Core Viewpoint - FinVolution Group (NYSE: FINV) is recommended with a "Strong Buy" rating due to its recent performance and effective management, indicating that the market has undervalued its stock [1] Group 1 - The company has shown strong recent performances that warrant a positive outlook [1] - There is a belief that the market has not fully recognized the value of FinVolution Group's stock [1] - A discounted cash flow (DCF) analysis was conducted to support the investment thesis [1]

Event - Xinyi Technology (FINV.US) has successfully issued a convertible senior note worth $130 million, maturing in 2030, with an initial buyer's option to increase the amount by up to $20 million, bringing the total issuance to $150 million. The coupon rate is notably low at 2.5% [1][2]. Cost of Capital - The cost of capital includes both the cost of debt and the cost of equity. Generally, the cost of equity is higher than the cost of debt, leading companies to prefer debt financing when feasible. However, if debt costs are too high, companies may opt for convertible bonds as a balanced financing decision [2]. Convertible Bond Terms - The initial conversion rate for the convertible bond is set at 80.8865 ADS per $1,000 principal, translating to a conversion price of $12.36 per ADS. This represents a 30% premium over the closing price of $9.51 on June 18 [3]. Use of Proceeds - The proceeds from the convertible bond will be allocated as follows: 40% ($60 million) for stock buybacks and 60% ($90 million) to enhance working capital and accelerate overseas expansion. The stock buyback aims to repurchase shares below $10, while the overseas expansion is crucial for future revenue growth [4]. Potential Dilution - The issuance of convertible bonds may lead to dilution of existing shareholders' equity and earnings per share (EPS). If all bonds are converted, dilution could be approximately 4.8%. However, the stock buyback will mitigate some of this dilution [5]. Fundamental Valuation - Xinyi Technology reported a record net profit in Q1 2025, with a 40% year-on-year increase in non-GAAP net profit. The company has a strong cash position and is well-positioned for overseas expansion, which is expected to contribute significantly to future revenues. The current valuation is estimated at 6-7 times earnings, with potential for increased shareholder returns through dividends and buybacks [6]. Industry Implications - Other Chinese concept stocks may follow suit in issuing similar convertible bonds to secure low-cost financing for overseas expansion and stock buybacks, reflecting a broader trend in the industry [6].

Core Viewpoint - FinVolution Group has successfully completed a convertible senior notes offering totaling US$150 million, which will be utilized for international expansion, working capital replenishment, and share repurchase activities [1][2]. Group 1: Notes Offering Details - The offering consists of convertible senior notes with an aggregate principal amount of US$150 million, including an additional US$20 million from the initial purchasers [1]. - The notes will bear an interest rate of 2.50% per year, payable semi-annually starting January 1, 2026, and will mature on July 1, 2030 [3]. - The initial conversion rate is set at 80.8865 American Depositary Shares (ADSs) per US$1,000 principal amount, translating to an initial conversion price of approximately US$12.36 per ADS [4]. Group 2: Use of Proceeds - The net proceeds from the notes offering will be allocated for international business expansions, replenishing working capital, and funding the repurchase of American Depositary Shares (ADSs) [2]. Group 3: Company Overview - FinVolution Group is a leading fintech platform in China, Indonesia, and the Philippines, established in 2007, specializing in online consumer finance [7]. - The company has developed advanced technologies in credit risk assessment, fraud detection, big data, and artificial intelligence, enhancing the user experience through a highly automated loan transaction process [7]. - As of March 31, 2025, FinVolution had 216.2 million cumulative registered users across its platforms [7].

Core Viewpoint - The article discusses the volatile market conditions in 2025, highlighting the performance of top stock picks and the impact of tariffs and geopolitical events on market dynamics [7][9][19]. Market Overview - The US equity market experienced significant fluctuations due to tariff announcements, leading to a major correction in April 2025, with the S&P 500 dropping approximately 15% from its 52-week high [9][10]. - A barbell investment approach was recommended to diversify portfolios during market corrections, focusing on stocks with strong fundamentals and good dividend yields [10][13]. Stock Performance - The top 10 stocks recommended at the beginning of 2025 saw a performance swing from over 20% gains to below 20%, reflecting a nearly 40% change during the volatile period [15][16]. - By mid-2025, many of these stocks rebounded as fear subsided and investors returned to fundamentals [16]. Economic Indicators - Inflation rates showed a surprising decrease, with core CPI at 0.1% for May, and there is speculation about potential interest rate cuts by the Federal Reserve in September [22][23]. - The recession risk appears less severe than previously anticipated, with GDP growth projected to exceed 2% annualized after a decline in Q1 [23][31]. Top Stock Picks - **Barclays (NYSE: BCS)**: A diversified bank with a market cap of $62 billion, ranked 12 out of 691 in financial institutions, offering a dividend yield of 2.47% and a forward EPS growth rate of 28% [80][81]. - **Prudential (NYSE: PUK)**: Based in Hong Kong, this insurance company ranks 1 out of 19 in its industry, with a forward dividend yield of 1.89% and a long-term EPS growth rate of 17% [86][89]. - **FinVolution (NYSE: FINV)**: A fintech company with a market cap of $2.2 billion, ranking 7 out of 691 in financials, showing a 255% operating cash flow growth rate [93][94]. - **Power Solutions International (NASDAQ: PSIX)**: A small-cap company with a market cap of $1.23 billion, ranked number one in the industrials sector, with a one-year return of 835% [97][99]. - **New Gold (NYSE: NGD)**: Focused on gold, silver, and copper exploration, with an operating cash flow growth rate of 56% [107][110]. - **Gold Fields Limited (NYSE: GFI)**: A diversified mining company with a 37% EPS forward long-term growth rate, ranking 5 in the materials sector [111][113]. Investment Strategies - The article emphasizes a data-driven approach to stock selection, utilizing a GARP (Growth at a Reasonable Price) strategy that combines growth, value, profitability, and momentum metrics [40][42]. - The new PRO Quant Portfolio offers a higher frequency of stock ideas, designed for active investors, with a focus on global stocks across various market caps [59][64].

Core Insights - FinVolution (NYSE: FINV) has gained significant attention from investors, with its stock price increasing by 91.5% over the past year, indicating strong market interest and performance [1]. Company Analysis - FinVolution is categorized as a small-cap Asian FinTech company, which may not be well-known among Western investors, yet it has demonstrated substantial growth [1]. - The company has received a high rating from Seeking Alpha's Quant system, suggesting a favorable assessment of its financial health and growth potential [1]. Investment Perspective - The analysis emphasizes the importance of identifying stocks that exhibit both growth and quality factors, which are characterized by strong growth narratives supported by robust financial statements [1].

Core Viewpoint - FinVolution Group has announced a convertible senior notes offering totaling US$130 million, aimed at funding international expansion, replenishing working capital, and facilitating a concurrent share repurchase [1][2]. Notes Offering Details - The offering consists of convertible senior notes with a principal amount of US$130 million, maturing in 2030, and an option for initial purchasers to buy an additional US$20 million [1]. - The notes will bear an interest rate of 2.50% per year, payable semi-annually starting January 1, 2026 [3]. - The initial conversion rate is set at 80.8865 ADSs per US$1,000 principal amount, equating to an approximate conversion price of US$12.36 per ADS, representing a 30% premium over the closing price of US$9.51 on June 18, 2025 [4]. Repurchase Plan - Concurrently, the company plans to repurchase 6,377,740 ADSs at US$9.51 each, which is the last reported sale price on June 18, 2025 [6]. - This repurchase is intended to assist initial hedging by purchasers of the notes and is part of existing share repurchase programs announced in 2023 and 2025 [6]. Company Overview - FinVolution Group is a leading fintech platform in China, Indonesia, and the Philippines, established in 2007, focusing on connecting young borrowers with financial institutions [13]. - As of March 31, 2025, the company had 216.2 million cumulative registered users across its platforms [13].

Core Viewpoint - FinVolution Group announced a proposed offering of convertible senior notes totaling US$130 million, with an option for an additional US$20 million, aimed at institutional buyers under Rule 144A of the Securities Act [1][9] Group 1: Notes Offering Details - The convertible senior notes will mature on July 1, 2030, unless repurchased, redeemed, or converted prior to that date [3] - Holders can convert their notes into cash, American Depositary Shares (ADSs), or a combination of both at the company's discretion [4] - The company plans to use the net proceeds from the offering for international business expansions, replenishing working capital, and funding a concurrent repurchase of ADSs [2] Group 2: Repurchase and Market Impact - The concurrent repurchase will involve buying back ADSs from certain purchasers of the notes, facilitating initial hedging for those investors [6] - The repurchase activities may influence the market price of the ADSs and the trading price of the notes [7][8] - The repurchase price for the notes will be equal to 100% of the principal amount plus any accrued interest [5] Group 3: Company Overview - FinVolution Group is a leading fintech platform in China, Indonesia, and the Philippines, established in 2007, focusing on connecting young borrowers with financial institutions [11] - As of March 31, 2025, the company had 216.2 million cumulative registered users across its platforms [11]

Core Viewpoint - The article discusses the performance of FinVolution (NYSE: FINV) since the initiation of a long position, highlighting a total return of -11% during a challenging market period [1]. Group 1: Company Overview - FinVolution is a company focused on the consumer discretionary and financial services sectors in both the US and China [1]. - The investment strategy involves a long-biased and China-biased portfolio, with intentions to diversify globally [1]. Group 2: Analyst Background - The analyst has a background in commerce with high distinction from the University of Toronto, specializing in finance and economics [1]. - The analyst has 10 years of experience in investment banking and focuses on industry and company research [1].

Investment Rating - The report maintains a positive outlook on the Hong Kong stock market, indicating a strong risk appetite and suggesting investment opportunities in various sectors, particularly in virtual assets and Web 3.0 [3][10]. Core Insights - The Hong Kong stock market is experiencing a significant increase in risk appetite, with improved asset quality and trading volume, highlighting the value of asset trading platforms [3][10]. - There is a notable uptrend in multiple sectors such as AI, new consumption, and innovative pharmaceuticals, with a particular focus on small and mid-cap stocks in media and consumer sectors [3][10]. - The report emphasizes the ongoing development of virtual assets and the Web 3.0 market, driven by stablecoin policies and recent IPOs, suggesting that more regulatory frameworks will emerge [3][10]. - The trend of Chinese companies returning to Hong Kong for IPOs is gaining momentum, with increased trading of companies like NetEase and Ctrip in the Hong Kong market [3][10]. - The valuation of overseas Chinese assets remains influenced by US-China trade relations and the broader economic environment, necessitating close monitoring of trade policies and domestic economic changes [3][10]. Summary by Sections Education - The K12 education sector maintains high growth, with leading institutions reporting over 20% revenue growth during the winter training period, and an increase in non-academic course retention rates [5][11]. Luxury Goods - The luxury goods market shows slight pressure due to macroeconomic factors, but brands that align with demand trends are performing well, with cautious price increases observed [5][20]. Coffee and Tea Drinks & OTA - Coffee and tea remain key categories for delivery platforms, with strong performance from major brands like Luckin Coffee, which continues to expand its store presence [5][25]. E-commerce - The e-commerce sector faces slight pressure, but major platforms like Alibaba and JD.com are expected to benefit from ongoing promotional activities [5][26]. Streaming Platforms - Music streaming platforms are viewed as high-quality internet assets, with sustained profitability driven by scale effects [5][34]. Virtual Assets & Internet Brokers - The stablecoin leader Circle's IPO saw a 168% increase on its first day, marking a significant event in the virtual asset space [5][38]. Real Estate Transactions - Recent data shows a slight decline in second-hand housing transactions in major cities, suggesting a need for caution in the real estate market [5][50]. Automotive Services - The automotive aftermarket is under pressure, with traditional fuel vehicle service visits declining, while new energy vehicle service visits are increasing [5][45].

Core Viewpoint - Xinyi Technology has achieved significant profitability with a projected net profit of 2.388 billion yuan for 2024, translating to over 6.5 million yuan in daily earnings, positioning itself as a standout in the financial technology sector despite industry challenges [3][4]. Group 1: Profitability Insights - Xinyi Technology, formerly a leading P2P platform, transitioned to a loan facilitation model, connecting banks and consumers, which has led to substantial service fee revenues [6][7]. - The company employs aggressive customer acquisition strategies, including online marketing, telemarketing, and ground promotion, which are crucial for its profitability [8]. - Employee incentives are structured to motivate ground staff, with commissions ranging from 1.3% to 2.6% on loans, reflecting a high-stakes sales culture [9][10]. Group 2: Business Model and Risks - The KOO Wallet app, operated by Xinyi Technology, has been associated with high-interest rates, with claims of annualized rates reaching up to 24%, raising concerns about the sustainability of its profit margins [14][15]. - Complaints regarding deceptive practices by ground staff have surfaced, indicating potential ethical and regulatory risks that could impact the company's reputation and operations [11][12][13]. - The company does not disclose its gross margin, which may lead to scrutiny regarding the reasonableness of its fees and compliance with regulations [16]. Group 3: Future Growth Prospects - Xinyi Technology's revenue streams include loan facilitation fees, post-loan service fees, and guarantee income, with guarantee income projected to reach 5.085 billion yuan in 2024, a 13.54% increase [18][19]. - The company is expanding its international presence, with overseas active borrowers increasing by 106.1% to 1.7 million, contributing to 20.4% of total revenue [21][22]. - Projections indicate that Xinyi Technology may achieve a net profit of 2.941 billion yuan in 2025, reflecting a year-on-year growth of 23.4% [22]. Group 4: Conclusion - The high profitability of Xinyi Technology is seen as a product of specific historical conditions, emphasizing the need for genuine value creation rather than mere numerical gains [23].