Has someone done good research around P2P/Consumer lending companies in China. I have done some preliminary research and below are my observations –
- P2P lending market is expected to grow at a CAGR of 35% to around $1 tn
- Top players listed in the US are Yirendai (YRD), Hexindai (HX), Qudian (QD), LexinFintech (LX)
- 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)
- 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
- Defaults are also growing as the industry expands and the average risk level of the borrower goes up
- Questions have also been raised on the financial audits of the listed players
- 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.