Stock in 360 Finance Soars 17% on Quarterly Improvement, FountainVest Funding

Amid inner turbulence and outer challenges, 360 Finance sees a strong third quarter and promising future.

CapitalWatch Staff
    Nov 28, 2019 10:00 AM  PT
Stock in 360 Finance Soars 17% on Quarterly Improvement, FountainVest Funding
author: CapitalWatch Staff   

360 Finance Inc. (Nasdaq: QFIN) saw its stock soar nearly 17% on the day before stock markets in New York closed for Thanksgiving holiday. That was after the Chinese consumer finance platform posted better-than-expected financials and revealed it has scored an investment from Ruby Finance Investment Ltd.

The company, based in Shanghai, said its revenue for the third quarter, at $361.4 million, has nearly doubled from the same period of 2018. Net income, meanwhile, rose 27% to $102.6 million, or 34 cents per diluted share.

Some highlights from the financial report of 360 Finance include 108% year-over-year increase in loan origination volume, 90% rise in cumulative registered users on the platform and a 129% uptrend in borrowers with successful drawdown, including repeat borrowers.

Haisheng Wu, the chief executive officer and director of 360 Finance, commented on the regulatory challenges in China's financing sector.

"We have been actively working with regulators, industry associations and other leading companies to advocate for operating in regulatory compliance and protecting customer privacy," Wu said in a statement.

Specifically, 360 Finance plans to connect to the credit system of the People's Bank of China to share and receive data on borrowers under the recent regulations on credit reporting, as Wu said in a call with analysts on Wednesday.

He added, "For example, we jointed efforts with National Internet Finance Association of China to appeal for the establishment of an industry-wide anti-scam alliance. In response to the short-term market uncertainties, we expect to adopt a relatively conservative measure of customer acquisition, yet remain confident in meeting our full year guidance."

The company noted that funding from financial institutions, as opposed to individual investors on the peer-to-peer lending sector, was 93%. Wu said that 360 Finance is working with 74 financial institutions and has reduced the costs of funding for loans.

360 Finance also announced that FountainVest Partners, a private equity fund of Ruby Finance in China, has acquired 11.5 million of ADSs in QFIN from certain shareholders.

Eric Xiaohuan Chen, a managing director and head of financial services of FountainVest, has joined the board of 360 Finance with this funding. He previously served in investment banking of Lehman Brothers and Citigroup, and before that was with Micron Technology.

A subsidiary of 360 Security, a $20 billion anti-virus software firm, 360 Finance operates an automated decision-making platform that evaluates applications for loans typically used for consumer spending. Backed by Qihoo 360 Technology Co. Ltd., it primarily matches underserved borrowers with the company's funding partners. 

In its initial public offering in December 2018, 360 Finance raised $51 million for shares priced at $16.50. Weighed by market uncertainties, tightened regulations in China's lending sector and the resignation of CEO Jun Xu in August, the stock of the company has been on a slide for the past half-year.

On Wednesday, shares in QFIN closed at $9.15 apiece, up $1.31 on the day.

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