 Good day, fellow investors. Today I want to discuss a stock I'm still long. It's a Chinese stock. I have been long in both of my portfolios on my stock market research platform and we already made a nice money on it. But I'm still long with part and I want to discuss the company and explain also my approach to investing, my approach to analyzing stocks and how that evolves over a long period of time. Only when you know a company very well for the last years that I feel comfortable enough to really invest a significant part of my money in it, no matter the volatility, no matter what's going on. The company we are talking about is Chudian or how I would say it, Kudian, but I think in Chinese it's Chudian. New York Stock Exchange, Kudi is the ticker, 2017 recent IPO FinTech lender. So loans, microloans, not P2P, not P2P lender official loans to the unbanked population in China with 76 million users. So the company has been really beaten down over the last two years. It's up significantly over the last few months as things are starting to change and the positives are outweighing the negatives that have crushed it since the IPO. So I want to give you the story of Kudian, why I'm still long in my model portfolio and lump sum portfolio, even if I just managed a little bit the risk there and sold the initial investment in the lump sum portfolio after it was up 50%, so I still keep the profits, but if it goes down on my buy more or things like that, that's something that will evolve over the long term. In short, Kudian is a stock with a forward price to earnings ratio of four that has grown net income over the last 12 months for 57% for a price earnings ratio of four has a book value of around 6.6 on a current stock price of around seven something. So it is a margin of safety. The book value isn't in cash because it is a lender. It's growing extremely fast. It's doing well. The management has been trying different things but has shown to be relatively speaking, trustworthy when you put it in a Chinese environment. So a lot of those things are developing. I want to discuss the company, explain how I follow it, what I learned by reading through the conference calls, listening to those, reading to the announcements, the risks, the rewards and why I think over the long term this might work out like a real gem. Let's start. The fintechs lending sector in China had a very bad year, year and a half. Everybody rushed to do an IPO in 2017 because I think they were feeling that the government will crack them down, especially on P2P lenders. Companies like Hexindai, PPDai, Yurindai, Yankpu and Chudian all fared terribly with stock prices down between 60 and 90%. So that was a terrible experience for the whole sector and especially for those greedy investors that invested in growth stocks at the beginning. So end of 2017, the government started with a crackdown. They increased the legal requirements for micro lenders, limited the total charging rate of 46%, so extremely high interest rates on loans, eliminated many lucrative fees and all other scams that were the normal two years ago. However, since then a lot of things changed. First, Cudi is not and never was a P2P lender. It was backed by end financial that had a stake that had a connection with them on their platform. So that's how they got to 74, 6 million users, later end financial sold the stake. It was 11%. So it wasn't material for them. However, during that process of crackdowns and financials, also something very interesting, the main shareholder of, one of the main shareholders of Chudian, I think they had a 16% share, they are a gaming software, something in China. They were forced to sell the stock because of their own financial issues and they were stupid enough to announce it publicly in June, 2018. So when somebody owning 60% of a Chinese Vintech company says it will sell its entire stake and does it publicly, you know, nobody wants to buy such a stock because there will be so much pressure on selling. I think the announcement was part of a bigger plan or better to say blackmail attempt to force Chudian's management into a quick buyback. However, the management didn't budge, waited for the price to fall to four and then to six. And only in April, 2019, agreed to buy all of the remaining Kunlun shares. That was a move that really took guts but a wonderful move by the management and I respect them even more for doing that. However, since then the stock started slowly to recover, the main seller is out of the picture, but the negative sentiments surrounding those lenders, online lenders is still there and everybody's still scared and burned from all the losses over the last year and a half. However, the fact that Kudian repurchased more than 50 million shares, the number of shares outstanding went from 320 to 270 million, that's almost a 20% buyback yield since it's IPO doesn't help it much and they announced another 200 million share repurchase program. However, what's sure when I was preparing this, the stock lost 8% in a day, so what is sure is volatility, but when does volatility meets fundamentals, then it is the time to take advantage of that. So let me give you an overview of the company, then discuss the main advantages and risks so that you can get good perspective on this risk reward situation. The business, it's a tech platform, everything is online, FinTech, they are finding people among the user base of 76 million, giving them micro loans with duration of about eight months and a crazy 36% interest on it. So that's extortion or however you want to call it. That's a part I don't really like. However, they're very profitable meeting all the legal requirements in China and now they started even something else. They have a massive user base and they started to create an open platform for those users to find and connect them with other lenders, especially banks with their assessment of risk. So they get the fee eight to 10% for connecting them and without risk and if the lender come, the borrower and the lender come back to the platform, they still go to Kudian's, Kudian's platform, not, they're not selling, giving the customer to the lender. So it's a very permanent long-term rate idea and the revenues and numbers from that open platform are staggering. Further, Kudian looks relatively well managed, conservative, their leverage ratios are extremely low when compared to peers. I remember arguing with some year and die investors that Kudian, Kudian is better, but they didn't wanna listen because others have been much more leveraged, much more risky and I think still that Kudian had the best in fundamentals since I researched all the Chinese fintech a year and a half ago. Therefore, I bought also this recently. The open platform is very interesting. However, they launched a similar business, Dubai auto when they were trying to sell cars but that wasn't profitable so that they closed it immediately. There wasn't a big loss but this shows how the management is constantly testing to get the best use of that big user base. Who knows what's going to be the case in the next years. So the fundamentals, the numbers just look staggering. Q2 net income is already 40% of the total 2018 net income thanks to the open platform net income was 57% higher than in Q2 2018. So can the market be blinded by Kudian being a micro lender in China and the past negative sentiment or it can't recognize value because there is nothing intrinsically wrong with Kudian's business model. Let's discuss this further. So 57% growth in net income. You might think about whether should you invest in it at a price earnings ratio of 40. At the price earnings ratio of four, it's unbelievable that such bargains exist. So when it comes to investing in that, I always wonder, okay, what's the risk? Is it a trap? And then you'll see, okay, what's the risk and reward? So let's discuss the investment thesis when it comes to Kudian. But also before that, let me discuss the risks. It is a Chinese lender. So it's Chinese money, it's renminbi. There can be a devaluation, you can lose 40%. But if you lose 40% on debt, the P ratio goes from four to six. Still very undervalued. Then there are always regulatory issues, but for now, Kudian has been on the forefront of getting those licenses to operate. Now it's even partnering with banks, with the open platform. So everything looks pretty well. Then the management tried a year ago, a year and a half ago, they tried to buy auto. So they tried to sell cars and lend money for the customers to purchase those cars. The car market got subdued over the last year in China. So that didn't work out well, but the losses haven't been big. So they are constantly trying things. Now the open platform, if one of those things explodes, they make 10x their money. If it doesn't, they just lose X. This is a very intriguing and interesting FinTech growth company with the price earnings ratio of four. That's my risk reward there. Now there are other two risks that I want to mention. The interest rate they are lending money out with the fees is 36%, which is the maximum allowed in China. 36% for me is crazy high. I wonder how they get customers, but it's China, it's crazy. So I don't think that over the long term, this could be sustainable. The government can come and say, maximum interest rate 20. And that would, again, lower Kudian's profit margin, but it will still keep the growth, keep the business model, keep the 76 million of users, and then again, grow over the long term. The key is that there is the margin of safety within the cash, I think. So much lower, it can go to four. I hope it goes to four again so that I can buy again and play again the same game that they played already. But over the long term, I think the risk is low because the company has done well over the past. The second risk is they issued just a convertible note, 300 million of convertible notes to buy back stock. Okay, they issued with a conversion target of nine. They bought back stocks at seven. So they increased shareholder value, although I personally don't like convertible bonds. So okay, they did that, no hard feelings, but still not something really, really nice. So the nice thing on the other hand, the chairman, the CEO, Min Luo said that until Kudian reaches a hundred billion of market capitalization, he will not get any compensation. So Elon Musk like story there. Very interesting risk reward, it's not the perfect stock, of course it can't be the perfect stock at the price earnings ratio of four, but it's a very tempting risk reward ratio. Let me show you my little risk reward table. I think that downturn, just 10% risk, really things should go bad with China, China, US, whatever, to lose 100%. 15% down chance also, down 50%, also just a 15% chance. If everything goes bad, but that's over five years, then it would recover. Short term, I hope it goes down. 25% chance for a double in the next five years, 25% chance for a triple, and also 25% chance for a quintuple over the next five years, because still we are talking about a price earnings ratio of four. So the value should be 20 in five years, discount that to your returns or about 10 should be the fair value at the 15% required return on investment. So this is really, really a bargain. If things evolve well, then it could be a 5x, 10x company over the long term. So that's the upside compared to 50% downside, and that is for a speculative exposure in the portfolio, a risk I would, I am taking, and I like to take in this case. So this summarizes a little bit the story. I've been following Kudian, Chudian since their IPO. So when you follow such stocks for two years, you start to get the handle of them, and if you want something like that, where I follow more than 30 stocks now and I continue to research, I continue to add stocks, it's my research platform. There are reports. We update those reports every quarter when there are earnings, when there are news. There is a table with in detailed descriptions, risk analysis, reward analysis for each stocks, intrinsic value, and you can really follow what I do. I do that for less than a dollar a day. So please check the platform, see whether it is for you. If you're interested in such investment stories, I think you will really enjoy the investment platform. Thank you for watching. I'm looking forward to your comments. You can ask questions on Facebook or send me an email that's always welcome. So thank you, don't forget to subscribe, and I'll see you in the next video.