On November 10th, PPDAI (stock code PPDF), China’s first internet finance brand, got listed on the New York Stock Exchange. It plans to raise $298 million and the valuation is $5.7 billion. PPDAI is the fourth Chinese internet finance platform that was listed in the U.S. iResearch was the exclusive industry consultant which helped PPDAI to get listed.
iResearch helped PPDAI to understand the basic situation of the industry, sort out the major players in the market and learn the company's status in the industry. It revealed the advantages of the company and the trends of the industry through rich data and in-depth analysis. Together with the company and investment bank, iResearch helps investors to have a more comprehensive and clearer understanding of the company. With the help of iResearch, the company got listed successfully and entered a new stage of development.
Credit will be very important in the life of the middle class in China
In 2016, the database of Credit Reference Center of the People's Bank of China covers 910 million natural persons and 420 million credit users. In four years in a row, the growth rate of credit users has been 2 times faster than that of the natural persons. This shows that in the credit system of traditional financial institutions, credit is gradually becoming a common financial service in daily life of Chinese residents. In the past, the Chinese people did not accept credit because they believed that they would only need credit when they were out of money. People in both developed and developing countries are trying to avoid overdrawing. However, the emergence of internet finance is gradually changing this thought. More and more people now regard credit as an important part of personal wealth management. It is not the case that credit is needed only when one is out of money. In the future, the major financial institutions and internet finance platforms that attach importance to wealth management business will keep strengthening this concept. The upgrading concept will inevitably make credit the norm of the Chinese middle class.
In 2016 and 2017, online wealth management kept growing vigorously. Especially, in 2017, affected by the high interest on the interbank market, financial products based on account balance became increasingly popular. The leading product on this market, Yu’erbao amazed the world by its record-high scale. However, on the whole, the demographic dividends of the users of online financial products are disappearing. This is mainly because since the emergence of Yu’erbao, there has been no significant innovation in the model of online financial products. As a result, growth if the users is slowing down and the industry is growing at a pace that is similar to that of the securities industry, both “a game of luck”.
Even if the online credit industry will keep the credit outstanding growing at a rate approximately of 40% annually, the industry, though growing at a lower rate, is still one of the fast growing industries. The internet environment will continue to act as the “asset factory” and generate new assets efficiently and fast. In this process, how to select will be the core issue for the financial institutions with abundant funds. In absence of cooperation risk control or capital relations, brand heritage of the platforms will be a key indicator for funds to select high quality assets. iResearch believes that the brand strength of the online credit institutions will mainly be evaluated in the following three aspects: first, time of establishment, preferring those established earlier; second, platform conversion rate, preferring those with a higher conversion rate; and thirdly, repurchase rate, reflecting how users get loans again. If there is no intensive cooperation, considering the three indicators above may help enterprises maximally evaluate asset quality.
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