Stock in Jianpu Tumbles 7% on Challenges in Financing Sector

As the lending industry continues to suffer from tightened regulations, Jianpu sees an uncertain future.
Anthony RussoDec 09,2019,23:35

Jianpu Technology Inc. (NYSE: JT)  plunged 7% to $1.44 per American depositary share on Monday intraday after the company announced weak revenue and higher losses in the third quarter.

The Beijing-based company, which advertises financial products said in a statement today that in the three months through September its revenue was $45.3 million, down 27% year-over-year. Jianpu attributed the decline to its recommendation services, which slipped to $40 million, a 24% decrease from the same period last year, the report said.

Net loss widened to $51.5 million, or 24 cents per ADS compared with $8 million, or 5 cents per ADS, a year ago.

“As the 18 month law on trade disputes has heightened the risk of an economic slowdown, the growth of China has cut down to over 20 year low. Overall slowdown of macro economy and credit tightening continues to put downward pressure on consumer and SME lending,” Daqing Ye, the Co-Founder, Chairman and chief executive officer of Jianpu told analysts in a conference call following the results today.

He continued, “According to PBOC, the central bank, the growth of retail consumer loans significantly slowed down in the first half of 2019, with incremental volume less than 30% of the second half of 2018.

Over the last few years Chinese regulators have tightened up to limit fraud in the peer-to-peer lending industry, which has caused a number of companies to exit. As of October, just 427 P2P firms were operating in China compared with 6,000 in 2015, the South Morning China Post reported last month.

“In recent months, regulatory authorities across a range of jurisdictions have issued quite a few new rules, regulations and guidance, including rules regulating personal consumer finance guidelines regulating cooperation between commercial banks and the FinTech companies,”

Yi said in the conference call.

He added on the regulation changes in the P2P industry, “We want our investors to be aware of this industry regulatory policy change and reform and mounting regulatory pressure. The industry entered into a relatively tightening cycle, which consequently has a impact on the supply of financial products being listed on our platform.”

Citing data from the Consulting Group, iResearch, Jianpu operates as the leading independent open platform for discovery and recommendation of financial products in China, according to its website. To target and reach customers, Jianpu uses its financial service providers with sales and marketing solutions, the company’s website says.

Under two separate share repurchase programs, Jianpu has bought a combined $30 million of its ADSs, according to its statement. One was announced on Aug. 24, 2018 and the other was announced on Feb. 22, 2019, it said.

“The Company anticipates the external environment to remain uncertain and challenging, and consequently, the financial products available on our platform may continue to decline into the coming quarter, Jianpu said in its statement.

In the fourth quarter, Jianpu said it expects to generate revenue in range of $34.1 million and $36.9 million