20180914-招商证券_香港_-51信用卡-02051.HK-China_s_top-notch_online_credit_card_mgmt._ecosystem_35页_2mb

51 Credit Card (2051 HK) Summary

Core Content

51 Credit Card Inc. (2051 HK) is recognized as China's largest and earliest online credit card management platform, with a dynamic and self-reinforced ecosystem. The company offers a comprehensive suite of financial services, including credit card application, personal credit management, and online credit facilitation and investment services. It has accumulated 81 million registered users and 106.3 million credit cards under management as of 2017.

Main Points

• Market Position:

  • 51 Credit Card is the first and largest online credit card management platform by MAU, according to Oliver Wyman.
  • It has a leading position in the online credit card management market, with a strong user base and credit card management capabilities.

• Growth Potential:

  • The company is expected to maintain a 23% CAGR in revenue and a 35% CAGR in adjusted net profit from 2017 to 2020E.
  • The self-reinforced ecosystem is a key driver for long-term growth, supported by increasing user numbers and penetration rates.

• Financial Forecast:

  • Revenue is projected to grow to RMB4,211 million in 2020E.
  • Net profit is forecasted to reach RMB1,137 million in 2019E and RMB1,705 million in 2020E.
  • Adjusted net profit is expected to grow from RMB531 million in 2018E to RMB1,815 million in 2020E.

• Valuation:

  • The stock is currently trading at 6.2x 19E P/E.
  • The target price is HK$8.47, based on a 7.7x 2019E P/E valuation, which is a 10% premium over the average P/E of listed China online lenders.

Key Risks

• Ongoing regulatory tightening.
• Further delays in the registration process.
• Credit risk.
• Weakened confidence of individual P2P investors.

Key Catalysts

• Recovery of loan outstanding balance in 4Q18 and 2019.

Financial Highlights (RMB mn)

Industry Analysis

• The online financial services industry is growing rapidly in China, driven by increasing internet and mobile penetration, rising consumer credit demand, and improved risk assessment technologies.
• The credit card market in China is expanding, with the number of credit cards issued and in use expected to grow significantly from 2017 to 2021.
• The credit card penetration rate in China is much lower than in the US and Japan, indicating substantial growth potential.

Market Landscape

• The consumer finance market is expected to grow at a CAGR of 24.9% from 2017 to 2021.
• Credit card holders are the primary borrowers, with a high credit quality and consumption demand.
• Non-credit card holders also represent a significant market segment, especially with the development of technology-enabled risk management capabilities.

Key Players

• 51 Credit Card is the largest online credit card management platform by MAU.
• Other key players include Qudian, VCREDIT, Yirendai, PPDAI, Lexin, and Yixin Group, each with different business models and target borrowers.

Business Model and Services

• 51 Credit Card offers a one-stop financial service for credit card management, loan facilitation, and investment services.
• It utilizes big data and machine learning for risk assessment and credit decisioning.
• The company has a strong ecosystem that includes credit card application, management, and financial facilitation services.

User Acquisition and Risk Management

• User acquisition cost is relatively low, with new users costing RMB19.2-24.8 per registered user.
• The company employs advanced risk management systems, such as iCredit and Hummingbird, to manage credit risk and improve user retention.

Conclusion

51 Credit Card is positioned as a leader in the online credit card management and consumer finance market in China, with a strong ecosystem and growth potential. Despite near-term challenges from regulatory tightening and weakened investor confidence, the company is expected to rebound in 2019E and 2020E, supported by its self-reinforced platform and increasing user base.