Issuer and reporting period
Filing mismatch: The supplied filing is Qudian Inc.’s Form 20-F, not a filing by High Templar Tech Ltd. It reports the fiscal year ended December 31, 2021; it is not a standalone 2021 Q4 report. Qudian is a Cayman Islands holding company operating primarily in China, including through variable interest entities (VIEs). Financial statements are audited under U.S. GAAP.
Financial results and liquidity
Amounts below are in RMB unless otherwise stated; RMB figures are in millions. The filing also provides U.S. dollar equivalents.
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | 1,654.0 | 3,688.0 | Down 55.2% |
| Operating income | 922.7 | 865.6 | Up 6.6% |
| Net income | 585.9 | 958.8 | Down 38.9% |
| Net income attributable to Qudian shareholders | 589.1 | 958.8 | Down 38.6% |
| Operating cash flow | 922.1 | 2,471.7 | Down 62.7% |
Operating margin was approximately 55.8% versus 23.5%; net margin was approximately 35.4% versus 26.0%. These are calculated from reported figures. Basic and diluted EPS were RMB2.32 and RMB2.27, respectively, versus RMB3.78 and RMB3.59 in 2020. The company’s non-GAAP adjusted net income was RMB612.4 million, up from RMB382.3 million; it excludes share-based compensation and convertible-note repurchase income.
At year-end, total assets were RMB14,091.1 million and total liabilities RMB1,567.6 million; total equity was RMB12,523.5 million. Cash and cash equivalents were RMB2,065.5 million, restricted cash RMB177.9 million, and short-term investments RMB5,926.6 million. Short-term loan principal and fee receivables, net, fell to RMB2,372.0 million from RMB3,940.5 million. Financing income was RMB1,255.5 million, or 75.9% of revenue.
Investing cash outflow was RMB246.6 million and financing cash outflow RMB84.2 million. Reported debt included RMB681.4 million carrying value of convertible notes and RMB145.3 million of long-term borrowings; no short-term borrowings were reported at year-end. The filing says the company repurchased US$297.5 million principal amount of notes through March 31, 2022, leaving US$47.5 million outstanding then. Operating lease commitments were RMB253.7 million and long-term borrowing and interest obligations RMB170.9 million; construction capital commitments were RMB546.0 million.
Business changes and comparison with prior year
- Revenue declined sharply as transaction volume contracted. Total facilitated transactions were RMB15,117.3 million in 2021, down from RMB22,413.6 million in 2020; 97.7% were under the loan-book business. The company primarily funded loan-book transactions with its own capital.
- The outstanding borrower count fell to 2.8 million from 3.5 million; registered users rose to 83.7 million from 81.9 million. Outstanding on-balance-sheet loan principal was RMB2,596.7 million, down from RMB4,718.0 million.
- Financing income fell 40.3% to RMB1,255.5 million. Transaction-services revenue was RMB151.7 million, compared with a reported loss of RMB136.5 million in 2020, mainly reflecting a change in estimates for prior-period variable consideration. The transaction-services business ceased in Q3 2021; merchandise credit products ceased in January 2022.
- Operating income increased despite lower revenue, aided by lower total costs and operating expenses, including a reversal of RMB151.8 million in receivables provisions versus RMB1,641.4 million of provision expense in 2020. General and administrative expense rose 55.0% to RMB443.3 million, primarily due to salaries associated with Wanlimu Kids. A RMB156.4 million long-lived asset impairment was recorded, mainly related to downsizing that business.
- The company is winding down its Wanlimu e-commerce platform and budget auto-financing business and significantly downsizing Wanlimu Kids Clubs. It launched QD Food, a ready-to-cook meal business, in March 2022, after the reporting year.
Outlook, risks, contingencies and unusual items
- Management expected revenue to decline sequentially in Q1 2022 versus Q4 2021, with further declines in transaction volume and related revenue in Q2. It may wind down the credit business depending on market and regulatory conditions. It expected QD Food to become an important 2022 revenue stream, but anticipated initial losses from discounts and marketing and potentially significant facility investment.
- Management said available cash and anticipated operating cash flow should cover ordinary working capital and capital expenditure needs for the next 12 months. This outlook is subject to the rapid decline in credit activity, new-business costs and other uncertainties.
- Credit risk improved on reported historical measures: the 2021 provision ratio was a reversal of 1.33%, charge-off ratio was 2.64%, and year-end M1+ delinquency coverage was 1.8x. The filing warned that COVID-19-related disruption in China could increase near-term delinquencies.
- Material structural and regulatory risks include reliance on VIE contracts rather than direct ownership of China operating entities; evolving Chinese lending, data, cybersecurity and overseas-listing rules; currency conversion and limits on distributions; and the possibility of U.S. delisting under the HFCA Act. The PCAOB had identified the auditor as unable to be fully inspected, and the filing described potential delisting in 2024, or 2023 if proposed changes took effect.
- The NYSE notified Qudian in February 2022 that its ADS price had been below US$1 for 30 trading days; the company had a six-month cure period. The filing also disclosed a pending putative U.S. securities class action concerning 2019 financial guidance; earlier IPO-related class actions had been settled or dismissed.
- The company reported no dividends paid and no present plan to pay them in the foreseeable future. The independent auditor gave an unqualified opinion on the financial statements and internal controls; management also concluded internal controls were effective. The auditor identified allowance for loan receivables as a critical audit matter because of judgment involved in selecting and weighting forecast and qualitative factors.
Important facts for investors to verify
- Confirm the issuer and period: this is Qudian Inc.’s full-year 2021 20-F, not High Templar Tech Ltd.’s filing or a quarterly report.
- Reconcile the filing’s transaction-volume descriptions: its detailed tables report RMB15,117.3 million, while some narrative text labels the amount in billions.
- Check the adjusted diluted EPS discussion: the filing reports adjusted net income of RMB612.4 million but gives a per-share comparison whose stated direction and figures appear inconsistent with the reported net income and share counts.
- Assess whether the 2022 credit-business contraction, potential wind-down, and QD Food launch economics materially alter the earnings and cash-flow outlook.
- Review loan-loss assumptions, delinquency trends, the Secoo investment and related losses, outstanding convertible notes, and the status of the NYSE minimum-price cure and PCAOB inspection/delisting risk.