1、 China Online Lending Sector A rough patch ahead Consumer Finance|Sector Review Figure 1:YoY growth in loan origination volume,FY19/20E Source:Company data,Credit Suisse estimates Sector headwinds more severe for high-APR lenders.Heading into 2020,we are turning incrementally cautious,as regulatory-
2、driven disruptions to credit supply are starting to cause liquidity squeezes especially among high APR-cohort borrowers.As the overall risk environment becomes more challenging,many online lenders are sounding increasingly cautious about their loan growth outlook and risk metrics.Adding to this,sele
3、ctive platforms with sizeable P2P exposure are still in the process of transitioning towards institutional funding while adjusting down effective APR.Trial regulation kicks off.As the P2P business model in China probably approaches its grand finale,we expect a shift in regulatory focus towards loan
4、facilitation while trial regulation kicks off for micro-credit licences.Regulatory clarity on bank-Fintech cooperation is also increasing.Meanwhile,we expect continued efforts by online lenders to pursue various financial licences as a hedge to potential regulatory tightening.Cutting volume and earn
5、ings forecast amid higher risks.Among the online lenders under our coverage,we cut volume growth by 5-36%for FY20E.Qudians open platform volume seems the most vulnerable as its institutional partners may be hesitant to grow loan volume amid deteriorating risk metrics.We also expect margin pressure f
6、rom:(1)further downward pressure on APR;(2)higher credit cost;and(3)the negative take-rate impact due to an increasing proportion of loan origination under non-guarantee model.We cut FY20E earnings forecasts by 49%/44%/37%/17%/7%for Qudian/9F/VCredit/FinV/YRD,respectively.OUTPERFORMs.Lexin(top pick)
7、,FinV,VCredit.We believe Lexin is better-positioned among online lending peers to weather the current industry environment thanks to more-diversified funding partners,lower APR,the prospect of a consumer finance licence and innovative products.We downgrade Qudian to NEUTRAL due to a dimmer outlook o
8、n the open platform momentum,while the company continues to deleverage its loan book business.YRD is downgraded to UNDERPERFORM given its relatively lagged progress in sourcing institutional funding vs peers.-40%-20%0%20%40%60%80%100%LexinVCredit9FYRDFinVQudian(openplatform)Qudian(loanbook)FY19EFY20
9、E22 January 2020 Equity Research Asia Pacific|China DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its r
10、esearch reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Research Analysts Yiran Zhong 852 2101 6125 yiran.zho
11、ngcredit- Charles Zhou,CFA 852 2101 6177 charles.zhoucredit- Richie Jiang 852 2101 6198 richie.jiangcredit- 每日免费获取报告1、每日微信群内分享7+最新重磅报告；2、每日分享当日华尔街日报、金融时报；3、每周分享经济学人4、行研报告均为公开版，权利归原作者所有，起点财经仅分发做内部学习。扫一扫二维码关注公号回复：研究报告加入“起点财经”微信群。22 January 2020 China Online Lending Sector 2 Focus charts Figure 2:YoY g
12、rowth in loan origination volume,FY19/20E Figure 3:YoY growth in net profit,FY19/20E Source:Company data,Credit Suisse estimates Source:Company data,Credit Suisse estimates Figure 4:Credit card 6-months+overdue ratio picked up in 3Q Figure 5:90-180 day delinquency rates for listed online lenders Sou
13、rce:CEIC,Credit Suisse research *M1+delinquency for Qudian.Source:Company data,Credit Suisse research Figure 6:Continued exits of P2P platforms Figure 7:resulting in credit supply disruptions especially for high-APR borrower cohort Source:WDZJ.com,Credit Suisse research Source:WDZJ.com,Credit Suisse
14、 research-40%-20%0%20%40%60%80%100%LexinVCredit9FYRDFinVQudian(openplatform)Qudian(loanbook)FY19EFY20E-50%-25%0%25%50%75%100%Lexin9FVCreditYRDFinVQudianFY19EFY20E1.0%1.1%1.2%1.3%1.4%1.5%020406080100Mar-16Jun-16Sep-16Dec-16Mar-17Jun-17Sep-17Dec-17Mar-18Jun-18Sep-18Dec-18Mar-19Jun-19Sep-19Credit card
15、payable:6-month+overdue(Rmb bn)%of payable balance(rhs)0.0%2.0%4.0%6.0%8.0%10.0%12.0%3Q174Q171Q182Q183Q184Q181Q192Q193Q19Qudian*VCreditFinVLexin9F360 Finance01,0002,0003,0004,0005,0006,0007,000Jan-14 Oct-14Jul-15Apr-16 Jan-17 Oct-17Jul-18 Apr-19No.of platforms in operationCumulative no.of problemati
16、c platforms02004006008001,0001,2001,400050100150200250300Jan-14Dec-14Nov-15Oct-16Sep-17Aug-18Jul-19Loan volumeOutstanding balance(RHS)22 January 2020 China Online Lending Sector 3 A rough patch ahead 2020 priorities:Further P2P exits and trial regulation Policy signals from recent regulatory meetings have shed some light on what to expect in 2020.We expect a continued focus on the further winding down of the P2P sector while setting up a regulatory framework to include selective players in licen
