Chinese Fintech Qudian to Explore Childhood Education Business After China Cracked Down on Micro Lending Sector

Qudian Inc. (NYSE: QD), an established technology platform that aims to improve the online consumer finance experience for Chinese consumers, recently released its unaudited financial results for the quarter ending on September 30, 2020.

Qudian’s management noted that the total number of registered users “as of September 30, 2020 reached 81.3 million, representing an increase of 3.8% from September 30, 2019.” The company further revealed that their “number of outstanding borrowers from loan book business and transaction services business as of September 30, 2020 decreased by 18.2% to 4.1 million from 5.0 million as of June 30, 2020 as a result of the conservative and prudent strategy which the company has deployed.”

While sharing other financial updates, the Qudian team noted that their total outstanding loan balance from their loan book business “decreased by 34.5% to RMB 6.4 billion (appr. $980 million) as of September 30, 2020, compared to the outstanding balance as of June 30, 2020.” The company further noted that its total outstanding loan balance from transactions serviced on its open platform “decreased by 29.6% to RMB 6.9 billion (appr. $1.06 billion) as of September 30, 2020, compared to the outstanding balance as of June 30, 2020.”

Min Luo, Founder, Chairman and CEO at Qudian, stated:

“In the third quarter, we maintained a prudent approach to the operation of our cash credit business amid fast-evolving regulations regarding online lending. We also remained focused on protecting our net assets, continuing to implement stringent credit approval standards in order to navigate the dynamic operating environment. Our loan book business generated a total transaction value of RMB 5.0 billion (appr. $770 million) during the period, representing an increase of 19% from the second quarter, which was in line with our expectation.”

Luo added that the company is pleased to see “meaningful” improvement across its delinquency metrics when “compared to the first half of this year, a validation of the effective execution of our operational strategy.” He also mentioned that their overall D1 delinquency rate fell to around 13% at the end of November 2020. He further noted that “looking ahead, we plan to maintain a thoughtful approach to our loan business operation in order to make further improvements to our asset quality.”

Sissi Zhu, VP of Investor Relations of Qudian, remarked:

“In light of macroeconomic and overall credit cycle uncertainties throughout this year, we have been upholding stringent requirements for credit applications and the approval process on our platform. In the meantime, we continued to make efforts to explore new business avenues and investment opportunities, including but not limited to early childhood education.”

(Note: to view the complete breakdown of Qudian’s latest financial results, check here.)

Established in 2014 in Beijing, Qudian began operating as an online small consumer credit provider and is headquartered in Xiamen. The company secured $900 million in capital through its initial public offering (IPO) on the New York Stock Exchange (NYSE) back in 2017.

Founded by experienced businessman Luo Min, Qudian mainly operated as a consumer credit firm. Its shares fell from an IPO price of $24.90 to only $1.50 in May 2020 as the Chinese government began cracking down on micro-lending businesses.

Qudian has also tried to get into the car-purchase financing and e-learning sectors, however, neither of these initiatives have been successful. In May of last year, Alibaba’s Ant Group, one of the firm’s earliest backers, dumped its stake in the company. In March 2020, Qudian introduced Wanlimu, a new luxury e-tailer.

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