Since our initial breakout alert February 25th, 2019 to our members (NASDAQ: CIFS) has risen from $1.70 to over $4.50/share.
China Internet Nationwide Financial Services Inc. (NASDAQ: CIFS) was established in 2014 and listed in Nasdaq on August 2017. The company provides traditional financial advisory services which help SMEs raising money, reducing costs and increasing investment return. After acquiring a Big Data company at late 2017, CIFS has been developing its Big Data and Artificial Intelligence technologies as well as its Fintech businesses which provide clients with specific Fintech products and industry application & analysis.
Analyst tracking the stock are bullish about CIFS and feels that one of the critical reasons for this optimism is the progress made to date for the company’ FinTech strategy. CIFS’ products and services are tailored to support businesses in solving investment and financial challenges as well as enterprise risk control. Not only the company is offering a wide range of products and services to existing clients, but also targeting a whole new group of potential clients such as financial institutions, banks and mutual funds, located in a larger geographic region.
Moreover, March will be very crucial and active for the market globally and in PRC, too. Much awaited clarity is likely to unfold on US-China trade deal by the second week of March. Furthermore, Trump is also contemplating a somewhat similar strategy with Europe, India, and Japan. Until now, the overall developments in this regard are quite positive, and there is less likelihood to be as pessimistic as envisaged earlier. Therefore, investors believe that the positive momentum will continue to build over the near to medium term and continue to have a very positive bias on China Internet Nationwide Financial Services Inc.
Key and unique differentiating factor:
- Serving a growing and underserved market
- Number of China’s SMEs reached 29 million in 2017; expected to grow to 43 million in 2020 (1)
- Less than 5% of SMEs have access to capital from commercial banks
- Lack of experience in accessing appropriate financial products leads to massive demand from SMEs
- History of profitable growth / high margin traditional business
- For FY 2017: revenue of $25.1 million (+59%); net income of $24 million and EPS of $1.15
- For 6M 2018: revenue of $11.4 million (+43%); net income of $6.9 million and EPS of $0.31
- Strong growth to continue in the second half of 2018
- 2018 is a transitional year: CIFS evolved from a traditional financial services provider to a FinTech company
- Develop New business segments: Supply Chain Financing, Big Data Analysis & AI Reports, Intelligent Investment Research
- Using big data and AI technologies, the company updates its advisory services processing system and support clients searching o FinTech products to gradually become the catalyst for future growth (expected to generate between 30%-35% of total revenue for FY 2018)
- Well-capitalized to fund initiatives: cash of $16.3 million as of 6/30/2018
- Further expansion through organic growth, acquisitions, and strategic partnerships
- Expansion in new markets using resources from its existing client base and strong business networks
- Expansions through additional acquisitions, investments, and strategic partnerships
Robust financial performance: Benefiting from the continuing growth of China’s economy and strong demand for its services by the underserved small and medium-sized enterprises, CIFS achieved a whopping 43% revenue growth in the first half of 2018 as compared to first half of 2017, mainly due to an increase in the total amount of financing advised and a higher number of clients advised/served.
China Internet Nationwide Financial Services Inc. Develops an E-Commerce Big Data System for InterPark Chifeng BizMarket: On Oct. 5, 2018, China Internet announced that its wholly-owned subsidiary, Beijing Anytrust Science & Technology Co., Ltd had developed an e-commerce big data system for InterPark Chifeng BizMarket (CF BizMarket), a subsidiary of InterPark Holdings Corporation. The agreement, which was signed earlier this year, is valued at approximately $1 million.
Management Commentary: Mr. Jianxin Lin, Chairman and Chief Executive Officer of CIFS, commented, “We are thrilled to be working with BizMarket, an e-commerce giant in the Korean and Asian markets. The agreement with BizMarket marks the international expansion of our Fintech business, and we are in discussions with other multinational corporations in the region. We hope to sign more service development agreements like this in the near future.
About the company’ Social Networking Platform: Incorporated in 2014, China Internet Nationwide Financial Services Inc. (NASDAQ: CIFS) Commenced its business by providing financial advisory services to small and medium-sized companies (“SMEs”). The traditional business segments include commercial payment advisory, intermediary bank loan advisory and international corporate financing advisory services which help clients to meet their commercial payment and investment needs. In late 2017, the Company made a strategic decision to transition into a FinTech company by providing clients with creative financial services, FinTech products and industry solutions leveraging big data and AI, aiming to help clients to reduce financing costs, lower financing risks and improve operating efficiency. Currently, its FinTech business includes three segments: Supply Chain Financing, Big Data Analysis & AI Reports, and Intelligent Investment Research.
Business units at a glance:
Key highlights of 2nd Quarter:
(1) Income from operations for the six months ended June 30, 2018, includes approximately $7,731,997 of SG&A and R&D expenses as compared to 638,155 for the same period of last year.
(2) Net income for the six-month periods ended June 30, 2018, and June 30, 2017, include approximately $6,577,824 and $8,586,456 of income before income tax expenses, respectively.
(3) Basic and diluted earnings per share for the six months ended June 30, 2018, is calculated based on approximately 11% more shares outstanding (22,114,188) as compared to shares outstanding (20,000,000) on June 30, 2017.
Promising outlook over the near to medium term: CIFS expect that the upcoming results to be much stronger than the first half of 2018 in terms of revenue as its new FinTech initiatives will start generating results. The company expects its three new business lines to encompass between 30% to 35% of its total revenue for the full year 2018, and FinTech to become the catalyst for the growth in 2019 and beyond. Furthermore, the management also expects its traditional business to continue to grow at rates similar to previous reporting periods.
- Organic growth of legacy / higher margin financial advisory services
- Developing potential client base and screening target clients leveraging CIFS’ big data analysis technology and business network integrated by AI technology
- Using big data analysis to establish e-processes and operating systems aiming to improve quality control and risk management
- Expanding its geographical coverage through innovative product offerings Focus on its FinTech Initiative
- Development of its big data platform by offering data access, analytics, artificial intelligence, machine learning, and intelligent investment research to clients such as SMEs, state-owned enterprises, financial institutions, and individuals.
- Continued investments in essential employee recruitment
- Strategic partnerships, acquisitions or investments in targeted business Expand service portfolio by establishing new entities or acquiring entities
- Establishing new entities or acquiring entities in order to obtain additional financial service licenses, such as microcredit, credit reporting, financial leasing, and pawn mortgage
Key risk factors and potential stock drivers:
- Company’ ability to ramp up operations while capitalizing on its FinTech strategy would continue to remain a key stock sensitivity factor over the medium term.
- Exposure to intense competition leading to pressure on profitability
- Company’s ability to maintain its liquidity and financial flexibility to fund its incremental capital requirements.
- On Thursday, March 7th, 2019, CIFS is trading at $4.59 (up by +2%), on an above average volume of 2.55 million shares exchanging hands. Market capitalization is $101.206 million. The current RSI is 76.54
- In the past 52 weeks, shares of CIFS have traded as low as $0.63 and as high as $36.6990
- At $4.59, shares of CIFS are trading above its 50-day moving average (MA) at $1.42 and below its 200-day moving average (MA) at $8.01
- The present support and resistance levels for the stock are at $3.77 & $5.75 respectively.
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