Qudian Rushes Earnings Release as Stock Slumps Below IPO Price

Online microlender Qudian Inc. has moved up its earnings release date, seeking to ease investor jitters as its shares sank below their initial public offering (IPO) price on concerns about its business model.

On Thursday, Qudian’s American Depositary Shares (ADSs) in New York dived 13.6% to $22.80. The shares have been on a roller-coaster ride in the six days since they were listed on Oct. 18. After rising as high as $34.90 on Oct. 19, they now trade below their IPO price of $24.

Qudian’s IPO of nearly $900 million was the fourth-largest in the U.S. this year.

The company has scheduled a release of its third-quarter earnings on Nov. 13, followed by a conference call, according to an announcement in the U.S. on Thursday. It had previously been considering a later release date, according to Caixin’s understanding.

Investors began dumping Qudian’s shares this week after the company’s loan-collection efforts, its reported bad-loan ratios and its effective interest rates were called into question following publication of an interview with company CEO Luo Min on Sunday, analysts said. The shares have lost 30% of their value this week.

In the interview, Luo was asked about Qudian’s efforts to collect bad loans. “If the debts are overdue, that’s a bad debt for us,” he responded. “In that case, we won’t do anything to collect the debt, not even a phone call. If you can’t pay, we will just give it away as a charity.” Shares of Qudian slumped nearly 20% after that interview.

Qudian later clarified in a statement dated Tuesday that it had successfully recovered 52.1% of delinquent principal and fees in the first six months of the year. The recovery rate due to collection efforts improved from 35.1% in 2016 and 20.1% in 2015, the company said.

“The company’s collection efforts extend to every delinquent borrower. The company’s collection process is divided into distinct stages based on the severity of delinquency, which dictates the level of collection steps taken,” the statement said.

Qudian also addressed questions that it might be charging interest rates that were higher than those allowed under Chinese law. It said “the annualized fee rates charged in all credit drawdowns do not exceed 36%” since April — a situation that complies with Chinese law.

Qudian, formally named Qufenqi, started in 2014 by offering small loans online to college students for buying gadgets. In July 2016, the company shifted to lending unsecured microloans to white-collar workers after China banned online loans to students following several financial scams.

In the absence of regulations and a unified credit-rating system for its small borrowers, Qudian’s most important asset is its core technology for managing its bad-debt exposure, analysts said. Such a company’s average nonperforming-loan ratio should be 15% to 20%, market insiders told Caixin.

But Qudian’s bad-loan ratio was less than 0.5% of its lending, Luo said.

Contact reporters Aries Poon (ariespoon@caixin.com) and Leng Cheng (chengleng@caixin.com)