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China Internet Reports Big Jump in Revenue, Profits

Shares in the company, which reported its earnings after the New York markets closed, ended Tuesday trading at $30.19 per share, down 21 cents. The stock was up a slight 6 cents per share in after-hours trading Tuesday evening.

Peter H. Frank
    May 16, 2018 4:15 AM  PT
China Internet Reports Big Jump in Revenue, Profits

China Internet Financial Services Inc., a Beijing-based provider of financial advisory services, reported today that its revenue increased nearly 150 percent to $12 million during its fourth quarter ended Dec. 31 while net income rose nearly as much to $10.8 million, or 49 cents per share. 

Shares in the company, which reported its earnings after the New York markets closed, ended Tuesday trading at $30.19 per share, down 21 cents. The stock was up a slight 6 cents per share in after-hours trading Tuesday evening.

China Internet (Nasdaq: CIFS), which has been buffeted in recent months by allegations from a noted short-seller, said its commercial payment advisory services, which accounted for nearly 63 percent of revenue, more than doubled during the period to $7.5 million from $2.9 million a year earlier. The company said it assisted 14 small- and medium-sized enterprises (SMEs) to obtain financing from banks with a total amount advised of $649 million in the quarter. 

In all, the company reported that, with revenue of $12 million, it had a gross profit of $11.6 million for the quarter and an operating margin of 78.6 percent. China Internet had 166 employees at year-end. 

"We are very pleased to close the year on a high note," said Jianxin Lin, chairman and chief executive officer of China Internet. "With both net revenue and net profit more than doubled, our growth moment remained strong in the fourth quarter of 2017." 

As the target of critical reports issued by short-seller Muddy Waters Research, China Internet has seen its stock get battered on and off since December. The research firm published a report on Dec. 20 listing several reasons why the firm believed China Internet had willfully misstated or misrepresented its financial condition. 

"We conclude that China Internet Financial Services Inc. (Nasdaq: CIFS) is a King Zero – just another worthless China fraud," concluded Muddy Waters.

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Since going public in early August at $10 per share, China Internet has seen large swings

 in its stock price, primarily brought on by a short-seller's negative report in December, 

which was reiterated in April - both of which led to significant drops

 in its share value. (Source: Thomson Reuters Eikon) 

More recently, after Muddy Waters reiterated its view in April on Twitter, China Internet struck back, refuting the allegations. 

The company, in its earnings report today, repeated that its independent special committee of the board of directors completed its review of the allegations on April 30. The company said two weeks ago after that review that it found no evidence to back up the bulk of the claims of Muddy Waters. 

In addition to its commercial payment services, China Internet also said its intermediary bank loan advisory services, which accounts for 26 percent of revenue, nearly doubled in the fourth quarter. The company reported revenue from that segment grew to $3.1 million from $1.6 million a year before. 

"We remain focused on executing our long-term growth plan and start making good progress in our FinTech Initiative which we launched in November 2017," Lin said. "Our newly launched supply chain financing services and the newly acquired big data platform, Anytrust, are also starting to ramp quickly. Looking ahead, we believe that we have the right strategy and the right execution plan to take the Company to the next level and anticipate continuing growth momentum for our businesses in the near future."

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