 Good day fellow investors. We have already discussed ZTO Express as a Chinese investment company and YY as a Chinese interesting social platform. Now I want to discuss a third Chinese opportunity in the peer-to-peer lending environment. Peer-to-peer lending has been booming around the world. It's a very interesting sector growing, developing. A lot of people want to get away from banks and I want to dig into the sector in China. I have one stock that I found here and I limited, which I found very interesting to see how the environment evolves and to describe an interesting Chinese investment. And I assure you, perhaps you will invest in it, but you will learn a lot about the investment environment in China. Let's start with Virendai and its stock price because it's very interesting. It IPL'd in 2015 at $10 per share. It fell immediately to $3.56 only to increase to $40 in less than six months and then it has been trading sideways between $40, $20, $30 and now it's at $28, $29. So many don't like to invest in stocks that have performed this well in the past. It's almost a 10-bar beggar. However, as investors, we must never look at what happened in the past. We must look at what is now related to the stock price and what will happen in the future. Peter Lynch preferred to buy stocks that have already had a nice run up because then the fundamentals have been confirmed and are confirmed. So it's a different investing perspective than an actual value investing catching a fallen knife, but it's always interesting to look at. Let's look at the company and at the sector where it operates. Virendai was recently founded by Credit Ease, which is a company that analyzes personal individual credit in China. So logical that they offer peer-to-peer company. Loan volume growth has been exploding in the last four years. So it's practically a new sector in China. What does Virendai do? They are a platform that allows the connection between individual borrowers and investors. Typical peer-to-peer lending. Everything is automated. They use the data from Credit Ease, the parent company, for credit assessment and then put interest rate on the loans and connect the two parties. Very simple business, very profitable, very easy business. However, that easy business made a very complicated situation. More than 2000 peer-to-peer lending platforms have been founded in the last few years in China. Of them, a few were real Ponzi schemes and one, as Ubao, was a Ponzi scheme that was blocked by the government and it cost investors about 8 billion dollars. So it's really really delicate sector to investigate. However, the government went in, is checking it and from August we have new regulation and according to Uirendai management, this new regulation should benefit the company because it will eliminate a lot of the Ponzi scheme competitors. So, re-increase the integrity of the business itself and when you're the biggest player, regulation usually helps. Now, what's the negative side of regulation? Regulation lowers interest rates because when it's regulated, more safety for investors, more safety for borrowers and interest rates get lower. Lower interest rates, less commissions. However, if the market gets stabilized, the better for Uirendai. Nevertheless, the value of the Chinese peer-to-peer lending environment is about to continue exploding for the next few years. There is a lot of liquidity in China and people want higher yields, especially with the relatively healthy inflation going on there. It is expected that the market will grow by 30% and Uirendai is also introducing a wealth management app that's going to increase the potential revenue for Uirendai and the company. On top of everything, perhaps I'll make a special video about China rising in GDP in China, more consumption, more financial consumption, so China has still a long way to go to reach the level in the United States. It's their objective, so we can be assured that China will grow for the next 10, 20, 30 years. And accordingly, with sound regulation also the peer-to-peer market. So, very interesting environment, very interesting new technology platform. It's a disruptive financial technology requested by the Chinese customer because the environment is booming. Uirendai is leading online consumer finance marketplace ranked number one by the online meeting platform development index. China reputation ranking number one is extremely important in such online platforms and apps. The new regulation will lower the number of Chinese peer-to-peer lending providers and lower the growth of it, because it won't be as crazy as it is. But don't get confused by this second chart, because the growth will still be around 50% in 2017 and then 30-20% in the future years, which is still huge. Okay, so the sector is okay, the growth is great. Let's look at the fundamentals, which are even more, even better. Annual revenue has been exploding quarterly. We have seen how already the impact of regulation has streamed growth. Okay, so if there is no growth or growth will be table, you want a low price earnings ratio. However, net earnings have been also very growing very fast, so that is a good sign. A look at valuations will show a lot. Price earnings ratio is just eight. So, if the company grows at 30%, the price earnings ratio should be around 20%. Plus the growth, there is potential for the stock to explode. What's very important are the delinquency rates, which are very, very low, according to company reports. Look, 0.3 is all under 1%. So, everything looks well. The company is well set. A lot of data from credit is, which is assessing credit risk in China, peer-to-peer lending, a lot of interesting, a booming environment, regulatory coming in, stabilizing the sector. So, with a low price earnings ratio of eight, it's a very tempting investment. Now, this would be a different video than most other videos, because I'm now going to show you something that puts me off from investing in such a company. It's simply not an investment that I want to be attached to, because the risk that, in a snap of fingers, you lose everything, is pretty high. And here is the risk explained. The loan facilitation breakdown, you have the credit ratings ABCD. 83% of the loan volume is to the consumers. And the average transaction fee rates are 27.6%. That's robbery. So, in short, Urenda is a company focused on subprime borrowers. When you go into subprime, when the government sees the level of fees that those companies are charging, the subprime borrowers and investors, there is the possibility that the Chinese government, and they don't have any problems to do that, simply shuts down the business and, as to la vista, I don't know how to say it in Chinese. So, there is a huge risk in investing in such companies. There is the binary risk of losing everything in the next days, weeks, very, very abruptly. So, whatever happens to Urenda, I will not invest. If you have a different risk appetite, the company doesn't pay a dividend, so you cannot lean on something that's going on. So, it's a very, very risky investment. And I think the price on this ratio of eight is really fair in this case. And that's it. Very often, you make an analysis of the company, you look at the company, you look, see good, good, good things, good things piling up, interesting sector, interesting market dynamics, interesting fundamentals. Everything looks very well, interesting prospects, and then you find something that is simply too much risk to invest. I don't like those things, but the more companies I found that I say no, there will be one that I say, oh, this is very interesting. And I'm looking at just a few of those per year, and I'm happy. Thank you for watching. Please leave your comments on Urenda. I'm looking forward to hear what are your thoughts, what are your thoughts about the risk somebody using perhaps from China. So, let's see, let's learn together. Thank you for watching, and I'll see you in the next video.