Release Date: 10 May 2017

Credit China FinTech Holdings

Customer Verification Checks

Ticker: 8207.HK Last year, Credit China acquired a 35% stake

in a company called Shanghai Jifu for
Market Cap: HK$22 billion RMB560 million in cash and shares. This
was the largest acquisition in Credit Chinas
Recent Price: HK$1.03 history.
Target Price: HK$0.12 Based on a review of relevant SAIC filings
we believe that several of Shanghai Jifus
Expected Return: -88%
top customers are entities with negligible
operations unlikely to conduct business of
Opinion: Strong Sell the size claimed.
In one case, it appears a company claimed
to be Shanghai Jifus largest customer in
2014 wasnt even established until 2015.

You should have expected us

aainfo [@] neomailbox.ch

Twitter: @anonanalytics
www.anonanalytics.com
 Disclaimer
Neither Anonymous Analytics nor its principles is a registered investment advisor or otherwise licensed in any jurisdiction,
and the opinions expressed herein should not be construed as investment advice. This report expresses our opinions,
which we have based upon publicly available facts and evidence collected and analyzed including our understanding of
representations made by the managements of the companies we analyze, all of which we set out in our research reports
to support our opinions, all of which we set out herein. We conducted basic research based on public information in a
manner than any person could have done if they had been interested in doing so. You can publicly access any piece of
evidence cited in this report.

All facts, figures, and opinions are as at the last practicable date. This document has been prepared for informational
purposes only. This document is not an offer, or the solicitation of an offer, to buy or sell a security or enter into any other
agreement. We have made every effort to ensure that all information contained herein that support our opinions is
accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable, and who are not
insiders or connected persons of the stock or company covered herein or who may otherwise owe any fiduciary duty to
the issuer. However, we do not represent that it is accurate or complete and should not be relied on as such, in particular,
Credit China FinTech Holdings Ltd. (Credit China or the Company) and insiders, agents, and legal representatives of
Credit China and other entities mentioned herein may be in possession of material non-public information that may be
relevant to the matters discussed herein. Do not presume that any person or company mentioned herein has reviewed
our report prior to its publication.

As evident by the contents of our research and analysis, we expend considerable time and effort to ensure that our
research analysis and written materials are complete and accurate, we strive for accuracy and completeness to support
our opinions, and we have a good-faith belief in everything we write - but such information is presented as is, without
warranty of any kind, whether express or implied. All expressions of opinion are subject to change without notice, and we
make no representation, express or implied, as to the accuracy, timeliness, or completeness of any such opinions and
information or with regard to the results to be obtained from its use, and we makes no representation that we will update
any information on this. You should assume that all statements contained herein are our opinion and are not statements
of fact even if certain statements can be perceived as such. That way, we dont have to sacrifice our (hopefully)
entertaining writing style by starting every sentence with In our opinion as advised by our team of neurotic and
overpriced lawyers.

We believe that the publication of our opinions and the underlying facts about the public companies we research is in the
public interest, and that publication is justified due to the fact that public investors and the market are connected in a
common interest in the true value and share price of the public companies we research. We are exercising our right to
express such opinions in a public forum. Any investment involves substantial risks, including complete loss of capital. Any
forecasts or estimates are for illustrative purpose only and should not be taken as limitations of the maximum possible
loss or gain. Any information contained in this report may include forward-looking statements, expectations, and
projections. You should assume that these types of statements, expectations, and projections may turn out to be incorrect.

Anonymous Analytics itself holds no direct or indirect interest or position in any of the securities profiled in this report.
However, you should assume that certain of Anonymous Analytics research and due diligence contacts, consultants,
affiliates, and/or clients may have a short position in the stock or debt of Credit China and/or options of the stock, and
therefore stand to gain substantially in the event that the price of the stock decreases. You should further assume that
following the distribution of this report, the aforementioned individuals and entities may continue transacting in the
securities covered therein, and may be long, short or neutral at any time hereafter regardless of this reports initial
opinions.

Dont be stupid and invest in the public markets unless you are prepared to do your own homework and due diligence.

1
 Executive Summary
Credit China is a HK$22 billion company listed on the alternative board of the Hong Kong Stock Exchange.
Historically, Credit China operated as a predatory shadow banking company that provided traditional
shot-term loans, including collateral-backed loans and pawn loans.1

Starting in 2013, Credit China shifted strategies and moved into the FinTech space with a series of internet-
themed acquisitions aided by massive capital raises, while shedding some of its more traditional loan
business.

The biggest of these acquisitions happened in April 2016, when Credit China acquired a 35% stake in a
company called Shanghai Jifu for RMB560 million in cash and shares. Shanghai Jifu was described as a
leading provider of mobile Point of Sales (mPOS) terminals.

However, based on our research, including a review of SAIC filings,2 we believe a Credit China subsidiary
was already a major shareholder of Shanghai Jifu as early as November 2015, well before the 30 April
2016 date the Company claims that it acquired the 35% stake. Furthermore, these filings show that the
documented transfer price for the 35% stake in Shanghai Jifu was only RMB2.95 million not RMB560
million.

And finally, based on a review of relevant SAIC filings we believe that several of Shanghai Jifus top
customers are entities with negligible business operations. We suspect the purported RMB150 million+
profit Shanghai Jifu generated in 2016 may have been materially fabricated.

In one case, it appears a company claimed to be Shanghai Jifus largest customer in 2014 wasnt even
established until 2015.

Given our findings, the question turns to exactly what steps Credit Chinas auditor, Shinewing (HK) CPA,
undertook to properly vet this major acquisition and if those steps included customer verification checks.
According to our reading of the 2016 Independent Auditors Report, the extent of Shinewings vetting
process seems to have been to simply rely on the word of Management for their audit of Shanghai Jifu.

Ultimately, we believe this case reflects a failing of Shinewing in its role as independent auditor and public
gatekeeper.

What makes the story of Shanghai Jifu all the more interesting is that last year a listed company on the
Shenzhen Stock Exchange also announced it would buy a stake in Shanghai Jifu. However, PRC regulators
are still reviewing the deal which has yet to close. Given the length of the review, we suspect local
regulators may have found similar irregularities with Shanghai Jifu and will not allow the deal to go
through.

1
http://www.hkexnews.hk/listedco/listconews/GEM/2010/1119/GLN20101119035.PDF pg. 1
2
By way of background, chinse companies are required to file annual financial and business information with the
State Administration for Industry and Commerce (SAIC). SAIC filings are public documents.

2
 Shanghai Jifu
On 30 April 2016, Credit China acquired a 35% stake in a company called Shanghai Jifu, which was
described as a leading provider of mobile Point of Sales (mPOS) terminals. The 35% stake was acquired
for total consideration of RMB560 million in cash and shares:

Source: http://www.hkexnews.hk/listedco/listconews/GEM/2017/0330/GLN20170330409.pdf pg. 34

Shanghai Jifu was the largest acquisition in Credit Chinas history, with the consideration ultimately
representing 18% of Credit Chinas total assets and 33% of its net assets at year-end 2015.3

The RMB560 million consideration for a 35% stake purportedly represented 10.7x Shanghai Jifus profit
guarantee of RMB150 million for 2016:4

Source: http://www.hkexnews.hk/listedco/listconews/GEM/2016/0407/GLN20160407009.pdf pg. 10

3
http://www.hkexnews.hk/listedco/listconews/GEM/2016/0330/GLN20160330123.pdf pg. 115, 116 by the time
the deal closed, the value of the shares had pushed the total consideration to RMB856 million
4
http://www.hkexnews.hk/listedco/listconews/GEM/2016/0407/GLN20160407009.pdf pg. 10

3
In connection with this acquisition, Credit China also claims to have appointed an independent appraiser,
who valued Shanghai Jifu as actually being worth more than what Credit China was paying.

What a deal!

Source: http://www.hkexnews.hk/listedco/listconews/GEM/2016/1221/GLN20161221001.pdf pg. 5

In the months leading up the acquisition, Credit China made clear to its shareholders that Shanghai Jifu
was to be acquired from purportedly independent third party vendors. Here is the claim from the
acquisition circular dated 7 April 2016, only a few weeks before the deal closed:

http://www.hkexnews.hk/listedco/listconews/GEM/2016/0407/GLN20160407009.pdf pg. 4

However, based on our research, we believe these claims to be utterly misleading if not outright lies.
Specifically,

SAIC filings suggest that a Credit China subsidiary was already a major shareholder of Shanghai
Jifu as early as November 2015, well before the 30 April 2016 date the Company claims that it
acquired the 35% stake.

Credit China claims to have purchased its 35% stake in Shanghai Jifu for RMB560 million. However,
SAIC filings show that the documented transfer price for the 35% was only RMB2.95 million.

Based on SAIC filings, we believe that a number of Shanghai Jifus top customers are entities with
negligible business operations. We suspect the purported RMB150 million+ profit generated in
2016 may have been materially fabricated.

4
Who actually owned Shanghai Jifu?
From the beginning, Credit China has maintained that Shanghai Jifu was owned by independent third
parties right up until the 30 April 2016 close date. Here is another announcement dated 27 November
2015 reaffirming this claim:

Source: http://www.hkexnews.hk/listedco/listconews/GEM/2015/1127/GLN20151127001.pdf pg. 3

However, according to SAIC filings, UCF Pay, a wholly-owned subsidiary of Credit China, was already listed
as a shareholder of Shanghai Jifu as early as 24 November 2015:

Source: SAIC filings

5
In fact, SAIC filings show that a shareholder modification request adding UCF Pay as a shareholder was
submitted on 19 November 2015, and ultimately came into effect on 24 November 2015:

Source: SAIC filings

6
Moreover, this page of the SAIC filings not only shows UCF Pay as a shareholder, it actually shows it as the
largest shareholder with 36.84% interest in Shanghai Jifu, per the 19 November 2015 addendum:

Source: SAIC filings

What this means is that throughout the time that Credit China claimed to be in negotiations with
independent vendors for a stake in Shanghai Jifu, it was apparently already the biggest listed shareholder
of the target company.

7
None of these findings should come as too much of a surprise. In our previous report on Credit China, we
presented substantial evidence that even before the 35% acquisition was announced, Shanghai Jifu was
secretly owned by a substantial shareholder and non-executive director of Credit China through a private
company called UCF Group, which would have made this acquisition an undisclosed related-party
transaction from the very beginning.5

5
http://www.anonanalytics.com/2016/12/credit-china.html pg. 4 - 10

8
How Much did Credit China Pay for its Stake in Shanghai Jifu?
According to Hong Kong Stock Exchange disclosures, Credit China paid consideration of RMB560 million
for a 35% stake in Shanghai Jifu.6

However, according to the following page of the SAIC filings, UCF Pay (Credit Chinas wholly-owned
subsidiary) acquired a 14.74% stake in Shanghai Jifu for RMB1.18 million from a Ms. Wang on 19
November 2015:

Source: SAIC filings

6
Source: http://www.hkexnews.hk/listedco/listconews/GEM/2017/0330/GLN20170330409.pdf pg. 34

9
Furthermore, this page states that an additional 5.5% stake was acquired from an entity named Huzhou
Tongshen for RMB0.44 million on the same date:

Source: SAIC filings

10
And finally, to round off its 36.84% stake, this page states that UCF Pay acquired 16.6% of Shanghai Jifu
for RMB1.33 million from a Mr. Huang on 19 November 2016:

Source: SAIC filings

All told, on 19 November 2015, Credit China indirectly acquired a 36.84% stake in Shanghai Jifu from the
three previous shareholders at a documented price of RMB2.95 million according to SAIC filings.

11
Therefore, we are left with the conclusion that either the parties in this transaction grossly understated
the transfer price to avoid paying taxes to the government (a very big no-no in China), or that Credit China
grossly overstated the consideration paid for its stake in Shanghai Jifu.

We think the answer lies somewhere in between.

Realistically, we do believe that Shanghai Jifu is worth well more than the RMB8 million valuation implied
by the transfer price. To believe otherwise is probably a bit too sensationalist. However, we suspect the
documented transfer price may have been so incredibly low to avoid paying taxes.

But we also dont believe that the 35% stake in Shanghai Jifu was worth the RMB560 million Credit China
claims to have paid. This opinion is based on our research, which includes customer verification checks
(discussed next), and the overhanging evidence that Shanghai Jifu was under the control of an undisclosed
related party at all relevant times.

12
How Real is Shanghai Jifu?
Credit China is effectively controlled by Mr. Zhang Zhenxin, a non-executive director and a substantial
shareholder of the Company. In addition to his role at Credit China, Mr. Zhang is also the Chairman of
UCF Group, which is his own private company:

Source: http://www.hkexnews.hk/listedco/listconews/GEM/2016/0330/GLN20160330123.pdf pg. 34

We believe there is substantial evidence from our previous report that UCF Group (not to be confused
with UCF Pay) was actually the ultimate, undisclosed owner of Shanghai Jifu well before it was sold to
Credit China.

In any case, around the same time that Credit China was purportedly negotiating for its 35% stake in
Shanghai Jifu, another company named Keybridge Communications (Keybridge) was separately mulling
its own 45% stake in Shanghai Jifu. As it happens, Keybridge is a listed stock on the Shenzhen exchange
and Mr. Zhang is one of its directors, as noted in the above biography.

Effectively, we believe that there are two possible explanations for these acquisitions:

i) Shanghai Jifu is such a great company that Mr. Zhang was star-struck by it and decided to use
two public companies that he had substantial influence over to acquire a combined 80% stake
in it.

ii) Or, as our research suggests, Mr. Zhang was the ultimate undisclosed owner of Shanghai Jifu
from the beginning, and used the two public companies to purchase large stakes in Shanghai
Jifu with shareholder money at substantial benefit to himself.

13
Engaging in undisclosed self-dealing in Hong Kong is one thing. Hong Kong regulators have historically
shown to have limited jurisdiction to bring PRC citizens to justice for their transgressions. But we believe
Mr. Zhang may have broken the cardinal rule of ripping off shareholders: you dont pull that shit in the
PRC.

While Credit Chinas 35% stake in Shanghai Jifu seems to have gone through without any discernable
scrutiny by the Hong Kong Stock Exchange, the same cant be said for the mirror transaction by Keybridge
in the PRC.

The 45% acquisition of Shanghai Jifu by Keybridge was announced on 24 May 2016.7 Trading in Keybridge
shares have been suspended since the announcement as local regulators take time to scrutinize this deal.

As a Shenzhen-listed stock, Keybridge falls under the jurisdiction of the Shenzhen Stock Exchange and
China Securities Regulatory Commission (CSRC). The CSRC is not an entity to be toyed with.

Given the relative size of the acquisition, Keybridge is required to file a substantial amount of relevant
information concerning the transaction for regulatory review. These filings yield a wealth of information
on Shanghai Jifu that werent required by the Hong Kong Stock Exchange when Credit China acquired its
35% interest. The most important of these disclosures is the Significant Asset Purchase and Related
Transaction Report filed to the Shenzhen Stock Exchange by Keybridge on 5 November 2016 (The
Transaction Report).8

We have reviewed The Transaction Report and believe we have found substantial evidence that Shanghai
Jifu is not the leading mPOS company of the size that Credit China claims.9 Indeed, several of its biggest
customers appear to be entities that have only been established to transact with Shanghai Jifu on paper
to plug the audit hole.

The case of Shanghai Jifu is not only a clinic in the difference between regulatory vigilance between the
Hong Kong Stock Exchange and its PRC counterparts, we believe its also an unveiling of the failings of
Shinewing (HK) CPA, Credit Chinas auditor.

7
http://disclosure.szse.cn/finalpage/2016-05-25/1202337090.PDF
8
http://disclosure.szse.cn/finalpage/2016-11-05/1202816280.PDF
9
http://www.hkexnews.hk/listedco/listconews/GEM/2017/0330/GLN20170330409.pdf pg. 34

14
Ningbo Jifu: a Top Customer
Among the disclosures found in The Transaction Report is a list of Shanghai Jifus top five purported
customers and suppliers in each of 2014 and 2015.

According to The Transaction Report, Shanghai Jifus second largest customer in 2014 was an entity named
Ningbo Jifu (). As a top customer, Ningbo Jifu accounted for RMB6 million of
Shanghai Jifus revenue in 2014:

Awkwardly, the text in the red box above claims that Ningbo Jifu is not a related party, but uses the Jifu
name to increase its business credibility. Okay then.

In addition to claiming Ningbo Jifu as its second biggest customer in 2014, The Transaction Report also
claims that Ningbo Jifu generated RMB1.4 million in profit-sharing commission from Shanghai Jifu that
year:

Source: http://disclosure.szse.cn/finalpage/2016-11-05/1202816280.PDF

15
However, the SAIC filings of Ningbo Jifu tell a completely different tale. According to the 2014 SAIC filings,
Ningbo Jifu is a negligible entity with no revenue, no profits, no inventory and only one employee:

Ningbo Jifu 2014 Financial Information

Source: 2014 SAIC filings of Ningbo Jifu

Clearly, the claims in The Transaction Report are inconsistent with the SAIC filings which show that Ningbo
Jifu generated no revenue and no profits in 2014.

16
2015 is more of the same nonsense. The Transaction Report claims that Ningbo Jifu generated RMB13
million in profit sharing from Shanghai Jifu, making it the largest commission earner that year:

Source: http://disclosure.szse.cn/finalpage/2016-11-05/1202816280.PDF pg. 159

However, the 2015 SAIC filings once again show that Ningbo Jifu generated no revenue, reported a loss,
still had no inventory and only one employee:

Ningbo Jifu 2015 Financial Information

Source: 2015 SAIC filings of Ningbo Jifu

17
Notably, Ningbo Jifus SAIC filings state that the reason the company generated no revenue was because
the business is still not mature.

18
Fujian Jifu: 2nd Largest Customer
Shanghai Jifus largest customer in 2014 and second largest customer in 2015 was an entity named Fujian
Jifu (). According to The Transaction Report, Fujian Jifu accounted for
RMB6 million and RMB17 million of Shanghai Jifus revenue in 2014 and 2015, respectively:

Source: http://disclosure.szse.cn/finalpage/2016-11-05/1202816280.PDF pg. 159

19
Fujian Jifu may be the biggest joke of a customer yet. Despite being named as Shanghai Jifus largest
customer in 2014, SAIC registration data shows Fujian Jifu wasnt even established until February 2015:

Fujian Jifu Registration Information

Source: SAIC database

Given the extremely low bar, 2015 was slightly better for Fujian Jifu (because it actually existed). In
addition to claiming to be the second biggest customer of Shanghai Jifu with RMB17 million in revenue
that year, The Transaction Report also claims that Fujian Jifu generated RMB12 million in profit-sharing
commission:

Source: http://disclosure.szse.cn/finalpage/2016-11-05/1202816280.PDF

20
Between the RMB17 million purchase from Shanghai Jifu and the RMB12 million in profit sharing
commission, Fujian Jifu should have reported RMB29 million in revenue and inventory in 2015.

Yet Fujian Jifus SAIC filings show that at most it only reported RMB20 million in revenue and inventory
combined for 2015:

Fujian Jifu 2015 Financial Information

Source: 2015 SAIC filings of Fujian Jifu

That leaves at least RMB9 million that we cannot account for.

21
Shanghai Leshua: 4th Largest Customer

The fourth largest customer on this list is an entity named Shanghai Leshua (
). According to this list, Shanghai Leshua accounted for RMB4 million and RMB13.5 million of
Shanghai Jifus revenue in 2014 and 2015, respectively:

Source: http://disclosure.szse.cn/finalpage/2016-11-05/1202816280.PDF pg. 158, 159

22
However, according to Shanghai Leshuas 2014 and 2015 SAIC filings, Shanghai Leshua is actually a shell
entity with no revenue or profits.

The 2014 SAIC filing show that Shanghai Leshua generated no revenue, no profits, paid no taxes, and had
no assets in 2014:

Shanghai Leshua 2014 Financial Information

Source: 2014 SAIC filings of Shanghai Leshua

Likewise, 2015 was just as bleak for Shanghai Leshua, with no revenue and no profits:

Shanghai Leshua 2015 Financial Information

Source: 2015 SAIC filings of Shanghai Leshua

Notably, Shanghai Leshua does show RMB20 million of inventory in 2015, which could potentially consist
of the RMB13.5 million of mPOS terminals the company purportedly purchased from Shanghai Jifu that
year. But given the fact Shanghai Leshua did not generate any revenue, it leads us to believe this inventory
is simply being warehoused instead of being used in the normal course of business, as would be the logical
intent of a bona-fide independent customer.

23
In addition to claiming to generate revenue by selling mPOS terminals to Shanghai Leshua, the Transaction
Report also claims that Shanghai Jifu has a profit-sharing agreement with Shanghai Leshua, wherein
Shanghai Leshua generated RMB3.8 million of commission in 2015:

Source: http://disclosure.szse.cn/finalpage/2016-11-05/1202816280.PDF pg. 160

This claim is contradicted by Shanghai Leshuas 2015 SAIC filings which show no revenue generated that
year. Additionally, the inventory build-up suggests that the mPOS terminals are not online, and thus not
capable of generating any commission revenue.

We think the most linear reason Shanghai Leshua would purchase inventory and warehouse it is if it was
a related-party instead of the purportedly independent customer The Transaction Report claims. None of
the purported revenue streams in The Transaction Report seem to be supported by Shanghai Leshuas
SAIC filings.

24
 Shinewing CPA
Of Shanghai Jifus top purported customers, several seem to have either been exaggerated or have de
minimis business operations, according to SAIC filings. One of them wasnt even established until 2015.
Yet, this is the same company that Credit China purportedly paid RMB560 million for a 35% stake in.

From here, the question turns to exactly what steps Credit Chinas auditor, Shinewing (HK) CPA, undertook
to properly vet this major acquisition and if those steps included customer verification checks.

According to our read of the 2016 Independent Auditors Report, the extent of Shinewings vetting process
seems to have been to simply rely on the word of Management for their audit:

Source: http://www.hkexnews.hk/listedco/listconews/GEM/2017/0330/GLN20170330409.pdf pg. 154

25
We believe that Shinewings soft-touch approach and apparent failing in its role as independent auditor
and public gatekeeper is made all the more unforgivable by the fact that it was warned prior to the 2016
audit season that the Shanghai Jifu acquisition by Credit China was highly suspicious and clearly pointed
to an undisclosed related-party transaction.

Credit China is a serial capital raiser.10 In the last two years, Credit China has raised RMB3.7 billion from
financing activity, mostly through the issuance of shares and convertible bonds:

Source: http://www.hkexnews.hk/listedco/listconews/GEM/2017/0330/GLN20170330409.pdf pg. 173

10
http://www.hkexnews.hk/listedco/listconews/GEM/2016/0630/GLN20160630231.pdf

26
Most of these proceeds have been spent on the acquisition of esoteric FinTech and internet companies
that even Credit China bulls admit they cant analyze:

Source: HSBC research report dated 9 August 2016

Investors and bond holders deserve a competent and proactive auditor to properly scrutinize these
acquisitions and make sure they arent just self-dealing transactions of nebulous or otherwise
questionable businesses.

Shanghai Jifu was by far Credit Chinas largest acquisition. Given the glaring red flags we found, it does
not bode well for Credit Chinas numerous other acquisitions and its growth-through-acquisition strategy.

*****

In two weeks, Keybridge will have been suspended on the Shenzhen Stock Exchange for one year (except
for a single trading day on 9 November 2016). Based on our experience, this is an unusually long time for
regulators to vet a transaction. It seems to us that local regulators may have found similar irregularities in
the Keybridge/Shanghai Jifu acquisition and may not allow the deal to go through.

We think it may be worthwhile for the local regulators to consider our findings in their review of this
transaction to ensure that shareholders of Keybridge dont get a bad deal. We consider the release of this
report a matter of public interest.

Notably, in September 2016, Mr. Zhang transferred his stake in Keybridge and stepped down as director.11
We find it curious that Mr. Zhang who undoubtedly championed the 45% acquisition of Shanghai Jifu by
Keybridge would subsequently remove himself from Keybridge at a time when the stock was halted and
regulatory scrutiny of this transaction would have been well underway.

11
http://disclosure.szse.cn/finalpage/2016-09-30/1202740644.PDF

27
 Conclusion
The recent collapse of Huishan Dairy is a sobering reminder of the scourge of manipulated stocks on the
Hong Kong Stock Exchange. But its also a reminder that all these stocks eventually collapse like Hanergy,
Tech Pro, and Hang Fat Ginseng in spectacular fashion.

We previously presented evidence that Credit China is just another manipulated stock,12 which we also
expect to ultimately collapse. Manipulating a stock is a constant fight against the gravity of fundamentals
and it usually ends in disaster.

After all, isnt it telling that a US$3 billion company with a history of tapping the capital markets is only
covered by two sell-side analysts? 13 And HSBC being one of those analysts hasnt even updated their
research with a standalone piece since 8 November 2016, as far as we can tell. Meanwhile, Nomura
dropped coverage last month.

In any case, based on fundamentals alone, we believe Credit China should trade more in line with Yirendai,
a China-based P2P company, and the closest publicly-traded comparable we could find:

Peer Analysis
Market Cap Share Price P/E Estimates
Ticker
(US$ millions) (LC) 2017 2018
Yirendai YRD.NYSE 1,454 US$24.24 7.3 5.5
Credit China 8207.HK 2,861 HK$1.03 64.2 50.0
Source: Yahoo Finance, Bloomberg estimates, HSBC 8 November 2016 report on Credit China

Yirendai currently trades at 7.3x 2017 estimated earnings. If we were to apply the same multiple to Credit
Chinas 2017 estimated earnings (HK$0.016),14 it would value the Company at HK$0.12 per share. With
shares of Credit China currently trading at HK$1.03, this would suggest potential downside of 88%.

But even at HK$0.12 per share, an investor would have to assume that all of Credit Chinas earnings are
real. Given the evidence in this report, that is a questionable proposition.

Opinion: Strong Sell

12
http://www.anonanalytics.com/2016/12/credit-china.html pg. 30-32
13
https://markets.ft.com/data/equities/tearsheet/forecasts?s=8207:HKG
14
Based on HSBC estimates from 8 November 2016 report

28
29