Hui Ying Financial Holdings Corp. Reports Fiscal Year 2017 Financial Results

Revenues increased by 88.4% to $46.5 million and loans facilitated through platform increased 59.9% to over $1.3 Billion

SHANGHAI, March 19, 2018 /PRNewswire/ — Hui Ying Financial Holdings Corp. (OTCQB: SFHD) (“Hui Ying” or the “Company”), a leading online financial credit facility solution provider servicing Small-to-Medium Enterprises (“SMEs”) and individual borrowers in China, today announced its financial results for the twelve months ended December 31, 2017*.

* financial statements for 2016 have been restated.

Fiscal Year 2017 Highlights

	For the Twelve Months Ended December 31,
($ millions, except per share data)	2017	2016	% Change
Revenues	$ 46.50	$ 24.68	88.4%
Loan origination service Fee	$ 26.70	$ 17.49	52.7%
Loan repayment management fee	$ 18.21	$ 7.19	153.3%
Financing income from entrusted loans	$ 1.58	$ –	NM
Operating income	$ 17.95	$ 4.47	301.6%
Other income (expenses)	$ (0.11)	$ 0.03	-466.7%
Net income	$ 15.27	$ 3.44	343.9%
EPS – diluted	$ 0.21	$ 0.05	320.0%

Total loans facilitated through our platform increased by 59.9% to $1,308.7 million for the year ended 2017 from $818.5 million in 2016, as China’s online peer-to-peer lending platform industry continued to grow significantly during 2017, coupled with an increased marketing campaign, promotion activities on our platform as well as increased brand awareness of our online marketplace. This led to accumulated value of loans facilitated through our platform in the aggregate amount of $2.87 billion since the launch of our marketplace in December 2013 through the end of 2017.
We had 8,047 borrowers and 69,232 investors participated in an aggregate of 23,263 loans during 2017, compared to 1,067 borrowers, 39,999 investors and 8,739 loans during 2016. As of the end of 2017, we had 367, 893 registered investors and 24 cooperative partners who frequently serve as guarantors of loans on our platform.
Total revenues increased by 88.4% to $46.50 million for the year ended 2017 from $24.68 million in 2016, as a result of an increase in loans facilitated through our platform and the contribution from the newly launched entrusted loan business. Revenues from loan origination service fees, loan repayment management fees and financing income from entrusted loans were $26.70 million, $18.21 million and $1.58 million, respectively, for the year ended 2017 compared to $17.49 million, $7.19 million and nil, respectively, in 2016.
Net income increased by 344.1% to $15.27 million for the year ended 2017 from $3.44 million in 2016. Diluted earnings per share was $0.21 for the year ended 2017, compared to $0.05 for 2016.

Bodang Liu, Chairman and Chief Executive Officer of Hui Ying, commented, “We are very pleased to report strong 2017 financial results with revenues growing by 88.4% to $46.50 million and net income more than quadrupled to $15.27 million. We have benefitted from continuing growth and momentum in the peer-to-peer lending industry as well as the increasing awareness and reputation of our online marketplace.”

“Looking ahead, despite uncertainties in the regulatory environment and challenges in quickly evolving market conditions and the competitive landscape, we are increasingly confident in our long-term prospects as we remain steadfast and determined to build and promote our online marketplace as a convenient, secure, and effective solution for under-served SMEs and individual borrowers who need access to financing.”

Fiscal Year 2017 Financial Results

Revenues

For the year ended 2017, total revenues increased by $21.82 million, or 88.4%, to $46.50 million from $24.68 million in 2016. The increase of total revenues was mainly attributable to the increase in the volume of loans facilitated through our platform as well as financing income generated through our entrusted loan business we launched in June 2017, which contributed 3.4% of total revenues in 2017. The total loan volume facilitated through our platform increased by $490.2 million or 59.9%, to $1,308.7 million for the year ended 2017 from $818.5 million in 2016.

The loan origination service fee increased by $9.21 million, or 52.7%, to $26.70 million for the year ended 2017 from $17.49 million in 2016. The loan repayment management fee increased in 2017 by $11.02 million, or 153.3%, to $18.21 million from $7.19 million in 2016. The financing income from entrusted loans was $1.58 million for 2017, compared to nil for 2016. The loan origination service fee, loan repayment management fee, and financing income from entrusted loans accounted for 57.4%, 39.2% and 3.4%, respectively, of total revenues for the year ended 2017, compared to 70.9%, 29.1% and nil, respectively, for 2016. The change is due to the shift in structuring our loan products towards longer duration loans. Since our loan repayment management fee is based on a certain percentage of the duration of a loan, the more loans with longer terms, the more loan repayment management fees we generate. We expect this trend will continue as the industry becomes more regulated and investors are getting more comfortable investing in loans with longer terms. We will continue to adjust our loan product offerings accordingly.

Operating Expenses

Operating expenses increased by $8.34 million, or 41.2%, to $28.55 million for the year ended 2017 from $20.21 million in 2016. Sales and marketing expenses increased by $6.10 million, or 37.7%, to $22.29 million for 2017 from $16.19 million for 2016. The increase in sales and marketing expenses was associated with sales and marketing efforts and promotion activities that led to a higher volume of loans facilitated through our platform. As a percentage of total revenues, sales and marketing expenses were 47.9% for the year ended 2017, compared to 65.6% for 2016. General and administrative expenses increased $2.78 million, or 88.0%, to $5.94 million from $3.16 million in 2016, primarily due to over $1.2 million in professional, consulting and related expenses associated with the Company’s uplisting efforts onto Nasdaq. As a percentage of total revenues, general and administrative expenses were 12.8% in 2017, essentially unchanged from 2016.

Operating Income

Operating income increased by $13.48 million, or 301.6%, to $17.95 million in 2017 from $4.47 million in 2016. The increase in operating income was primarily driven by an increase in total revenues and partially offset by an increase in operating expenses. Operating margin was 38.6% for the year ended 2017, compared to 18.1% in 2016.

Income before Income Taxes

Total other expense, including interest income, interest expenses and bank charges, realized gain on investments and others, was $0.11 million for the year ended 2017, compared to total other income of $0.03 million in 2016. The change was primarily related to the increase in interest expense and bank changes and partially offset by the increase in realized gain on investments and interest income.

Income before provision for income taxes increased by $13.34 million, or 296.6%, to $17.84 million for the year ended 2017 from $4.50 million for the same period of last year

Net Income

Provision for income taxes was $2.56 million in 2017, compared to $1.06 million in 2016.

Net income increased by $11.83 million, or 343.9%, to $15.27 million for 2017 from $3.44 million in 2016.

Earnings per Share

Basic and diluted earnings per share were $0.21 for the year ended 2017, compared to $0.05 for 2016.

Loan Portfolio

	For the Twelve Months Ended December 31,
	2017	2016	2015
Number of Borrowers	8,047	1,067	571
Repeat borrower rate	8%	15%	9%

Number of investors	69,232	39,999	43,302
Repeat investor rate	55%	56%	42%

Number of loans	23,263	8,739	2,818
Value of loans ($ millions)	$1,308.7	$818.5	$513.0
Average loan amount ($)	$56,258	$93,658	$182,039

Loans outstanding -EoP ($ millions)	$436.3	$246.1	$186.0

For the year ended 2017, the Company facilitated 23,263 loans with an aggregate loan amount of $1,308.7 million. This compared to 8,739 loans with an aggregate loan amount of $818.5 million in 2016. During 2017, the company had 8,047 borrowers, of which 8% were repeat borrowers. This was compared to 1,067 borrowers with a 15% repeat borrower rate for the year ended 2016. During the year ended 2017, the company had 69,232 investors, of which 55% were repeat investors. This is compared to 39,999 investors with a 56% repeat investor rate in 2016.

As of December 31, 2017, we had an outstanding loan balances of $436.3 million, compared to $246.1 million at the end of 2016.

Financial Condition

As of December 31, 2017, the Company had cash and cash equivalents of $12.68 million, compared to $8.56 million at the end of 2016. The cash held in private loan risk reserve accounts was $12.10 million and $7.30 million as of the end of 2017 and 2016, respectively. Short term investments were nil as of December 31, 2017, compared to $8.27 million at the end of 2016. As of December 31, 2017, we had $55.27 million in total current assets and $17.47 million in total current liabilities, representing a current ratio of 3.16. As a comparison, we had $19.95 million in total current assets and $9.14 million in total current liabilities, with a current ratio of 2.18 as of December 31, 2016.

Net cash provided by operating activities was $24.07 million for the year ended 2017, compared to $4.83 million for 2016. Net cash used in investing activities was $34.02 million for the year of 2017, compared to $9.16 million for 2016. Net cash provided by financing activities was $13.37 million in 2017 related to cash proceeds received from the issuance of senior convertible promissory notes in 2017, compared to $7.88 million in2016 as a result of private placement of common shares in 2016.

About Hui Ying Financial Holdings Corporation

Hui Ying Financial Holdings Corporation, previously known as Sino Fortune Holding Corporation, is a leading online financial credit facility solution provider servicing under-served SME and individual borrowers in China. Through operating an electronic online financial platform, www.hyjf.com, the Company matches investors with SME and individual borrowers in China. The Company also sets aside risk reserve funds with the aim of limiting losses to investors from borrower defaults. In addition, the company provides investors with access to a liquid secondary market, giving them an opportunity to exit their investments before the underlying loans become due. For more information, please visit: ir.hyjf.com.

Forward-Looking Statements

This press release may contain projections or other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements.

Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

For investors and media inquiries please contact:

At the Company:
Ede Yang
Email: [email protected]

Investor Relations:
Tony Tian, CFA
Weitian Group LLC
Email: [email protected]
Phone: +1-732-910-9692

HUI YING FINANCIAL HOLDINGS CORPORATION (f/k/a SINO FORTUNE HOLDING CORPORATION AND SUBSIDIARIES) CONSOLIDATED BALANCE SHEETS
	December 31,
	2017		2016
			(Restated)
ASSETS
Current assets
Cash and cash equivalents	$	12,684,370	$	8,561,695
Short-term investments		–		8,274,306
Accounts receivable		690,600		281,038
Short-term loans receivable		40,492,363		–
Prepayments		581,484		2,078,926
Other receivables		749,071		755,792
Due from related party		75,149		–
Total current assets		55,273,037		19,951,757
Property and equipment – net		833,828		279,408
Investment in an equity investee		2,935,121		–
Intangible assets		13,398		17,745
Total assets	$	59,055,384	$	20,248,910

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	980,031	$	327,071
Taxes payable		3,326,474		1,285,160
Deferred tax liability		–		16,673
Interest payable		551,087		–
Due to related party		214,571		194,313
Liabilities from risk reserve fund guarantee, without recourse to the Company		12,105,557		7,297,123
Other payables		289,689		18,267
Total current liabilities		17,467,409		9,138,607

Convertible notes payable		13,189,164		–
Total long-term liabilities		13,189,164		–
Total liabilities		30,656,573		9,138,607

Stockholders’ equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued		–		–
Common stock, $0.001 par value, 598,000,000 shares authorized, 72,364,178 shares issued and outstanding as of December 31, 2017 and 2016, respectively		72,364		72,364
Additional paid-in capital		9,527,326		9,527,326
Retained earnings		17,449,837		2,175,746
Accumulated other comprehensive income (loss)		1,349,284		(665,133)
Total stockholders’ equity		28,398,811		11,110,303
Total liabilities and stockholders’ equity	$	59,055,384	$	20,248,910

HUI YING FINANCIAL HOLDINGS CORPORATION (f/k/a SINO FORTUNE HOLDING CORPORATION AND SUBSIDIARIES) CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)
	For the Years Ended December 31,
	2017		2016
			(Restated)
Revenues:
Financing income from entrusted loans	$	1,583,387	$	–
Loan facilitation and repayment management fees and others		44,914,425		24,679,249
Total revenues		46,497,812		24,679,249


Operating expenses
Selling, general and administrative expenses		28,237,779		19,355,753
Business and related taxes		179,347		175,854
Depreciation		128,492		678,991
Total operating expenses		28,545,618		20,210,598
Income from Operations		17,952,194		4,468,651

Other income (expenses)
Interest income		196,500		112,344
Interest expense and bank charges		(697,609)		(7,226)
Realized gain on investments		393,146		–
Other		(6,456)		(76,467)
Total other (expense) income		(114,419)		28,651
Income before provision for income taxes		17,837,775		4,497,302
Provision for income taxes		(2,563,684)		(1,058,097)
Net income		15,274,091		3,439,205

Other comprehensive income (loss)
Net unrealized (loss) gain on investments (net of tax effect)		(50,018)		50,018
Foreign currency translation adjustment		2,064,435		(685,947)
Total other comprehensive income (loss)		2,011,295		(632,952)
Total comprehensive income	$	17,288,508	$	2,803,276

Net income per common share
Basic	$	0.21	$	0.05
Diluted	$	0.21	$	0.05

Weighted average number of common shares outstanding – basic and diluted
Basic		72,364,178		68,540,156
Diluted		75,697,703		68,540,156

HUI YING FINANCIAL HOLDINGS CORPORATION (f/k/a SINO FORTUNE HOLDING CORPORATION AND SUBSIDIARIES) CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Years Ended December 31,
	2017		2016
				( Restated)
Cash flows from operating activities:
Net income	$	15,274,091	$	3,439,205
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		128,492		678,991
Accrued interest for convertible notes		551,087		–
Gain or loss on disposal of fixed assets		–		(6,490)
Changes in operating assets and liabilities:
Accounts receivable		(376,197)		(293,756)
Prepayments		1,576,506		(1,725,695)
Other receivables		55,387		72,468
Due from related party		(72,364)		–
Accounts payable and accrued liabilities		622,970		(701,703)
Taxes payable		1,882,499		799,277
Due to related party		6,931		203,106
Liabilities from risk reserve fund guarantee		4,157,957		2,340,578
Other payable		260,215		19,061
Net cash provided by operating activities		24,067,574		4,825,042

Cash flows from investing activities:
Purchases of property and equipment		(636,915)		(566,409)
Purchases of intangible asset		(2,036)		(18,548)
Purchase of short-term investments		(7,398,858)		(8,579,041)
Proceeds from disposal of short-term investments		15,833,556		–
Disbursements for short-term entrusted loans made		(38,991,980)		–
Investment in an equity investee		(2,826,365)		–
Net cash used in investing activities		(34,022,598)		(9,163,998)

Cash flows from financing activities:
Proceeds from issuance of convertible notes		13,370,818		–
Proceeds from issuance of common stock		–		7,878,670
Net cash provided by financing activities		13,370,818		7,878,670

Effect of exchange rate change		706,881		(690,760)

Cash and cash equivalents:
Net increase		4,122,675		2,848,954
Balance at beginning of year		8,561,695		5,712,741
Balance at end of year	$	12,684,370	$	8,561,695

Supplemental Disclosures of Cash Flow Information:
Cash received for interest income	$	1,407,769	$	112,344
Cash paid for interest	$	146,507	$	–
Cash paid for income taxes	$	692,655	$	15,733
Non-cash activities:
Transfer of fixed assets as payment to a service provider	$	–	$	247,200