Puyi Inc. Announces Unaudited Financial Results For the First Half of the Fiscal Year 2020

GUANGZHOU, China, March 26, 2020 (GLOBE NEWSWIRE) -- Puyi Inc. (a??Puyia??, a??wea?? or the a??Companya??) (NASDAQ: PUYI), a leading third-party wealth management service provider in China focusing on mass affluent and emerging middle class population, today announced its unaudited financial results for the first half of its fiscal year 2020 from JulyA 1,A 2019 to DecemberA 31, 2019.

Net revenues decreased by 49.8% to RMB62.4 million (US$9.0 million) from RMB124.3 million for the same period of the fiscal year 2019; and

Net loss was RMB22.6 million (US$3.2 million) and net loss attributable to Puyia??s shareholders was RMB22.0 million (US$3.2 million), while Puyi recognized net income of RMB45.6 million and net income attributable to Puyi's shareholders of RMB46.5 million for the same period of the fiscal year 2019.

Mr. Yong Ren, Chief Executive Officer of Puyi, commented,a??With the further implementation of the Guidelines on Standardizing Asset Management Businesses of Financial Institutions, or the 2018 Guidelines, the focus of wealth management market in China has fully turned into truly market-oriented wealth management products. To closely follow such industry trend, we have further optimized our product portfolio and market strategies. In particular, we have focused on distribution of fund products and ceased to offer exchange administered products since October 2019. For fund products, based on the anticipated development of macro-economy in China, and our understanding of changes in risk appetites of our clients, we have significantly downsized the distribution of privately raised funds that primarily invest in private companies. In the meanwhile, we have increased the distribution of privately raised funds that mainly invest in public traded stocks. However, as we are in the process of optimizing our product portfolio, the downsized scale outpaced the increased distribution amount of the privately raised funds for the first half of the fiscal year 2020, resulting in a short-term negative impact on our net revenues and profitability. In addition, we have further increased marketing and promotion activities for publicly raised fund products to further expand our client basis. Out of the total selling expenses, our marketing promotion expenses was RMB22.0 million (US$3.2 million) during the first half of the fiscal year 2020, and the aggregated number of clients purchasing publicly raised fund products increased from 75,000 as of June 30, 2019 to 184,000 as of December 31, 2019 with an average client acquisition cost at approximately RMB202 per client. Furthermore, we have invested extensive resources to improve our back-office professional capabilities, especially in the introduction of the key management members and professionals and the continuing upgrades of information technology platforms, therefore our general and administrative expenses increased by 18.3% for the first half of the fiscal year 2020 from the same period of the fiscal year 2019. We believe such investments are particularly critical for us to lay a solid foundation for our future development. As a result of foregoing measures, (i) our net revenues generated from distribution of publicly raised fund products were RMB13.0 million (US$1.9 million) for the first half of the fiscal year 2020, reflecting over an eight-fold increase from RMB1.4 million for the same period of the fiscal year 2019; (ii) the total transaction value of publicly raised fund products we distributed for the first half of the fiscal year 2020 was RMB2.2 billion (US$0.3 billion), representing a 100.0% increase from RMB1.1 billion for the same period of the fiscal year 2019; and (iii) the outstanding balance of publicly raised fund products distributed by us was RMB1.9 billion (US$0.3 billion) as of December 31, 2019, representing a 215.3% increase from RMB0.6 billion as of December 31, 2018.For the second half of the fiscal year 2020, we will continue to focus on truly market-oriented wealth management products and further implement the strategies emphasizing client base expansion and information technology platform development, which are expected to continue to increase our selling expenses and general and administrative expenses in short term, but have tremendous potential in generating long-term and sustainable growth in our business and operation results in the view of our management.
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