Hot Stock in Focus: Hexindai Inc. (NASDAQ: HX)

Hexindai Inc. (HX), a fast-growing consumer lending marketplace in China, recently declared its unaudited financial results for the quarter ended June 30, 2018.

First Quarter of Fiscal Year 2019 Unaudited Financial Results

Net revenue:

Net revenue during the first quarter of fiscal year 2019 was US$51.70M, a boost of 241.8% contrast to US$15.10M during the same quarter of fiscal year 2018. The increase was mainly because of the noteworthy increase in the volume of credit loans facilitated through Hexindai’s marketplace, which increased from US$0.20B (RMB1.30B) in the first quarter of fiscal year 2018 to US$0.50B (RMB2.90B) in the same quarter of fiscal year 2019. The increase in the volume of credit loans facilitated through Hexindai’s marketplace was driven by a boost in the number of credit loan borrowers from 14,723 in the first quarter of fiscal year 2018 to 28,979 in the same quarter of fiscal year 2019.

Operating expenses:

Total operating expenses during the first quarter of fiscal year 2019 were US$15.60M, a boost of 224.2% from US$4.80M in the same quarter of last fiscal year. The noteworthy increase was mainly because of a boost in sales and marketing expenses and general and administrative expenses.

Sales and marketing expenses:

Sales and marketing expenses during the first quarter of fiscal year 2019 were US$11.70M, a boost of 354.2% from US$2.60M during the same quarter of last fiscal year. The increase was mainly because of a boost in employee expenses and advertising expenses associated with enhancing the Company’s brand recognition and acquiring more customers.

Service and development expenses:

Service and development expenses during the first quarter of fiscal year 2019 were US$1.40M, a boost of 2.2% from US$1.30M during the same quarter of last fiscal year. Service and development expenses remained stable when contrast to the same period of last fiscal year, which was mainly because of improvements in operational efficiency.

General and administrative expenses:

General and administrative expenses during the first quarter of fiscal year 2019 were US$2.30M, a boost of 158.6% from US$0.90M during the same period of last fiscal year. The increase was mainly attributable to a boost in employee expenses, professional service fees and rental expenses.

Share-based compensation:

Share-based compensation during the first quarter of fiscal year 2019 was US$0.20M, contrast to nil during the same period of last fiscal year. The increase was attributable to awards granted under the 2016 Equity Incentive Plan since November 3, 2017 on which date the Company accomplished its IPO.

Net income and earnings per share (“EPS”):

As a result of the foregoing, a boost of 233.7% in our net income, which increased from US$8.90M during the first quarter of fiscal year 2018 to US$29.70M during the same quarter of fiscal year 2019? Accordingly, earnings per basic share increased to US$0.62 in the first quarter of fiscal year 2019 from US$0.21 in the same period of fiscal year 2018 and earnings per diluted share increased to US$0.56 in the first quarter of fiscal year 2019 from US$0.21 in the same period of fiscal year 2018.

Adjusted net income and adjusted EPS:

Adjusted net income, which excluded share-based compensation expenses, increased by 236.1% to US$29.90M in the first quarter of fiscal year 2019 from US$8.90M in the same quarter of fiscal year 2018. Accordingly, adjusted earnings per basic share increased to US$0.62 in the first quarter of fiscal year 2019 from US$0.21 in the same period of fiscal year 2018 and the adjusted earnings per diluted share increased to US$0.56 in the first quarter of fiscal year 2019 from US$ 0.21 in the same quarter of fiscal year 2018.

Cash and Cash Flow:

As of June 30, 2018, the Company had cash and cash equivalents of US$148.40M. Net cash offered by operating activities for the first quarter of fiscal year was US$23.40M, contrast to US$12.40M in the same quarter of last fiscal year. The increase was mainly because of a boost in net income during the three months ended June 30, 2018. Net cash used in investing activities for the first quarter ended June 30, 2018 was US$2.50M, contrast to US$0.10M in the same quarter of last fiscal year. The increase was mainly because of loan principal originating from the Company’s microlending business.

Business Outlook

Three Months Ending September 30, 2018:

  • Total loans facilitated will be in the range of US$32.0M to US$36.0M.
  • Net revenue will be in the range of US$3.0M to US$3.30M.
  • Adjusted net loss will be in the range of US$11.0M to US$13.0M.

Fiscal Year Ending March 31, 2019:

  • Total loans facilitated will be in the range of US$1.90B to US$2.10B.
  • Net revenue will be in the range of US$240.00M to US$260.00M.
  • Adjusted net income will be in the range of US$115.00M to US$127.00M.

The Company offered net profit margin of 60.00%. ROE was recorded at 73.50%. The stock, as of recent close, has shown the weekly downbeat performance of -17.28% which was maintained at -41.09% in this year.

Grover Beam

Grover Beam has over 14 years experience in the financial services industry giving him a vast understanding of how news affects the financial markets. He is an active day trader spending the majority of her time analyzing earnings reports and watching commodities and derivatives. He has a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.