Yixin Car Loan News

This online auto finance trading platform turned a profit last year, reflecting a "gorgeous turnaround" after business adjustments.

Key points:

When the road is blocked, choose to turn, and maybe you will see another beautiful scenery. This is just used to describe the company we introduce today.

Benefiting from the substantial growth in service income brought by loans, CreditEase Group Co., Ltd. (2858.HK) achieved a net profit of 28.95 million yuan in 2021, and the adjusted net profit was even higher than 273 million yuan, reversing the The loss in 2020 reflects that after regulatory authorities strictly controlled online finance and P2P online lending, the company transformed into a loan intermediary, assisting banks in providing auto loans, and successfully opened up a new path.

Easy announced last Thursday night that total revenue last year increased by 5.1% to approximately 3.5 billion yuan, of which trading platform service revenue increased by 72% to 2.3 billion yuan, mainly due to an increase in loan enabling service revenue. 65% to 1.95 billion yuan, accounting for 55.9% of total revenue. As for the self-financing business that is gradually fading out, revenue fell by 40% from 58.7% to 1.19 billion yuan, accounting for 33.1% of total revenue, reflecting the company's "gorgeous turnaround" after its business transformation.

Easy's shift from a direct lender to an intermediary role as a loan facilitator is part of a broader trend among Chinese fintech companies following a government crackdown on their original direct lending business model, including tight regulation . On the other hand, official regulation of loan facilitation that does not require intermediaries to handle actual funds is relatively light, prompting many companies like CreditEase to enter this field.

After the announcement, Yixin’s share price plummeted 8% last Friday, closing at HK$0.92. The stock reached a high of HK$2.89 in April last year, but has trended lower since then. The current level could only be at the low end of the last 52 weeks or reflect investor dissatisfaction with its financial performance.

In the past ten years, China's automobile financing market has grown rapidly, and the financing penetration rate has increased year by year. The market size is expected to reach 2 trillion yuan this year. Even though the COVID-19 epidemic has recurred in the past two years and semiconductor supply shortages continue to affect automobile production, the growth of domestic automobile financing business has not slowed down.

The announcement shows that last year, the total amount of auto financing promoted by Yixin through loan promotion services and self-operated financing business increased by 66% to 45 billion yuan. Other industry data show that the total number of Yixin Auto financing transactions last year increased by 49% to approximately 530,000, far exceeding the industry average. Among them, the new car financing transaction volume was approximately 293,000 units, a year-on-year increase of 31%; the second-hand car financing transaction volume increased by 80% to approximately 237,000 units, mainly due to the reduction of value-added tax in the second-hand car circulation link and the promotion of convenient transactions, which benefited related businesses.

The profit is not as good as direct lending

CreditEase mainly engages in car loans and vehicle leasing, and has gradually successfully transformed into a loan intermediary. But it still has to go through pains. It is mainly a third-party lending intermediary platform, and the profit is not as good as direct financial leasing. After the company's transformation, it had to accept the operation of "small profits but quick turnover", but the advantage is that it can reduce the risk of customer defaults.

Last year, the company's asset quality continued to improve, and credit impairment losses dropped from 1.812 billion yuan in 2020 to 286 million yuan last year, a decrease of 84%, which became the biggest reason for the turnaround of performance. In addition, after it faded out of its self-operated car loan business, the proportion of CreditEase's overdue loans of more than 90 days last year has dropped from 2.28% in 2020 to 1.95% last year, and the rate of overdue loans between 30 and 90 days has dropped to a record low.

The company explained that since the second half of 2020, the company has adopted more prudent risk control measures. In the financing transaction stage, the company actively improves access standards to provide services to more qualified customers. At the same time, it uses AI, big data and other technologies to improve financing risk control capabilities, and overdue loans continue to decrease.

Although CreditEase's self-operated financing business declined significantly last year, it did not have a great impact on the group's overall gross profit margin. As the economies of scale of auto finance transactions increase, the total profit of auto finance transactions

After the results were announced, Yixin’s latest price-to-earnings ratio was approximately 1.54 times, compared with Cangu’s 0.32 times and Autohome’s 3.5 times In comparison, it is at the middle level of the industry. Looking at the evaluation of CreditEase by major banks, there is general optimism mixed with some caution.

According to a report published by Citigroup, CreditEase should be able to benefit from continued improvements in credit control, but it will still take time to increase the turnover of the trading platform to achieve stable growth in group revenue. Its rating is "neutral", but the target price Up to HK$2.50 – a potential increase of 171% from the current share price. Related Q&A: Why is the online Yixin car loan chaotic? The Yixin car loan platform has been complained by many car owners. Yixin Auto Loan, a subsidiary of Yixin Group, sells cars and finances leases under the guise of mortgage loans. The car owner was only a few days overdue, and the car was driven away for no reason. The owner wanted to make up the balance, but Yixin Car Loan refused. It stands to reason that Yixin Auto Loan has the support of giants JD.com and Tencent. How did it develop to the current situation? 1. The car owner reported that his car was towed in the middle of the night. A car owner who complained on a certain platform said that his car loan was overdue for only two days, and the Yixin platform towed his car away. He also said that if he wanted to get his car back, he would need to tow it away. Pay a deducted fare of 5,000 yuan. A similar thing happened as early as 2018. The car owner's car was towed away in the middle of the night. He wanted to make up the balance to get his car back, but Yixin Auto Loan refused for various reasons. According to the feedback of these car owners, the contract signed between Yixin Auto Loan and them was in default due to failure to repay the loan in time for various reasons, so their car was sold by Yixin Auto Loan. Even if they wanted to make up the balance, Yixin Auto Loan would still sell it. Car loans were declined for various reasons. 2. What the car owners signed was not a loan contract. In 2019, complaints about Yixin Auto Loan did not decrease, and the content of the complaints became more and more abundant. According to media reports, Mr. Xiao from Changsha said that he borrowed a car loan on the Yixin Car Loan platform. Unexpectedly, he signed not a car loan contract, but a financial lease contract. The car was sold to the other party and he had to pay a fee. rent. Mr. Xiao also said that not long after, four or five tough guys dragged him out of the car in the parking lot and drove away in his BMW x5. 3. Yixin Car Loan Salesperson Charged Unreasonably According to media reports, a contract regarding the "borrower" was found, in which the total purchase price of the vehicle was 310,000. According to this, the borrower said that after the funds were successfully transferred out, the sales staff at Yixin Auto Loan requested another 18,000 yuan, which was used for mortgage appraisal fees and service fees. Then it is obvious that the actual amount received by this car owner is only 230,000. If you want to borrow money, you need to find a reliable platform. Yixin Auto Loan has been really chaotic in the past few years. In order to avoid unnecessary losses, it is recommended that you do not choose the Yixin car loan platform. Related Q&A: Is Yixin Car Loan reliable for buying a car?

On November 16, Yixin Group (stock code: 2858.HK), the first new automobile retail stock, was officially listed on the main board of the Hong Kong Stock Exchange and began trading at 9:30 a.m. that day. HK$10.00/share, 500 shares per lot, soared 29.9% at the opening.

It is reported that before the official listing, Yixin Group has been oversubscribed 559 times, with frozen capital of up to 382 billion Hong Kong dollars (49 billion US dollars). Together with China Literature Group (00772.HK), it has become The tenth largest new issue with frozen capital in the history of the Hong Kong Stock Exchange.

Media Training Camp once reviewed Yixin’s development history when Yixin Group submitted its prospectus.

Yixin Group was established in 2014 and spun off from Bitauto in 2015. In February 2015, Yixin Group received 2.5 billion yuan in Series A investment from Tencent, JD.com, and Bitauto. In October 2016, Yixin Group completed US$505 million in financing, with investors including Tencent, JD.com, Baidu, and Bitauto investing RMB 3.5 billion in Series B. In May this year, Yixin Group received US$505 million in financing from investors including Tencent, Bitauto, Oriental Assets, one of the four major state-owned asset management companies, and Wang Wei, founder of SF Express.

Since then, Yixin Group has become the only platform in the industry that has received capital injections from Tencent, Baidu, JD.com, IDG, Oriental Assets, etc.

Among them, Tencent indirectly and directly holds Yixin has 33% of the total issued share capital. In addition, Tencent Chief Strategy Officer James Gordon Mitchell and Tencent Financial Technology Group Head Lai Zhiming also serve as members of the board of directors of Yixin Company.

In the first half of 2017, its operating income reached 1.551 billion yuan and net profit reached 261 million yuan. Among them, the income from the trading platform business was 321 million yuan, contributing 20.7% of the total income; the income from the self-operated financing business was 1.230 billion yuan, contributing 79.3% of the total income.

In the six months ended June 30, 2017, the trading platform business revenue was 321.1 million yuan, contributing 20.7% of the total revenue, an increase of 449.9% compared with the same period in 2016; the self-operated financing business revenue was 1.2 billion yuan, contributing 20.7% of the total revenue. 79.3%, an increase of 209.6% compared with the same period in 2016.

In 2014, Yixin Group’s revenue was 47.99 billion yuan; in 2015, it was 271 million yuan; in 2016, it was 1.488 billion yuan. Yixin Group's net loss in the first half of 2017 was 6.105 billion yuan, compared with a net loss of 647,000 yuan in the same period last year. The net profits of Yixin Group in 2014, 2015 and 2016 were 60,000 yuan, -28.2 million yuan and -1.404 billion yuan respectively.

As of June 30, 2017, Yixin’s cumulative losses reached 7.6 billion yuan. The main reason for the cumulative losses was the substantial increase in the fair value of convertible and redeemable preference shares. As of 2015, 2016 and the six months ended June 30, 2017, the fair values ??of Yixin Group's convertible and redeemable preference shares were 53.5 million yuan, 1.4 billion yuan and 6.3 billion yuan respectively.

Because the listing on the Hong Kong Stock Exchange adopts International Accounting Standards (IFRS) instead of US Accounting Standards (US GAAP), the "fair value of convertible and redeemable preference shares" is considered to be a bond item rather than an equity item. Once listed, all convertible and redeemable preference shares will be automatically converted into ordinary shares, and Yixin Group will not incur a loss in the fair value of the convertible and redeemable preference shares.

Calculated by the number of vehicles traded, Yixin Group ranked first in the Internet automobile retail transaction market in 2016, with a market share of 18.7%. In the first nine months of this year alone, Yixin's automotive Internet retail trading platform has facilitated approximately 300,000 automotive retail and related transactions, involving a total vehicle value of more than RMB 29 billion.

Looking at the industry, Uxin used cars completed US$500 million in financing in January this year, Yixin received a third round of financing of US$505 million in May, and Guazi used car sales website upgraded at the end of October. Chehaoduo Group operates two brands, Guazi used cars and Maodou new car network. Guazi used cars received more than US$400 million in financing in June, and Chehaoduo received more than US$180 million in financing in October. Competition in the Internet automobile industry is becoming increasingly fierce.

Zhang Xu'an, chairman, CEO and executive director of Yixin Group Co., Ltd., said that the successful listing of Yixin is an important step in the history of Yixin's development and provides new impetus for Yixin's long-term development.

“In the future, on the one hand, it will continue to be consumer-centered and continuously enrich and improve the products and services of the platform. On the other hand, Yixin will also continue to expand its partner network, improve the automobile transaction ecology, and let Automakers, auto dealers, auto financing partners and after-sales service providers can better interact and trade in the ecosystem built by Yixin to achieve mutual growth. ”