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Roan Holdings Group Co., Ltd. (RAHGF)·Q2 2016 Earnings Summary

Executive Summary

  • China Lending (now Roan Holdings) delivered a strong Q2 2016: revenue (total interest and fee income) rose 22% YoY to $9.22M and net income jumped 66% YoY to $6.16M, with EPS of $0.31 versus $0.19 a year ago .
  • Sequentially, revenue increased to $9.22M from a derived Q1 $8.67M, while net income rose to $6.16M from a derived Q1 $3.69M; net income margin expanded to 66.8% in Q2 from ~42.6% in Q1 (derived from the six‑month figures) .
  • Management introduced FY2016 guidance: revenue $32.7–$34.1M (+16–21% YoY) and net income $16.9–$17.5M (+20–25% YoY), citing sustained funding demand, higher lending rates, and a new consulting/credit risk analysis segment (~23% of H1 revenue) .
  • Post-quarter, the Board declared a one-time $0.09 per share dividend (15% of 2015 net income), payable October 18, 2016 in cash or stock—an incremental capital return catalyst for shares .

What Went Well and What Went Wrong

  • What Went Well

    • Strong topline and profitability: Q2 revenue up 22% YoY to $9.22M; net income up 66% YoY to $6.16M; non-interest expense fell YoY, supporting operating leverage .
    • Higher pricing and new fees: Average lending rate rose to 22.77% in H1 2016 (from 21.24% in H1 2015) and the consulting/credit risk analysis segment contributed ~23% of H1 revenue .
    • Risk discipline: Management emphasized short-term, small-size, highly collateralized loans (security up to 150% of loan size), diversified across >8 industries, with historical NPL below 0.1%—“fast growing, efficient, high margin and low risk business” (CEO Li) .

  • What Went Wrong

    • Funding costs higher: Interest expense increased YoY in Q2 to $1.13M (from $0.93M), reflecting greater use/cost of funding, partially offset by strong net interest income growth .
    • Loan loss provisioning: Provision for loan losses was $0.14M in Q2 versus a provision recovery in Q2 2015, raising credit costs YoY (though still modest) .
    • Limited public history/visibility: As a newly listed company via business combination (July 6, 2016), there was no Q2 earnings call transcript and limited prior quarterly public operating disclosures, which may constrain near-term estimate formation and investor visibility .

Financial Results

MetricQ2 2015Q1 2016 (Derived)Q2 2016
Total Interest and Fee Income (Revenue) ($)7,535,532 8,666,086 (H1 17,888,107 – Q2 9,222,021) 9,222,021
Interest Expense ($)927,060 1,311,898 (H1 2,441,504 – Q2 1,129,606) 1,129,606
Provision for Loan Losses ($)(523,901) 1,516,781 (H1 1,657,123 – Q2 140,342) 140,342
Net Interest Income ($)6,084,571 5,556,723 (H1 13,789,480 – Q2 8,232,757) 8,232,757
Total Non-Interest Expense ($)1,717,089 949,851 (H1 1,749,265 – Q2 799,414) 799,414
Income Before Tax ($)4,367,482 4,606,967 (H1 12,040,310 – Q2 7,433,343) 7,433,343
Income Tax Expense ($)644,251 918,672 (H1 2,189,761 – Q2 1,271,089) 1,271,089
Net Income ($)3,723,231 3,688,295 (H1 9,850,549 – Q2 6,162,254) 6,162,254
EPS – Basic & Diluted ($)0.19 0.18 (H1 0.49 – Q2 0.31) 0.31
Net Income Margin (%)49.4% (3,723,231/7,535,532) 42.6% (3,688,295/8,666,086) 66.8% (6,162,254/9,222,021)

Notes: Q1 2016 values are derived as H1 minus Q2 using the company’s H1 and Q2 reported figures .

Revenue breakdown (selected components)

ComponentQ2 2015Q2 2016
Interests and Fees on Loans ($)7,302,870 9,160,497
Interests and Fees on Loans – Related Parties ($)232,254 60,963
Total Interest and Fee Income ($)7,535,532 9,222,021

Balance sheet snapshot (as of June 30, 2016)

MetricValue
Cash and Cash Equivalents ($)558,171
Loans Receivable – Third Parties, net ($)139,448,018
Loans Receivable – Related Parties, net ($)1,077,269
Interest and Fee Receivable ($)1,550,038
Total Assets ($)147,775,837
Short-Term Bank Loans ($)5,267,673
Secured Loan ($)15,020,393
Loans from Cost Investment Investee ($)15,050,494
Total Liabilities ($)37,098,561
Total Investors’ Equity ($)110,677,276

KPIs and operating metrics (H1 2016 unless noted)

  • Average lending rate: 22.77% (vs. 21.24% in H1 2015) .
  • Consulting and credit risk analysis segment: ~23% of H1 total revenue (launched August 2015) .
  • Average loan size: ~$0.8M; average duration: 5.9 months .
  • Loan collateralization: security up to 150% of loan size; diversified across >8 industries; historical NPL below 0.1% .
  • Registered capital: $94.7M (as of June 30, 2016) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($)FY 2016N/A$32.7M–$34.1M (+16%–21% YoY) New
Net Income ($)FY 2016N/A$16.9M–$17.5M (+20%–25% YoY) New
Dividend2016NoneOne-time $0.09 per share (cash or shares), record 9/8/16, pay 10/18/16 New

Earnings Call Themes & Trends

Note: No Q2 2016 earnings call transcript was filed; themes below are drawn from the Q2/H1 press release and strategy commentary.

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2016)Trend
Pricing/Unit EconomicsN/A (limited prior public operating commentary)Average lending rate increased to 22.77% (H1 2016) vs 21.24% (H1 2015) Improving pricing power
New revenue streamsN/AConsulting & credit risk analysis contributed ~23% of H1 revenue (launched Aug 2015) Diversifying revenue
Risk management/creditN/ASmall, short-term, highly collateralized loans; NPL historically <0.1% Stable risk posture
Macro/policy tailwindsN/AManagement cites supportive government policies and “One Belt, One Road” with Urumqi as a hub Positive backdrop
Technology/PlatformsN/AMid-term plan: develop P2P lending and first internet banking platform in the region New initiatives

Management Commentary

  • CEO Jingping Li on drivers: “The 30% increase in revenue and net income for the 2016 six-month period…is due to the sustained growth in funding demand in the region, higher interest lending rates… and also revenue generated from our newly established consulting and credit risk analysis business segment…approximately 23% of total revenue” .
  • On loan strategy and risk: “Focusing on short term, small size, high collateral and diversified loans… security of up to 150% of the loan size… diversified across more than 8 industries… due diligence and risk management… our non-performing loan (NPL) rate has historically been below 0.1%” .
  • On growth plans: “Our mid-term growth plan includes the development of a peer-to-peer (P2P) lending platform and the establishment of the first internet banking platform operating out of the region” .

Q&A Highlights

  • No earnings call transcript or Q&A for Q2 2016 was found in company filings; therefore, no Q&A themes to report for the quarter .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q2 2016 revenue/EPS were unavailable for this ticker at the time of analysis; as such, no comparison to consensus is provided. Values retrieved from S&P Global.

Where estimates may need to adjust:

  • Given FY2016 guidance introduced (revenue $32.7–$34.1M; net income $16.9–$17.5M) and strong Q2 profitability, any emerging coverage would likely recalibrate models to reflect higher average lending rates, a meaningful consulting revenue mix, and lower non-interest expense run-rate versus the prior-year period .

Key Takeaways for Investors

  • Q2 2016 marked a step-up in earnings power: strong YoY growth in revenue (+22%) and net income (+66%), with sequential margin expansion, driven by higher rates and operating leverage .
  • New consulting/credit risk analysis revenue (~23% of H1 revenue) is becoming a strategic second leg, diversifying away from pure interest income and supporting guidance .
  • Credit discipline remains a cornerstone (short-duration, high-collateral loans; historically <0.1% NPL), supporting high margins while managing risk through diversification .
  • Funding costs rose YoY; monitoring the mix and cost of short-term bank and secured borrowings remains important as growth scales (Q2 interest expense up YoY) .
  • Introduced FY2016 guidance and a one-time dividend ($0.09/share) signal confidence and potential for shareholder returns as the company transitions to public markets .
  • Near-term catalysts: execution against guidance, progress on P2P/Internet banking initiatives, and continued consulting revenue traction; absence of analyst coverage/transcripts may keep visibility lower near term but also creates room for positive surprises .

Source Documents Read (Q2 2016)

  • 8-K (Item 2.02) with press release and full financials for the six months and Q2 detail; includes FY2016 guidance and KPI disclosures .
  • Q2 2016 10-Q (corporate actions and background on the business combination/listing; limited operating details vs Adrie’s financials) .
  • Other relevant press release: One-time dividend declaration ($0.09 per share) .

No Q2 2016 earnings call transcript was found in company filings or transcript repositories for this issuer/ticker during the period reviewed .