Yintech Turns to Profit Amid Bullish Markets in Period of Trade Truce

The Chinese investment and trading company reported strong results for the first quarter, marked by the truce in the tariff war between Beijing and Washington.

Author: Belinda Zhou   

Yintech Investment Holdings Ltd. (Nasdaq: YIN) reported strong quarterly results Friday, but left investors unimpressed as its stock inched down 3 cents intraday to $5.28 per share.

The Chinese investment and trading company said in a statement today its revenue reached $67.7 million in the first quarter, representing an increase of 69 percent from the same period of 2018. The company stressed its net commissions and fees from securities services increased 172 percent year-over-year, totaling $18.3 million.

The gains were offset by a decline in Yintech's commodities services, down 19 percent to $18.4 million during the first quarter. The company also reported a lower trading volume in commodities, which suffered a year-over-year decrease of 37 percent to $47 billion.

Yintech said its net income in the three months through March was $10.3 million, or 14 cents per share, in contrast to net loss of $7.3 million during the same period last year.

"Benefiting from the market rally and our ability to capitalize on the market opportunities our asset management team delivered outstanding gains and contributed significantly to the financial results," Wenbin Chen, the chief executive officer of Yintech said in the statement.

Yintech said its growth was driven by China's equity markets with China A shares rising over 30 percent in the first quarter. "Investors' engagement in our securities services was enthusiastic under this bullish market," Chen said.

The first quarter was marked by a trade truce between Washington and Beijing, as U.S. President Donald Trump and his counterpart Xi Jinping agreed to a 90-day halt in the tariff war in December. At the time, the United States agreed to delay a planned increase to 25 percent in tariffs on $200 billion worth of Chinese imports. While the uncertainty between the world's largest economies remained, stock exchanges in China and New York enjoyed a period of gains during the truce. 

However, as the truce came to an end, the U.S.-Sino relations have been dampened in the recent weeks by the renewed tariff war, with no end to it in sight.

Meanwhile, Yintech has turned to increase its market share in Hong Kong. CEO Chen said in his statement today, "We're expected to see benefits of our successful acquisition of Type 2 and Type 5 regulatory licenses from the Hong Kong Securities and Futures Commission, which permitted Forthright Securities to deal in futures and advise on futures contracts."

Yintech also announced a $20 million share repurchase program this morning, effective June 2, 2019, over the next 12 months. Yintech said the share buyback program will be funded with cash, which was to $261.2 million as of March 31.

A year ago, the company set off a $30 million share repurchase program, and said it has acquired 523,377 ADSs through March.

Looking forward, Yintech said it expects its revenues from commissions, interest income and other revenues of between 250 million yuan and 270 million yuan, or $36.2 million and $39.1 million, in the second quarter.