Sino Fortune Holding Corp. Reports Unaudited Second Quarter and First Half 2017 Financial Results
Net revenue increased by 88% to $10.80 million as loans facilitated through our platform grew 91% to RMB 2.12 billion (approximately $308 million) in the second quarter
SHANGHAI, Aug. 21, 2017 /PRNewswire/ -- Sino Fortune Holding Corporation (OTCQB: SFHD) ("Sino Fortune" or the "Company"), a leading online financial credit facility solution provider servicing Small-to-Medium Enterprises ("SMEs") and individual borrowers in China, today announced its financial results for the three and six months ended June 30, 2017.
Second Quarter 2017 Highlights
For the Three Months Ended June 30,
-----------------------------------
($
millions,
except
per
share
data) 2017 2016 % Change
---- ---- --------
Revenue $10.80 $5.75 87.9%
Loan
origination
service
Fee $6.47 $4.09 58.2%
Loan
repayment
management
fee $4.33 $1.66 161.2%
Operating
income $3.55 $(0.42) 949.6%
Other
income
(expenses) $0.21 $0.00 5771.9%
Net
income $2.89 $(0.41) 797.5%
EPS -
diluted $0.040 $(0.006) 750.0%
------ ------- -----
-- Total loans facilitated through our platform increased by 91.0% to RMB
2.12 billion (approximately $308 million) for the second quarter of
2017, from RMB 1.11 billion (approximately $169 million) for the same
period of last year, as China's online peer-to-peer lending platform
industry continued to grow significantly during the second quarter,
coupled with the increased marketing campaign, promotion activities on
our platform as well as increased brand awareness of our online
marketplace.
-- Total net revenue increased by 87.9% to $10.80 million for the second
quarter of 2017, from $5.75 million for the same period of last year, as
a result of increase in loans facilitated through our platform. Revenue
from loan repayment management fee was particularly strong, increasing
by 161.2% to $4.33 million and accounted for 40.1% of total revenue,
while revenue from loan origination service fee also increased by 58.2%
to $6.47 million and accounted for 59.9% of total revenue, for the
second quarter of 2017.
-- Net income was $2.89 million, or $0.040 per share, for the second
quarter of 2017, compared to net loss of $0.41 million, or loss of
$0.006 per share, for the same period of last year.
-- On June 30, the Company issued $13,189,164 aggregate principal amount of
senior convertible promissory notes to certain investors in China.
-- On June 27, 2017, the Company announced that its Board of Directors has
approved a one (1) -for- five (5) reverse stock split (the "Reverse
Split") of its authorized and issued and outstanding shares of common
stock. The Reverse Split went effective at the market open on August 7,
2017 under the symbol of "SFHDD". The symbol will be reverted back to
"SFHD" after 20 business days.
-- On June 20, 2017, the Company signed a framework agreement (the
"Framework Agreement") to acquire a 4.45% equity interest in Shenzhen
TouZhiJia Financial Information Service Co., Ltd., an operator of a P2P
online lending and vertical search platform, www.touzhijia.com, from
three selling shareholders for an aggregate purchase price of RMB19.10
million (approximately US$2.8 million).
Bodang Liu, Chairman and Chief Executive Officer of Sino Fortune, commented, "We are very pleased to report strong financial results for the second quarter that well exceeded our expectations, highlighting continued strong growth of China's online peer-to-peer lending platform industry and accelerated momentum in our own business. We also made significant progress in carrying out our strategic plans, including the execution of a framework agreement to acquire a 4.45% equity interest in Touzhijia on June 20, the issuance of $13.2 million aggregate principal amount of senior convertible promissory notes on June 30, the launch of entrusted loan services on July 7, and the effectiveness of a one (1) -for- five (5) reverse stock split on August 7. As the online peer-to-peer lending platform industry is in the midst of enormous changes that pose both challenges and opportunities, we believe that we are on a strong footing in the second half of the year and beyond."
Second Quarter 2017 Financial Results
Total net revenue for the second quarter of 2017 increased by $5.05 million, or 87.9%, to $10.80 million from $5.75 million for the same period of last year. The increase of total net revenue was mainly attributable to the increase in the volume of loans facilitated through our platform which increased by 91.0% to RMB 2.12 billion (approximately $308 million) for the second quarter of 2017 from RMB 1.11 billion (approximately $169 million) for the same period of last year.
The loan origination service fee increased by $2.38 million, or 58.2%, to $6.47 million for the second quarter of 2017 from $4.09 million for the same period of last year. The loan repayment management fee increased by $2.67 million, or 161.2%, to $4.33 million for the second quarter of 2017 from $1.66 million for the same period of last year. The loan origination service fee and loan repayment management fee accounted for 59.9% and 40.1%, respectively, of total net revenue for the second quarter of 2017, compared to 71.2% and 28.8%, respectively, for the same period of last year. The change is due to the shift in structure of our loan products towards longer duration loans. Since our loan repayment management fee is based on a certain percentage of the borrowing times duration of a loan, the more loans with longer terms, the more loan repayment management fees we generate. Loans that mature in two months or less accounted for only 24% of total loans for the second quarter of 2017, as compared to 50% for the same period of last year.
Operating expenses increased by $1.08 million, or 17.5%, to $7.24 million for the second quarter of 2017 from $6.17 million for the same period of last year. Sales and marketing expenses increased by $0.85 million, or 18.4%, to $5.46 million for the second quarter of 2017 from $4.61 million for the same period of last year. The increase in sales and marketing expenses was associated with sales and marketing efforts and promotion activities that led to higher volume of loans facilitated through our platform. General and administrative expenses increased $0.21 million, or 13.6%, to $1.71 million for the second quarter of 2017 from $1.51 million for the same period of last year, primarily due to expenses related to public company listing on the OTCQB.
Operating income was $3.55 million for the second quarter of 2017, compared to operating loss of $0.42 million for the same period of last year. The increase in operating income was primarily driven by increase in total net revenue and partially offset by increase in operating expenses. Operating profit margin was 32.9% for the second quarter of 2017, compared to operating loss margin of 7.3% for the same period of last year.
Provision for income taxes was $0.87 million for the second quarter of 2017, compared to nil for the same period of last year.
Net income was $2.89 million for the second quarter of 2017, compared to net loss of $0.41 million for the same period of last year.
Earnings per share was $0.040 for the second quarter of 2017, compared to net loss per share of $0.006 for the same period of last year.
First Half 2017 Financial Results
For the Six Months Ended June 30,
---------------------------------
($
millions,
except
per
share
data) 2017 2016 % Change
---- ---- --------
Revenue $18.69 $11.31 65.3%
Loan
origination
service
Fee $11.65 $8.15 42.9%
Loan
repayment
management
fee $7.04 $3.16 122.9%
Operating
income $6.16 $1.16 431.2%
Other
income
(expenses) $0.24 $0.01 1820.9%
Net
income $4.89 $1.05 364.9%
EPS -
diluted $0.068 $0.016 333.6%
------ ------ -----
Total net revenue for the first half of 2017 increased by $7.38 million, or 65.3%, to $18.69 million from $11.31 million for the same period of last year. The increase of total net revenue was mainly attributable to the increase in the volume of loans facilitated through our platform which increased by 64.5% to RMB 3.75 billion for the first half of 2017 from RMB 2.28 billion for the same period of last year.
The loan origination service fee increased by $3.50 million, or 42.9%, to $11.65 million for the first half of 2017 from $8.15 million for the same period of last year. The loan repayment management fee increased by $3.88 million, or 122.9%, to $7.04 million for the first half of 2017 from $3.16 million for the same period of last year. The loan origination service fee and loan repayment management fee accounted for 62.3% and 37.7%, respectively, of total net revenue for the first half of 2017, compared to 72.1% and 27.9%, respectively, for the same period of last year. The change is due to the shift in structure of our loan products towards longer duration loans. Since our loan repayment management fee is based on a certain percentage of the borrowing times duration of a loan, the more loans with longer terms, the more loan repayment management fees we generate. Loans that mature in two months or less accounted for only 25% of total loans for the first half of 2017, as compared to 51% in the same period of 2016, while loans with a term of three months or more increased from 49% in the first half of 2016 to 75% in the same period of 2017.
Operating expenses increased by $2.38 million, or 23.4%, to $12.52 million for the first half of 2017 from $10.15 million for the same period of last year. Sales and marketing expenses increased by $2.33 million, or 31.4%, to $9.73 million for the first half of 2017 from $7.41 million for the same period of last year. The increase in sales and marketing expenses was associated with sales and marketing efforts and promotion activities that led to higher volume of loans facilitated through our platform. General and administrative expenses increased $0.01 million, or 0.5%, to $2.65 million for the first half of 2017 from $2.63 million for the same period of last year. The Change in general and administrative expenses was primarily due to expenses related to public company listing on the OTCQB, offset by the layoff of more than 1,000 off-line sales related personnel in April 2016 to comply with new industry regulatory measures, which reduced related general and administrative expenses.
Operating income increased by $5.00 million, or 431.2%, to $6.16 million for the first half of 2017 from $1.16 million for the same period of last year. The increase in operating income was primarily driven by increase in total net revenue and partially offset by increase in operating expenses. Operating profit margin was 33.0% for the first half of 2017, compared to 10.3% for the same period of last year.
Provision for income taxes was $1.52 million for the first half of 2017, compared to $0.12 million for the same period of last year.
Net income increased by $3.84 million, or 364.9%, to $4.89 million for the first half of 2017, compared to $1.05 million for the same period of last year.
Earnings per share was $0.068 for the first half of 2017, compared to $0.016 for the same period of last year.
Financial Condition
As of June 30, 2017, the Company had cash and cash equivalents of $21.73 million, compared to $8.56 million at the end of 2016. The cash balance included cash held in private loan risk reserve accounts of $10.08 million and $7.30 million as of June 30, 2017 and December 31, 2016, respectively. Short term investments were $7.42 million as of June 30, 2017, compared to $8.27 million at the end of 2016. As of June 30, 2017, we had $42.98 million in total current assets and $13.68 million in total current liabilities, representing a current ratio of 3.14. As of December 31, 2016, we had $19.99 million in total current assets and $9.05 million in total current liabilities, with a current ratio of 2.21.
Net cash provided by operating activities $3.00 million for the first half of 2017, compared to $1.25 million for the same period of last year. Net cash used in investing activities was $0.40 million for the first half of 2017, compared to $0.12 million for the same period of last year. Net cash provided by financing activities was $10.18 for the first half of 2017, related to cash proceeds received from issuance of senior convertible promissory notes on June 30, 2017, compare to nil for the same period of last year.
Recent Developments
On August 14, 2017, the Company announced that FINRA has approved the effectiveness of a one (1) -for- five (5) reverse stock split (the "Reverse Split") of the Company's authorized and issued and outstanding shares of common stock, effective at the market open on August 7, 2017 under the symbol of "SFHDD". The symbol will be reverted back to "SFHD" after 20 business days.
On July 7, 2017, the Company announced the launch of entrusted loan services (the "Services") with the engagement of Qingdao Weichuang Private Capital Management Co., Ltd. as the trustee of the Services at the launch. The Company also announced that it has entered into a series of entrusted loan contracts, pursuant to which the Company, as the trustor and provider of the funds, entrusted the Trustee to grant entrusted loans in the aggregate principal amount of RMB 50 million to five SME borrowers.
On July 7, 2017, the Company announced the closing of its offering of $13,189,163.87 aggregate principal amount of senior convertible promissory notes, dated June 30, 2017, to certain investors in China.
On June 27, 2017, the Company announced that its Board of Directors has approved a one (1) -for- five (5) reverse stock split (the "Reverse Split") of its authorized and issued and outstanding shares of common stock. The Reverse Split was effected by the Company filing a Certificate of Change with the Secretary of State of the State of Nevada on June 20, 2017.
On June 20, 2017, the Company signed framework agreement a framework agreement (the "Framework Agreement") to acquire a minority equity interest in Shenzhen TouZhiJia Financial Information Service Co., Ltd. ("TouZhiJia"), an operator of a P2P online lending and vertical search platform, www.touzhijia.com. Pursuant to the Framework Agreement executed by and between the Company and the three selling shareholders of TouZhiJia, consisting of Huiping Huang, Wei Deng, and Tianyi Zhang (collectively, the "Selling Shareholders"), the Company has agreed to acquire a 4.45% equity interest in TouZhiJia from the Selling Shareholders for an aggregate purchase price of RMB19.10 million (approximately US$2.8 million). The purchase price is subject to adjustment based on the Company's due diligence investigation of TouZhiJia and may be payable by the Company in cash or by issuing Company equity or debt securities (or a combination of the foregoing).
About Sino Fortune Holding Corporation
Founded in 2013, Sino Fortune Holding Corporation ("Sino Fortune") is a leading online financial credit facility solution provider servicing under-served SME and individual borrowers in China. Through operating an electronic online financial platform, www.hyjf.com, the Company matches investors with SME and individual borrowers in China. The Company also sets aside risk reserve funds with the aim of limiting losses to investors from borrower defaults. In addition, the company provides investors with access to a liquid secondary market, giving them an opportunity to exit their investments before the underlying loans become due. For more information, please visit: www.hyjf.com.
Forward-Looking Statements
This press release may contain projections or other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements.
Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
For investors and media inquiries please contact:
At the Company:
Ede Yang
Email: ir@hyjf.com
Investor Relations:
Tony Tian, CFA
Weitian Group LLC
Email: tony.tian@weitian-ir.com
Phone: +1-732-910-9692
SINO FORTUNE HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For The Three Months Ended June 30, For The Six Months Ended June 30,
----------------------------------- ---------------------------------
2017 2016 2017 2016
---- ---- ---- ----
Revenues $10,798,846 $5,747,405 $18,685,745 $11,307,547
Operating expenses
Selling, general and administrative expenses 7,176,725 6,120,753 12,381,576 10,041,469
Business and related taxes 21,323 13,806 65,540 40,545
Depreciation 46,763 31,185 76,458 65,547
------ ------ ------ ------
Total operating expenses 7,244,811 6,165,744 12,523,574 10,147,561
--------- --------- ---------- ----------
Income from Operations 3,554,035 (418,339) 6,162,171 1,159,986
--------- -------- --------- ---------
Other income (expenses)
Interest income 125,176 26,841 156,028 59,525
Interest expense and bank charges (148,793) - (150,540) (4,826)
Realized gain on investments 217,041 - 217,041 -
Other 19,669 (23,212) 17,444 (42,206)
Total other income (expense) 213,093 3,629 239,973 12,493
------- ----- ------- ------
Income (loss) before provision for income taxes 3,767,128 (414,710) 6,402,144 1,172,479
Provision for income taxes (874,377) - (1,516,105) (121,489)
-------- --- ---------- --------
Net income (loss) 2,892,751 (414,710) 4,886,039 1,050,990
Other comprehensive income (loss)
Net unrealized gain on investments (net of tax effect) 32,198 - 32,198 -
Foreign currency translation adjustment 353,388 (48,536) 440,446 (21,168)
------- ------- ------- -------
Total comprehensive income (loss) $3,278,337 $(463,246) $5,358,683 $1,029,822
========== ========= ========== ==========
Net income (loss) per common share
Basic $0.04 $(0.01) $0.068 $0.016
===== ====== ====== ======
Diluted $0.04 $(0.01) $0.068 $0.016
===== ====== ====== ======
Weighted average number of common shares outstanding
Basic 72,364,178 67,500,000 72,364,178 67,500,000
========== ========== ========== ==========
Diluted 72,436,643 67,500,000 72,400,611 67,500,000
========== ========== ========== ==========
SINO FORTUNE HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
-------- ------------
2017 2016
---- ----
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $21,731,270 $8,561,695
Short-term investments 7,420,365 8,274,306
Accounts receivable 360,799 281,038
Short-term loans receivable 7,377,434 -
Prepayments 904,476 2,078,926
Deposit for business acquisition 1,409,091 -
Other receivables 3,780,801 792,849
Total current assets 42,984,236 19,988,814
Property and equipment - net 466,479 279,408
Intangible assets 14,543 17,745
------ ------
Total assets $43,465,258 $20,285,967
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and
accrued liabilities $426,713 $227,895
Taxes payable 2,389,238 1,285,160
Deferred tax liability 10,732 16,673
Interest payable 146,098 -
Liabilities from risk reserve fund
guarantee, without recourse to the
Company 10,078,847 7,297,123
Other payables 626,578 219,911
Total current liabilities 13,678,206 9,046,762
---------- ---------
Convertible notes payable 13,189,164 -
---------- ---
Total long-term liabilities 13,189,164 -
---------- ---
Total liabilities 26,867,370 9,046,762
---------- ---------
Stockholders' equity
Preferred stock, $0.001 par value,
10,000,000 shares authorized, none
issued - -
Common stock, $0.001 par value,
598,000,000 shares authorized,
72,364,178 shares issued and
outstanding as of June 30, 2017 and
December 31, 2016 72,364 72,364
Additional paid-in capital 9,527,326 9,527,326
Retained earnings 7,196,519 2,310,480
Accumulated other comprehensive loss (198,321) (670,965)
-------- --------
Total stockholders' equity 16,597,888 11,239,205
---------- ----------
Total liabilities and
stockholders' equity $43,465,258 $20,285,967
=========== ===========
SINO FORTUNE HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For The Six Months Ended June 30,
---------------------------------
2017 2016
---- ----
Cash flows from operating activities:
Net income $4,886,038 $1,050,990
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 76,458 65,547
Accrued interest on subscription funds for convertible notes 144,021 -
Realized Gain on investments (217,041) -
Changes in operating assets and liabilities:
Accounts receivable (71,786) -
Short-term loans receivable (7,272,561) -
Prepayments 1,208,356 (912,708)
Other receivables 38,417 (277,212)
Accounts payable and accrued liabilities 191,220 (440,403)
Taxes payable 1,057,101 474,185
Risk reserve fund payable 2,564,532 1,285,201
Other payable 395,565 -
-------
Net cash provided by operating activities 3,000,320 1,245,600
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (250,479) (117,438)
Payments made for short-term investments (7,272,561) -
Repayments of short-term investments 8,507,761 -
Deposit for business acquisition (1,389,061) -
Net cash used in investing activities (404,340) (117,438)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of convertible notes 10,177,986 -
Net cash provided by financing activities 10,177,986 -
---------- ---
Effect of exchange rate change 395,609 (131,891)
------- --------
Cash and cash equivalents:
Net increase 13,169,575 996,271
Balance at beginning of period 8,561,695 5,712,741
Balance at end of period $21,731,270 $6,709,012
=========== ==========
Supplemental Disclosures of Cash flow Information:
Cash paid for interest expense $ - $ -
=== === === ===
Cash paid for income taxes $398,593 $ -
======== === ===
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SOURCE Sino Fortune Holding Corporation
