China Finance Online Co. (ADR) (NASDAQ:JRJC) is a former high-flyer that has recently fallen on hard times. JRJC has been seeing some recent improvement and just reported its Q2 results, in which, despite a net loss, we may see some important signals.
For a start, net revenues were $9.6 million, compared with $16.0 million during the second quarter of 2016 and $8.7 million during the first quarter of 2017. During the second quarter of 2017, revenues from financial services, the financial information and advisory business, and advertising services contributed 67%, 20% and 10% of the net revenues, respectively, compared with 76%, 18% and 5%, respectively, for the corresponding period in 2016.
China Finance Online Co. (ADR) (NASDAQ:JRJC) bills itself as a company that provides Web-based financial services company in the People’s Republic of China and Hong Kong.
JRJC operates through three segments: Commodities Brokerage Services; Online Financial Information and Advisory Service, and Other Related Services; and Hong Kong Brokerage Services. It provides online access to securities and commodities trading services, wealth management products, and securities investment advisory services to retail investors; and financial database and analytics to institutional investors, including financial, research, academic, and regulatory institutions, as well as financial software products.
JRJC is involved in the operation of Yinglibao, an Internet-based financial platform that integrates cash management solutions and mutual fund distribution; Securities Master, an integrated securities trading platform; and Investment Master, a Web-based mobile investment advisory service platform that facilitates securities investment advisors to communicate with their clients and followers. In addition, it provides commodities brokerage services; and securities and futures contracts brokerage, and related services to its customers, who invest in stocks listed on Hong Kong Stock Exchange.
JRJC offers its products and services to individual investors managing their own money; professional investors, such as institutional investors managing large sums of money on behalf of their clients and high net worth individuals; and other financial professionals, including investment bankers, stock analysts and financial reporters, and middle-class individuals. China Finance Online Co., Limited was founded in 1998 and is based in Beijing, the People’s Republic of China.
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As noted above, JRJC has been seeing a tough time of late, but may get a boost from the company’s recent financial results. Digging a little deeper, we can see that revenues from financial services were $6.4 million, compared with $12.2 million during the second quarter of 2016 and $5.4 million during the first quarter of 2017. Revenues from financial services mainly represent equity and commodities brokerage services.
The equity brokerage business grew 456.9% year-over-year and 8.3% quarter-over-quarter. The year-over-year decrease in revenues from financial services was mainly due to a decline in revenues from the Company’s commodities brokerage services. Revenue from commodities brokerage declined by 85.7% year-over-year but up 94.0% quarter-over-quarter.
Mr. Zhiwei Zhao, Chairman and CEO of China Finance Online, commented, “We posted sequential improvement in the second quarter. Our intelligent-finance driven fintech business is gaining traction as accredited retail investors began to subscribe our mobile application based analytical tools to guide their quantitative trading investment strategies. In addition, we are in beta test of our cloud-based investment research software product for enterprise users, namely large financial institutions. We remain confident that we will turn a positive net cash-flow in the fourth quarter of 2017. As the Chinese stock market continues to mature, we are committed to providing state-of-the-art tools with cloud computing capability and robust database to power our users in their investment decisions.”
Currently trading at a market capitalization of $47M, JRJC has a significant war chest ($47.3M) of cash reported on the books, which must be weighed relative to virtually no total current liabilities. JRJC is pulling in trailing 12-month revenues of $59.5M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -71.7%. You can bet we will update this one again as new information comes into view. For continuing coverage on shares of $JRJC stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!
Disclosure: We hold no position in $JRJC, either long or short, and we have not been compensated for this article.