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Qudian: Superb Borrower Growth But Credit Risks Increase

Sep. 12, 2019 1:07 AM ETQudian Inc. (QD)21 Comments
Himalayas Research profile picture
Himalayas Research


  • Strong borrower growth numbers.
  • Non-GAAP net income grew 57% yoy in 2Q19.
  • Open platform revenue increased 150% qoq.
  • New borrowers have increased credit risk profiles.
  • Stock is affected by falling RMB and worsening NPL ratios.

Qudian (NYSE:QD) reported earnings on August 16, when they beat consensus estimates, but the stock has fallen roughly 20% since. The positives include 2Q non-GAAP net income growing 57% yoy to RMB1.16bn, referral service fee increasing 150% qoq to RMB398mn, contributing to 27% of net revenue and outstanding loan balance surging 91% yoy to RMB28.7bn.

But, the credit trial program which aimed to attract new borrowers also brought worse NPL ratios which could deteriorate quicker as they are shorter term loans.

Along with the expected yet gradual depreciation of the RMB, translation back to USD could be adversely affected as well.

While I think the company is well run by a good team, there are increasingly bigger risks revolving macro which could affect the Chinese economy. Valuation appears to be cheap with P/E but fairly valued in P/B terms. Some investors might have been disappointed that they kept the full year guidance unchanged.

ChartData by YCharts

Fast growing user base

Owing to Qudian raising risk appetite, it has been more aggressive in attracting new users to its platform by offering new borrowers smaller ticket size loans and shorter durations. Here is a summary of borrower statistics:

2Q19 YoY QoQ
New borrowers ('mn') 1.09 73% 109%
New registered users ('mn') 2.70 4% 80%

Outstanding borrowers ('mn')

6.1 20% 13%

Source: Company

Changba partnership was launched in July so the flow of new users didn't have an impact yet and the management expects more partnerships to come which will help drive further traffic.

Source: Company

Source: Company

Open platform, a new major topline driver

Its open platform has become a major revenue driver, generating RMB398.1million in referral service fees for 2Q with little marginal operational cost and zero credit risk, and propelling over RMB4.8 billion in loan balance for its

This article was written by

Himalayas Research profile picture
Buyside analyst covering global consumers and tech. I've been investing personally and professionally across major equity markets for a few years. Subscribe for equity research and trading ideas.Opinions are not qualified investment or trading advice. Please do your own due diligence.

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