42, respectively, in the same period of 2020.

— Non-GAAP adjusted net income per basic and adjusted diluted ADS in the second quarter of 2021 was RMB4.38 (US$0.68), and RMB4.26 (US$0.66), compared with Non-GAAP adjusted net loss per basic and diluted ADS of RMB6.12 and RMB6.12, respectively, in the same period of 2020.

Business Outlook

For the third quarter of 2021, the company is expecting total loan facilitation amount to be in the range of RMB14.5 billion to RMB15.5 billion and net income attributable to X Financial’s shareholders to be no less than RMB230 million. This forecast reflects the company’s current and preliminary views, which are subject to changes.

KEY QUOTES:

“We are very pleased to deliver another strong quarter of operational and financial results. In the second quarter, total loan facilitation amount hit a historical high since our inception and our bottom line continued to maintain strong growth momentum on both a year-over-year and quarter-over-quarter basis, in line with our guidance.”

“During the quarter, we reduced the fees we charged for our loan facilitation service, which matches institutional funding partners with borrowers, as well as lowered the weighted average total borrowing cost for our loan products to attract and retain borrowers. With the effective management of our cost control policy, we continued to maintain strong momentum of profitable growth.”

“On the regulatory front, in April, the National People’s Congress Standing Committee released a second draft of the Personal Information Protection Law for public comments, demonstrating that the Chinese government is determined to strengthen user data security and privacy protection. We have always placed a high value on user data protection and continue to improve our self-regulated internal mechanism. We continue to closely monitor regulatory developments, and adjust our strategies and services in compliance with government policies and evolving market trends.”

“In conclusion, we are encouraged by the solid progress we made during the first half of the year and will continue to execute our proven strategy to drive sustainable long-term growth. We expect to commence operation of our microcredit business in the third quarter of 2021. Consumer confidence in China’s economy has continued to trend upward, and we see rising demand for consumer finance solutions. We are confident of leveraging our technology and service capabilities to capture the vast opportunities ahead and bring more valuable returns to our shareholders.”

— Justin Tang, the Founder, Chief Executive Officer and Chairman of the Company

“During the second quarter, our total loan facilitation amount reached RMB12.8 billion, an increase of 108.6% year-over-year and 18.2% quarter-over-quarter. This was mainly driven by the strong growth in the loan facilitation amount of Xiaoying Card Loan, which increased 180.1% year-over-year and 18.2% quarter-over-quarter. Xiaoying Card Loan has contributed 100% of our total loan facilitation amount since the first quarter of 2021. As of June 30, 2021, the total outstanding loan balance of Xiaoying Card Loan reached RMB20.4 billion, an increase of 24.9% compared with the previous quarter.”

“Recently, the Chinese government has been gradually introducing guiding principles for lower lending rates to the market to stimulate economic growth, which is expected to put some pressure on our revenues. For the second half of the year, we will continue to be fully compliant but will mitigate policy pressures by devising feasible solutions with our institutional funding partners. At the same time, we remain in active negotiations with existing funding partners to reduce funding costs, and our team continues to improve our risk management capabilities and take proactive measures on cost control.”

— Kent Li, President of the Company

“We continued to deliver strong financial performance during the second quarter. Total net revenue increased 140.4% year-over-year to RMB932.4 million. With a combination of effective cost control and increasing economies of scale, our net income further improved to RMB223.2 million from a net loss of RMB343.6 million in the same period of last year and a net income of RMB192.8 million in the previous quarter.”

“We continue to experience steady improvement in our asset quality. As of June 30, 2021, the delinquency rates for all outstanding loans that are past due for 31-60 days was 0.77%, a decrease from 0.82% as of March 31, 2021 and 1.80% as of June 30, 2020, a clear demonstration of our risk management capabilities and premium borrower base. We also continued to strengthen cooperation with third-party financial guarantee companies during the quarter, whereby the proportion of loan amounts facilitated that was covered by these financial guarantee companies increased to 49.8% from 48.1% in the previous quarter.”

“Moving forward, we will continue to invest in the development of our technology capabilities, further improve operational efficiency and expand cooperation with more institutional funding partners. We expect to maintain the growth momentum in our operational performance in the third quarter.”

— Frank Fuya Zheng, Chief Financial Officer of the Company

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.