Senmiao Sees Revenue Growth but Faces Challenges This Quarter

Now a provider of auto transaction services, the Chengdu-based company reported revenue growth of more than 2,000%. This quarter will be more challenging, however, management says.

Author: Anna Vodopyanova   

The stock in Senmiao Technology Ltd. (Nadaq: AIHS) skyrocketed 71% in after-hours trading Friday, to $1 per share, after the company reported significant year-over-year improvement in business for the year-end quarter.

In a statement after markets closed Friday, Senmiao, which facilitates auto transactions, reported $2.7 million in revenue for the three months through December – that's compared with $118,700 in the same period in 2018.

Net loss in the quarter increased to $5.4 million from $768,000 in the preceding year. Loss per share from continuing operations was 3 cents, while loss per share from discontinued operations was 15 cents, according to the report.

A year ago, the stock in Senmiao was trading above $3 per share. After Beijing imposed strict new rules in China's financing market, previously unregulated and inundated with fraud, many players suffered. In November 2019, authorities issued a directive for all P2P lenders to close within two years – at this time, only about 430 P2P firms remained in the once-booming industry, as the South China Morning Post reported.

Previously a peer-to-peer lending platform, Senmiao transitioned to providing services in the auto industry following the acquisition of Ruixi Financial Leasing, an automobile transaction and financing business. Now, Chengdu-based Senmiao provides services related to vehicle purchases and management, auto financing, and ride-sharing.

In its statement on Friday, the company also reported financials for the nine months through December. For the three quarters, it had revenue of $13.6 million on losses of $4.7 million. Earnings per share from continuing operations were 3 cents, while loss per share from discontinued operations was 20 cents, Senmiao said.

"The discontinuation of our online peer-to-peer lending operations will allow us to effectively focus our resources on the current automobile financing facilitation and transaction business, which remained profitable through the first nine months of this fiscal year," Senmiao's chairman, chief executive, and president, Xi Wen, said in a statement.

Wen noted a seasonal decrease in sales of new autos and the anticipated negative impact from the Chinese New Year holidays and the coronavirus. He said he hopes Senmiao will succeed in the long-term.

He added, "We are developing ways to assist our ride-hailing drivers contend with the challenges posed by the outbreak. This is a difficult time for the industry and our nation, but we are confident that our company will overcome the challenges in the short-term, continue to expand our automobile business and create long-term sustainable value for our shareholders."

On Monday, Feb. 17, the stock exchanges of New York will be closed in observance of Washington's Birthday.