Xiaobai Maimai Inc. (NASDAQ:HX)

HX (Potential China IPO, named Hexindai Inc.; Underwriter: Network 1 Financial Securities, Inc.) - According to an amended prospectus filed on 10/16/2017, the company is a consumer lending marketplace that facilitates loans to meet the increasing consumption demand of the emerging middle class in China. The company is offering a minimum of 2.73m ADSs and a maximum of 8.89m ADSs in a price range between $9.00 and $11.00 per ADS. After the IPO, the shares outstanding would be in the range between 45.7m and 51.8m considering the minimum and maximum offering. The implied market cap would be $456m to $518m based on the midpoint offering price of $10.00 per share.

• The company’s revenues in Q1 2018 (ended on June 30, 2017) were $15.1m, an increase of 287% from $3.9m in the same period of 2016, and net income of $8.9m, an increase of 575% from $1.3m in the same period last year. What’s worth noting is in FY 2017, the full year net income was only $8.6m, which is less than the $8.9m in one quarter of FY 2018. It seems like the company’s business is currently in a very fast growth phase.

• Implied post-IPO TTM P/E based on midpoint offering price of $10.00 per ADS would be 28.3 and 32.1 considering the minimum and maximum offering. The implied P/E based on annualized Q1 2018 results would be 12.8 and 14.6, respectively.

Caveats

• Regulation risk:  The consumer loan sector in China has undergone  fast growth in the past couple of years. However, it is possible that more severe regulation from the government could become a limiting factor in this industry..