Hui Ying Financial Holdings Corp. Reports Unaudited Third Quarter 2017 Financial Results
Revenues increased by 102% to $14.28 million with loans facilitated through platform growing 73% to RMB 2.6 billion
SHANGHAI, Nov. 14, 2017 /PRNewswire/ -- Hui Ying Financial Holdings Corp. (OTCQB: SFHD) ("Hui Ying" or the "Company"), a leading online financial credit facility solution provider servicing Small-to-Medium Enterprises ("SMEs") and individual borrowers in China, today announced its financial results for the three and nine months ended September 30, 2017.
Third Quarter 2017 Highlights
For the Three Months Ended September 30,
----------------------------------------
($ millions, except per share data) 2017 2016 % Change
---- ---- --------
Revenues $14.28 $7.07 101.9%
Loan origination service fee $8.39 $5.11 64.3%
Loan repayment management fee $5.25 $1.97 167.0%
Financing income from entrusted loans $0.64 $ - NM
Operating income $6.41 $1.92 233.2%
Other income (expenses) $(0.24) $0.04 -717.6%
Net income $4.76 $1.46 226.3%
EPS - diluted $0.06 $0.02 179.0%
----- ----- -----
-- Total loans facilitated through our platform increased by 73.3% to RMB
2.6 billion for the third quarter of 2017, from RMB 1.5 billion for the
same period of last year, as China's online peer-to-peer lending
platform industry continued to grow significantly during the third
quarter, coupled with the increased marketing campaign, promotion
activities on our platform as well as increased brand awareness of our
online marketplace.
-- Total revenues more than doubled to $14.28 million for the third quarter
of 2017 from $7.07 million for the same period of last year, as a result
of increase in loans facilitated through our platform and the
contribution from the newly launched entrusted loan business. Revenues
from loan origination service fee, loan repayment management fee and
financing income from entrusted loans were $8.39 million, $5.25 million
and $0.64 million, respectively, for the third quarter of 2017 compared
to $5.11 million, $1.97 million and nil, respectively, for the same
period of last year.
-- Net income was $4.76 million, or $0.06 per diluted share, for the third
quarter of 2017, compared to $1.46 million, or $0.02 per diluted share,
for the same period of last year.
Bodang Liu, Chairman and Chief Executive Officer of Hui Ying, commented, "Our business continued to accelerate during the third quarter with loans facilitated through our platform increasing by 73.3% to RMB 2.6 billion, leading to revenues growth of 101.9% to $14.28 million and net income growth of 226.3% to $4.76 million, both were record high. Our recently launched entrusted loan business already making an impact, contributing 4.5% of revenues in the third quarter."
"We also completed the transaction of acquiring 4.4538% equity interest in Shenzhen TouZhiJia Financial Information Service Co., Ltd. ("TouZhiJia") in September. We view this as a strategic investment and expect to benefit meaningfully from TouZhiJia's vertical peer-to-peer lending search engine, www.touzhijia.com, through this strategic investment. As the peer-to-peer lending platform industry continues to evolve amidst dramatically changing competitive landscape and regulatory environment, we are optimistic about our outlook and expect the strong momentum to continue in the next several quarters," concluded Mr. Liu.
Third Quarter 2017 Financial Results
Revenues
For third quarter of 2017, total revenues increased by $7.21 million, or 101.9%, to $14.28 million from $7.07 million for the same period of last year. The increase of total revenues was mainly attributable to the increase in the volume of loans facilitated through our platform as well as financing income generated through our entrusted loan business which we launched in June 2017 and contributed 4.5% of total revenues in the third quarter this year. The total loan volume facilitated through our platform increased by 73.3% to RMB 2.6 billion for the third quarter of 2017 from RMB 1.5 billion for the same period of last year.
The loan origination service fee increased by $3.29 million, or 64.3%, to $8.39 million for the third quarter of 2017 from $5.11 million for the same period of last year. The loan repayment management fee increased by $3.29 million, or 167.0%, to $5.25 million for the third quarter of 2017 from $1.97 million for the same period of last year. The financing income from entrusted loans were $0.64 million for the third quarter of 2017, compared to $nil for the same period of last year. The loan origination service fee, loan repayment management fee, and financing income from entrusted loans accounted for 58.8%, 36.8% and 4.5%, respectively, of total revenues for the third quarter of 2017, compared to 72.2%, 27.8% and nil, 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. We expect this trend will continue as the industry becomes more regulated and investors are getting more comfortable investing in loans with longer terms. We will continue to adjust our loan product offerings accordingly.
Operating Expenses
Operating expenses increased by $2.72 million, or 52.9%, to $7.88 million for the third quarter of 2017 from $5.15 million for the same period of last year. Sales and marketing expenses increased by $1.88 million, or 42.0%, to $6.37 million for the third quarter of 2017 from $4.49 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 $0.85 million, or 161.3%, to $1.38 million for the third quarter of 2017 from $0.53 million for the same period of last year, primarily due to expenses related to public company listing on the OTCQB.
Operating Income
Operating income increased by $4.48 million, or 233.2%, to $6.41 million for the third quarter of 2017 from $1.92 million for the same period of last year. The increase in operating income was primarily driven by increase in total revenues and partially offset by increase in operating expenses. Operating margin was 44.9% for the third quarter of 2017, compared to 27.2% for the same period of last year.
Income before Income Taxes
Total other expense, including interest income, interest expenses and bank charges, realized gain on investments and others, was $0.24 million for the third quarter of 2017, compared to total other income of $0.04 million for the same period of last year. The change was primarily related to interest expense and bank changes.
Income before provision for income taxes increased by $4.20 million, or 214.2%, to $6.16 million for the third quarter of 2017 from $1.96 million for the same period of last year
Net Income
Provision for income taxes was $1.41 million for the third quarter of 2017, compared to $0.50 million for the same period of last year.
Net income increased by $3.30 million, or 226.3%, to $4.76 million for the third quarter of 2017 from $1.46 million for the same period of last year.
Earnings per Share
Basic and diluted earnings per share were $0.07 and $0.06, respectively, for the third quarter of 2017, compared to $0.02 and $0.02, respectively, for the same period of last year.
Nine Months Ended September 30, 2017 Financial Results
For the Nine Months Ended September 30,
---------------------------------------
($ millions, except per share data) 2017 2016 % Change
---- ---- --------
Revenues $32.97 $18.38 79.4%
Loan origination service fee $20.04 $13.26 51.2%
Loan repayment management fee $12.29 $5.13 139.8%
Financing income from entrusted loans $0.64 $ - NM
Operating income $12.57 $3.08 307.7%
Other income (expenses) $(0.00) $0.05 -103.9%
Net income $9.65 $2.51 284.3%
EPS - diluted $0.13 $0.04 247.8%
----- ----- -----
Revenues
For the nine months ended September 30, 2017, total revenues increased by $14.59 million, or 79.4%, to $32.97 million from $18.38 million for the same period of last year. The increase of total revenues was mainly attributable to the increase in the volume of loans facilitated through our platform as well as financing income generated through our entrusted loan business which we launched in June 2017 and contributed 1.9% of total revenues in the nine months ended September 30, 2017. The total loan volume facilitated through our platform increased by 61.5% to RMB 6.3 billion for the nine months ended September 30, 2017 from RMB 3.9 billion for the same period of last year.
The loan origination service fee increased by $6.78 million, or 51.2%, to $20.04 million for the nine months ended September 30, 2017 from $13.26 million for the same period of last year. The loan repayment management fee increased by $7.17 million, or 139.8%, to $12.29 million for the nine months ended September 30, 2017 from $5.13 million for the same period of last year. The financing income from entrusted loans were $0.64 million for the nine months ended September 30, 2017, compared to $nil for the same period of last year. The loan origination service fee, loan repayment management fee, and financing income from entrusted loans accounted for 60.8%, 37.3% and 1.9%, respectively, of total revenues for the nine months ended September 30, 2017, compared to 72.1%, 27.9% and nil, 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. We expect this trend will continue as the industry becomes more regulated and investors are getting more comfortable investing in loans with longer terms. We will continue to adjust our loan product offerings accordingly.
Operating Expenses
Operating expenses increased by $5.10 million, or 33.3%, to $20.40 million for the nine months ended September 30, 2017 from $15.30 million for the same period of last year. Sales and marketing expenses increased by $4.21 million, or 35.4%, to $16.10 million for the nine months ended September 30, 2017 from $11.89 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 $0.87 million, or 27.4%, to $4.03 million for the nine months ended September 30, 2017 from $3.16 million for the same period of last year, primarily due to expenses related to public company listing on the OTCQB.
Operating Income
Operating income increased by $9.49 million, or 307.7%, to $12.57 million for the nine months ended September 30, 2017 from $3.08 million for the same period of last year. The increase in operating income was primarily driven by increase in total revenues and partially offset by increase in operating expenses. Operating margin was 38.1% for the nine months ended September 30, 2017, compared to 16.8% for the same period of last year.
Income before Income Taxes
Total other expense, including interest income, interest expenses and bank charges, realized gain on investments and others, was $2,040 for the nine months ended September 30, 2017, compared to total other income of $51,680 for the same period of last year. The change was primarily related to the increase in interest expense and bank changes and partially offset by the increase in realized gain on investments and interest income.
Income before provision for income taxes increased by $9.43 million, or 300.9%, to $12.57 million for the nine months ended September 30, 2017 from $3.13 million for the same period of last year
Net Income
Provision for income taxes was $2.92 million for the nine months ended September 30, 2017, compared to $0.62 million for the same period of last year.
Net income increased by $7.14 million, or 284.3%, to $9.65 million for the nine months ended September 30, 2017 from $2.51 million for the same period of last year.
Earnings per Share
Basic and diluted earnings per share were $0.13 for the nine months ended September 30, 2017, compared to $0.04 for the same period of last year.
Loan Portfolio
For the Nine For the Year For the Year
Months Ended Ended Ended
September 30, December 31, December 31,
2017 2016 2015
---- ---- ----
Number of borrowers 1,444 1,067 571
Repeat borrower rate 21% 15% 9%
Number of investors 53,754 39,999 43,302
Repeat investor rate 56% 56% 42%
Number of loans 12,688 8,739 2,818
Value of loans ($ millions) $956.6 $818.5 $513.0
Average loan amount ($) 75,516 93,658 182,039
Loans outstanding -EoP ($ millions) $443.6 $246.1 $186.0
------ ------ ------
For the nine months ended September 30, 2017, the Company facilitated 12,688 loans with aggregate loan amount of $956.6 million. This compared to 8,739 loans with aggregate loan amount of $818.5 million for the year of 2016. For the nine months ended September 30, 2017, the company had 1,444 borrowers, of which 21% was repeated borrowers. This compared to 1,067 borrowers with 15% repeat borrower rate for the year of 2016. For the nine months ended September 30, 2017, the company had 53,754 investors, of which 56% was repeated investors. This compared to 39,999 investors with 56% repeat investor rate for the year of 2016.
For the nine months ended September 30, 2017, by guarantor type, pawn shops were the largest segment for us with 6,959 loans and aggregate loan amount of $648.0 million, followed by asset or investment management companies with 2,148 loans and aggregate loan amount of $56.5 million, and micro credit companies with 875 loans and aggregate loan amount of $97.2 million. Financial guarantee companies accounted for 476 loans with aggregate loan amount of $37.3 million while others accounted for 2,210 loans with aggregate loan amount of $117.6 million for the nine months ended September 30, 2017. The following table summarizes comparison of number of loans and loan amount for the nine months ended September 30, 2017 versus the years of 2016 and 2015.
Number of Loans Value of Loans ($ millions)
--------------- --------------------------
Guarantor type For the Nine For the Year For the Year For the Nine For the Year For the Year
Months Ended Ended Ended Months Ended Ended Ended
September 30, December 31, December 31, September 30, December 31, December 31,
2017 2016 2015 2017 2016 2015
---- ---- ---- ---- ---- ----
Pawn shops 6,959 6,152 1,489 $648.0 $572.3 $323.4
Financing guarantee companies 476 351 17 37.3 46.2 1.9
Asset or investment management
companies 2,148 1,143 - 56.5 71.8 -
Micro credit companies 875 837 308 97.2 111.6 100.5
Others 2,210 256 1,005 117.6 16.7 87.3
----- --- ----- ----- ---- ----
Total 12,668 8,739 2,818 $956.6 $818.5 $513.0
====== ===== ===== ====== ====== ======
As of September 30, 2017, we had outstanding loan balances of $443.6 million, compared to $246.1 million at the end of 2016.
Financial Condition
As of September 30, 2017, the Company had cash and cash equivalents of $12.94 million, compared to $8.56 million at the end of 2016. The cash held in private loan risk reserve accounts was $13.10 million and $7.30 million as of September 30, 2017 and December 31, 2016, respectively. Short term investments were $nil as of September 30, 2017, compared to $8.27 million at the end of 2016. As of September 30, 2017, we had $50.49 million in total current assets and $19.04 million in total current liabilities, representing a current ratio of 2.65. 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 was $20.23 million for the nine months ended September 30, 2017, compared to $2.91 million for the same period of last year. Net cash used in investing activities was $29.58 million for the nine months ended September 30, 2017, compared to $0.04 million for the same period of last year. Net cash provided by financing activities was $13.28 for the nine months ended September 30, 2017, related to cash proceeds received from issuance of senior convertible promissory notes on June 30, 2017, compared to nil for the same period of last year.
Recent Developments
On September 29, 2017, the Company announced the change of its corporate name to Hui Ying Financial Holdings Corporation.
On September 7, 2017, the Company announced that Puhui Equity Investment Co., Ltd. ("Puhui"), a wholly owned subsidiary of the Company's variable interest entity -- Benefactum Alliance Business Consultant (Beijing) Co., Ltd., entered into a definitive share transfer agreement on September 1, 2017 to acquire a 4.4538% equity interest in Shenzhen TouZhiJia Financial Information Service Co., Ltd. ("TouZhiJia") from certain selling shareholders for an aggregate purchase price of RMB19,100,008 (approximately US$2.87 million). TouZhiJia's main businesses include vertical Peer-to-Peer ("P2P") search engine, private wealth management and secondary loan exchange services. TouZhiJia Financial, as a service provider, refers potential investors to the Company through online channel.
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 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.
About Hui Ying Financial Holdings Corporation
Hui Ying Financial Holdings Corporation, previously known as Sino Fortune Holding Corporation, 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: ir.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
HUI YING FINANCIAL HOLDINGS CORPORATION
(f/k/a SINO FORTUNE HOLDING CORPORATION AND SUBSIDIARIES)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
------------- ------------
2017 2016
---- ----
ASSETS
Current assets
Cash and cash equivalents $12,942,309 $8,561,695
Short-term investments - 8,274,306
Accounts receivable 572,440 281,038
Short-term loans receivable 35,312,326 -
Prepayments 587,237 2,078,926
Other receivables 1,079,850 792,849
--------- -------
Total current assets 50,494,162 19,988,814
Property and equipment - net 792,133 279,408
Investment in an equity investee 2,870,067 -
Intangible assets 15,004 17,745
------ ------
Total assets $54,171,366 $20,285,967
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and
accrued liabilities $470,282 $227,895
Taxes payable 4,002,070 1,285,160
Deferred tax liability - 16,673
Interest payable 348,252 -
Due to related party 601,538 -
Liabilities from risk reserve fund
guarantee, without recourse to the
Company 13,101,290 7,297,123
Other payables 519,235 219,911
------- -------
Total current liabilities 19,042,667 9,046,762
---------- ---------
Convertible notes payable 13,189,164 -
---------- ---
Total long-term liabilities 13,189,164 -
---------- ---
Total liabilities 32,231,831 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 September 30,
2017 and December 31, 2016 72,364 72,364
Additional paid-in capital 9,527,326 9,527,326
Retained earnings 11,955,875 2,310,480
Accumulated other comprehensive loss 383,970 (670,965
------- --------
Total stockholders' equity 21,939,535 11,239,205
---------- ----------
Total liabilities and
stockholders' equity $54,171,366 $20,285,967
=========== ===========
HUI YING FINANCIAL HOLDINGS CORPORATION
(f/k/a SINO FORTUNE HOLDING CORPORATION AND SUBSIDIARIES)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For The Three Months For The Nine Months Ended
Ended September 30, September 30,
------------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Revenues:
Financing income from entrusted loans $636,449 $ - $636,449 $ -
Loan facilitation and repayment management fees and others 13,646,313 7,074,552 32,332,058 18,382,099
---------- --------- ---------- ----------
Total revenue 14,282,762 7,074,552 32,968,507 18,382,099
---------- --------- ---------- ----------
Operating expenses
Selling, general and administrative expenses 7,753,250 5,016,297 20,134,827 15,057,766
Business and related taxes 58,117 82,028 123,657 122,573
Depreciation 64,872 53,629 141,330 119,176
------ ------ ------- -------
Total operating expenses 7,876,239 5,151,954 20,399,814 15,299,515
--------- --------- ---------- ----------
Income from Operations 6,406,523 1,922,598 12,568,693 3,082,584
--------- --------- ---------- ---------
Other income (expenses)
Interest income 27,237 23,657 183,265 83,182
Interest expense and bank charges (339,300) (1,486) (489,840) (6,312)
Realized gain on investments 93,752 - 310,793 -
Other (23,702) 17,016 (6,258) (25,190)
------- ------ ------ -------
Total other income (expense) (242,013) 39,187 (2,040) 51,680
-------- ------ ------ ------
Income before provision for income taxes 6,164,510 1,961,785 12,566,653 3,134,264
Provision for income taxes (1,405,154) (503,232) (2,921,258) (624,721)
---------- -------- ---------- --------
Net income 4,759,356 1,458,553 9,645,395 2,509,543
Other comprehensive income
Net unrealized gain on investments (net of tax effect) (50,018) - (50,018) -
Foreign currency translation adjustment 614,489 (24,158) 1,104,953 (45,326)
------- ------- --------- -------
Total comprehensive income $5,323,827 $1,434,395 $10,700,330 $2,464,217
========== ========== =========== ==========
Net income per common share
Basic $0.07 $0.02 $0.13 $0.04
===== ===== ===== =====
Diluted $0.06 $0.02 $0.13 $0.04
===== ===== ===== =====
Weighted average number of common shares outstanding
Basic 72,364,178 67,500,000 72,364,178 67,500,000
========== ========== ========== ==========
Diluted 78,958,760 67,500,000 74,594,599 67,500,000
========== ========== ========== ==========
HUI YING FINANCIAL HOLDINGS CORPORATION
(f/k/a SINO FORTUNE HOLDING CORPORATION AND SUBSIDIARIES)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For The Nine Months Ended
September 30,
-------------
2017 2016
---- ----
Cash flows from operating
activities:
Net income $9,645,395 $2,509,543
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 141,330 119,176
Accrued interest for convertible
notes 348,252 -
Changes in operating assets and
liabilities:
(increase) decrease:
Accounts receivable (272,943) (752)
Prepayments 1,547,000 (720,051)
Other receivables (246,844) (802,900)
Increase (decrease): 228,775 (792,708)
Accounts payable and accrued
liabilities
Taxes payable 2,601,664 474,045
Due to related party 588,140 -
Liabilities from risk reserve fund
guarantee 5,364,095 2,122,641
Other payables 283,324 -
------- ---
Net cash provided by operating
activities 20,228,188 2,908,994
---------- ---------
Cash flows from investing
activities:
Purchases of property and equipment (627,301) (17,886)
Purchase of intangible asset - (18,850)
Purchase of short-term investments (7,345,919) -
Proceeds from disposal of short-
term investments 15,720,267 -
Disbursements for short-term
entrusted loans made (34,525,821)
Investment in an equity investee (2,806,142) -
---------- ---
Net cash used in investing
activities (29,584,916) (36,736)
----------- -------
Cash flows from financing
activities:
Proceeds from issuance of
convertible notes 13,275,151 -
---------- ---
Net cash provided by financing
activities 13,275,151 -
---------- ---
Effect of exchange rate change 462,191 (191,649)
------- --------
Cash and cash equivalents:
Net increase 4,380,614 2,680,609
Balance at beginning of period 8,561,695 5,712,741
--------- ---------
Balance at end of period $12,942,309 $8,393,350
=========== ==========
Supplemental Disclosures of Cash
flow Information:
Cash paid for income
taxes $415,719 $ -
======== === ===
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SOURCE Hui Ying Financial Holdings Corporation
