Xiaoying Technology (小赢科技)'s core shareholders have lost all patience — 3 minutes ago

Shareholder exodus amid puzzling valuation gap

Xiaoying Technology (小赢科技), the Beijing-based fintech firm led by founder Tang Yue (唐越), is facing a stark vote of no confidence from several of its early, high-profile investors even as headline metrics suggest the company is still making money. It has been reported that key IPO-era shareholders — including names tied to Chow Tai Fook (周大福), Hong Kong investor Zhang Songqiao (张松桥) and pharmaceutical founder Zhu Baoguo (朱保国) — have withdrawn from the company’s most recent major-holder list. Why sell when earnings and cash balances still appear healthy? Is this a bargain or a value trap?

The numbers are contradictory. For 2025 Xiaoying posted revenue of RMB 7.6394 billion and net profit of RMB 1.4646 billion, and the company reports an EPS of 6 while market PE has collapsed to about 1.1 — an extraordinarily low valuation in any capital market. Yet the stock has tumbled more than 65% from its July 2025 peak. Xiaoying has mounted buybacks and dividends — roughly $200 million deployed in buybacks to date, with about $67.9 million spent last year and ~$48 million quota still available — but repurchases have only produced short, temporary rallies. Reportedly, the coordinated retreat by significant shareholders signals deeper concerns about future profitability and regulatory risk than public metrics show.

Asset quality and regulatory headwinds

Beneath growth in loan facilitation volume — RMB 1305.52 billion arranged in 2025 and year-end outstanding loans above RMB 50 billion — asset quality is clearly deteriorating. Xiaoying’s net profit fell year-on-year, driven by rising credit provisions: fourth-quarter net income plunged to RMB 57.2 million, an 85.2% drop from year-earlier levels. Delinquency rates have surged; 30–60 day delinquencies rose to about 2.9% and 91–180 day delinquencies jumped to 6.31%, up several hundred basis points. The company said higher loan-loss provisions and weaker loan-related revenue explain the decline. With quarterly origination volumes and active borrowers shrinking, management is guiding for a further contraction in Q1 2026 — a defensive pullback that appears driven by rising risk, not bold strategy.

This all unfolds against China’s tightening regulatory backdrop for fintech — from the post‑2020 P2P wind-down to recent "assist-loan" (助贷) rules that curb third‑party facilitation models — and amid broader geopolitical scrutiny of Chinese tech on data and governance grounds. Xiaoying’s dual-class share structure concentrates control: Tang Yue’s family trust owns about 42.91% of economic interests but commands roughly 91.5% of voting rights, complicating minority-investor calculus. Reportedly, some of the departed shareholders accepted modest gains vs. IPO highs, but sold largely to limit exposure to regulatory and credit risk.

Tech claims, collection complaints, and the road ahead

Management has emphasized a pivot to "financial + technology" and rolled out a Win-series tech stack — WinSAFE, WinPROT and AI-driven systems — framed as the path from "data-driven" to "intelligence-driven" lending. But if these systems are truly effective, why are delinquency curves worsening and provisions ballooning? It has been reported that consumer complaints on platforms such as Black Cat allege aggressive third‑party collections, unauthorized personal-data use and other abusive recovery methods — charges that, if widespread, could further tarnish the company’s "technology-for-good" narrative and invite regulatory scrutiny.

The next few quarters will be decisive. If provisions stabilize and delinquencies fall, Xiaoying’s low multiple and cash cushion might attract patient investors. If losses and complaints mount, the company could remain structurally discounted despite sound-sounding metrics. For Western observers trying to understand China’s fintech shakeout: this is a microcosm of a larger story — heavy regulation, founder-controlled structures, and the hard test of whether digital underwriting and AI can meaningfully replace the old, risk-prone lending economics.