P2P/Consumer lending market in China

by ForwardInstance

Has someone done good research around P2P/Consumer lending companies in China. I have done some preliminary research and below are my observations –

Observations –

  1. P2P lending market is expected to grow at a CAGR of 35% to around $1 tn
  2. Top players listed in the US are Yirendai (YRD), Hexindai (HX), Qudian (QD), LexinFintech (LX)
  3. The government has been regulating the consumer lending market in China and this has resulted in several fraudulent companies being shut down (around 4k companies shut down in 2017)
  4. Govt is also capping the interest rates being charged by the investors. This has resulted in investors withdrawing from the platforms as they see better opportunities elsewhere
  5. Defaults are also growing as the industry expands and the average risk level of the borrower goes up
  6. Questions have also been raised on the financial audits of the listed players
  7. All of this has resulted in 50-60% decline stock prices over the past 4-5 months, leading to extremely low P/E, PEG levels on account of high growth rates, high margins

While I understand that the impact of regulations can go either way for the big players, has someone done a detailed study around how these regulations will affect the so-called well established players in the industry and which companies are likely to emerge the strongest ?

 

Disclaimer: Consult your financial professional before making any investment decision.

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