Peak Fintech Group Inc. (CSE: PKK; OTCQX: PKKFF)
Commercial Lending in China Ready to Peak!
By Cathy Hume, CEO CHF Capital Markets
Originally published on July 31, 2018
There’s a myriad of technologies that have revolutionized the way we do things. To mention only a few, in the banking and financial services sector, ATM’s, on-line banking, trading shares from our computers, and so on.
Don’t look now, but in that same vein, little-known Peak Positioning Technologies (CSE: PKK) is poised to change the way commercial lending is done in China and I think it’s time for investors to take notice. Peak was able to secure a license for the exclusive commercial rights to the Cubeler commercial lending platform in China and began to operate Cubeler earlier this year. Cubeler brings lenders (banks and other financial service providers) and SMEs, who are looking for funding, together to transact with one another by using analytics to match the right lenders with the right SMEs. Think of Cubeler as a dating website where lenders and SMEs simply login to their accounts and review their respective matches. Commercial lending will never be the same or more efficient than with this cutting edge platform.
Peak’s financial services subsidiary, Asia Synergy Financial Capital (ASFC) began offering loans on Cubeler in May 2018. By the end of June 2018 ASFC had extended loans to almost 1,700 Chinese SMEs totalling more than $20M. Other Chinese lenders are closely monitoring what ASFC is doing on Cubeler, and that’s very important because getting other lenders to buy into the Cubeler concept is what can potentially take Peak and its shareholders from the penny stock world to much greener pastures.
Under the Cubeler revenue model, Peak earns a service fee representing a percentage of the value of the transaction for each loan conducted on the platform. Peak has yet to reveal what that percentage is, but I think it would be safe to assume that it’ll be in the 1% to 2% range. In addition to ASFC, two other lenders, who combine to make $220M in loans annually, have also joined Cubeler. This brought the platform’s total annual lending capacity to $240M. Peak’s formula for success, when it comes to Cubeler, is quite simple: bring as many lenders as possible to the platform in order to increase the platform’s lending capacity and earn a service fee on an ever-increasing pool of lending capital.
Let’s take a look at some numbers to see what all of this means for Peak shareholders. Let’s assume Peak earns 1.5% on all loans done on Cubeler (again, the percentage that the company earns on the loans has not yet been disclosed, so we’re just guessing here). With a current annual lending capacity of $240M, Peak would gross $3.6M per year in Cubeler service fees.
Now here comes the interesting part. The first 2 lenders to join Cubeler (other than ASFC) brought a total of $220M to the platform for an average of $110M per lender. There are apparently over 8,000 lenders in China. Using an average of $110M per lender, imagine for a moment what Peak’s revenues would look like with 10, 20, 50 or even more lenders on the platform. Sure, Peak’s sceptics say “I’ll believe it when I see it.” Understood. But the positive feedback from both lenders and borrowers so far points to Cubeler’s rapid adoption. So even if you’re not yet convinced that now is the right time to bet on Peak as a transformative force in the Chinese commercial lending space, keep an eye out for news on the lenders who join the platform, expansion of the platform’s lending capital pool and the company’s upcoming quarterlies. Once the company discloses the percentage of the service fee it earns on loans done on Cubeler this fall, management plans to follow that up with meetings with technology analysts and investment community professionals to expand the company’s audience. There may not be a better time than right now to take a gamble on Peak!
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