(Yicai Global) Dec. 14 -- Shares in Chinese microlender Qudian soared 20 percent on the New York Stock Exchange yesterday, after the firm unveiled plans to again repurchase USD300 million of its own shares.
Its share price [NYSE:QD] closed at USD6.32, barely more than a quarter of its initial public offering price just 14 months ago.
The Beijing-based firm, which was once partnered with Ant Financial Services Group, announced the share buyback in a statement yesterday while touting a CNY3.5 billion (USD508 million) net profit target for 2019, excluding non-recurring gains and losses. Qudian made the same plan for this year at the end of 2017, and has rebought USD267 million of its share so far.
"Given the disconnect between our strong business fundamentals and stock price, we are stepping up our share repurchase plan," said Chief Executive Luo Min. "This reflects our confidence in our growth prospect and our continuous commitment to enhancing shareholder value."
Qudian listed last October, pricing its IPO higher than expectations at USD24 a share, making it one of the biggest overseas listings for a Chinese company that year. It opened at nearly USD34.4 on its first day of trading, but had slumped to just USD12.2 by Nov. 24 and has fallen perpetually since.
The stock hit its first speed bump when an online article went viral online, accusing Qudian of usury -- overcharging for loans. Luo then made matters worse by announcing that if borrowers were unable to pay their debts, the company would write them off as a form of "welfare."
If that was not enough, the Chinese government announced in November 2017 that it would tighten supervision over online small loan lenders, sparking a 20% drop in Qudian's share price from which it seems the firm may never recover.
Luo unveiled a USD100 million buyback the same month, and there were signs of a rebound when he extended this to USD300 million in December and shares jumped 15 percent, but the repurchase plan ultimately failed to reignite the excitement that surrounded Qudian at its IPO.
Qudian split with partner Ant Financial, an affiliate of tech giant Alibaba Group Holding, in August this year. It then proceeded to log CNY1.9 billion (USD280 million) in revenue in the third quarter, a 33 percent gain on the year but a 14 percent dip from the second quarter, Qudian's first since it went public.
The firm has also seen a decrease in its active users, a problem that began last year when Ant Financial began reducing its efforts to promote Qudian. When the two firms went their separate ways, Qudian lost one of its key channels to locate potential borrowers and access to Sesame Credit, a credit-scoring system run by Ant Financial.
It has since announced it will lay off 200 workers, and according to state-backed International Financial News it will pay each CNY100,000 (USD14,511) in compensation.
Editor: James Boynton