AHG — Akso Health Group

Summary of Hexindai Q1 2020 Earnings Call

1. Key Financial Results and Metrics:

• Net Revenue: $4.9 million, a significant decrease of 90.5% year-over-year.
• Loan Volume Facilitated: $28.2 million (RMB 0.2 billion), down from RMB 2.9 billion in Q1 2019.
• Sequential Improvement: Revenue increased by 8.6% from the previous quarter.
• Operating Costs: $12.6 million, down 18.9% year-over-year, primarily due to reduced sales and marketing expenses.
• Net Loss: $7.2 million, compared to a net income of $29.7 million in the same period last year.
• Loss Per Share: Basic and diluted loss per share of $0.15, compared to earnings per share of $0.62 (basic) and $0.56 (diluted) in Q1 2019.
• Adjusted Net Loss: $7 million, down from an adjusted net income of $29.9 million year-over-year.

2. Strategic Updates and Business Highlights:

• Transition Period: The company is repositioning its business amidst a challenging regulatory environment for the P2P industry.
• Loan Assistance Business: Hexindai is developing a loan assistance business to complement its P2P operations, targeting institutional partnerships for future growth.
• Partnerships: Collaborations with financial institutions like Bohai International Trust and Kunming Aotou have begun yielding results, with significant loan volumes funded by institutional partners.
• Risk Management: Enhanced risk management systems are being developed using data from legacy P2P products to support the new loan assistance business.

3. Forward Guidance and Outlook:

• The company anticipates that approximately 80% of loans facilitated will be funded by institutional partners in 2020.
• Hexindai is optimistic about the growth potential of its loan assistance business, which is expected to mitigate the decline in P2P operations and provide long-term sustainable growth.

4. Bad News, Challenges, or Points of Concern:

• Regulatory Environment: The P2P industry remains under scrutiny, creating uncertainty and challenges for operations.
• Declining Metrics: The dramatic drop in net revenue and loan volume indicates significant headwinds in the current business model.
• Net Losses: The company reported a substantial net loss, raising concerns about financial stability and operational efficiency during the transition phase.

5. Notable Q&A Insights:

• Borrower Acquisition: 42% of borrowers were acquired online, with the remainder offline; the company expects the online percentage to increase as the loan assistance business grows.
• Advantages of Loan Assistance: Compared to P2P, the loan assistance model benefits from institutional demand, regulatory clarity, and a stronger risk management framework.
• Share Repurchase Program: Approximately 1.2 million ADS have been repurchased, reflecting the company's commitment to shareholder value amidst challenging conditions.
• Regulatory Compliance: Hexindai has proactively connected with Baihang Credit for compliance with new regulatory requirements, enhancing its credit assessment capabilities.

This summary encapsulates the key points from Hexindai's Q1 2020 earnings call, highlighting both the challenges faced and the strategic initiatives being undertaken to navigate the evolving landscape.