OCFT stock exploded higher on January 10, 2020, after the company received a host of positive analyst actions.
On January 7, 2020, BofA analyst Emerson Chan initiated coverage of OneConnect with a Buy rating and $18 price target. The analyst expects 57% revenue CAGR in FY19-22 driven by contribution from the Ping An Group, increased number of premium customers on upselling, and rising net expansion rate of premium customers on cross selling, new product launch and growth in Lufax.
KeyBanc analyst Hans Chung initiated coverage of OneConnect with an Overweight rating and $15 price target, stating that he sees an accelerated need for digital transformation in small and medium-sized banks in China and believes the company’s technology advantages and industry expertise could help differentiate it from competition.
Morgan Stanley initiated coverage of OneConnect Financial Technology with an Overweight rating and $16 price target.
Goldman Sachs analyst Bill Liu initiated coverage of OneConnect Financial with a Buy rating and $15.90 price target. The company is is well positioned to capture the technology-as-a-service market opportunity at Chinese financial institutions, Liu tells investors in a research note. The analyst highlights OneConnect’s cloud-native technology platform with full-stack full-scope solutions.
What got these analysts so excited about OCFT stock?
On January 2, 2020, a financing platform for SMEs in China’s Guangdong province was formally launched. The platform is supported by OneConnect (NYSE: OCFT), a leading Chinese fintech company that has just been listed on the New York Stock Exchange. The launch of the platform with blockchain as its key underlying technology marks the deep integration of digital government and fintech, signaling that difficulties in obtaining financing, including the associated high cost and slow pace of completing the process, faced by small and medium-sized businesses can be solved by following the “Guangdong model”.
Guangdong province governor Ma Xingrui, Ping An Group chairman and CEO Ma Mingzhe and OneConnect chairman and CEO Ye Wangchun attended the launch ceremony.
OneConnect leveraged Guangdong’s “digital government” data resources, as well as its own advanced financial technologies in blockchain, artificial intelligence and big data, to build a platform that furnishes financing to SMEs, while resolving the issue of information asymmetry. This was accomplished by providing comprehensive commercial credit profiles for businesses, as well as solutions for supply chain financing, trade financing and intellectual property financing, with the result that financial institutions can strengthen their risk management capabilities and improve the efficiency of their financial services.
The SME financing platform currently has access to data in 213 categories from 26 government departments, collecting information and creating a corporate profile alongside a risk evaluation for more than 11 million companies. In addition, the platform has successfully connected with 129 financial institutions in the province, including ICBC, China Construction Bank and Ping An Bank, in addition to launching 319 financial products.
The prominent technical advantage of the SME platform is the blockchain technology it uses and its information sharing, privacy protection and mutual trust mechanism, which not only assures the accuracy and security of the corporate profile, but also enables financial institutions to acquire company information in accordance with laws and regulations, said by OneConnect CEO Mr. Ye. Blockchain can play a role in solving financing problems for SMEs, whether they are engaged in manufacturing, foreign trade or the more innovative areas of science and technology.
At the event, the Guangdong provincial governor, Mr. Ma, formally inaugurated the “Intelligent Matching” feature of the SME financing platform, witnessing the platform’s accepting and granting of the first online unsecured financing credit based on blockchain technology. Within 10 minutes, Huizhou Shenghua Industry Co., Ltd. received 1.12 million yuan in supply chain financing from ICBC, while Guangdong Sunlux IOT Technology Co., Ltd. obtained 500,000 yuan in foreign trade financing from Ping An Bank, and Corehelm Electronic Technology Co., Ltd. received 200,000 yuan in intellectual property financing from China Construction Bank.
On December 19, 2019, OneConnect announced in Tokyo the official opening of SBI OneConnect Japan, a joint venture with Japanese financial service group SBI Holdings, providing cutting-edge cloud-based and AI technological services to regional banks in Japan to help them to achieve digital transformation. It is reported that in March 2019, this joint venture was incorporated in Japan. This is also the first shot that OneConnect has made to the overseas market after being successfully listed on the NYSE.
“We have the world’s leading technology!” said Ye Wangchun, Chairman and CEO of OneConnect. “OneConnect has proven its influence in the Chinese market. We help banks to improve their income, efficiency and quality of services, and reduce their risks and costs, we can help Japanese financial institutions to achieve the same goal.”
OneConnect has been in overseas markets since 2018. In March 2018, OneConnect officially established its branch in Singapore, as headquarters and R & D center of Southeast Asia. It also opened a subsidiary in Indonesia in December 2018. Currently, OneConnect has operations in 10 countries and regions, including Hong Kong, Singapore, Thailand, Indonesia, Cambodia and South Korea.
Ye Wangchun said: “In overseas markets, the main service targets of OneConnect are mainstream local banks and insurance companies. For example, in Europe, OneConnect signed a cooperation agreement with fintech ecosystem software provider Finleap to provide European market Fintech SaaS. In the Middle East, OneConnect set up a base in Abu Dhabi to build up financial technology ecosystem. In Asia, in addition to serving regional banks in Japan by joint venture, OneConnect also developed Cross-border blockchain trading network with Korean companies.”
OneConnect’s partner, SBI Group, is one of the world’s largest integrated online finance groups and one of the largest VC/PE asset management institutions in Asia. Recently, SBI Group also bought equities of some Japanese regional banks. It is believed that the company is constructing an ambitious plan to create a technology-driven bank which will be the “fourth largest bank” in Japan.
The President of SBI Group Yoshitaka Kitao said the joint venture with OneConnect would “become the key to regional revitalization in Japan.”