OneConnect Down 6% on Heavy Losses, Project Delays

Recent operations have been impacted by delays in project implementation due to the coronavirus.

Author: Anthony Russo   

The stock in OneConnect Financial Technology Co. Ltd. (NYSE: OCFT) plunged 6% to $12.26 per American depositary share in early trading Wednesday after the company released its earnings report. The company showed an impressive increase in revenues but also incurred heavy net losses. 

The Shenzhen-based cloud technology solutions company said in a statement yesterday after the markets closed that its revenue in the three months through December reached $110.5 million, up 51% year-over-year. Net loss attributable to shareholders in the quarter was $88.5 million compared with $88.7 million in the corresponding period of 2018.

OneConnect attributed the revenue growth to its third party customers, which hit $48.7 million, nearly double from the same period in 2018. 

Today's financial report marked OneConnect's first since it became a publicly traded company in December. With the underwriters exercising their over-allotment option, OneConnect raised $382.4 million in its IPO. 

Since its IPO, OneConnect has mostly closed its trading days exceeding its issuance price of $10 per share. The company has traded as high as $16.60 per share, but as low as $9.50 per share. However, OneConnect hasn't traded under its $10 per share issuance price since the month of its IPO. 

OneConnect noted that its business has been impacted by delays in project implementation and client interactions since the outbreak of the coronavirus in December. However, OneConnect said that it is "well positioned" to support financial institutions.

"As we head into 2020, macro challenges remain. The outbreak of coronavirus is causing short-term disruptions, but over the long-term we are extremely optimistic," Wangchun Ye, the chairman of OneConnect and its chief executive officer, said in a statement today.

He added, "We believe awareness for online business management and cloud-based solutions will grow in the wake of these temporary hurdles."

Operating as an affiliate of Chinese conglomerate Ping An Insurance, OneConnect provides technology applications business services in the financial service sector. The company has won 23 technology awards in global competitions.